Exhibit 10.1


 


SECURITIES PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of November 17, 2016, between Immune Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, including its
successors and assigns, the “Purchasers” and each a “Purchaser”).


 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers,
and the Purchasers desires to purchase from the Company, $1,000,000 of securities of the Company, as more fully described in this
Agreement (the “Offering”).


 


NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:


 


ARTICLE I.


DEFINITIONS


 


Definitions. In addition to the
terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(j).


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.


 


“Closing
Statement” means the Closing Statement in the form Annex A attached hereto.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $.0001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed into.


 



     


     


    

 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive Common Stock.


 


“Company”
means Immune Pharmaceuticals Inc.


 


“Company
Counsel” means Sheppard Mullin Richter & Hampton, LLP.


 


“Conversion
Price” shall have the meaning ascribed to such term in the Notes.


 


“Notes”
means the Convertible Notes due, subject to the terms therein, twelve months from their respective dates of issuance, issued by
the Company to the Purchaser hereunder, in the form of Exhibit A attached hereto.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.


 


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


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors or consultants
of the Company pursuant to any stock or option plan or agreement duly adopted for such purpose by the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose up to the amounts on the terms set forth on
Schedule 3.1(g) consistent with past practices, (b) securities upon the exercise, exchange or conversion of any Notes issued
hereunder and/or other securities, options, warrants, convertible securities or other rights to acquire, exercisable or exchangeable
for or convertible into, shares of Common Stock, in each case that are issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities and which securities and the principal terms thereof are set forth
on Schedule 3.1(g) or described in the SEC Reports, (c) securities issued pursuant to acquisitions of companies, assets
or intellectual property (or licensing of assets or intellectual property) or strategic transactions approved by a majority of
the disinterested directors of the Company, if any, provided that any such issuance shall only be to a Person which is, itself
or through its subsidiaries, an operating company, a university or other non-financial institution and in which the Company receives
benefits in addition to the investment of funds but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) securities
issued or issuable in exchange for consideration other than cash in connection with any other transaction that is not for the primary
purpose of financing the Company’s business, but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (e) securities
issued or issuable upon an at-the-market agreement or similar arrangement pursuant to the Company’s S-3 Registration Statement
filed with the SEC on October 28, 2014 (SEC File No.333-198647), or (f) securities issued or issuable to the Purchasers or their
assigns pursuant to this Agreement, the Notes or other Transaction Documents, including without limited to Section 4.18 and Section
4.20 herein, or upon conversion or exchange of any such securities.


 



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“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“G&M”
shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.


 


“Hercules”
means Hercules Capital, Inc.


 


“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).


 


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).


 


“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Registration
Rights Agreement” means the registration rights agreement, substantially in the form attached in Exhibit B.


 



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“Required
Minimum” means, as of any date, 200% of the maximum aggregate number of Underlying Shares issuable upon conversion in
full of the Notes (including Underlying Shares issuable as payment of interest on the Notes), ignoring any conversion or exercise
limits set forth therein, provided however, that if an Institutional Raise, as such term is defined in the Note, does not occur
within 180 days of the Closing Date, the Required Minimum shall be adjusted every 30 days based on the VWAP at the end of each
applicable 30 day period.


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities”
means the Notes and the Underlying Shares.


 


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


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 


 


“SM”
means Sheppard Mullin Richter & Hampton LLP, 30 Rockefeller Plaza, New York, New York 10112.


 


“Subordination
Agreement” means the means the subordination agreement between the Purchaser and Hercules, substantially in the form
attached in Exhibit C.


 


“Subscription
Amount” means the aggregate amount to be paid for the Notes purchased hereunder as specified below the Purchaser’s
name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars
and in immediately available funds.


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE MKT, LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange, the OTC Bulletin Board or the OTC QB maintained by the OTC Markets Group, Inc.


 



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“Transaction
Documents” means this Agreement, the Notes, the Registration Rights Agreement, Subordination Agreement, all exhibits
and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.


 


“Transfer
Agent” means VStock Transfer LLC, the current transfer agent of the Company with a mailing address of 18 Lafayette Place,
Woodmere, NY 11598 and a telephone number of (212) 828-8436 and any successor transfer agent of the Company.


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Notes and issued and
issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); (b) if the Common Stock is not then listed or quoted for
trading on a Trading Market and if prices for the Common Stock are then reported on the OTC Pink (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or
(c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.


