Exhibit 10.2


 





EXECUTION COPY


 


NOTE PURCHASE
AGREEMENT


 


This NOTE PURCHASE
AGREEMENT (the “Agreement”), dated as of January 29 2018, is by and among Innovate Biopharmaceuticals Inc.,
a Delaware corporation with offices located at 8480 Honeycutt Rd, Suite 120, Raleigh, NC 27615 (the “Company”),
and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).


 


RECITALS


 


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


 


B.       The
Company has authorized a new series of senior notes of the Company, in the aggregate original principal amount of $4,800,000, substantially
in the form attached hereto as Exhibit A (the “Notes”).


 


C.       Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, a Note in the
aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers.


 


AGREEMENT


 


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


 


1.       PURCHASE
AND SALE OF NOTES.


 


(a)       Purchase
of Notes. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date
(as defined below) a Note in the original principal amount as is set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers.


 


(b)       Closing.
The closing (the “Closing”) of the purchase of the Notes by the Buyers shall occur at the offices of Kelley
Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the “Closing Date”)
shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections
6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York,
New York are authorized or required by law to remain closed.


 






     


     


    

 


(c)       Purchase
Price. The aggregate purchase price for the Notes to be purchased by each Buyer (the “Purchase Price”) shall
be the amount set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.


 


(d)       Form
of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the case of any Buyer, the
amounts withheld pursuant to Section 4(f)) to the Company for the Notes to be issued and sold to such Buyer at the Closing,
by wire transfer of immediately available funds in accordance with the by wire transfer of immediately available funds in accordance
with the Flow of Funds Letter (as defined below) and (ii) the Company shall deliver to each Buyer a Note in the aggregate
original principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers duly executed
on behalf of the Company and registered in the name of such Buyer or its designee.


 


(e)       Residency.
Such Buyer is a resident of that jurisdiction specified below its address of the Schedule of Buyers.


 


2.       BUYER’S
REPRESENTATIONS AND WARRANTIES.


 


Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing
Date:


 


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


 


(b)       No
Public Sale or Distribution. Such Buyer is acquiring its Note for its own account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree,
or make any representation or warranty, to hold any of the Notes for any minimum or other specific term and reserves the right
to dispose of the Notes at any time in accordance with or pursuant to a registration statement or an exemption from registration
under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Notes in violation of applicable securities laws. For purposes of this Agreement, “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and any Governmental Entity or any department or agency thereof.


 


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


 


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


 






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(e)       Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Notes that have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's representations and warranties contained herein. Such Buyer understands that its investment
in the Notes involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its acquisition of the Notes.


 


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


 


(g)       Transfer
or Resale. Such Buyer understands that, except as may be contemplated in connection with a Public Company Date (as defined
below): (i) the Notes have not been and are not being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered
to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect
that such Notes to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such Buyer provides the Company with reasonable assurance that such Notes can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Notes made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further,
if Rule 144 is not applicable, any resale of the Notes under circumstances in which the seller (or the Person through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor
any other Person is under any obligation to register the Notes under the 1933 Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Notes may be pledged in connection with
a bona fide margin account or other loan or financing arrangement secured by the Notes and such pledge of Notes shall not be deemed
to be a transfer, sale or assignment of the Notes hereunder, and no Buyer effecting a pledge of Notes shall be required to provide
the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction
Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).


 


(h)       Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.


 






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(i)       No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer,
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 such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Buyer to perform its obligations hereunder.


 


3.       REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


 


The Company represents
and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date.


 


(a)       Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse
Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect
on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise)
or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in
any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith
or (iii) the authority or ability of the Company to perform its obligations under any of the Transaction Documents (as defined
below). Other than the Persons (as defined below) set forth on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries”
means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity
or similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of
such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”


 


(b)       Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the Notes in accordance with the terms hereof and thereof. The execution
and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of the Notes) have been duly authorized by the Company’s
board of directors or other governing body, as applicable, and (other than the filing of a Form D with the SEC and the filing(s)
required by applicable state “blue sky” securities laws, rules and regulations (together the “Securities Filings”))
no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors
or their stockholders or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party
will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification
and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively,
this Agreement, the Notes, and each of the other agreements and instruments entered into or delivered by any of the parties hereto
in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.


