Exhibit 10.4

 

COMMON STOCK PURCHASE AGREEMENT

 

COMMON STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of November 17, 2016
by and between IMMUNE PHARMACEUTICALS INC., a Delaware corporation (the
“Company”), and HLHW IV, LLC, a Delaware limited liability company (the
“Buyer”). Capitalized terms used herein and not otherwise defined herein are
defined in Section 10 hereof.

 

WHEREAS:

 

Subject to the terms and conditions set forth in this Agreement, the Company
wishes to sell to the Buyer, and the Buyer wishes to buy from the Company, up to
Ten Million Dollars ($10,000,000) of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”). The shares of Common Stock to be
purchased hereunder are referred to herein as the “Purchase Shares.”

 

NOW THEREFORE, the Company and the Buyer hereby agree as follows:

 

1.PURCHASE OF COMMON STOCK.

 

Subject to the terms and conditions set forth in this Agreement, the Company has
the right to sell to the Buyer, and the Buyer has the obligation to purchase
from the Company, Purchase Shares as follows:

 

(a)  Commencement of Purchases of Common Stock.  On the day following the filing
of the Form 8-K as described in Section 4 herein, but not later than November
23, 2016 (“Effective Date”), the Company shall deliver cash, such number of
shares of Common Stock or a combination thereto, at the election of Buyer,
representing a dollar amount equal to $700,000 representing the payment of the
Commitment Shares (as defined in Section 4(e )) based on a per share price equal
to the lowest intraday bid price on the Effective Date (each such tranche of the
purchase, the “Initial Purchase” and each such tranche of the initial Purchase
Shares are referred to herein as “Initial Purchase Shares”). Such Initial
Purchase Shares shall be validly issued and fully paid and non-assessable.
Thereafter, the purchase and sale of additional Purchase Shares hereunder shall
occur from time to time upon written notices by the Company to the Buyer on the
terms and conditions as set forth herein following the satisfaction of the
conditions (the “Commencement”) as set forth in Sections 6 and 7 below (the date
of satisfaction of such conditions, the “Commencement Date”). In addition, per a
loan agreement dated November 1, 2016 between the Company as borrower and HLHW
IV, LLC as lender, the Company shall pay the loan balance of $306,000 upon
Commencement by delivering a number of shares of Common Stock with an aggregate
value of $306,000 based on a per share price equal to the Purchase Price on each
of the dates that Buyer agrees to accept all or a portion of such shares of
Common Stock. The foregoing notwithstanding, Buyer, in it sole discretion, may
elect to receive the shares of Common Stock representing the Commitment Shares
and/or the shares issuable as repayment of the $306,000 loan in one or more
tranches. Furthermore, all fees and expenses as further described in Section
11(n) herein are immediately due and payable in cash in connection with this
Section 1(a).

 

(b)  The Company’s Right to Require Regular Purchases. Subject to item (d) below
and the terms and conditions of this Agreement, on any given Business Day after
the Commencement Date, the Company shall have the right but not the obligation
to direct the Buyer by its delivery to the Buyer of a Purchase Notice from time
to time, and the Buyer thereupon shall have the obligation, to buy the number of
Purchase Shares specified in such notice, up to 500,000 Purchase Shares, on such
Business Day (as long as such notice is delivered on or before 9:00 a.m. Eastern
time on such Business Day), unless delivery of a Purchase Notice is waived by
Buyer in its sole discretion (each such purchase, a “Regular Purchase”) at the
Purchase Price on the Purchase Date; however, in no event shall the Purchase
Amount of a Regular Purchase exceed Two Hundred and Fifty Thousand Dollars
($250,000) per Business Day, unless the Buyer and the Company mutually
agree. The Company and the Buyer may mutually agree to increase the number of
Purchase Shares that may be sold pursuant to a Regular Purchase to as much as an
additional 2,000,000 Purchase Shares per Business Day. The foregoing
notwithstanding, the Company shall have the obligation to sell and the Buyer
shall have the obligation to purchase at the Purchase Price a number of Purchase
Shares with an aggregate value of $2,000,000 of Purchase Shares on or before
December 31, 2016. Upon failure by the Company to comply with the obligation to
sell to Buyer a number of Purchase Shares with an aggregate value of $2,000,000
by December 31, 2016, Buyer will be entitled to liquidated damages of $100,000.
The Company may deliver additional Purchase Notices to the Buyer from time to
time so long as the most recent purchase has been completed. The share amounts
in this Section 1(b) shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other
similar transaction. Unless waived by the Buyer, the Company is prohibited from
requesting Regular and/or Additional Purchases for five (5) Business Days from
the Commencement Date.

 

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(c)  Additional Purchases. Subject to item (d) below and the terms and
conditions of this Agreement, in addition to purchases of Purchase Shares as
described in Section 1(b) above, with one Business Day’s prior written notice,
the Company shall also have the right but not the obligation to direct the Buyer
by delivery to the Buyer of an Additional Purchase Notice from time to time, and
the Buyer thereupon shall have the obligation, to buy up to an additional 30% of
the trading volume of the Common Stock for the next Business Day (each such
purchase, an “Additional Purchase”) at the Additional Purchase Price. The
Company may deliver an Additional Purchase Notice to the Buyer on or before 9:00
a.m. Eastern time on a date on which (i) the Company also submitted a Purchase
Notice for a Regular Purchase of at least 200,000 Purchase Shares to the Buyer
and (ii) the Closing Bid Price is higher than $0.10. The share amount in the
prior sentence shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other
similar transaction.  Upon completion of each Additional Purchase, the Buyer
shall submit to the Company a confirmation of the Additional Purchase in form
and substance reasonably acceptable to the Company. The Company may deliver
Additional Purchase Notices to the Buyer from time to time so long as the most
recent purchase has been completed.

 

(d)  Limitation on Purchases. In the event the Company delivers a Purchase
Notice or Additional Purchase Notice to Buyer for more than thirty percent (30%)
of the average of the five (5) previous Business Days dollar volume of the
Common Stock on the Trading Market on which the Common Stock is then listed or
quoted as reported by Bloomberg L.P. based on a Trading Day from 9:30 AM (NYC
time) to 4:02 PM (NYC time) for the nearest preceding Business Day (“Volume
Limitation”), the Buyer, in its sole discretion, may either accept or reject the
Purchase Notice or Additional Purchase Notice, in whole or in part. Furthermore,
provided the Company can deliver the Purchase Shares or Additional Purchase
Shares via DWAC, the Company shall be obligated to require Regular Purchases
and/or Additional Purchases for an aggregate number of Purchase Shares and/or
Additional Purchase Shares representing a dollar value of an aggregate amount of
not less than $1,000,000 per month, subject to the Volume Limitation. Upon
failure of the Company to comply with its obligation to sell to Buyer a number
of Purchase Shares with an aggregate value of at least $1,000,000, the Company
will pay to the Buyer as liquidated damages the sum of $50,000 for each thirty
(30) day period such failure continues. If for any reason the Transfer Agent
does not timely deliver the Shares via DWAC, Buyer, in its sole discretion, may
then cancel the Purchase and the Company will be required to pay Buyer as
liquidated damages, and not as a penalty the sum of $5,000. If the Buyer elects
not to cancel the Purchase Notice and/or an Additional Purchase Notice, the
Company will pay to the Buyer as liquidated damages the sum of $5,000 per day
until the Transfer Agent delivers the Purchase Shares to Buyer. In the event the
Principal Market is closed or there is no trading in the Common Stock or trading
has been halted for any reason whatsoever, Buyer, in its sole discretion, may
reject a part of or all of the Purchase Notice or Additional Purchase Notice.

 

(e)  Payment for Purchase Shares. For each Regular Purchase, the Buyer shall pay
to the Company an amount equal to the Purchase Amount minus any amounts or
credits whatsoever due to Buyer, as full payment for such Purchase Shares via
wire transfer of immediately available funds on or before the fourth Business
Day following delivery of the Purchase Shares to Buyer. For each Additional
Purchase, the Buyer shall pay to the Company an amount equal to the Additional
Purchase Amount minus any amounts or credits whatsoever due to Buyer, as full
payment for such Additional Purchase Shares via wire transfer of immediately
available funds on or before the fourth Business Day following the delivery of
Additional Purchase Shares to Buyer. All payments made under this Agreement
shall be made in lawful money of the United States of America via wire transfer
of immediately available funds to such account as the Company may from time to
time designate by written notice in accordance with the provisions of this
Agreement. Whenever any amount expressed to be due by the terms of this
Agreement is due on any day that is not a Business Day, the same shall instead
be due on the next succeeding day that is a Business Day. Failure to deliver the
Purchase Shares or Additional Purchase Shares within three Business Days of the
Purchase Date or Additional Purchase Date, the Company will pay Buyer as
liquidated damages, and not as a penalty, five percent (5%) of the value of the
Common Stock based on the closing bid price of the Common stock for each such
day until the Shares are delivered to Buyer.