 


ARTICLE II


 


PURCHASE AND SALE


 


2.1           Closing.
The purchase and sale of the Notes by the Company to the Purchaser shall occur at one closing of the Offering (a “Closing”
and the date of such Closing, the “Closing Date”) to occur on November 17, 2016. Purchasers signing a counterpart
signature page to this Agreement as of a Closing Date shall become parties to this Agreement only as of such Closing Date. On each
Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, a principal amount of
the Notes equal to its Subscription Amount plus an original issue discount of 5%. The Purchaser shall deliver to the Company, via
wire transfer within three (3) business days of the Closing Date, immediately available funds equal to its Subscription Amount
together with the surrender of a promissory note in the principal amount of $306,000 which shall represent a portion of the aggregate
Subscription Amount of $1,000,000, and the Company shall deliver to the Purchaser its Notes, as determined pursuant to Section
2.2(a), and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the conditions set forth in Sections 2.2 and 2.3, the initial Closing shall occur at the offices of SM or such
other location as the parties shall mutually agree.


 



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2.2          Deliveries.


 


(a)          On
the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:


 


(i)          this
Agreement duly executed by the Company;


 


(ii)         the
Registration Rights Agreement, duly executed by the Company;


 


(iii)        
the Subordination Agreement duly executed by each Purchaser, the Company and Hercules;


 


(iv)        a
Note with a principal amount of $1,050,000, registered in the name of the Purchaser; And


 


(b)          On
each Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:


 


(i)          a
counterpart of this Agreement duly executed by the Purchaser;


 


(ii)         the
Registration Rights Agreement duly executed by the Purchaser;


 


(iii)        such
Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company (see Annex A); and


 


(iv)        the
Subordination Agreement duly executed by the Purchaser, the Company and Hercules.


 


2.3          Closing
Conditions.


 


(a)          The
obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:


 


(i)          the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on such Closing Date of the representations and warranties of the Purchaser contained herein;


 


(ii)         all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to such Closing Date shall have been
performed; and


 


(iii)        the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.


 


(b)          The
obligations of the Purchaser hereunder in connection with each Closing are subject to the following conditions being met, unless
waived in the sole and absolute discretion of the Purchaser:


 



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		(i)	the accuracy in all respects (determined without regard
to any materiality, Material Adverse Effect or other similar qualifiers therein) when made and on such Closing Date of the representations
and warranties of the Company contained herein;



 


		(ii)	all obligations, covenants and agreements of the Company
required to be performed at or prior to such Closing Date shall have been performed;



 


		(iii)	the delivery by the Company of the items set forth in
Section 2.2(a) of this Agreement;



 


		(iv)	there shall have been no Material Adverse Effect with
respect to the Company since the date hereof;



 


ARTICLE III.


REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or otherwise made herein only to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each
Purchaser as of each Closing, except where otherwise indicated:


 


(a)          Subsidiaries.
The Company has three Subsidiaries: Cytovia, Inc., Maxim Pharmaceuticals Inc. and Immune Pharmaceuticals USA Corp.. The Company
owns, directly or indirectly, the capital stock or other equity interests of each Subsidiary, in the amounts set forth on Schedule
3.1(a), free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If
the Company shall at any time in which the Notes remain outstanding have no subsidiaries, all other references to the Subsidiaries
or any of them in the Transaction Documents shall be disregarded.


 


(b)          Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any respect on a timely basis its obligations under any Transaction Document (any
of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 



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(c)          Authorization;
Enforcement. Subject to the Stockholder Approval, the Company has the requisite corporate power and authority to enter into
and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith
other than in connection with the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited
by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.


 


(d)          No
Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by it of
the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 



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(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6, (ii) such consents, waivers, or authorizations as have been obtained before the initial
Closing, (iii) if required, the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the
Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, (iv) obtaining
Shareholder Approval (as defined in Section 4.16 herein) and (v) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (collectively, the “Required Approvals”).


 


(f)          Issuance
of the Securities. The issuance of the Notes has been duly authorized by all applicable corporate power and authority, and,
when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of any and all Liens imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be validly
issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Company has reserved the Required Minimum from its duly authorized capital stock a number
of shares of Common Stock for issuance of the Underlying Shares.