 






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(c)       Issuance
of Securities. The issuance of the Notes are duly authorized and upon issuance in accordance with the terms of the Transaction
Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects,
claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively
“Liens”) with respect to the issuance thereof. Subject to the accuracy of the representations and warranties
of the Buyers in this Agreement, the offer and issuance by the Company of the Notes is exempt from registration under the 1933
Act.


 


(d)       No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes) will not
(i) result in a violation of the Certificate of Incorporation (as defined below) (including, without limitation, any certificate
of designation contained therein), Bylaws (as defined below), certificate of formation, memorandum of association, articles of
association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other
securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign,
federal and state securities laws and regulations) 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.


 


(e)       Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the Securities Filings), any Governmental Entity (as defined below) or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated
by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been
or will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware
of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the
registration, application or filings contemplated by the Transaction Documents. “Governmental Entity” means
any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local,
municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.


 






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(f)       Acknowledgment
Regarding Buyer’s Purchase of Notes. The Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby
and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary
of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase
of the Notes. The Company further represents to each Buyer that the Company’s and each Subsidiary’s decision to enter
into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company, each
Subsidiary and their respective representatives.


 


(g)       No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Notes. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its
investment advisor) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation, attorney's fees and out-of-pocket expenses) arising
in connection with any such claim. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent
in connection with the offer or sale of the Notes.


 


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


 






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(i)       Transactions
With Affiliates. No current or former employee, partner, director, officer or stockholder (direct or indirect) of the Company
or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof, or any relative with
a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction
with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services
by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or stockholder
or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors
of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association
or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive investment
(direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through a NMS stock
exchange), nor does any such Person receive income from any source other than the Company or its Subsidiaries which relates to
the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. No employee, officer,
stockholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the Company
or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for
reasonable expenses incurred on behalf of the Company, (iii) for other standard employee benefits made generally available to all
employees or executives (including stock option agreements outstanding under any stock option plan approved by the Board of Directors
of the Company); and (iv) other than convertible promissory notes issued by the Company to affiliates of the Company’s directors
and officers.


 


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


 






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(ii)       No
Hazardous Materials:


 


(A)       have
been disposed of or otherwise released from any Property of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or


 


(B)       are
present on, over, beneath, in or upon a Property or any portion thereof in quantities that would constitute a violation of any
Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Property has occurred that violates any Environmental
Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.


 


(iii)       Neither
the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of
or otherwise located on any Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated
biphenyls.


 


(iv)       None
of the Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related
Liens.


 


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


 


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


 


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


 






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


 


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


 


(p)       Acknowledgement
Regarding Buyers' Trading Activity. It is understood and acknowledged by the Company (a) (i) that none of the Buyers have been
asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed with the Company or its Subsidiaries, to desist from
purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Notes for any specified term; and (ii) that each Buyer shall not be deemed to have any affiliation
with or control over any arm's length counter party in any “derivative” transaction. The Company further understands
and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to
the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading activities at various times during
the period that the Notes are outstanding, and such hedging and/or trading activities, if any, can reduce the value of the existing
stockholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted.
The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement,
the Notes or any other Transaction Document or any of the documents executed in connection herewith or therewith.


 


(q)       Management.
Except as set forth in Schedule 3(q) hereto, during the past five year period, no current officer or director of the
Company or any of its Subsidiaries has been the subject of:


 


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


 






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


 


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


 


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


 


(2)       Engaging
in any particular type of business practice; or


 


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


 


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


 


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


 


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


 


(r)No Disqualification
Events. With respect to Notes to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation
D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company's
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule
405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”
and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.


 






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(s)       Other
Covered Persons(b). The Company is not aware of any Person that has been or will be paid (directly or indirectly) remuneration
for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.