 

(f)  Purchase Price Floor. The Company and the Buyer shall not effect any sales
under this Agreement on any Purchase Date where the Closing Bid Price is less
than the Floor Price, unless waived by Buyer. “Floor Price” means $0.10 per
share of Common Stock, which shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction.

 

(g)  Records of Purchases. The Buyer and the Company shall each maintain records
showing the remaining Available Amount at any given time and the dates and
Purchase Amounts for each purchase, or shall use such other method reasonably
satisfactory to the Buyer and the Company to reconcile the remaining Available
Amount.

 

(h)  Taxes. The Company shall pay any and all transfer, stamp or similar taxes
that may be payable with respect to the issuance and delivery of any shares of
Common Stock to the Buyer made under this Agreement.

 

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(i)  Compliance with Principal Market Rules. Notwithstanding anything in this
Agreement to the contrary, unless permitted by the applicable rules and
regulations of the Principal Market, the total number of shares of Common Stock
that may be issued under this Agreement, including the Commitment Fee (as
defined in Section 4(e) hereof), shall not exceed the aggregate number of shares
of Common Stock which the Company may issue upon without breaching the Company’s
obligations under the rules or regulations of the Principal Market (the number
of shares which may be issued without violating such rules and regulations, the
“Exchange Cap”). Notwithstanding the foregoing, such limitation shall not apply
in the event that the Company obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for issuances of shares
of Common Stock in excess of such amount The Exchange Cap shall be appropriately
adjusted for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction.  The Company may, in
its sole discretion, determine whether to obtain stockholder approval to issue
more shares of Common Stock hereunder than is permitted by the Exchange Cap if
such issuance would require stockholder approval under the rules or regulations
of the Principal Market.

 

(j)  Beneficial Ownership Limitation. The Company shall not issue, and the Buyer
shall not purchase any shares of Common Stock under this Agreement, if such
shares proposed to be issued and sold, when aggregated with all other shares of
Common Stock then owned beneficially (as calculated pursuant to Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “1934 Act”) and Rule 13d-3
promulgated thereunder) by the Buyer and its affiliates would result in the
beneficial ownership by the Buyer and its affiliates of more than 4.99% of the
then issued and outstanding shares of Common Stock of the Company, unless waived
in writing by Buyer.

 

2.BUYER’S REPRESENTATIONS AND WARRANTIES.

 

The Buyer represents and warrants to the Company that as of the date hereof and
as of the Commencement Date:

 

(a)  Investment Purpose. The Buyer is entering into this Agreement and acquiring
the Commitment Shares and the Purchase Shares (the Purchase Shares and the
Commitment Shares are collectively referred to herein as the “Securities”), for
its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof; provided however,
by making the representations herein, the Buyer does not agree to hold any of
the Securities for any minimum or other specific term.

 

(b)  Accredited Investor Status. The Buyer is an “accredited investor” as that
term is defined in Rule 501(a)(3) of Regulation D under the 1933 Act.

 

(c)  Information. The Buyer has been furnished with all materials relating to
the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities that have been reasonably requested by the
Buyer, including, without limitation, the SEC Documents (as defined in Section
3(f) hereof). The Buyer understands that its investment in the Securities
involves a high degree of risk. The Buyer (i) is able to bear the economic risk
of an investment in the Securities including a total loss, (ii) has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment in the Securities and
(iii) has had an opportunity to ask questions of and receive answers from the
officers of the Company concerning the financial condition and business of the
Company and other matters related to an investment in the Securities. Neither
such inquiries nor any other due diligence investigations conducted by the Buyer
or its representatives shall modify, amend or affect the Buyer’s right to rely
on the Company’s representations and warranties contained in Section 3
below. The Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

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

 

(e)  Organization. The Buyer is a limited liability company duly organized and
validly existing in good standing under the laws of the jurisdiction in which it
is organized, and has the requisite organizational power and authority to own
its properties and to carry on its business as now being conducted.

 

(f)  Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable against the Buyer in accordance with its
terms, subject as to enforceability to (i) general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies and (ii) public policy underlying any
law, rule or regulation (including any federal or state securities law, rule or
regulation) with regards to indemnification, contribution or exculpation. The
execution and delivery of the Transaction Documents (as defined in Section 3(b)
hereof) by the Buyer and the consummation by it of the transactions contemplated
hereby and thereby do not conflict with the Buyer’s certificate of organization
or operating agreement or similar documents, and do not require further consent
or authorization by the Buyer, its managers or its members.

 

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(g)  Residency. The Buyer is a resident of the State of Delaware.

 

(h)  No Prior Short Selling. The Buyer represents and warrants to the Company
that at no time prior to the date of this Agreement has any of the Buyer, its
agents, representatives or affiliates engaged in or effected, in any manner
whatsoever, directly or indirectly, any (i) “short sale” (as such term is
defined in Section 242.200 of Regulation SHO of the 1934 Act) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.

 

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as set forth herein or in the Schedules, the Company represents and
warrants to the Buyer that as of the date hereof and as of the Commencement
Date:

 

(a)  Organization and Qualification. The Company and its “Subsidiaries” (which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns more than 50% of the voting stock or capital stock or other
similar equity interests) are corporations or limited liability companies duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated or organized, and have the requisite
corporate or organizational power and authority to own their properties and to
carry on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or limited liability
company to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect. As used in this Agreement, “Material Adverse Effect”
means any material adverse effect on any of: (i) the business, properties,
assets, operations, results of operations or financial condition of the Company
and its Subsidiaries, if any, taken as a whole, or (ii) the authority or ability
of the Company to perform its obligations under the Transaction Documents (as
defined in Section 3(b) herein). The Company has no material Subsidiaries except
as set forth on Schedule 3(a).

 

(b)  Authorization; Enforcement; Validity. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, and each of the other agreements entered into by the parties on
the Commencement Date and attached hereto as exhibits to this Agreement
(collectively, the “Transaction Documents”), and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation, the
issuance of the Commitment Shares and the reservation for issuance and the
issuance of the Purchase Shares and Additional Purchase Shares issuable under
this Agreement, have been duly authorized by the Company’s Board of Directors or
duly authorized committee thereof, do not conflict with the Company’s
Certificate of Incorporation or Bylaws (as defined below), and do not require
further consent or authorization by the Company, its Board of Directors, except
as set forth in this Agreement, or its stockholders, (iii) this Agreement has
been, and each other Transaction Document shall be on the Commencement Date,
duly executed and delivered by the Company and (iv) this Agreement constitutes,
and each other Transaction Document upon its execution on behalf of the Company,
shall constitute, the valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by (y) general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies and (z) public policy underlying any law, rule or regulation (including
any federal or state securities law, rule or regulation) with regards to
indemnification, contribution or exculpation. The Board of Directors of the
Company or a duly authorized committee thereof has approved the resolutions (the
“Signing Resolutions”) substantially in the form as set forth as Exhibit B
attached hereto to authorize this Agreement and the transactions contemplated
hereby. The Signing Resolutions are valid, in full force and effect and have not
been modified or supplemented in any material respect. The Company has delivered
to the Buyer a true and correct copy of the Signing Resolutions as approved by
the Board of Directors of the Company.

 

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(c)  Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (i) 225,000,000 shares of Common Stock, par value $0.0001,
of which as of the date hereof, 131,291,362 shares are issued and outstanding,
zero shares are held as treasury shares, 642,373 shares are reserved for future
issuance pursuant to the Company’s 2015 Equity Incentive Plan, of which
approximately 642,373 shares remain available for future option grants or stock
awards, exercisable or exchangeable for, or convertible into, shares of Common
Stock, and (ii) zero shares of Series C or Series D preferred stock, with per
share liquidation preferences set forth on Schedule 3(c), of which as of the
date hereof zero shares are issued and outstanding. All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and non-assessable. Except as disclosed in Schedule 3(c) or the first sentence
of this Section 3(c), (i) no shares of the Company’s capital stock are subject
to preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company, (ii) there are no outstanding debt
securities of the Company or any of its Subsidiaries, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no material agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement. The Company has furnished or made available to the
Buyer true and correct copies of the Company’s Certificate of Incorporation, as
amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s Bylaws, as amended and as in effect on the
date hereof (the “Bylaws”).

 

(d)  Issuance of Securities. The Commitment Shares and the Initial Purchase
Shares have been duly authorized and, upon issuance in accordance with the terms
hereof, the Commitment Shares and the Initial Purchase Shares and Additional
Purchase Shares shall be (i) validly issued, fully paid and non-assessable and
(ii) free from all taxes, liens and charges with respect to the issuance
thereof. Upon issuance and payment therefore in accordance with the terms and
conditions of this Agreement, the Purchase Shares and Additional Purchase Shares
shall be validly issued, fully paid and non-assessable and free from all taxes,
liens and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.