 


(g)          Capitalization.
The capitalization of the Company immediately prior to the Closing is, in all material respects, as set forth in the SEC Reports.
Except as provided on Schedule 3.1(g), or the SEC Reports, no Person has (i) any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents except
for such, if any, as will have been validly waived before each Closing and (ii) except pursuant to the operation of agreements
filed as exhibits to the SEC Reports before the date of this Agreement and as set forth on Schedule 3.1(j), the issuance
and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other
than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable, have been issued in compliance with all applicable laws (including, without limitation, applicable
federal and state securities laws), and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except for obtaining Shareholder Approval, no further approval or authorization
of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. Except as filed as
exhibits to the SEC Reports, there are no stockholders agreements, voting agreements or other similar agreements with respect to
the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.


 



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(h)          SEC
Reports; Financial Statements. Except as set forth on Schedule 3.1(h) hereto, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under Section 15(d) of the Exchange Act for the two years
preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred
to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension, except as set forth on Schedule 3.1(h). As of their
respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles
(“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be in compliance
with all its reporting requirements under the Securities Act and Exchange Act.


 


(i)          Material
Changes. Except as provided in Schedule 3.1(i) hereto, since the date of the latest financial statements included in
the SEC Reports: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result
in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has not declared, nor has the Board of Directors of
the Company authorized, or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed
or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities
or common stock equivalents to any officer, director or Affiliate, except pursuant to existing Company equity incentive plans.
The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement and as may otherwise be disclosed herein or in any Schedule hereto, no event,
liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties,
operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date
that this representation is made.


 



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(j)          Litigation.
Except as disclosed in the SEC Reports and as may otherwise be disclosed herein or in any Schedule hereto, there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective assets or properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities
or the availability of the Company to perform its obligations under the Transaction Documents or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director, officer or affiliate thereof, is or has been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 


(k)          Labor
Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is, or is now expected
to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement
or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the
continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with
respect to any of the foregoing matters. To the Company’s knowledge, the Company and its Subsidiaries are in compliance with
all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions
of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.


 



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(l)          Compliance.
To the Company’s knowledge, neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other material agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or violation has been waived) and such default or violation
has not been cured, (ii) is in violation of any judgment, order of any court, arbitrator or governmental body or (iii) is or has
been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal,
state and local laws applicable to its business and all such laws that affect the environment, except in each of the foregoing
cases as may otherwise be disclosed herein or in any Schedule hereto or as could not have or reasonably be expected to result in
a Material Adverse Effect.


 


(m)          Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess
such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any
Material Permit.


 


(n)          Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title in all personal property owned by it that, in each case, is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment
of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties in any material respect.
Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are in compliance.


 


(o)          Patents
and Trademarks. To the Company’s knowledge (without having conducted any independent investigation): (i) the Company
and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as
described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure
to so have could reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”);
(ii) neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property
Rights violates or infringes upon the rights of any Person; (iii) all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual Property Rights, except where the failure to be so enforceable
or for such infringements as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
and (iv) the Company and its Subsidiaries have taken all commercially appropriate security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.


 



    	 	12	 



     


    

 


(p)          Transactions
with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and,
to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the
Company


 


(q)          Environmental
Laws. The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval.


 


(r)          Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in the SEC Reports, the Company is in material compliance with all provisions
of the Sarbanes-Oxley Act of 2002 which are applicable to it as of each Closing Date. The Company and the Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.


 



    	 	13	 



     


    

 


(s)          Certain
Fees. Except as disclosed on Schedule 3.1(t), no brokerage, due diligence, finder’s fees or commissions are or
will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by the Transaction Documents,. The Purchaser shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


(t)          Private
Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Notes by the Company to the Purchaser as contemplated hereby.
The issuance and sale of the Notes hereunder does not contravene the rules and regulations of the Trading Market.


 


(u)          Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of
1940, as amended.


 


(v)         Registration
Rights. Except as disclosed in the SEC Reports and on Schedule 3.1(v) hereto, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the Company.


 


(w)          Listing
and Maintenance Requirements. Except as set forth on Schedule 3.1(w) hereto, (i) the Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration, (ii) the Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance requirements of such Trading Market and (iii) the Company
is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements.


 



    	 	14	 



     


    

 


(x)          Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.


 


(y)          Disclosure.
Except with respect to (i) the material terms and conditions of the transactions contemplated by the Transaction Documents and
(ii) information given to the Investor, if any, which the Company hereby confirms does not constitute material non-public information,
the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or their agents or counsel
with any information that it believes constitutes or might constitute material, nonpublic information. The Company understands
and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company.
All disclosure furnished in writing by or on behalf of the Company to the Purchaser regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during
the twelve months preceding the date of this Agreement do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchaser has not made any
representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section
3.2 hereof.


