NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

Effective Date: September 28, 2018 U.S. $3,170,000.00

 

FOR VALUE RECEIVED, Hemispherx Biopharma, Inc., a Delaware corporation
(“Borrower”), promises to pay to Iliad Research and Trading, L.P., a Utah
limited partnership, or its successors or assigns (“Lender”), $3,170,000.00 and
any interest, fees, charges, and late fees accrued hereunder on the date that is
twelve (12) months after the Purchase Price Date (the “Maturity Date”) in
accordance with the terms set forth herein and to pay interest on the
Outstanding Balance at the rate of ten percent (10%) per annum from the Purchase
Price Date until the same is paid in full. This Secured Convertible Promissory
Note (this “Note”) is issued and made effective as of September 28, 2018 (the
“Effective Date”). This Note is issued pursuant to that certain Securities
Purchase Agreement dated September 28, 2018, as the same may be amended from
time to time, by and between Borrower and Lender (the “Purchase Agreement”).
Certain capitalized terms used herein are defined in Attachment 1 attached
hereto and incorporated herein by this reference.

 

This Note carries an OID of $150,000.00. In addition, Borrower agrees to pay
$20,000.00 to Lender to cover Lender’s legal fees, accounting costs, due
diligence, monitoring and other transaction costs incurred in connection with
the purchase and sale of this Note (the “Transaction Expense Amount”), all of
which amount is included in the initial principal balance of this Note. The
purchase price for this Note shall be $3,000,000.00 (the “Purchase Price”),
computed as follows: $3,170,000.00 original principal balance, less the OID,
less the Transaction Expense Amount. The Purchase Price shall be payable by
Lender by wire transfer of immediately available funds.

 

1. Payment; Prepayment.

 

1.1. Payment. All payments owing hereunder shall be in lawful money of the
United States of America or Conversion Shares (as defined below), as provided
for herein, and delivered to Lender at the address or bank account furnished to
Borrower for that purpose. All payments shall be applied first to (a) costs of
collection, if any, then to (b) fees and charges, if any, then to (c) accrued
and unpaid interest, and thereafter, to (d) principal.

 

1.2. Prepayment. Notwithstanding the foregoing, Borrower shall have the right to
prepay all or any portion of the Outstanding Balance (less such portion of the
Outstanding Balance for which Borrower has received a Lender Conversion Notice
(as defined below) or a Redemption Notice (as defined below) from Lender where
the applicable Conversion Shares have not yet been delivered. If Borrower
exercises its right to prepay this Note, Borrower shall make payment to Lender
of an amount in cash equal to 115% multiplied by the portion of the Outstanding
Balance Borrower elects to repay.

 

2. Security. This Note is secured by that certain Security Agreement of even
date herewith, as the same may be amended from time to time (the “Security
Agreement”), executed by Borrower in favor of Lender encumbering certain of
Borrower’s assets, as more specifically set forth in the Security Agreement, all
the terms and conditions of which are hereby incorporated into and made a part
of this Note.

 

   

 

 

3. Lender Optional Conversion.

 

3.1. Lender Conversions. Subject to Sections 12 and 13 below, Lender has the
right at any time after the Purchase Price Date until the Outstanding Balance
has been paid in full, at its election, to convert (“Lender Conversion”) all or
any portion of the Outstanding Balance into shares (each instance of conversion
is referred herein as a “Lender Conversion Shares”) of fully paid and
non-assessable common stock, $0.001 par value per share (“Common Stock”), of
Borrower as per the following conversion formula: the number of Lender
Conversion Shares equals the amount being converted (the “Conversion Amount”)
divided by the Lender Conversion Price (as defined below). Conversion notices in
the form attached hereto as Exhibit A (each, a “Lender Conversion Notice”) may
be effectively delivered to Borrower by any method set forth in Section 8.9 of
the Purchase Agreement, and all Lender Conversions shall be cashless and not
require further payment from Lender. Borrower shall deliver the Lender
Conversion Shares from any Lender Conversion to Lender in accordance with
Section 9 below.

 

3.2. Lender Conversion Price. Subject to adjustment as set forth in this Note,
the price at which Lender has the right to convert all or any portion of the
Outstanding Balance into Common Stock is $0.30 per share of Common Stock (the
“Lender Conversion Price”).