 


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


 


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


 


(v)       Ranking
of Notes. Except for Permitted Senior Indebtedness (as defined in the Notes), no Indebtedness of the Company, at the Closing,
will be senior to, or pari passu with, the Notes in right of payment, whether with respect to payment or redemptions, interest,
damages, upon liquidation or dissolution or otherwise.


 


(w)       Disclosure.
No statement made by the Company in this Agreement, any other Transaction Document or the exhibits and schedules attached hereto
or in any certificate or schedule furnished or to be furnished by or on behalf of the Company to the Investors or any of their
representatives in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained herein or therein not misleading. The due diligence
materials previously provided by or on behalf of the Company to each Buyer (the “Due Diligence Materials”),
have been prepared in a good faith effort by the Company to describe the Company's present and proposed products, and projected
growth of the Company and do not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading, except that with respect to assumptions, projections and expressions of opinion or
predictions contained in the Due Diligence Materials, the Company represents only that such assumptions, projections, expressions
of opinion and predictions were made in good faith and that the Company believes there is a reasonable basis therefor. The Company
acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.


 


(x)       Additional
Representations and Warranties. The Company hereby makes, as of the date hereof, to each Buyer the representations and warranties
of the Company set forth in Section 3.1(e), and Sections 3.1(h) through 3.1(m) of that certain Subscription Agreement by and among
the Company and each of the purchasers listed on Annex A attached thereto and dated as of the date of this Agreement (the
“Subscription Agreement”), subject in all respect to the disclosures of the Company set forth on the Company’s
Disclosure Schedules (as defined in the Subscription Agreement), which representations, warranties and disclosure are hereby incorporated
by reference in this Agreement, mutatis mutandis.


 






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4.       COVENANTS.


 


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


 


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


 


(c)       Reporting
Status. Immediately following the date the Common Stock of the Company is initially registered (or is exchanged into a class
of securities registered) under the 1934 Act (whether by registration, merger or otherwise) (the “Public Company Date”)
and until the date on which a Buyer or any transferee or assignee thereof to which a Buyer assigns its rights as a holder of Notes
under this Agreement (each an “Investor,” and collectively, the “Investors”) no longer holds
any Notes (the “Reporting Period”), the Company shall timely file all reports required to be filed with the
SEC pursuant to the 1934 Act.


 


(d)       Use
of Proceeds. The Company will use the proceeds from the sale of the Notes for general corporate purposes, but not, directly
or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company or any of its
Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the settlement
of any outstanding litigation.


 


(e)       Financial
Information. From and after the Public Company Date, the Company agrees to send the following to each Investor during the Reporting
Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity statements
and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through
EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following
are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available or giving thereof to the stockholders.


 






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(f)       Fees.
The Company shall reimburse the lead Buyer for all costs and expenses not to exceed $20,000.00 incurred by it or its affiliates
in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction
Documents (including, without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley
Drye & Warren LLP, counsel to the lead Buyer, any other reasonable fees and expenses in connection with the structuring, documentation,
negotiation and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings
in connection therewith) (the “Transaction Expenses”) and shall be withheld by the lead Buyer from its Purchase
Price at the Closing; provided, that the Company shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction
Expenses not so reimbursed through such withholding at the Closing. The Company shall be responsible for the payment of any placement
agent’s fees or financial advisory fees relating to or arising out of the transactions contemplated hereby. The Company shall
pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’
fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth
in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Notes
to the Buyers.


 


(g)       Pledge
of Notes. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the
Notes may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that
is secured by the Notes. The pledge of Notes shall not be deemed to be a transfer, sale or assignment of the Notes hereunder, and
no Investor effecting a pledge of Notes shall be required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(g)
hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof
in order to effect a sale, transfer or assignment of Notes to such pledgee. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Notes may reasonably request in connection with a pledge of the Notes to such pledgee by a Buyer.


 


(h)       Disclosure
of Transactions and Other Material Information.