 


(z)          No
Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or 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 cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act which would require the
registration of any such securities under the Securities Act. 


 


(aa)         Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in
a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary. There are no audits pending by any tax or other governmental
authority relating to the payment of taxes by the Company or any subsidiary other than the tax notices received from the Israeli
Tax Authority relating to the 2010 to 2014 tax years which have been disclosed in the Company’s SEC Reports.


 



    	 	15	 



     


    

 


(bb)         No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchaser
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(cc)         Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of
the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation
of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


 


(dd)         No
Disagreements with Accountants and Lawyers; Outstanding SEC Comments. There are no disagreements of any kind presently existing,
or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is or immediately after each Closing Date will be current with respect to any fees owed to its accountants
which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. There
are no unresolved comments or inquiries received by the Company or its Affiliates from the Commission which remain unresolved as
of the date hereof.


 


(ee)         Acknowledgment
Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely
in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by the Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents to
the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


(ff)         Disqualification.
No executive officer, member of the Board of Directors of the Company or shareholder of the Company beneficially owning more than
10% of the Company’s securities is currently subject to a Disqualifying Event. For purposes of this Agreement, “Disqualifying
Event” means any conviction, order, judgment, decree, suspension, expulsion, event or other matter set out in Rule 506(d)(1)(i)
through (viii) of Regulation D that is currently in effect or which occurred within the periods set out in Rule 506(d)(1)(i) through
(viii).


 



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(gg)         Solvency.
Based on the consolidated financial condition of the Company and Subsidiaries as of each Closing Date, and the Company’s
good faith estimate of the fair market value of its assets, after giving effect to the receipt by the Company of the proceeds from
the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities)
as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current
cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking
into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of
any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports discloses, as of the date hereof
all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $100,000 in the aggregate (other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same
are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.


 


(hh)         Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere
herein to the contrary notwithstanding, it is understood and acknowledged by the Company that: (i) none of the Purchasers has
been asked by the Company to agree, nor has any Purchaser agreed, 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 Securities for
any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation,
Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions,
may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties
in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently have a
“short” position in the Common Stock and (iv) each Purchaser 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 (y) one or more Purchasers may engage in hedging activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods that the value of the Underlying Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing
stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted.  The
Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
The Company acknowledges that anything to the contrary in the Transaction Documents
notwithstanding, Purchaser may sell long any Underlying Shares it anticipates receiving after conversion of any part of a Note.


 



    	 	17	 



     


    

 


(ii)          Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.


 


(jj)          Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.


 


(kk)        Stock
Option Plans. Each stock option and similar security granted by the Company was granted (i) in accordance with the terms of
such any applicable stock option plans and (ii) with an exercise price at least equal to the fair market value of the Common Stock
on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under any stock
option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice
to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.


 


(ll)          Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“OFAC”).


 


(mm)      Indebtedness
and Seniority. As of the date hereof, all Indebtedness and Liens of the Company and the principal terms thereof are set forth
in the SEC Reports. Except as set forth on Schedule 3.1(mm), as of the Closing Date, no Indebtedness or other equity of
the Company is or will be pari passu or senior to the Notes in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior
only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).


 



    	 	18	 



     


    

 


(nn)         FDA.
The Company has no applications pending before the jurisdiction of the U.S. Food and Drug Administration (“FDA”).


 


(oo)         Survival.
The foregoing representations and warranties shall survive the Closing.


 


3.2          Representations
and Warranties of the Purchaser. Each Purchaser, as to itself only, hereby represents and warrants as of the date hereof and
as of each Closing Date to the Company as follows:


 


(a)          Organization;
Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents
have been duly authorized by all necessary corporate or similar action on the part of the Purchaser. Each Transaction Document
to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its
terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.


 


(b)          Own
Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a present view to or for distributing or reselling such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s
right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state securities law. The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.


 


(c)          Purchaser
Status. At the time the Purchaser was offered the Notes, it was, and as of the date hereof it is, and on each date on which
it converts any Notes it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.


 



    	 	19	 



     


    

 


(d)          Experience
of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 


(e)          General
Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.


 


ARTICLE IV.


OTHER AGREEMENTS OF THE PARTIES


 


4.1          Transfer
Restrictions.


 


(a)          The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or in connection with a pledge as contemplated
in Section 4.1(b) or a transfer to an Affiliate of the Purchaser, the Company may require the transferor thereof to provide to
the Company at the Company’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement, including the representations
and warranties made by the Purchaser herein, and shall have the rights of a Purchaser under this Agreement.