 

4. Defaults and Remedies.

 

4.1. Defaults. The following are events of default under this Note (each, an
“Event of Default”): (a) Borrower fails to pay any principal, interest, fees,
charges, or any other amount when due and payable hereunder; (b) subject to
Section 12 and 13 below, Borrower fails to deliver any Lender Conversion Shares
in accordance with the terms hereof and such default continues for two (2)
Trading Days after written notice to Company by Lender of such default; (c)
subject to Section 12 and 13 below, Borrower fails to deliver any Redemption
Conversion Shares (as defined below) in accordance with the terms hereof and
such default continues for two (2) Trading Days after written notice to Company
by Lender of such default; (d) a receiver, trustee or other similar official
shall be appointed over Borrower or a material part of its assets and such
appointment shall remain uncontested for twenty (20) days or shall not be
dismissed or discharged within sixty (60) days; (e) Borrower admits in writing
its inability to pay, its debts as they become due, subject to applicable grace
periods, if any; (f) Borrower makes a general assignment for the benefit of
creditors; (g) Borrower files a petition for relief under any bankruptcy,
insolvency or similar law (domestic or foreign); (h) an involuntary bankruptcy
proceeding is commenced or filed against Borrower and is not dismissed within
sixty (60) days; (i) Borrower or any pledgor, trustor, or guarantor of this Note
defaults or otherwise fails to observe or perform any covenant, obligation,
condition or agreement of Borrower or such pledgor, trustor, or guarantor
contained herein or in any other Transaction Document (as defined in the
Purchase Agreement), other than those specifically set forth in this Section 4.1
and Section 4 of the Purchase Agreement and such default or failure remains
uncured for a period of ten (10) days after written notice to Company by Lender
of such default or failure; (j) any representation, warranty or other statement
made or furnished by or on behalf of Borrower or any pledgor, trustor, or
guarantor of this Note to Lender herein, in any Transaction Document, or
otherwise in connection with the issuance of this Note is false, incorrect,
incomplete or misleading in any material respect when made or furnished; (k) the
occurrence of a Fundamental Transaction without Lender’s prior written consent;
(l) Borrower fails to maintain the Share Reserve (as defined in the Purchase
Agreement) as required under the Purchase Agreement and such failure continues
for five (5) days after written notice to Company by Lender of such failure; (m)
Borrower effectuates a reverse split of its Common Stock without twenty (20)
Trading Days prior written notice to Lender; (n) any money judgment, writ or
similar process is entered or filed against Borrower or any subsidiary of
Borrower or any of its property or other assets for more than $1,000,000.00, and
shall remain unvacated, unbonded or unstayed for a period of twenty (20)
calendar days unless otherwise consented to by Lender; (o) Borrower fails to be
DWAC Eligible at any time after the six (6) month anniversary of the Closing and
such failure continues for ten (10) days after written notice to Company by
Lender of such failure; (p) [intentionally omitted]; (q) Borrower fails to
observe or perform any covenant set forth in Section 4 of the Purchase Agreement
(other than the covenant with respect to Unapproved Variable Security
Issuances); or (r) Borrower makes any Unapproved Variable Security Issuance.

 

 2 

 

 

4.2. Remedies. At any time and from time to time after Lender becomes aware of
the occurrence of any Event of Default, Lender may accelerate this Note by
written notice to Borrower, with the Outstanding Balance becoming immediately
due and payable in cash at the Mandatory Default Amount. Notwithstanding the
foregoing, at any time following the occurrence of any Event of Default, Lender
may, at its option, elect to increase the Outstanding Balance by applying the
Default Effect (subject to the limitation set forth below) via written notice to
Borrower without accelerating the Outstanding Balance, in which event the
Outstanding Balance shall be increased as of the date of the occurrence of the
applicable Event of Default pursuant to the Default Effect, but the Outstanding
Balance shall not be immediately due and payable unless so declared by Lender
(for the avoidance of doubt, if Lender elects to apply the Default Effect
pursuant to this sentence, it shall reserve the right to declare the Outstanding
Balance immediately due and payable at any time and no such election by Lender
shall be deemed to be a waiver of its right to declare the Outstanding Balance
immediately due and payable as set forth herein unless otherwise agreed to by
Lender in writing). Notwithstanding the foregoing, upon the occurrence of any
Event of Default described in clauses (d), (e), (f), (g) or (h) of Section 4.1,
the Outstanding Balance as of the date of acceleration shall become immediately
and automatically due and payable in cash at the Mandatory Default Amount,
without any written notice required by Lender. At any time following the
occurrence of any Event of Default, upon written notice given by Lender to
Borrower, interest shall accrue on the Outstanding Balance beginning on the date
the applicable Event of Default occurred at an interest rate equal to the lesser
of 22% per annum or the maximum rate permitted under applicable law (“Default
Interest”). For the avoidance of doubt, Lender may continue making Lender
Conversions and Redemption Conversions (as defined below) at any time following
an Event of Default until such time as the Outstanding Balance is paid in full.
In connection with acceleration described herein, Lender need not provide, and
Borrower hereby waives, any presentment, demand, protest or other notice of any
kind, and Lender may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by Lender at any time prior to payment hereunder and Lender shall have
all rights as a holder of the Note until such time, if any, as Lender receives
full payment pursuant to this Section 4.2. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereon.
Nothing herein shall limit Lender’s right to pursue any other remedies available
to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to Borrower’s failure to
timely deliver Conversion Shares upon Conversion of the Note as required
pursuant to the terms hereof.