 

(e)  No Conflicts. Except as disclosed in Schedule 3(e), the execution, delivery
and performance of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including,
without limitation, the reservation for issuance and issuance of the Purchase
Shares and Commitment Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the Bylaws
or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result, to the Company’s knowledge, in a violation
of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market applicable to the Company or any of its Subsidiaries) or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except in the case of conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations under clause (ii), which
would not reasonably be expected to result in a Material Adverse Effect. Except
as disclosed in Schedule 3(e), neither the Company nor its Subsidiaries is in
violation of any term of or in default under its Certificate of Incorporation,
any Certificate of Designation, Preferences and Rights of any outstanding series
of preferred stock of the Company or the Bylaws or their organizational charter
or bylaws, respectively. Except as disclosed in Schedule 3(e), neither the
Company nor any of its Subsidiaries is in violation of any term of or is in
default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
violations, defaults, terminations or amendments that would not reasonably be
expected to have a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, ordinance, or regulation of any governmental entity, except for
possible violations, the sanctions for which either individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement, reporting
obligations under the 1934 Act, or as required under the 1933 Act or applicable
state securities laws or the filing of a Listing of Additional Shares
Notification Form with the Principal Market, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in Schedule 3(e) and for
reporting obligations under the 1934 Act, all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence shall be obtained or effected on or prior to the
Commencement Date. Except as disclosed in Schedule 3(e), the Company is not
subject to any notices or actions from or to the Principal Market other than
routine matters incident to listing on the Principal Market and not involving a
violation of the rules of the Principal Market. Except as disclosed in Schedule
3(e), to the Company’s knowledge, the Principal Market has not commenced any
delisting proceedings against the Company.

 

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(f)  SEC Documents; Financial Statements. Except as disclosed in Schedule 3(f),
since January 1, 2016, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). As of their respective dates
(except as they have been correctly amended), the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC (except
as they may have been properly amended), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates (except as they have been properly amended), the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as disclosed in Schedule 3(f) or routine correspondence,
such as comment letters and notices of effectiveness in connection with
previously filed registration statements or periodic reports publicly available
on EDGAR, to the Company’s knowledge, the Company or any of its Subsidiaries are
not presently the subject of any inquiry, investigation or action by the SEC.

 

(g)  Absence of Certain Changes. Except as disclosed in Schedule 3(g), since
January 1, 2016, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries taken as a whole. For purposes of this Agreement,
neither a decrease in cash or cash equivalents or in the market price of the
Common Stock nor losses incurred in the ordinary course of the Company’s
business shall be deemed or considered a material adverse change. The Company
has not taken any steps, and does not currently expect to take any steps, to
seek protection pursuant to any Bankruptcy Law nor does the Company or any of
its Subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy or insolvency proceedings. The Company
is financially solvent and is generally able to pay its debts as they become
due.

 

(h)  Absence of Litigation. Except as disclosed in Schedule 3(h), to the
Company’s knowledge, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against the Company, the Common Stock or
any of the Company’s Subsidiaries or any of the Company’s or the Company’s
Subsidiaries’ officers or directors in their capacities as such, which would
reasonably be expected to have a Material Adverse Effect (each, an “Action”). A
description of each such Action, if any, is set forth in Schedule 3(h).

 

(i)  Acknowledgment Regarding Buyer’s Status. The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm’s length purchaser
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer’s
purchase of the Securities. The Company further represents to the Buyer that the
Company’s decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.

 

(j)  Intellectual Property Rights. To the Company’s knowledge, the Company and
its Subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights (collectively, “Intellectual Property”) necessary to conduct their
respective businesses as now conducted, except as set forth in Schedule 3(j) or
to the extent that the failure to own, possess, license or otherwise hold
adequate rights to use Intellectual Property would not, individually or in the
aggregate, have a Material Adverse Effect. Except as disclosed in Schedule 3(j),
to the Company’s knowledge, none of the Company’s active and registered
Intellectual Property have expired or terminated, or, by the terms and
conditions thereof, will expire or terminate within two years from the date of
this Agreement, except as would not reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any Intellectual Property
of others and, except as set forth on Schedule 3(j), there is no claim, action
or proceeding being made or brought against, or to the Company’s knowledge,
being threatened against, the Company or its Subsidiaries regarding Intellectual
Property, which could reasonably be expected to have a Material Adverse Effect.

 

 6 

 

 

(k)  Environmental Laws. To the Company’s knowledge, the Company and its
Subsidiaries (i) are in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety or the environment and with respect to hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received all material permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective businesses
and (iii) are in material compliance with all terms and conditions of any such
permit, license or approval, except where, in each of the three foregoing
clauses, the failure to so comply or receive such approvals would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

 

(l)  Title. The Company and its Subsidiaries have good and marketable title to
all personal property owned by them that is material to the business of the
Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(l) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries or would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Any real property and facilities held
under lease by the Company and any of its Subsidiaries, to the Company’s
knowledge, are held by them under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
Subsidiaries.

 

(m)  Insurance. The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be reasonable and customary in
the businesses in which the Company and its Subsidiaries are engaged. To the
Company’s knowledge, since January 1, 2016, neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied for and
neither the Company nor any such Subsidiary, to the Company’s knowledge, will be
unable to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not reasonably be expected to have
a Material Adverse Effect.

 

(n)  Regulatory Permits. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as currently conducted, and neither the Company nor any such
Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any such material certificate, authorization or
permit.

 

(o)  Tax Status. The Company and each of its Subsidiaries has made or filed all
federal and state income and all other material tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books reserves reasonably adequate for the payment of all unpaid and
unreported taxes or filed valid extensions) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books reserves reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. To the Company’s knowledge,
there are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction.

 

(p)  Transactions With Affiliates. Except as set forth on Schedule 3(p) and
other than the grant or exercise of stock options or any other equity securities
offered pursuant to duly adopted stock or incentive compensation plans as
disclosed on Schedule 3(c) or in the first sentence of Section 3(c), none of the
officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for services
as employees, officers and directors and reimbursement for expenses incurred on
behalf of the Company), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a material interest or is an officer, director, trustee
or general partner.

 

(q)  Application of Takeover Protections. The Company and its board of directors
have taken or will take prior to the Commencement Date all necessary action, if
any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the state of its incorporation, other than Section 203 of the
Delaware General Corporation Law, which is or could become applicable to the
Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and the Buyer’s
ownership of the Securities.

 

 7 

 

 

(r)  Registration Statement. The Shelf Registration Statement (as defined in
Section 4(a) hereof) has been declared effective by the SEC, and no stop order
has been issued or is pending or, to the knowledge of the Company, threatened by
the SEC with respect thereto. As of the date hereof, the Company has a dollar
amount of securities registered and unsold under the Shelf Registration
Statement, which is not less than the sum of (i) the Available Amount and (ii)
the market value of the Commitment Fee on the date hereof.

 

4.COVENANTS AND OTHER AGREEMENTS OF THE PARTIES.

 

(a)  Filing of Form 8-K and Prospectus Supplement. The Company agrees that it
shall, within one day of the Commencement Date, file a Current Report on Form
8-K disclosing this Agreement and the transaction contemplated hereby. From and
after the filing of the Form 8-K, the Company represents to the Purchasers that
it shall have publicly disclosed all material, non-public information delivered
to any of the Purchasers by the Company or any Subsidiary, or any of their
respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. The Company shall file
within two (2) Business Days from the date hereof a prospectus supplement to the
Company’s existing shelf registration statement on Form S-3 (File No.
333-198647, the “Shelf Registration Statement”) covering the sale of the
Commitment Shares and Purchase Shares (the “Prospectus Supplement”) in
accordance with the terms of the Registration Rights Agreement between the
Company and the Buyer, dated as of the date hereof (the “Registration Rights
Agreement”). The Company shall use commercially reasonable efforts to keep the
Shelf Registration Statement and any New Registration Statement (as defined in
the Registration Rights Agreement) effective pursuant to Rule 415 promulgated
under the 1933 Act and available for sales of all Securities to the Buyer until
such time as (i) it no longer qualifies to make sales under the Shelf
Registration Statement (which shall be understood to include the inability of
the Company to immediately register sales of Securities to the Buyer under the
Shelf Registration Statement or any New Registration Statement pursuant to
General Instruction I.B.6 of Form S-3), (ii) the date on which all the
Securities have been sold under this Agreement and no Available Amount remains
thereunder, or (iii) the Agreement has been terminated. The Shelf Registration
Statement (including any amendments or supplements thereto and prospectuses or
prospectus supplements, including the Prospectus Supplement, contained therein)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.

 

(b)  Blue Sky. The Company shall take such action, if any, as is reasonably
necessary in order to obtain an exemption for or to qualify (i) the initial sale
of the Securities to the Buyer under this Agreement and (ii) any subsequent sale
of the Securities by the Buyer, in each case, under applicable securities or
“Blue Sky” laws of the states of the United States in such states as is
reasonably requested by the Buyer from time to time, and shall provide evidence
of any such action so taken to the Buyer.