 


(b)          The
Purchaser agrees to the imprinting by the Company, so long as is required by this Section 4.1, of a legend on any of the Securities
in the following form:


 


[NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE
SECURITIES ISSUABLE UPON [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.


 



    	 	20	 



     


    

 


The Company
acknowledges and agrees that the Purchaser may from time to time grant a security interest in some or all of the Securities to
a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who
agrees in writing with the Company to be bound by the provisions of this Agreement and, if required under the terms of such arrangement
and subject to compliance with applicable federal and state securities laws, the Purchaser may transfer secured Securities to the
secured parties. Absent special circumstances, such a transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the secured party shall be required in connection therewith. At the Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a secured party of Securities may reasonably request in connection with
a pledge or transfer of the Securities.


 


(c)          The
Company agrees that certificates evidencing the Underlying Shares (or, if Underlying Shares are issued in uncertificated form,
comparable share notices) shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration
statement covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying
Shares pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for
the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without
volume or manner-of-sale restrictions, or (iv) if such legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff of the Commission), as reasonably determined by
the Company. Upon the Purchaser’s request in connection with a proposed sale of Underlying Shares pursuant to Rule 144 and
if the Company reasonably determines it is so required, upon receipt of customary documentation from Purchaser’s broker (if
the Underlying Shares are sold in brokers transactions), the Company shall, at its own cost and effort, retain legal counsel to
provide an opinion letter to the Company’s transfer agent opining that the Underlying Shares may be resold without registration
under the Securities Act, pursuant to Rule 144, promulgated thereunder, so long as the requirements of Rule 144 are met for any
Underlying Shares to be resold thereunder. The Company shall arrange for any such opinion letter to be provided not later than
two (2) business days after the date of delivery to and receipt by the Company of a written request by the Purchaser together with
(if required in order to render the opinion) any broker’s representation letter of other customary documentation reasonably
requested by the Company evidencing compliance with Rule 144 (the “Legend Removal Date”).


 



    	 	21	 



     


    

 


(d)          The
Purchaser agrees that the Purchaser will sell any Securities only pursuant to either an exemption from registration or a registration
statement under the Securities Act, including any applicable prospectus delivery requirements, and that if Securities are sold
pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated
upon the Company’s reliance upon this understanding.


 


(e)          Legend
Removal Default. In addition to such Purchaser’s other available remedies, provided the conditions for legend removal
set forth in Section 4.1(c) exist, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty,
for each $1,000 of Underlying Shares (based on the higher of the actual purchase price or VWAP of the Common Stock on the date
such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(d),
$10 per Trading Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading Day after the third Trading
Day) until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents,
and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief.         


 


(f)          DWAC.
In lieu of delivering physical certificates representing the Unlegended Shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Purchaser’s
prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.


 


(g)          Injunction.
In the event a Purchaser shall request delivery of Unlegended Shares as described in this Section 4.1 and the Company is required
to deliver such Unlegended Shares, the Company may not refuse to deliver Unlegended Shares based on any claim that such Purchaser
or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction
Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and
or enjoining delivery of such Unlegended Shares shall have been sought and obtained by the Company and the Company has posted a
surety bond for the benefit of such Purchaser in the amount of the greater of (i) 120% of the amount of the aggregate purchase
price of the Underlying Shares to be subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock
on the trading day before the issue date of the injunction multiplied by the number of Unlegended Shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.


 



    	 	22	 



     


    

 


(h)          Buy-In.
In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser Unlegended Shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of Underlying Shares delivered to the Company for reissuance as Unlegended Shares, the Company shall be required to pay the
Purchaser $1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts payable
to the Purchaser in respect of the Buy-In.


 


(i)          Plan
of Distribution. Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser
will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will
be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon
this understanding.


 


 


4.2          Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of the effect of any such dilution or any claim the Company may have against the Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.


 


4.3          Furnishing
of Information.


 


(a)          Until
the earlier to occur of the time that (i) the Purchaser owns no Securities, or (ii) 24 months from the date hereof, the Company
covenants that it will maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to use
all commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the Purchaser
owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell
the Securities under Rule 144. The Company further covenants that it will use all commercially reasonable efforts to take such
further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person
to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule
144.