 

5. Unconditional Obligation; No Offset. Borrower acknowledges that this Note is
an unconditional, valid, binding and enforceable obligation of Borrower not
subject to offset, deduction or counterclaim of any kind. Borrower hereby waives
any rights of offset it now has or may have hereafter against Lender, its
successors and assigns, and agrees to make the payments or Conversions called
for herein in accordance with the terms of this Note.

 

6. Waiver. No waiver of any provision of this Note shall be effective unless it
is in the form of a writing signed by the party granting the waiver. No waiver
of any provision or consent to any prohibited action shall constitute a waiver
of any other provision or consent to any other prohibited action, whether or not
similar. No waiver or consent shall constitute a continuing waiver or consent or
commit a party to provide a waiver or consent in the future except to the extent
specifically set forth in writing.

 

 3 

 

 

7. Adjustment of Lender Conversion Price upon Subdivision or Combination of
Common Stock. Without limiting any provision hereof, if Borrower at any time on
or after the Effective Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Lender Conversion Price in
effect immediately prior to such subdivision will be proportionately reduced.
Without limiting any provision hereof, if Borrower at any time on or after the
Effective Date combines (by combination, reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Lender Conversion Price in effect immediately prior to such
combination will be proportionately increased. Any adjustment pursuant to this
Section 7 shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
Section 7 occurs during the period that a Lender Conversion Price is calculated
hereunder, then the calculation of such Lender Conversion Price shall be
adjusted appropriately to reflect such event.

 

8. Borrower Redemptions.

 

8.1. Redemption Conversion Price. Subject to the adjustments set forth herein,
the conversion price for each Redemption Conversion (the “Redemption Conversion
Price”) shall be the lesser of (a) the Lender Conversion Price, and (b) the
Market Price.

 

8.2. Redemption Conversions. Beginning on the date that is six (6) months from
the Purchase Price Date, Lender shall have the right, exercisable at any time in
its sole and absolute discretion, to redeem all or any portion of the Note (such
amount, the “Redemption Amount”) by providing Borrower with a notice
substantially in the form attached hereto as Exhibit B (each, a “Redemption
Notice”, and each date on which Lender delivers a Redemption Notice, a
“Redemption Date”). For the avoidance of doubt, Lender may submit to Borrower
one (1) or more Redemption Notices in any given calendar month. Payments of each
Redemption Amount may be made (a) in cash, or (b) by converting such Redemption
Amount into shares of Common Stock (“Redemption Conversion Shares”, and together
with the Lender Conversion Shares, the “Conversion Shares”) in accordance with
this Section 8.2 (each, a “Redemption Conversion”) per the following formula:
the number of Redemption Conversion Shares equals the portion of the applicable
Redemption Amount being converted divided by the Redemption Conversion Price, or
(c) by any combination of the foregoing, so long as the cash is delivered to
Lender on the third (3rd) Trading Day immediately following the applicable
Redemption Date and the Redemption Conversion Shares are delivered to Lender on
or before the applicable Delivery Date (as defined below). Notwithstanding that
failure to repay this Note in full by the Maturity Date is an Event of Default,
the Redemption Dates shall continue after the Maturity Date pursuant to this
Section 8.2 until the Outstanding Balance is repaid in full.