 

(c)  Listing. The Company shall promptly secure the listing of all of the
Company’s Common Stock listed upon each national securities exchange and
automated quotation system that requires an application by the Company for
listing, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain such listing, so long as any
other shares of Common Stock shall be so listed. The Company shall use its
commercially reasonable efforts to maintain the Common Stock’s listing on the
Principal Market. Neither the Company nor any of its Subsidiaries shall take any
action that would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market, unless the Common Stock
is immediately thereafter traded on the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Capital Market, or the OTCQB or
OTCQX market places of the OTC Markets. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section.

 

(d)  Limitation on Short Sales and Hedging Transactions. The Buyer agrees that
beginning on the date of this Agreement and ending on the date of termination of
this Agreement as provided in Section 11(k), the Buyer and its agents,
representatives and affiliates shall not in any manner whatsoever enter into or
effect, directly or indirectly, any (i) “short sale” (as such term is defined in
Section 242.200 of Regulation SHO of the 1934 Act) of the Common Stock or (ii)
hedging transaction, which establishes a net short position with respect to the
Common Stock.

 

(e)  Issuance of Commitment Shares. In connection with the Commencement, the
Company shall issue to the Buyer in one or more tranches, at the sole discretion
of Buyer, as consideration for the Buyer entering into this Agreement such
number of shares of Common Stock representing a dollar amount equal to $700,000
based on a per share price equal to the Purchase Price on each of the dates that
Buyer agrees to accept all or part of such shares of Common Stock (the
“Commitment Shares”). The Commitment Shares shall be transmitted via DWAC within
two (2) Business Days of the filing of the Prospectus Supplement and without any
restrictive legend whatsoever or prior sale requirement. If the Commitment
Shares are not received within two (2) Business Days of the filing of the
Prospectus Supplement, the Company shall pay to Buyer all outstanding amounts in
cash, including but not limited to, liquidated damages of $5,000 per day until
the Commitment Shares are delivered.

 

 8 

 

 

(f)  Due Diligence. The Buyer shall have the right, from time to time as the
Buyer may reasonably deem appropriate, to perform reasonable due diligence on
the Company during normal business hours and subject to reasonable prior notice
to the Company. The Company and its officers and employees shall provide
information and reasonably cooperate with the Buyer in connection with any
reasonable request by the Buyer related to the Buyer’s due diligence of the
Company, including, but not limited to, any such request made by the Buyer in
connection with (i) the filing of the prospectus supplement described in Section
4(a) hereof and (ii) the Commencement; provided, however, that at no time is the
Company permitted to disclose material nonpublic information to the Buyer or
breach any obligation of confidentiality or non-disclosure to a third party or
make any disclosure that could cause a waiver of attorney-client privilege. Each
party hereto agrees not to disclose any Confidential Information of the other
party to any third party and shall not use the Confidential Information of such
other party for any purpose other than in connection with, or in furtherance of,
the transactions contemplated hereby. Each party hereto acknowledges that the
Confidential Information shall remain the property of the disclosing party and
agrees that it shall take all reasonable measures to protect the secrecy of any
Confidential Information disclosed by the other party.

 

(g)  Offering Restrictions. For a period of ninety (90) days from the date
hereof, the Company is prohibited from discussing, negotiating, agreeing to or
entering into any similar At The Market or equity line type of transactions.

 

5.TRANSFER AGENT INSTRUCTIONS.

 

All of the Commitment Shares and Purchase Shares to be issued under this
Agreement shall be issued without any restrictive legend and as DWAC Shares
unless the Buyer expressly consents otherwise. The Company shall issue
irrevocable instructions to the Transfer Agent, and any subsequent transfer
agent, to issue Common Stock in the name of the Buyer for the Purchase Shares
(the “Irrevocable Transfer Agent Instructions”). The Company warrants to the
Buyer that no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5, will be given by the Company to the Transfer
Agent with respect to the Purchase Shares and that the Commitment Shares and the
Purchase Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement.

 

6.CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE SALES OF SHARES OF COMMON STOCK
UNDER THIS AGREEMENT.

 

The right of the Company hereunder to commence sales of the Purchase Shares is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales of Purchase
Shares):

 

(a)  The Buyer shall have executed each of the Transaction Documents and
delivered the same to the Company;

 

(b) The representations and warranties of the Buyer shall be true and correct as
of the Commencement Date as though made at that time (except for representations
and warranties that speak as of a specific date, which shall be true and correct
in all material respects as of such specific date) and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants
and agreements required by this Agreement to be performed, satisfied or complied
with by the Buyer at or prior to the Commencement Date, and the Company shall
have received a certificate, executed by a duly authorized officer of the Buyer,
dated as of the Commencement Date, to the foregoing effect; and

 

(c)  The Prospectus Supplement shall have been delivered to the Buyer and no
stop order with respect to the registration statement covering the sale of
shares to the Buyer shall be pending or threatened by the SEC.

 

7.CONDITIONS TO THE BUYER’S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON
STOCK.

 

The obligation of the Buyer to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales of Purchase Shares)
and once such conditions have been initially satisfied, there shall be an
ongoing obligation to continue to satisfy such conditions after the Commencement
has occurred:

 

(a) The Company shall have executed each of the Transaction Documents and
delivered the same to the Buyer;

 

 9 

 

 

(b) The Company shall have issued to the Buyer the Commitment Shares;

 

(c) The Common Stock shall be authorized for quotation on the Principal Market,
trading in the Common Stock shall not have been within the last 365 days
suspended by the SEC or the Principal Market, other than a general halt in
trading in the Common Stock by the Principal Market under halt codes indicating
pending or released material news, and the Securities shall be approved for
listing upon the Principal Market;

 

(d) The Buyer shall have received the opinion of the Company’s legal counsel
dated as of the Commencement Date in customary form and substance;

 

(e) The representations and warranties of the Company shall be true and correct
in all material respects (except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 3 above, in
which case, such representations and warranties shall be true and correct
without further qualification) as of the date of this Agreement and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects as of such specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Commencement
Date. The Buyer shall have received a certificate, executed by the CEO,
President or CFO of the Company, dated as of the Commencement Date, to the
foregoing effect in the form attached hereto as Exhibit A;

 

(f) The Board of Directors of the Company or a duly authorized committee thereof
shall have adopted resolutions substantially in the form attached hereto as
Exhibit B which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;

 

(g) As of the Commencement Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting future
purchases of Purchase Shares hereunder, 25,000,000 shares of Common Stock;

 

(h) The Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer
shall have been delivered to and acknowledged in writing by the Company and the
Buyer and have been delivered to the Transfer Agent;

 

(i) The Company shall have delivered to the Buyer a certificate evidencing the
incorporation and good standing of the Company in the State of Delaware issued
by the Secretary of State of the State of Delaware as of a date within ten (10)
Business Days of the Commencement Date;

 

(j) The Company shall have delivered to the Buyer a secretary’s certificate
executed by the Secretary of the Company, dated as of the Commencement Date, in
the form attached hereto as Exhibit C;

 

(k) The Shelf Registration Statement shall have been declared effective under
the 1933 Act by the SEC and no stop order with respect thereto shall be pending
or threatened by the SEC. The Company shall have prepared and delivered to the
Buyer a final and complete form of prospectus supplement, dated and current as
of the Commencement Date, to be used in connection with any issuances of any
Commitment Shares or Purchase Shares to the Buyer, and to be filed by the
Company within two (2) Business Days after the Commencement Date pursuant to
Rule 424(b). The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of the
Commitment Shares and the Purchase Shares pursuant to this Agreement in
compliance with such laws;

 

(l) No Event of Default has occurred and is continuing, or any event which,
after notice and/or lapse of time, would become an Event of Default has
occurred;

 

(m) On or prior to the Commencement Date, the Company shall take all necessary
action, if any, and such actions as reasonably requested by the Buyer, in order
to render inapplicable any control share acquisition, business combination,
stockholder rights plan or poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the Certificate
of Incorporation or the laws of the state of its incorporation, other than
Section 203 of the Delaware General Corporation Law, that is or could become
applicable to the Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the
Securities and the Buyer’s ownership of the Securities; and

 

(n) The Company shall have provided the Buyer with the information reasonably
requested by the Buyer in connection with its due diligence requests made prior
to, or in connection with, the Commencement, in accordance with the terms of
Section 4(f) hereof.

 

 10 

 

 

8.INDEMNIFICATION.

 

In consideration of the Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and all of its
affiliates, members, officers, directors, and employees, and any of the
foregoing person’s agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
other than with respect to Indemnified Liabilities which directly and primarily
result from (A) a breach of any of the Buyer’s representations and warranties,
covenants or agreements contained in this Agreement, or (B) the gross
negligence, bad faith or willful misconduct of the Buyer or any other
Indemnitee. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

 

9.EVENTS OF DEFAULT.