 



    	 	23	 



     


    

 


(b)          At
any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser,
in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or impairment of its ability to sell
the Securities, an amount in cash equal to 2.0% of the aggregate principal amount of Notes and accrued interest thereon, held by
such Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less
than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that
such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the
Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.


 


4.4           Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction or to effectuate such other transaction unless shareholder approval is obtained before
the earlier of the closing of such subsequent transaction or effectuation of such other transaction.


 


4.5           Conversion
and Exercise Procedures. The form of Notice of Conversion included in the Notes sets forth the totality of the procedures
required of the Purchaser in order to convert the Notes. No additional legal opinion, other information or instructions shall be
required of the Purchaser to convert their Notes. The Company shall honor conversions of the Notes and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.


 



    	 	24	 



     


    

 


4.6           Securities
Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately following the
date hereof, issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and including
the Transaction Documents as exhibits thereto. The Company and the Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any
such press release nor otherwise make any such public statement (other than in the Company’s SEC Reports after the initial
Closing Date or exhibits filed therewith) without the prior consent of the Company, with respect to any press release of the Purchaser,
or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably
be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide
the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, other than in connection
with the Company’s SEC Reports or disclosures to any regulatory agency or Trading Market that the Company determines are
necessary or appropriate, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser,
in any press release or similar public statement, without the prior written consent of the Purchaser.


 


4.7           Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect, or that the Purchaser could
be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents
or any other agreement between the Company and the Purchaser.


 


4.8           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that after each Closing Date neither it, nor any other Person acting on its behalf, will provide
the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company. Purchaser acknowledges that it is aware that the United States
securities laws prohibit any person who has material non-public information about a company from purchasing or selling securities
of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities, and Purchaser agrees not to engage in any unlawful trading in securities
of the Company or unlawful misuse or misappropriation of any such information. Purchaser agrees to maintain the confidentiality
of and not disclose or use (except for purposes relating to the transactions contemplated by this Agreement) any confidential,
proprietary or non-public information disclosed by the Company to Purchaser, unless such information becomes publicly known through
no breach of this Agreement by Purchaser.


 



    	 	25	 



     


    

 


4.9           Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes.
The net proceeds shall not be used for: (a) the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior practices) or (b) the settlement of any outstanding
litigation.


 


4.10         Indemnification
of Purchaser. Subject to the provisions of this Section 4.10, the Company will indemnify and hold the Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling person and their respective heirs, personal representatives,
successors and assigns (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to
any action, suit, claim or proceeding brought by a third party against such Purchaser Party arising out of or relating to (a) any
breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates,
by any stockholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or
covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder
or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud,
gross negligence, willful misconduct or malfeasance, as determined by a final judgment of a court of competent jurisdiction from
which no appeal may be taken). If any action shall be brought against the Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have
the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not
be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents, as determined by
a final judgment of a court of competent jurisdiction from which no appeal may be taken.


 



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4.11        Reservation
and Listing of Securities.


 


(a)          The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.


 


(b)          If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate
or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required
Minimum at such time, as soon as possible and in any event not later than the 75th calendar day after such date.


 


(c)          The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing
on such Trading Market as soon as possible thereafter, (iii) provide to the Purchaser evidence of such listing and (iv) maintain
the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another
Trading Market.


 


4.12        Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at each Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of the Purchaser.


 


4.13        Corporate
Existence. So long as any of the Notes remain outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, consolidation, sale of all or substantially all of the Company’s assets or any similar transaction
or related transactions (each such transaction, an “Organizational Change”) unless, prior to the consummation
an Organizational Change, the Company obtains the written consent of the Purchaser, which consent shall not be unreasonably withheld.
In any such case, the Company will make appropriate provision with respect to such holders’ rights and interests to insure
that the provisions of this Section 4.13 will thereafter be applicable to the Notes.


 


4.14        Transfer
Agent. The Company covenants and agrees that it will at all times while the Notes remains outstanding maintain a duly qualified
independent transfer agent.


 



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4.15         No
Short Selling. The Purchaser has and shall not, directly or indirectly, his, her or itself, through related parties, affiliates
or otherwise, (i) sell “short” or “short against the box” (as those terms are generally understood) any
equity security of the Company or (ii) otherwise engage in any transaction that involves hedging of the Purchaser’s position
in any equity security of the Company, until the later of (i) the date the Notes owned by the Purchaser is no longer owned by the
Purchaser, or (ii) the Maturity Date (as such term is defined in the Notes) and the Conversion Date.