 


(i)       Disclosure
of Transaction. The Company shall, on or before the fourth (4th) Business Day after the date of this Agreement, file a Current
Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and
all schedules to this Agreement), the form of Notes and the form of the Warrants) (including all attachments, the “8-K
Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information
(if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under
any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.


 






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(ii)       Limitations
on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company
or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be
granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants, or any
of the covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of
its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such
Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make
a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public
information, as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of
its or their respective officers, directors, employees, affiliates, stockholders or agents, for any such disclosure. To the extent
that the Company delivers any material, non-public information to a Buyer without such Buyer's consent, the Company hereby covenants
and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of,
such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue
any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the
Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted
by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written
consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not
(and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release
or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would
otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular
Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular Buyer (it
being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect
to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.


 


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


 


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


 


(k)       Restriction
on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem,
or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent
of the Buyers, except for the repurchase of common stock from employees, directors, consultants, and advisor in connection with
termination of services to the Company.


 


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


 


(m)      General Solicitation.
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the
Company or such affiliate will solicit any offer to buy or offer or sell the Notes by means of any form of general solicitation
or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising, unless otherwise permitted by applicable law.


 


(n)      Notice of
Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.


 


(o)      Books and
Records(b). The Company will keep proper books of record and account, in which full and correct entries shall be made of
all financial transactions and the asset and business of the Company and its Subsidiaries in accordance with GAAP.


 


(p)      Confidentiality,
Non-Compete, Non-Solicit and Assignment of Inventions Agreements. The Company shall cause every employee and consultant
to be hired by the Company after the date hereof to enter into a Confidentiality, Non-Compete, Non-Solicit and Assignment of Inventions
Agreement prior to being hired. The Company shall not amend, waive or terminate any material provision of any Confidentiality,
Non-Compete, Non-Solicit and Assignment of Inventions Agreement and shall enforce the provisions of each the Confidentiality, Non-Compete,
Non-Solicit and Assignment of Inventions Agreements in accordance with its terms. If any party to a Confidentiality, Non-Compete,
Non-Solicit and Assignment of Inventions Agreement breaches any material provision of a Confidentiality, Non-Compete, Non-Solicit
and Assignment of Inventions Agreement, the Company shall promptly use its best efforts to specific performance of the terms of
such Confidentiality, Non-Compete, Non-Solicit and Assignment of Inventions Agreement.


 






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(q)      Financial
Statements and Inspection.


 


(i)       The
Company shall deliver to each Buyer (unless any such Buyer has elected by written notice to the Company that it does not want to
receive any or all of the following):


 


(1)       as
soon as practicable following the end of each fiscal quarter (other than the fourth fiscal quarter of each fiscal year), but in
no event later than fifteen (15) days after the end of such fiscal quarter, the Company's consolidated unaudited balance sheet,
income statement, a statement of stockholder's equity and a statement of cash flows for such quarter, such quarter-end financial
reports to be in reasonable detail, prepared in accordance with GAAP (except that such financial statements may (A) be subject
to normal year-end audit adjustments and (B) not contain all notes thereto that may be required in accordance with GAAP);


 


(2)       as
soon as practicable following the end of each fiscal year, but in no event later than ninety (90) days following the end of such
fiscal year, the Company's audited consolidated balance sheet, income statement, a statement of stockholder's equity and a statement
of cash flows for such year and, if applicable, the immediately preceding fiscal year, such year-end financial reports to be in
reasonable detail, prepared in accordance with GAAP, and audited by independent public accountants of nationally recognized standing
selected by the Company and reasonably acceptable to the Required Holders;


 


(3)       as
soon as practicable, all material communications with stockholders or the financial community, including press releases, but in
no event later than three (3) days after the date of each such communication;


 


(4)       as
soon as practicable, (x) all material reports prepared for the Company by outside consultants, and (y) all reports prepared for
the Company by outside legal counsel and auditors, but in no event later than three (3) days after receipt thereof by the Company,
provided that the Company shall have no obligation to deliver to any Investor any report prepared by outside legal counsel to the
extent such report is privileged communication and is subject to the attorney/client privilege, in the reasonable opinion of such
legal counsel;