 

An “Event of Default” shall be deemed to have occurred at any time as any of the
following events occurs:

 

(a) during any period in which the effectiveness of any registration statement
is required to be maintained pursuant to the terms of the Registration Rights
Agreement, the effectiveness of such registration statement lapses for any
reason (including, without limitation, the issuance of a stop order) or is
unavailable to the Company for sale of all of the Registrable Securities (as
defined in the Registration Rights Agreement) to the Buyer in accordance with
the terms of the Registration Rights Agreement, and such lapse or unavailability
continues for a period of ten (10) consecutive calendar days or for more than an
aggregate of thirty (30) calendar days in any 365-day period, which is not in
connection with a post-effective amendment to any such registration statement or
the filing of a new registration statement; provided, however, that in
connection with any post-effective amendment to such registration statement or
filing of a new registration statement that is required to be declared effective
by the SEC, such lapse or unavailability may continue for a period of no more
than thirty (30) consecutive calendar days, which such period shall be extended
for an additional thirty (30) calendar days if the Company receives a comment
letter from the SEC in connection therewith;

 

(b) the suspension from trading or failure of the Common Stock to be listed on a
Principal Market for a period of three (3) consecutive Business Days;

 

(c) the delisting of the Common Stock from the Principal Market, and the Common
Stock is not immediately thereafter trading on the New York Stock Exchange, the
NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market, the OTC Bulletin Board or the OTCQB marketplace or OTCQX
marketplace of the OTC Markets Group;

 

(d) the failure for any reason by the Transfer Agent to issue Purchase Shares to
the Buyer within three (3) Business days after the applicable Purchase Date that
the Buyer is entitled to receive;

 

(e) the Company’s breach of any representation or warranty (as of the dates
made), covenant or other term or condition under any Transaction Document if
such breach would reasonably be expected to have a Material Adverse Effect and
except, in the case of a breach of a covenant which is reasonably curable, only
if such breach continues uncured for a period of at least five (5) Business
Days;

 

(f) if any Person commences a proceeding against the Company pursuant to or
within the meaning of any Bankruptcy Law;

 

(g) if the Company pursuant to or within the meaning of any Bankruptcy Law; (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors or (E) becomes insolvent;

 

 11 

 

 

(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary;

 

(i) if at any time after the Commencement Date, the Exchange Cap is reached
unless and until stockholder approval is obtained pursuant to Section 1(h)
hereof. The Exchange Cap shall be deemed to be reached at such time if, upon
submission of a Purchase Notice or Additional Purchase Notice under this
Agreement, the issuance of such shares of Common Stock would exceed the number
of shares of Common Stock which the Company may issue under this Agreement
without breaching the Company’s obligations under the rules or regulations of
the Principal Market;

 

(j) a default by the Company of a material term, covenant, warranty or
undertaking of any agreement to which the Company is a party to; or

 

(k) failure of the Company to publicly disclose within one business day any
material default described in Section 9(j) above.

 

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Closing Bid Price is below the
Floor Price, the Company may not require and the Buyer shall not be obligated to
purchase any shares of Common Stock under this Agreement. If pursuant to or
within the meaning of any Bankruptcy Law, the Company commences a voluntary case
or any Person commences a proceeding against the Company, a Custodian is
appointed for the Company or for all or substantially all of its property, or
the Company makes a general assignment for the benefit of its creditors, (any of
which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h)
hereof) this Agreement shall automatically terminate without any liability or
payment to the Company without further action or notice by any Person. No such
termination of this Agreement under Section 11(k)(i) shall affect the Company’s
or the Buyer’s obligations under this Agreement with respect to pending
purchases and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this Agreement.

 

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof,
upon the occurrence of an Event of Default, the Company will pay to Buyer as
liquidated damages and not as a penalty the sum of $250,000 in cash, shares or a
combination thereof, at the election of Buyer. If paid in shares, the shares
will be valued at the Purchase Price in effect on the day Buyer notifies the
Company of its election to receive such shares.

 

10.CERTAIN DEFINED TERMS.

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

(a) “1933 Act” means the Securities Act of 1933, as amended.

 

(b) Intentionally Omitted. .

 

(c) “Additional Purchase Amount” means, with respect to any particular
Additional Purchase Notice, the portion of the Available Amount to be purchased
by the Buyer pursuant to Section 1(c) hereof pursuant to a valid Additional
Purchase Notice which requires the Buyer to buy the additional Purchase Shares.

 

(d) “Additional Purchase Date” means, with respect to any Additional Purchase
made hereunder, the same Business Day following the receipt by the Buyer of a
valid Additional Purchase Notice that the Buyer is to buy Purchase Shares
pursuant to Section 1(c) hereof, provided such valid Additional Purchase Notice
is delivered no later than 9:00 a.m. Eastern Time on such Business Day. If
delivered later than 9:00 a.m. Eastern Time, the Additional Purchase Date will
be the next Business Day, unless waived by Buyer, in its sole discretion.

 

(e) Intentionally Omitted.

 

(f) Intentionally Omitted.

 

(g) “Additional Purchase Price” the lowest intra-day bid price of the Common
Stock on the Additional Purchase Date.

 

(h) “Additional Purchase Share Estimate” means the number of shares of Common
Stock that the Company has in its sole discretion irrevocably instructed its
Transfer Agent to issue to the Buyer via the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program in connection with a Additional
Purchase Notice pursuant to Section 1(c) hereof and issued to the Buyer’s or its
designee’s balance account with DTC through its Deposit Withdrawal At Custodian
(DWAC) system on the Additional Purchase Date (to be appropriately adjusted for
any reorganization, recapitalization, non-cash dividend, stock split, reverse
stock split or other similar transaction).

 

 12 

 

 

(i) “Additional Purchase Share Volume Maximum” means a number of shares of
Common Stock traded on the Principal Market during normal trading hours on the
Additional Purchase Date equal to: (i) the Additional Purchase Share Estimate,
divided by (ii) the Additional Purchase Share Percentage (to be appropriately
adjusted for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction).

 

(j) “Available Amount” means initially Ten Million Dollars ($10,000,000) in the
aggregate which amount shall be reduced by the Purchase Amount (including the
Initial Purchase) each time the Buyer purchases shares of Common Stock pursuant
to Section 1 hereof.

 

(k) “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state
law for the relief of debtors.

 

(l) “Business Day” means any day on which the Principal Market is open for
trading during normal trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time),
including any day on which the Principal Market is open for trading for a period
of time less than the customary time.

 

(m) “Closing Bid Price” means the closing bid price for the Common Stock on the
Principal Market as reported by the Principal Market.

 

(n) “Confidential Information” means any information disclosed by either party
to the other party, either directly or indirectly, in writing, orally or by
inspection of tangible objects (including, without limitation, documents,
prototypes, samples, protocols, development plans, commercialization plans,
compounds, formulations, preclinical study and clinical trial results, plant and
equipment), which is designated as “Confidential,” “Proprietary” or some similar
designation. Information communicated orally shall be considered Confidential
Information if such information is expressly identified as Confidential
Information at the time of such initial disclosure and confirmed in writing as
being Confidential Information within ten (10) Business Days after the initial
disclosure. Confidential Information may also include information disclosed to a
disclosing party by third parties. Confidential Information shall not, however,
include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party’s obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in
the receiving party’s possession; or (vi) is required by law to be disclosed by
the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure.

 

(o) “Custodian” means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.

 

(p)  “DTC” means the Depository Trust Company, or any successor performing
substantially the same function for the Company.

 

(q)  “DWAC Shares” means shares of Common stock that are (i) issued in
electronic form, (ii) freely tradable and transferable and without restriction
on resale, and (iii) timely credited by the Company to the Buyer or its
designee’s specified Deposit of Withdrawal at Custodian (“DWAC”) account with
DTC under its Fast Automatic Securities Transfer (“FAST”) Program or any similar
program hereafter adopted by DTC performing substantially the same function.

 

(r) “Market Price” shall mean, (i) shall mean, (i) from 9:30am to 4:00pm Eastern
Time of the regular session of any trading day, lowest intra-day bid price or
(ii) if after the close of the regular session on any trading day, then such
trading day’s Closing Bid Price.

 

(s) “Maturity Date” means the date that is twenty-four (24) months from the
Commencement Date.

 

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

 

(u) “Principal Market” means the Nasdaq Global Market; provided however, that in
the event the Company’s Common Stock is ever listed or traded on the New York
Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the Nasdaq Global
Market, the NASDAQ Capital Market, the OTC Bulletin Board or either of the OTCQB
Marketplace or the OTCQX marketplace of the OTC Markets Group, then the
“Principal Market” shall mean such other market or exchange on which the
Company’s Common Stock is then listed or traded.