 

8.3. Allocation of Redemption Amounts. Following its receipt of a Redemption
Notice, Borrower may either ratify Lender’s proposed allocation in the
applicable Redemption Notice or elect to change the allocation by written notice
to Lender by email or fax by the end of the next Trading Day immediately
following the date of delivery of such Redemption Notice, with a copy of such
written notice to the transfer agent of the Common Stock, so long as the sum of
the cash payments and the amount of Redemption Conversions equal the applicable
Redemption Amount. If Borrower fails to notify Lender of its election to change
the allocation prior to the deadline set forth in the previous sentence, it
shall be deemed to have ratified and accepted the allocation set forth in the
applicable Redemption Notice prepared by Lender. Borrower acknowledges and
agrees that the amounts and calculations set forth thereon are subject to
correction or adjustment because of error, mistake, or any adjustment resulting
from an Event of Default or other adjustment permitted under the Transaction
Documents (an “Adjustment”). Furthermore, no error or mistake in the preparation
of such notices, or failure to apply any Adjustment that could have been applied
prior to the preparation of a Redemption Notice may be deemed a waiver of
Lender’s right to enforce the terms of any Note, even if such error, mistake, or
failure to include an Adjustment arises from Lender’s own calculation. Borrower
shall deliver the Redemption Conversion Shares from any Redemption Conversion to
Lender in accordance with Section 9 below on or before each applicable Delivery
Date.

 

 4 

 

 

9. Method of Conversion Share Delivery. On or before the close of business on
the third (3rd) Trading Day following each Redemption Date or the third (3rd)
Trading Day following the date of delivery of a Lender Conversion Notice, as
applicable (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible
at such time and such Conversion Shares are eligible for delivery via DWAC,
deliver or cause its transfer agent to deliver the applicable Conversion Shares
electronically via DWAC to the account designated by Lender in the applicable
Lender Conversion Notice or Redemption Notice. If Borrower is not DWAC Eligible
or such Conversion Shares are not eligible for delivery via DWAC, it shall
deliver to Lender or its broker (as designated in the Lender Conversion Notice
or Redemption Notice), via reputable overnight courier, a certificate
representing the number of shares of Common Stock equal to the number of
Conversion Shares to which Lender shall be entitled, registered in the name of
Lender or its designee. For the avoidance of doubt, Borrower has not met its
obligation to deliver Conversion Shares by the Delivery Date unless Lender or
its broker, as applicable, has actually received the certificate representing
the applicable Conversion Shares no later than the close of business on the
relevant Delivery Date pursuant to the terms set forth above. Moreover, and
notwithstanding anything to the contrary herein or in any other Transaction
Document, in the event Borrower or its transfer agent refuses to deliver any
Conversion Shares without a restrictive securities legend to Lender on grounds
that such issuance is in violation of Rule 144 under the Securities Act of 1933,
as amended (“Rule 144”), Borrower shall deliver or cause its transfer agent to
deliver the applicable Conversion Shares to Lender with a restricted securities
legend, but otherwise in accordance with the provisions of this Section 9. In
conjunction therewith, Borrower will also deliver to Lender a written
explanation from its counsel or its transfer agent’s counsel opining as to why
the issuance of the applicable Conversion Shares violates Rule 144; provided,
Lender acknowledges that any Conversion Shares issued prior to the six (6) month
anniversary of the Closing Date will bear a restrictive securities legend, and
Borrower shall have no obligation to deliver such opinion letter for any
Conversion occurring prior to the six (6) month anniversary of the Closing Date.

 

10. Conversion Delays. If Borrower fails to deliver Conversion Shares in
accordance with the timeframe stated in Section 9, Lender may at any time prior
to receiving the applicable Conversion Shares rescind in whole or in part such
Conversion, with a corresponding increase to the Outstanding Balance (any
returned amount will tack back to the Purchase Price Date for purposes of
determining the holding period under Rule 144). In addition, for each
Conversion, in the event that Conversion Shares are not delivered by the third
(3rd) Trading Day (inclusive of the day of the Conversion), a late fee equal to
2% of the applicable Conversion Share Value rounded to the nearest multiple of
$100.00 but with a floor of $500.00 per day (but in any event the cumulative
amount of such late fees for each Conversion shall not exceed 200% of the
applicable Conversion Share Value) will be assessed for each day after the third
(3rd) Trading Day (inclusive of the day of the Conversion) until Conversion
Share delivery is made; and such late fee will be added to the Outstanding
Balance (such fees, the “Conversion Delay Late Fees”).