 


(5)       as
soon as practicable (but in no event later than two (2) Business Days after any such communication), all material communications
with and from United States federal or state or foreign regulatory agencies or other governmental or quasi-governmental authorities
of any kind;


 






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(6)       as
soon as practicable, notice of any material events, including any pending or threatened litigation and/or events that is reasonably
likely to materially delay the advancement of the business objectives of the Company or any of its Subsidiaries, but in no event
later than five (5) Business Days after the occurrence thereof; and


 


(7)       notice
of any Material Adverse Effect as soon as practicable after upon the occurrence thereof, but in no event later than five (5) Business
Days thereafter.


 


(ii)       The
Company shall notify the Buyers in writing of (i) any default under any of the Company's agreements governing its Indebtedness
and (ii) the receipt by the Company of any default notices in connection therewith, in each case promptly and in no event later
than five (5) Business Days after the occurrence of any such default or the receipt of any such default notice.


 


(iii)       The
Company shall permit each Buyer to visit and inspect the Company's properties, to examine its books of account, records, contracts
and agreements and to discuss the Company's affairs, finances and accounts with its Chief Executive Officer or Chief Financial
Officer, all at such times as may be reasonably requested by the Investor.


 


(iv)       The
covenants set forth in this Section 4(q) shall terminate as to Buyers and be of no further force or effect upon the earlier of
the Public Company Date and the time when no Notes are outstanding.


 


(r)       Closing
Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Notes and
any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.


 


5.       REGISTER;
LEGEND.


 


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


 


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


 






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THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY),
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


 


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


 


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


 


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


 


(ii)       Such
Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(f)) for the Note being purchased by such Buyer at the Closing by wire transfer of immediately
available funds in accordance with the Flow of Funds Letter.


 


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


 


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


 


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


 






    17 


     


    

 


(i)       The
Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents
to which it is a party and the Company shall have duly executed and delivered to such Buyer the Note (in such original principal
amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers) being purchased by such Buyer
at the Closing pursuant to this Agreement.


 


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


 


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


 


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


 


(v)       The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Notes.


 


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


 


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


 


(viii)       Such
Buyer shall have received a letter or other correspondence setting forth the wire amounts of each Buyer and the wire transfer instructions
of the Company (the “Flow of Funds Letter”).


 


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


 






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8.       TERMINATION.


 


In the event that the
Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the
right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on
such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under
this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have
been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale
and purchase of the Notes shall be applicable only to such Buyer providing such written notice, provided further that no such termination
shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(f)
above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.


 


9.       MISCELLANEOUS.


 


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


 


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


 


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


 


(d)       Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication
that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid
by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction
Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law)
exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection
by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such
obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary,
by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful
amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent
that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction
Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise
be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.


 






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(e)       Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the
Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions
by any Buyer with respect to Common Stock or the Notes, and the other matters contained herein and therein, and this Agreement,
the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect
on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any
other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries
and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof,
and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment to any provision of
this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Notes;
provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Notes
then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which
may be granted or withheld in such Buyer’s sole discretion). No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party, provided that the Required Holders may waive any provision of this Agreement,
and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding
on all Buyers and holders of Notes, provided that no such waiver shall be effective to the extent that it (1) applies to less than
all of the holders of the Notes then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation
or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s
sole discretion). No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, all holders of the Notes. From the date hereof and while any Notes
are outstanding, the Company shall not be permitted to receive any consideration from a Buyer or a holder of Notes that is not
otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce the Company or any Subsidiary (i)
to treat such Buyer or holder of Notes in a manner that is more favorable than to other similarly situated Buyers or holders of
Notes, or (ii) to treat any Buyer(s) or holder(s) of Notes in a manner that is less favorable than the Buyer or holder of Notes
that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably
than another Buyer shall disregard any securities of the Company purchased or sold by any Buyer. The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that,
except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing
to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company
expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its
advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner
or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction
Document and (y) nothing contained in any of the Due Diligence Materials shall affect such Buyer’s right to rely on, or shall
modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this
Agreement or any other Transaction Document. “Required Holders” means (I) prior to the Closing Date, each Buyer
entitled to purchase Notes at the Closing and (II) on or after the Closing Date, holders of a majority of the aggregate principal
amount of Notes then outstanding.