 

 13 

 

 

(v) “Purchase Amount” means, with respect to any particular purchase made
hereunder, the portion of the Available Amount to be purchased by the Buyer
pursuant to Section 1 hereof as set forth in a valid Purchase Notice or
Additional Purchase Notice which the Company delivers to the Buyer.

 

(w) “Purchase Date” means with respect to any Regular Purchase made hereunder,
the Business Day of receipt by the Buyer of a valid Purchase Notice that the
Buyer is to buy Purchase Shares pursuant to Section 1(b) hereof, provided such
valid Purchase Notice is delivered no later than 9:00 a.m. Eastern Time on such
Business Day. If delivered later than 9:00 a.m. Eastern Time, the Purchase Date
will be the next Business Day, unless waived by Buyer, in its sole discretion.

 

(x) “Purchase Notice” shall mean an irrevocable written notice from the Company
to the Buyer directing the Buyer to buy Purchase Shares pursuant to Section 1(b)
hereof as specified by the Company therein at the applicable Purchase Price on
the Purchase Date.

 

(y) “Purchase Price” shall mean the Market Price (to be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction).

 

(z) “SEC” means the United States Securities and Exchange Commission.

 

(aa) “Transfer Agent” means the transfer agent of the Company as set forth in
Section 11(f) hereof or such other person who is then serving as the transfer
agent for the Company in respect of the Common Stock.

 

11.MISCELLANEOUS.

 

(a)  Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of the Transaction
Documents shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any action, suit or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then, the prevailing
party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding. IN
ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST
ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(b)  Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile or pdf (or other
electronic reproduction) signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile or pdf (or other electronic
reproduction) signature.

 

(c)  Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.

 

(d)  Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

 14 

 

 

(e)  Entire Agreement. This Agreement and the Registration Rights Agreement
supersede all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other Transaction Documents
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. The Company acknowledges and agrees that is has not relied on, in any
manner whatsoever, any representations or statements, written or oral, other
than as expressly set forth in this Agreement.

 

(f)  Notices. Any notices, consents or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); (iii) upon receipt, when sent by electronic message (provided
the recipient responds to the message and confirmation of both electronic
messages are kept on file by the sending party); or (iv) one (1) Business Day
after timely deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

 

If to the Company:

 

Immune Pharmaceuticals Inc. 430 East 29th Street, Suite 940 New York, NY 10016
Telephone: 646-440-9310 Facsimile: 917-398-1922 Attention: Daniel Teper, Chief
Executive Officer Email: Daniel.teper@immunepharma.com

 

With a copy (which shall not constitute notice) to:

 

Sheppard Mullin Richter & Hampton LLP 30 Rockefeller Plaza, New York, NY 10112
Telephone: 212-634-3031 Facsimile: 212-655-1729 Attention: Richard A. Friedman,
ESQ Email: Rafriedman@sheppardmullin.com

 

If to the Buyer:

 

HLHW IV, LLC 708 Third Avenue, 6th Floor New York, NY 10017

 

With a copy to (which shall not constitute delivery to the Buyer):

 

Grushko & Mittman, P.C. 515 Rockaway Avenue Valley Stream, NY 11581 Telephone:
212-697-9500 Facsimile: 212-697-3575 Attention: Barbara R. Mittman, Esq. Email:
barbara@grushkomittman.com

 

If to the Transfer Agent:

 

VStock Transfer, LLC 18 Lafayette Place Woodmere, NY 11598 Telephone:
212-828-8436 Facsimile: 646-536-3179 Attention: Allison Niccolls Email:
Allison@vstocktransfer.com

 

 15 

 

 

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party at least one (1) Business Day prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, and
recipient facsimile number, (C) electronically generated by the sender’s
electronic mail containing the time, date and recipient email address or (D)
provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of receipt in accordance with clause (i), (ii), (iii) or
(iv) above, respectively.

 

(g)  Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Buyer, including by merger or
consolidation; provided, however, that any transaction, whether by merger,
reorganization, restructuring, consolidation, financing or otherwise, whereby
the Company remains the surviving entity immediately after such transaction,
shall not be deemed a succession or assignment. The Buyer may assign its rights
or obligations under this Agreement.

 

(h)  No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

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

 

(j)  Termination. This Agreement may be terminated only as follows:

 

(i)  By the Buyer any time an Event of Default exists without any liability or
payment to the Company. However, if pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding against the Company, a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event of
Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination of this
Agreement under this Section 11(k)(i) shall affect the Company’s or the Buyer’s
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.

 

(ii)  In the event that the Commencement shall not have occurred by November 15,
2016, the Company shall have the option to terminate this Agreement for any
reason or for no reason without any liability whatsoever of either party to the
other party under this Agreement.

 

(iii)  In the event that the Commencement shall not have occurred within ten
(10) Business Days of the date of this Agreement, due to the failure to satisfy
any of the conditions set forth in Sections 6 and 7 above with respect to the
Commencement, either party shall have the option to terminate this Agreement at
the close of business on such date or thereafter without liability of either
party to any other party except as described herein; provided, however, that the
right to terminate this Agreement under this Section 11(k)(iii) shall not be
available to either party if such failure to satisfy any of the conditions set
forth in Sections 6 and 7 is the result of a breach of this Agreement by such
party or the failure of any representation or warranty of such party included in
this Agreement to be true and correct in all material respects. A termination
fee pursuant to this Paragraph (j)(iii) of $250,000 in cash, shares or a
combination thereof, at Buyer’s election with such shares to be valued at the
Purchase Price, will be immediately payable by the Company to Buyer.

 

(iv)  At any time after the Commencement Date, the Company shall have the option
to terminate this Agreement for any reason or for no reason by delivering notice
(a “Company Termination Notice”) to the Buyer electing to terminate this
Agreement without any liability whatsoever of either party to the other party
under this Agreement except that the Company must transmit to Buyer a
Termination Fee of $250,000 in cash or shares, at Buyer’s election with such
shares to be valued at the Purchase Price, within two (2) Business Days
following delivery of the Company Termination Notice. The Company Termination
Notice shall not be effective until one (1) Business Day after it has been
received by the Buyer. If the Termination Fee is not received within two (2)
Business Days following delivery of the Company Termination Notice, the Company
will pay the Buyer as liquidated damages of $5,000 per day in cash, shares or a
combination thereof, at Buyer’s election with such shares to be valued at the
Purchase Price, for each day of delay in payment of the Termination Fee together
with any applicable legal fees.

 

 16 

 

 

(v)  This Agreement shall automatically terminate on the date that the Company
sells and the Buyer purchases the full Available Amount as provided herein,
without any action or notice on the part of any party and without any liability
whatsoever of any party to any other party under this Agreement.

 

(vi)  If by the Maturity Date for any reason or for no reason the full Available
Amount under this Agreement has not been purchased as provided for in Section 1
of this Agreement, this Agreement shall automatically terminate on the Maturity
Date, without any action or notice on the part of any party and without any
liability whatsoever of any party to any other party under this Agreement.

 

Except as set forth in Sections 11(j)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)), 11(j)(v) and 11(j)(vi), any termination of
this Agreement pursuant to this Section 11(j) shall be effected by written
notice from the Company to the Buyer, or the Buyer to the Company, as the case
may be, setting forth the basis for the termination hereof. The representations
and warranties of the Company and the Buyer contained in Sections 2, 3 and 5
hereof, the indemnification provisions set forth in Section 8 hereof and the
agreements and covenants set forth in Sections 4(e) and 11, shall survive the
Commencement and any termination of this Agreement. No termination of this
Agreement shall affect the Company’s or the Buyer’s rights or obligations (i)
under the Registration Rights Agreement which shall survive any such termination
in accordance with its terms or (ii) under this Agreement with respect to
pending purchases and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this Agreement.

 

(k)  No Financial Advisor, Placement Agent, Broker or Finder. The Company
represents and warrants to the Buyer that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the transactions
contemplated hereby. The Buyer represents and warrants to the Company that it
has not engaged any financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby. Each party shall be
responsible for the payment of any fees or commissions, if any, of any financial
advisor, placement agent, broker or finder engaged by such party relating to or
arising out of the transactions contemplated hereby. Each party shall pay, and
hold the other party harmless against, any liability, loss or expense
(including, without limitation, attorneys’ fees and out of pocket expenses)
arising in connection with any such claim.

 

(l)  No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

(m)  Failure or Indulgence Not Waiver. No failure or delay in the exercise of
any power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.

 

(n)  Fees and Expenses. The Company will pay on or before November 15, 2016 to
Grushko & Mittman, P.C. (“G&M”) the sum of $35,000 for the legal fees in
connection with G&M’s representation of Buyer. Except as expressly set forth in
the Transaction Documents, the Company shall also pay on each Purchase Date and
on each Additional Purchase Date 1.75% of such aggregate purchase price
representing the fees and expenses of Buyer’s advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by the Buyer incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. Additionally, the Company will pay Buyer a breakup fee of $250,000
together with the additional 1.75% fees described above in cash, shares or a
combination thereof, at Buyer’s election with such shares to be valued at the
Purchase Price, if the Commencement Date does not occur by November 15, 2016
together with any applicable legal fees. Such breakup fee must be transmitted to
Buyer no later than November 15, 2016.