 

11. Approved Variable Security Issuance. The Outstanding Balance will
automatically be increased by five percent (5%) for each Approved Variable
Security Issuance made by Borrower (without the need for Lender to provide any
notice to Borrower of such increase), which increase will be effective as of the
date of each applicable Approved Variable Security Issuance.

 

12. Ownership Limitation. Notwithstanding anything to the contrary contained in
this Note or the other Transaction Documents, the Company shall not effect any
conversion of this Note, and Lender shall not have the right to convert any
portion of this Note, and shall not deliver a Conversion Notice, to the extent
that after giving effect to such conversion would cause Lender (together with
its affiliates) to beneficially own a number of shares exceeding 4.99% of the
number of shares of Common Stock outstanding on such date (including for such
purpose the shares of Common Stock issuable upon such issuance) (the “Maximum
Percentage”). For purposes of this section, beneficial ownership of Common Stock
will be determined pursuant to Section 13(d) of the 1934 Act. Notwithstanding
the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time
as the Market Capitalization is less than $10,000,000.00. Notwithstanding any
other provision contained herein, if the term “4.99%” is replaced with “9.99%”
pursuant to the preceding sentence, such increase to “9.99%” shall remain at
9.99% until increased, decreased or waived by Lender as set forth below. By
written notice to Borrower, Lender may increase, decrease or waive the Maximum
Percentage as to itself but any such waiver will not be effective until the 61st
day after delivery thereof. The foregoing 61-day notice requirement is
enforceable, unconditional and non-waivable and shall apply to all affiliates
and assigns of Lender.

 

 5 

 

 

13. Issuance Cap. Notwithstanding anything to the contrary contained in this
Note or the other Transaction Documents, Borrower and Lender agree that the
total cumulative number of shares of Common Stock issued to Lender hereunder
together with all other Transaction Documents may not exceed the requirements of
NYSE Listing Rule 312.03(c) (“NYSE 19.99% Cap”), except that such limitation
will not apply following Approval (defined below). If the number of shares of
Common Stock issued to Lender reaches the NYSE 19.99% Cap, so as not to violate
the 20% limit established in NYSE Listing Rule 312.03(c), Borrower will use
reasonable commercial efforts to obtain stockholder approval of the Note and the
issuance of additional Conversion Shares, if necessary, in accordance with the
requirements of NYSE Listing Rule 312.03(c) (the “Approval”), and until the
Approval has been obtained, Lender shall not submit any Conversion Notice to the
extent after giving effect to such conversion would exceed the NYSE 19.99% Cap.
If the Borrower is unable to obtain such Approval, any remaining Outstanding
Balance of this Note must be repaid in cash.

 

14. Opinion of Counsel. In the event that an opinion of counsel is needed for
any matter related to this Note, Lender has the right to have any such opinion
provided by its counsel.

 

15. Governing Law; Venue. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of Utah, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Utah. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this
reference.

 

16. Arbitration of Disputes. By its issuance or acceptance of this Note, each
party agrees to be bound by the Arbitration Provisions (as defined in the
Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

17. Cancellation. After repayment or conversion of the entire Outstanding
Balance, this Note shall be deemed paid in full, shall automatically be deemed
canceled, and shall not be reissued.

 

18. Amendments. The prior written consent of both parties hereto shall be
required for any change or amendment to this Note.

 

19. Assignments. Borrower may not assign this Note without the prior written
consent of Lender. Subject to compliance with any applicable securities laws and
the immediately following sentence, this Note and any shares of Common Stock
issued upon conversion of this Note may be offered, sold, assigned or
transferred by Lender without the consent of Borrower. If at the time of any
transfer of this Note or any shares of Common Stock issued upon conversion of
this Note, the transfer of such Securities shall not be either (i) registered
pursuant to an effective registration statement under the 1933 Act and under
applicable state securities or blue sky laws or (ii) eligible for resale without
volume or manner-of-sale restrictions or current public information requirements
pursuant to Rule 144, the Company may require, as a condition of allowing such
transfer, that Lender or transferee, as the case may be, comply with the
transfer restrictions set forth on the restrictive legend on the face of such
Security.