 


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


 






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If to the Company:


 


Innovate Biopharmaceuticals Inc.

8480 Honeycutt Rd, Suite 120

Raleigh, NC 27615

Telephone: (919) 275-1933

Attention: President

E-Mail: corplegal@innovatebiopharma.com


 


With a copy (for informational purposes only) to:


 


Wilson Sonsini Goodrich & Rosati, P.C.:

12235 El Camino Real

San Diego, CA 92130

Telephone: (858) 350-2308

Facsimile: (858) 350-2399

Attention: Martin J. Waters

E-Mail: mwaters@wsgr.com


 


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


 


with a copy (for informational purposes only) to:


 


Kelley Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

E-mail: madelstein@kelleydrye.com


 






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or to such other address, e-mail 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 five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only
be provided copies of notices sent to the lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or
e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission, an image of the
first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) 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, including any purchasers of any of the Notes. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction
(as defined in the Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Notes
without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights.


 


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


 


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


 


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


 


(k)       Indemnification.


 


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


 






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(ii)       Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 9(k), deliver to the Company a written notice of the commencement thereof, and
the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (A) the Company has
agreed in writing to pay such fees and expenses; (B) the Company shall have failed promptly to assume the defense of such Indemnified
Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability; or (C) the named
parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the Company, and such
Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent
such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, then the Company shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the Company), provided further, that in the case of clause (C) above the Company shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel for the Indemnitees. The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability by the Company
and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action or Indemnified
Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or proceeding effected
without its prior written consent, provided, however, that the Company shall not unreasonably withhold, delay or condition its
consent. The Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter
into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement
shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder,
the Company shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a reasonable
time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section
9(k), except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.


 


(iii)       The
indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills are received or Indemnified Liabilities are incurred.


 


(iv)       The
indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against
the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.


 


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


 


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


 






    23 


     


    

 


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


 


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


 


(p)       Judgment
Currency.


 


(i)       If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Business Day immediately preceding:


 


(1)       the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or


 






    24 


     


    

 


(2)       the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment
Conversion Date”).


 


(ii)       If
in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change
in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with
the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion
Date.


 


(iii)       Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.


 


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


 


[signature pages follow]


 




    25 


     


    

 


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


 





	 	COMPANY:
	 	 	 
	 	INNOVATE BIOPHARMACEUTICALS INC.
	 	 	 
	 	 	 
	 	By:	/s/ Christopher Prior, Ph.D.
	 	 	Name: Christopher Prior, Ph.D.
	 	 	Title: Chief Executive Officer


 




     


     


    

 


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


 





	 	BUYER:
	 	 	 
	 	Gustavia capital partners llc
	 	 	 
	 	 	 
	 	 	 
	 	By:	/s/ Eli Hassett
	 	 	Name: 
	 	 	Title: 










 



     


     


    

 


SCHEDULE
OF BUYERS


 





	(1)	 	(2)	 	(3)	 	(4)	 	(5)
	 	 	 	 	 	 	 	 	 
	Buyer	 	Address and Facsimile Number	 	Original 

Principal 

Amount of Notes	 	Purchase Price	 	Legal Representative’s
 Address and Facsimile Number
	 	 	 	 	 	 	 	 	 
	Gustavia Capital Partners LLC	 	123 Grove Avenue 
Suite 101 
Cedarhurst, New York 11516	 	$4,800,000	 	$3,000,000	 	Kelley Drye & Warren LLP 
101 Park Avenue 
New York, NY 10178 
Telephone: (212) 808-7540 
Facsimile: (212) 808-7897 
Attention: Michael A. Adelstein, Esq.