 

*      *      *      *       *

 

 17 

 

 

 

IN WITNESS WHEREOF, the Buyer and the Company have caused this Common Stock
Purchase Agreement to be duly executed as of the date first written above.

 

  THE COMPANY:         IMMUNE PHARMACEUTICALS INC.         By: /s/ Daniel G.
Teper   Name: Daniel G. Teper   Title: CEO         BUYER:         HLHW IV, LLC  
      By:     Name:     Title:  

 

 18 

 

 

SCHEDULES

 

Schedule 3(a)   Subsidiaries Schedule 3(c)   Capitalization Schedule 3(e)  
Conflicts Schedule 3(f)   1934 Act Filings Schedule 3(g)   Material Changes
Schedule 3(h)   Litigation

 

EXHIBITS

 

Exhibit A   Form of Officer’s Certificate Exhibit B   Form of Resolutions of
Board of Directors of the Company Exhibit C   Form of Secretary’s Certificate

 

 19 

 

 

SCHEDULE 3.1(a)

 

List of Subsidiaries

 

Name of Entity   Jurisdiction of Incorporation   Ownership           Immune
Pharmaceuticals Ltd.   Israel   100%           Cytovia Inc.   Delaware   100%  
        Maxim Pharmaceuticals, Inc.   Delaware   100%           Immune
Pharmaceuticals Corp   Delaware   100%

 

 20 

 

 

SCHEDULE 3(c)

 

Capitalization

 

None

 

2015 Equity Inventive Plan -5,000,000 Shares

 

 21 

 

 

Schedule 3(e)

 

As disclosed on a Form 8-K filed with the SEC on November 8, 2016, on November
2, 2016, the Company received a notification from the Listing Qualifications
Department of The NASDAQ Stock Market LLC indicating that the Company had failed
to comply with NASDAQ’s shareholder approval requirement set forth in Listing
Rule 5635(d). The Company is working to address and remediate the issues raised
by NASDAQ as quickly as possible and intends to submit a remediation plan to
NASDAQ promptly for its approval.

 

 22 

 

 

SCHEDULE 3.1(h)

 

SEC Reports

 

None.

 

10-Q due on or before November 14, 2016.

 

 23 

 

 

SCHEDULE 3.1(i)

 

Material Changes

  

None 

 

 24 

 

 

SCHEDULE 3(g)

 

Litigation

 

As disclosed in the Q-2, 2016 Form 10-Q.

 

 25 

 

 

EXHIBIT A

 

FORM OF OFFICER’S CERTIFICATE

 

This Officer’s Certificate (“Certificate”) is being delivered pursuant to
Section 7(e) of that certain Common Stock Purchase Agreement dated as of
[REQUIRES COMPLETION], 2016 (the “Common Stock Purchase Agreement”), by and
between IMMUNE PHARMACEUTICALS INC., a Delaware corporation (the “Company”), and
HLHW IV, LLC, a Delaware limited liability company (the “Buyer”). Terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Common Stock Purchase Agreement.

 

The undersigned, [REQUIRES COMPLETION], [REQUIRES COMPLETION] of the Company,
hereby certifies as follows:

 

1. I am the [REQUIRES COMPLETION] of the Company and make the statements
contained in this Certificate in my capacity as such;

 

2. The representations and warranties of the Company are true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 of the Common
Stock Purchase Agreement, in which case, such representations and warranties are
true and correct without further qualification) as of the date when made and as
of the Commencement Date as though made at that time (except for representations
and warranties that speak as of a specific date);

 

3. The Company has performed, satisfied and complied in all material respects
with covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company at or prior to the
Commencement Date.

 

4. The Company has not taken any steps, and does not currently expect to take
any steps, to seek protection pursuant to any Bankruptcy Law nor does the
Company or any of its Subsidiaries have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy or insolvency
proceedings. The Company is financially solvent and is generally able to pay its
debts as they become due.

 

IN WITNESS WHEREOF, I have hereunder signed my name on this [REQUIRES
COMPLETION] day of [REQUIRES COMPLETION], 2016.

 

      Name:   Title:

 

The undersigned as Secretary of IMMUNE PHARMACEUTICALS INC., a Delaware
corporation, hereby certifies that [REQUIRES COMPLETION] is the duly elected,
appointed, qualified and acting [REQUIRES COMPLETION] of the Company and that
the signature appearing above is his/her genuine signature.

 

      Secretary

 

 26 

 

 

EXHIBIT B

 

FORM OF COMPANY RESOLUTIONS

FOR SIGNING PURCHASE AGREEMENT

 

WHEREAS, management has reviewed with the Board of Directors the background,
terms and conditions of the transactions subject to the Common Stock Purchase
Agreement (the “Purchase Agreement”) by and between the Company and HLHW IV, LLC
(“HLHW”), including all materials terms and conditions of the transactions
subject thereto, providing for the purchase by HLHW of up to Ten Million Dollars
($10,000,000) of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”); and

 

WHEREAS, after careful consideration of the Purchase Agreement, the documents
incident thereto and other factors deemed relevant by the Board of Directors,
the Board of Directors has determined that it is advisable and in the best
interests of the Company to engage in the transactions contemplated by the
Purchase Agreement, including, but not limited to, the issuance of such number
of shares of Common Stock representing a dollar amount equal to $550,000 to HLHW
as a commitment fee (the “Commitment Shares”), and the sale of shares of Common
Stock to HLHW up to the available amount under the Purchase Agreement (the
“Purchase Shares,” and together with the Commitment Shares, the “HLHW Shares”).

 

Transaction Documents

 

NOW, THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase
Agreement are hereby approved and the Chief Executive Officer, the Principal
Financial Officer of the Company (the “Authorized Officers”) are severally
authorized to execute and deliver the Purchase Agreement in substantially the
form attached as Exhibit A hereto, and any other agreements or documents
contemplated thereby including, without limitation, a registration rights
agreement (the “Registration Rights Agreement”) in substantially the form
attached as Exhibit B hereto providing for the registration of the issuance
and/or sale of shares of Common Stock to HLHW under the Purchase Agreement, with
such amendments, changes, additions and deletions as the Authorized Officers may
deem to be appropriate and approve on behalf of the Company, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon; and

 

FURTHER RESOLVED, that the terms and provisions of the Form of Transfer Agent
Instructions (the “Instructions”) in substantially the form attached as Exhibit
C hereto are hereby approved and the Authorized Officers are authorized to
execute and deliver the Instructions (pursuant to the terms of the Purchase
Agreement), with such amendments, changes, additions and deletions as the
Authorized Officers may deem appropriate and approve on behalf of the Company,
such approval to be conclusively evidenced by the signature of an Authorized
Officer thereon; and

 

Issuance of Common Stock

 

FURTHER RESOLVED, that the Company is hereby authorized to issue the Commitment
Shares to HLHW as consideration for HLHW entering into the Purchase Agreement,
and that upon issuance of the Commitment Shares pursuant to the Purchase
Agreement, the Commitment Shares shall be duly authorized, validly issued, fully
paid and non-assessable; and

 

FURTHER RESOLVED, that the Company is hereby authorized to issue shares of
Common Stock upon the purchase of Purchase Shares from time to time with an
aggregate purchase price of up to $10,000,000 under the Purchase Agreement, at a
price per share equal to or greater than $[REQUIRES COMPLETION], in accordance
with the terms of the Purchase Agreement, provided that the number of shares of
Common Stock issued pursuant to the Purchase Agreement (including all Commitment
Shares and Purchase Shares and Additional Purchase Shares) (the “Purchase
Shares” and “Additional Purchase Shares”, the “HLHW Shares”) shall not exceed
19.99% of the Company’s outstanding shares of Common Stock as of the date hereof
without the affirmative consent of the stockholders; and that, upon issuance of
the Purchase Shares pursuant to the Purchase Agreement, including payment
therefor, the Purchase Shares will be duly authorized, validly issued, fully
paid and non-assessable; and

 

FURTHER RESOLVED, that the Company is authorized to, and hereby does, reserve
out of its authorized but unissued shares of Common Stock the maximum number of
shares of Common Stock that is issuable to HLHW under the Purchase Agreement,
subject to automatic adjustment from time to time as Purchase Shares are sold to
HLHW; and

 

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Prospectus Supplement

 

FURTHER RESOLVED, that the Authorized Officers are hereby authorized, in the
name and on behalf of the Company:

 