 

 6 

 

 

20. Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with the
subsection of the Purchase Agreement titled “Notices.”

 

21. Liquidated Damages. Lender and Borrower agree that in the event Borrower
fails to comply with any of the terms or provisions of this Note, Lender’s
damages would be uncertain and difficult (if not impossible) to accurately
estimate because of the parties’ inability to predict future interest rates,
future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments,
Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated
damages (under Lender’s and Borrower’s expectations that any such liquidated
damages will tack back to the Purchase Price Date for purposes of determining
the holding period under Rule 144).

 

22. Severability. If any part of this Note is construed to be in violation of
any law, such part shall be modified to achieve the objective of Borrower and
Lender to the fullest extent permitted by law and the balance of this Note shall
remain in full force and effect.

 

[Remainder of page intentionally left blank; signature page follows]

 

 7 

 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the
Effective Date.

 

  BORROWER:       Hemispherx Biopharma, Inc.         By: /s/ Tom Equels   Name: 
Tom Equels   Title: CEO/PRES

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

LENDER:

 

Iliad Research and Trading, L.P.

 

By:  Iliad Management, LLC, its General Partner               By:  Fife Trading,
Inc., its Manager                 By:  /s/ John M. Fife         John M. Fife,
President  

 

[Signature Page to Secured Convertible Promissory Note]

 

   

 

 

ATTACHMENT 1

DEFINITIONS

 

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

 

A1. “Approved Variable Security Issuance” means a Variable Security Issuance (as
defined in the Purchase Agreement) for which Borrower received Lender’s written
consent prior to the applicable issuance.

 

A2. “Bloomberg” means Bloomberg L.P. (or if that service is not then reporting
the relevant information regarding the Common Stock, a comparable reporting
service of national reputation selected by Lender and reasonably satisfactory to
Borrower).

 

A3. “Closing Bid Price” and “Closing Trade Price” means the last closing bid
price and last closing trade price, respectively, for the Common Stock on its
principal market, as reported by Bloomberg, or, if its principal market begins
to operate on an extended hours basis and does not designate the closing bid
price or the closing trade price (as the case may be) then the last bid price or
last trade price, respectively, of the Common Stock prior to 4:00:00 p.m., New
York time, as reported by Bloomberg, or, if its principal market is not the
principal securities exchange or trading market for the Common Stock, the last
closing bid price or last trade price, respectively, of the Common Stock on the
principal securities exchange or trading market where the Common Stock is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of the Common Stock in the
over-the-counter market on the electronic bulletin board for the Common Stock as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for the Common Stock by Bloomberg, the average of the
bid prices, or the ask prices, respectively, of any market makers for the Common
Stock as reported by OTC Markets Group, Inc., and any successor thereto. If the
Closing Bid Price or the Closing Trade Price cannot be calculated for the Common
Stock on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Trade Price (as the case may be) of the Common Stock on such date
shall be the fair market value as mutually determined by Lender and Borrower.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.

 

A4. “Conversion” means a Lender Conversion under Section 3 or a Redemption
Conversion under Section 8.

 

A5. “Conversion Factor” means 80%.

 

A6. “Conversion Share Value” means the product of the number of Conversion
Shares deliverable pursuant to any Conversion Notice multiplied by the Closing
Trade Price of the Common Stock on the Delivery Date for such Conversion.

 

A7. “Default Effect” means multiplying the Outstanding Balance as of the date
the applicable Event of Default occurred by (a) fifteen percent (15%) for each
occurrence of any Major Default, (b) ten percent (10%) for each occurrence of an
Unapproved Variable Security Issuance Default, or (c) five percent (5%) for each
occurrence of any Minor Default, and then adding the resulting product to the
Outstanding Balance as of the date the applicable Event of Default occurred,
with the sum of the foregoing then becoming the Outstanding Balance under this
Note as of the date the applicable Event of Default occurred; provided that the
aggregate amount of the Default Effect for all Major Defaults and Minor Defaults
shall not exceed twenty-five percent (25%); and provided further that the
Default Effect shall not apply to any Event of Default pursuant to Section
4.1(b) hereof. There shall be no limit on the number of times the Default Effect
may be applied with respect to Unapproved Variable Security Issuance Defaults.