  1. to prepare, execute and file with the Securities and Exchange Commission
(the “SEC”) such prospectus supplements, including any preliminary or final
prospectus supplement, to the Company’s Registration Statement on Form S-3 on
file with the SEC (File No. 333-198647) (the “Shelf S-3 Registration Statement”)
and the prospectus included therein and such additional documents, including any
free writing prospectuses, as the Authorized Officer so acting may determine, in
his or her sole discretion, to be necessary, appropriate or desirable in
connection with the transactions pursuant to the Purchase Agreement, such
determination to be conclusively evidenced by the execution and filing of such
prospectus supplements, prospectuses or additional documents; and

 

  2. to prepare, execute and file with the SEC one or more additional
registration statements on Form S-3 relating to the registration under the
Securities Act of any Purchase Shares that were not registered pursuant to the
Shelf S-3 Registration Statement, to the extent required pursuant to the
Registration Rights Agreement; and

 

Proceeds

 

FURTHER RESOLVED, that following the sale of the Purchase Shares, it is the
intention of the Company (a) to continue to be primarily engaged in the business
of drug discovery, development and commercialization (the “Company Business”),
rather than in the business of investing or reinvesting in, or owning, holding
or trading securities; (b) to employ the proceeds of the sale of the Purchase
Shares in the Company Business; and (c) as soon as is reasonably possible, but
in any event within one year from the closing of any sale of Purchase Shares, to
have invested the proceeds of such sale not theretofore expended in the Company
Business in a manner consistent with their preservation for future use in the
Company Business and with the Company not being an “investment company” as
defined in the Investment Company Act of 1940, as amended; and

 

FURTHER RESOLVED, that, of the consideration to be received by the Company for
the Purchase Shares, an amount equal to the par value per share sold is hereby
determined to be capital to be allocated on the books of the Company to the
Common Stock capital account, and the difference between the aggregate amount so
allocated and the aggregate consideration received for the Purchase Shares shall
be credited on the books of the Company as additional paid-in capital for
purposes of financial reporting and as surplus for purposes of the General
Corporation Law of the State of Delaware; and

 

Transfer Agent and Registrar

 

FURTHER RESOLVED, that for the purpose of the original issuance of the HLHW
Shares in accordance with the foregoing resolutions, American Stock Transfer &
Trust Company (the “Transfer Agent”) is hereby authorized to issue, countersign
and register such certificates as may be required for such issuance and to
deliver such stock certificates in accordance with the instructions of an
Authorized Officer, or to cause any such HLHW Shares to be delivered through
electronic book entry; and that if the Transfer Agent requires a prescribed form
of preambles or resolutions relating to the foregoing, each such preamble or
resolution is hereby adopted by the Board, and the Secretary or any Assistant
Secretary of the Company is hereby authorized to certify the adoption of any
such preamble or resolution and to insert all such preambles and resolutions in
the minute book of the Company immediately following this resolution; and

 

Listing of Shares on the Nasdaq Capital Market

 

FURTHER RESOLVED, that the Authorized Officers, with the assistance of counsel
be, and each of them hereby is, authorized and directed to take all necessary
steps and do all other things necessary and appropriate to effect the listing of
the HLHW Shares on the Nasdaq Capital Market including, if applicable, the
filing of a Notification Form for Listing of Additional Shares and the payment
of any required fees; and

 

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State Securities Laws

 

FURTHER RESOLVED, that it is desirable and in the best interests of the Company
that its Common Stock be qualified or registered for sale, to the extent
required by law, in various states and other jurisdictions, and that the
Authorized Officers are each hereby authorized and directed to determine the
states and other jurisdictions in which appropriate action shall be taken to (i)
qualify or register for sale all or such part of such Common Stock and (ii)
register the Company as a dealer or broker; that the Authorized Officers be, and
hereby are, authorized to perform on behalf of the Company any and all such acts
as the officer so acting may deem necessary or advisable in order to comply with
the applicable laws of any such states and other jurisdictions, and in
connection therewith to execute, affix the Company’s seal to and file all
requisite papers and documents, including, without limitation, applications,
resolutions, reports, surety bonds, irrevocable consents and appointments of
attorneys for service of process; and that execution by any of the Authorized
Officers of any such paper or document or the doing by any of the Authorized
Officers of any act in connection with the foregoing matters shall conclusively
establish the authority of the officers so acting therefor from the Company and
the approval and ratification by the Company of the papers and documents so
executed and the action so taken; and

 

FURTHER RESOLVED, that if the securities or “blue sky” laws of any of the states
or other jurisdictions in which any of the Authorized Officers deem it necessary
or advisable to qualify or register for sale all or part of the Common Stock or
to register the Company as a dealer or broker, or any authority administering
such laws, requires a prescribed form of preambles or resolutions relating to
such sale or to any application, statement, instrument or other document
connected therewith, each such preamble or resolution is hereby adopted by the
Board, and the Secretary or any Assistant Secretary of the Company is hereby
authorized to certify the adoption of any such preamble or resolution to any
party who may so request and to insert all such preambles and resolutions in the
minute book of the Company immediately following these resolutions; and

 

Approval of Actions

 

FURTHER RESOLVED, that the Company be and hereby is authorized to enter into any
and all amendments to its agreements with, or obtain any and all waivers from,
(i) the holders of any outstanding securities of the Company and (ii) any other
entity, as may be necessary or desirable to effectuate the events and
transactions contemplated by these resolutions; and

 

FURTHER RESOLVED, that, without limiting the foregoing, the Authorized Officers
are, and each of them hereby is, authorized and directed to proceed on behalf of
the Company and to take all such steps as deemed necessary or appropriate, with
the advice and assistance of counsel, to cause the Company to consummate the
agreements referred to herein and to perform its obligations under such
agreements; and

 

FURTHER RESOLVED, that the Authorized Officers be, and each of them hereby is,
authorized, empowered and directed on behalf of and in the name of the Company,
to take or cause to be taken all such further actions and to execute and deliver
or cause to be executed and delivered all such further agreements, amendments,
documents, certificates, reports, schedules, applications, notices, letters and
undertakings and to incur and pay all such fees and expenses as in their
judgment shall be necessary, proper or desirable to carry into effect the
purpose and intent of any and all of the foregoing resolutions, and that all
actions heretofore taken by any officer or director of the Company in connection
with the transactions contemplated by the agreements described herein are hereby
approved, ratified and confirmed in all respects.

 

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EXHIBIT C

 

FORM OF SECRETARY’S CERTIFICATE

 

This Secretary’s Certificate (the “Certificate”) is being delivered pursuant to
Section 7(k) of that certain Common Stock Purchase Agreement dated as of
[REQUIRES COMPLETION], 2016 (the “Common Stock Purchase Agreement”), by and
between IMMUNE PHARMACEUTICALS, INC., a Delaware corporation (the “Company”) and
HLHW IV, LLC, a Delaware limited liability company (the “Buyer”), pursuant to
which the Company may sell to the Buyer up to Ten Million Dollars ($10,000,000)
of the Company’s Common Stock, par value $0.0001 per share (the “Common
Stock”). Terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Common Stock Purchase Agreement.

 

The undersigned, [REQUIRES COMPLETION], Secretary of the Company, hereby
certifies as follows in his capacity as such:

 

1. I am the Secretary of the Company and make the statements contained in this
Secretary’s Certificate.

 

2. Attached hereto as Exhibit A and Exhibit B are true, correct and complete
copies of the Company’s bylaws (“Bylaws”) and Certificate of Incorporation
(“Certificate of Incorporation”), respectively, in each case, as amended through
the date hereof, and no action has been taken by the Company, its directors,
officers or stockholders, in contemplation of the filing of any further
amendment relating to or affecting the Bylaws or the Certificate of
Incorporation.

 

3. Attached hereto as Exhibit C are true, correct and complete copies of the
resolutions duly adopted by the Board of Directors of the Company on [REQUIRES
COMPLETION], 2016 at which a quorum was present and acting throughout. Such
resolutions have not been amended, modified or rescinded and remain in full
force and effect and such resolutions are the only resolutions adopted by the
Company’s Board of Directors, or any committee thereof, or the stockholders of
the Company relating to or affecting (i) the entering into and performance of
the Common Stock Purchase Agreement, or the issuance, offering and sale of the
Purchase Shares and the Commitment Shares and (ii) and the performance of the
Company of its obligation under the Transaction Documents as contemplated
therein.

 

4. As of the date hereof, the authorized, issued and reserved capital stock of
the Company is as set forth on Exhibit D hereto.

 

IN WITNESS WHEREOF, I have hereunder signed my name on this [REQUIRES
COMPLETION] day of [REQUIRES COMPLETION].

 

      [REQUIRES COMPLETION], Secretary

 

The undersigned as [REQUIRES COMPLETION] of IMMUNE PHARMACEUTICALS INC., a
Delaware corporation, hereby certifies that [REQUIRES COMPLETION] is the duly
elected, appointed, qualified and acting Secretary of the Company, and that the
signature appearing above is his/her genuine signature.

 

   

 

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