 

A8. “DTC” means the Depository Trust Company or any successor thereto.

 

A9. “DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer
program.

 

A10. “DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.

 

A11. “DWAC Eligible” means that (a) Borrower’s Common Stock is eligible at DTC
for full services pursuant to DTC’s operational arrangements, including without
limitation transfer through DTC’s DWAC system; (b) Borrower has been approved
(without revocation) by DTC’s underwriting department; (c) Borrower’s transfer
agent is approved as an agent in the DTC/FAST Program; (d) the Conversion Shares
are otherwise eligible for delivery via DWAC other than due to the actions or
status of Lender; and (e) Borrower’s transfer agent does not have a policy
prohibiting or limiting delivery of the Conversion Shares via DWAC.

 

Attachment 1 to Secured Convertible Promissory Note, Page 1

 

 

A12. “Fundamental Transaction” means that (a) (i) Borrower shall, directly or
indirectly, in one or more related transactions, consolidate or merge with or
into (whether or not Borrower or any of its subsidiaries is the surviving
corporation) any other person or entity, or (ii) Borrower shall, directly or
indirectly, in one or more related transactions, sell, lease, license, assign,
transfer, convey or otherwise dispose of all or substantially all of its
respective properties or assets to any other person or entity, or (iii) Borrower
shall, directly or indirectly, in one or more related transactions, allow any
other person or entity to make a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding shares of voting
stock of Borrower (not including any shares of voting stock of Borrower held by
the person or persons making or party to, or associated or affiliated with the
persons or entities making or party to, such purchase, tender or exchange
offer), or (iv) Borrower shall, directly or indirectly, in one or more related
transactions, consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other person or entity whereby such
other person or entity acquires more than 50% of the outstanding shares of
voting stock of Borrower (not including any shares of voting stock of Borrower
held by the other persons or entities making or party to, or associated or
affiliated with the other persons or entities making or party to, such stock or
share purchase agreement or other business combination), or (v) Borrower shall,
directly or indirectly, in one or more related transactions, reorganize,
recapitalize or reclassify the Common Stock, other than an increase in the
number of authorized shares of Borrower’s Common Stock, or (b) any “person” or
“group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
1934 Act and the rules and regulations promulgated thereunder) is or shall
become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding voting stock of Borrower.

 

A13. “Major Default” means any Event of Default occurring under Sections 4.1(a),
4.1(c), 4.1(l), or 4.1(q) of this Note.

 

A14. “Mandatory Default Amount” means the Outstanding Balance following the
application of the Default Effect.

 

A15. “Market Capitalization” means a number equal to (a) the average VWAP of the
Common Stock for the immediately preceding fifteen (15) Trading Days, multiplied
by (b) the aggregate number of outstanding shares of Common Stock as reported on
Borrower’s most recently filed Form 10-Q or Form 10-K.

 

A16. “Market Price” means the Conversion Factor multiplied by the lowest daily
VWAP during the ten (10) Trading Days immediately preceding the applicable
measurement date.

 

A17. “Minor Default” means any Event of Default that is not a Major Default or
an Unapproved Variable Security Issuance Default.

 

A18. “OID” means an original issue discount.

 

A19. “Other Agreements” means, collectively, (a) all existing and future
agreements and instruments between, among or by Borrower (or an affiliate), on
the one hand, and Lender (or an affiliate), on the other hand, and (b) any
financing agreement or a material agreement that affects Borrower’s ongoing
business operations.

 

A20. “Outstanding Balance” means as of any date of determination, the Purchase
Price, as reduced or increased, as the case may be, pursuant to the terms hereof
for payment, Conversion, offset, or otherwise, plus the OID, the Transaction
Expense Amount, accrued but unpaid interest, collection and enforcements costs
(including attorneys’ fees) incurred by Lender, transfer, stamp, issuance and
similar taxes and fees related to Conversions, and any other fees or charges
(including without limitation Conversion Delay Late Fees) incurred under this
Note.

 

A21. “Purchase Price Date” means the date the Purchase Price is delivered by
Lender to Borrower.

 

A22. “Trading Day” means any day on which the New York Stock Exchange (or such
other principal market for the Common Stock) is open for trading.

 

A23. “Unapproved Variable Security Issuance” means a Variable Security Issuance
for which Borrower did not receive Lender’s written consent prior to the
applicable issuance.

 

A24. “Unapproved Variable Security Issuance Default” means an Event of Default
occurring under Section 4.1(r) of this Note.

 

A25. “VWAP” means the volume weighted average price of the Common stock on the
principal market for a particular Trading Day or set of Trading Days, as the
case may be, as reported by Bloomberg.

 

[Remainder of page intentionally left blank]

 

Attachment 1 to Secured Convertible Promissory Note, Page 2

 

 

EXHIBIT A

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

Hemispherx Biopharma, Inc. Date: __________________ Attn: Thomas Equels, CEO  
2117 SW Highway 484   Ocala, Florida 34473  

 

LENDER CONVERSION NOTICE

 

The above-captioned Lender hereby gives notice to Hemispherx Biopharma, Inc., a
Delaware corporation (the “Borrower”), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on September 28,
2018 (the “Note”), that Lender elects to convert the portion of the Note balance
set forth below into fully paid and non-assessable shares of Common Stock of
Borrower as of the date of conversion specified below. Said conversion shall be
based on the Lender Conversion Price set forth below. In the event of a conflict
between this Lender Conversion Notice and the Note, the Note shall govern, or,
in the alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Lender Conversion Notice to conform to the Note.
Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.

 

A. Date of Conversion: ____________ B. Lender Conversion #: ____________ C.
Conversion Amount: ____________ D. Lender Conversion Price: _______________ E.
Lender Conversion Shares: _______________ (C divided by D) F. Remaining
Outstanding Balance of Note: ____________*

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Lender Conversion Notice and such Transaction Documents.

 

Please transfer the Lender Conversion Shares electronically (via DWAC) to the
following account:

 

Broker:     Address:    DTC#:         Account #:         Account Name:        

 

To the extent the Lender Conversion Shares are not able to be delivered to
Lender electronically via the DWAC system, deliver all such certificated shares
to Lender via reputable overnight courier after receipt of this Lender
Conversion Notice (by facsimile transmission or otherwise) to:

 

                 

 

[Signature Page Follows]

 

Exhibit A to Secured Convertible Promissory Note, Page 1

 

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By:  Iliad Management, LLC, its General Partner               By:  Fife Trading,
Inc., its Manager               By:            John M. Fife, President  

 

Exhibit A to Secured Convertible Promissory Note, Page 2

 

 

EXHIBIT B

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

Hemispherx Biopharma, Inc. Date: __________________ Attn: Thomas Equels, CEO  
2117 SW Highway 484   Ocala, Florida 34473  

 

REDEMPTION NOTICE

 

The above-captioned Lender hereby gives notice to Hemispherx Biopharma, Inc., a
Delaware corporation (the “Borrower”), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on September 28,
2018 (the “Note”), that Lender elects to redeem a portion of the Note in
Redemption Conversion Shares or in cash as set forth below. In the event of a
conflict between this Redemption Notice and the Note, the Note shall govern, or,
in the alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Redemption Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note.

 

REDEMPTION INFORMATION

 

A. Redemption Date: ____________, 201_ B. Redemption Amount:____________ C.
Portion of Redemption Amount to be Paid in Cash: ____________ D. Portion of
Redemption Amount to be Converted into Common Stock: ____________ (B minus C) E.
Redemption Conversion Price: _______________ (lower of (i) Lender Conversion
Price in effect and (ii) Market Price as of Redemption Date) F. Redemption
Conversion Shares: _______________ (D divided by E) G. Remaining Outstanding
Balance of Note: ____________ *

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Redemption Notice and such Transaction Documents.

 

Please transfer the Redemption Conversion Shares, if applicable, electronically
(via DWAC) to the following account:

 

Broker:     Address:    DTC#:         Account #:         Account Name:        

 

To the extent the Redemption Conversion Shares are not able to be delivered to
Lender electronically via the DWAC system, deliver all such certificated shares
to Lender via reputable overnight courier after receipt of this Redemption
Notice (by facsimile transmission or otherwise) to:

 

                 

 

Exhibit B to Secured Convertible Promissory Note, Page 1

 

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By:  Iliad Management, LLC, its General Partner               By:  Fife Trading,
Inc., its Manager               By:            John M. Fife, President  

 

Exhibit B to Secured Convertible Promissory Note, Page 2