 


4.16         Shareholder
Approval. If it is required in order to permit the conversion of the Notes (or any other securities that may be issued under
or in connection with this Agreement or the transactions contemplated hereby) issued pursuant to this Agreement into shares of
Common Stock in accordance with applicable listing rules of The Nasdaq Capital Market or any shareholder approval requirement of
Nasdaq (the “Shareholder Approval”), the Company shall (i) hold a special meeting of shareholders (which may
also be at the annual meeting of shareholders) as soon as reasonably practicable for the purpose of obtaining Shareholder Approval,
with the recommendation of the Company’s Board of Directors that such proposal be approved, and the Company shall solicit
proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement
and all management-appointed proxyholders shall vote their proxies in favor of such proposal and (ii) file a definitive proxy statement
(the “Proxy Statement”) in connection with the foregoing as soon as reasonably practicable; provided however,
that the obligations of the Company under clauses (i) and (ii) are subject to the Commission’s review of the Proxy Statement
and the Company shall not be deemed to be in violation of this Section 4.16 if it responds to the Commission’s comments on
the Proxy Statement, if any, in a timely manner. If the Company does not obtain Shareholder Approval at the first special meeting,
the Company shall call a meeting every three months thereafter to seek Shareholder Approval until the earlier of the date Shareholder
Approval is obtained or the Notes are no longer outstanding.


 


4.17         Registration
Rights. The Company shall file a “resale” registration statement with the Commission covering the Underlying Shares,
so that such shares of Common Stock will be registered under the Securities Act. The Company will maintain the effectiveness of
the “resale” registration statement from the effective date of the registration statement until all Registrable Securities
(as defined in the Registration Rights Agreement) covered by such registration statement have been sold, or may be sold without
the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144.  The
Company will use its best efforts to have such “resale” registration statement filed by the Filing Date (as defined
in the Registration Rights Agreement) and declared effective by the SEC as soon as possible and, in any event, by the Effectiveness
Date (as defined in the Registration Rights Agreement).


 


4.18         DTC
Program. At all times that Notes are outstanding, the Company shall employ as the transfer agent for its Common Stock and Underlying
Shares a participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common Stock and Underlying
Shares to be transferable pursuant to such program.


 


4.19         Indebtedness.
For so long the Notes are outstanding, the Company will not incur any Indebtedness other than Permitted Indebtedness, without the
consent of the Purchaser.


 



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4.20         Most
Favored Nation Provision. From the date hereof and for so long as a Purchaser holds any Securities, in the event that the Company
issues or sells any Common Stock or common stock equivalents, if a Purchaser then holding outstanding Securities reasonably believes
that any of the terms and conditions appurtenant to such issuance or sale are more favorable to such investors than are the terms
and conditions granted to the Purchasers hereunder, upon notice to the Company by such Purchaser within five (5) Trading Days after
disclosure of such issuance or sale, the Company shall amend the terms of this transaction as to such Purchaser only so as to give
such Purchaser the benefit of such more favorable terms or conditions. This Section 4.20 shall not apply with respect to an Exempt
Issuance. The Company shall provide each Purchaser with notice of any such issuance or sale not later than ten (10) Trading Days
before such issuance or sale.


 


4.21         Subsequent
Equity Sales. From the date hereof until such time as the Notes are no longer outstanding, the Company will not, without the
consent of Purchaser, enter into any Equity Line of Credit or similar agreement, issue or agree to issue floating or Variable Priced
Equity Linked Instruments nor any of the foregoing or equity with price reset rights (subject to adjustment for stock splits, distributions,
dividends, recapitalizations and the like) (collectively, a “Variable Rate Transaction”).   For
purposes hereof, “Equity Line of Credit” shall include any transaction involving a written agreement between
the Company and an investor or underwriter whereby the Company has the right to “put” its securities to the investor
or underwriter over an agreed period of time and at an agreed price or price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity securities which are convertible into, exercisable or exchangeable
for, or carry the right to receive additional shares of Common Stock or common stock equivalents or any of the foregoing at a price
that can be reduced either (1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security, or
(2) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date at any time after the
initial issuance of such debt or equity security due to a change in the market price of the Company’s Common Stock since
date of initial issuance, or upon the issuance of any debt, equity or common stock equivalent, and (B) any amortizing convertible
security which amortizes prior to its maturity date, where the Company is required or has the option to (or any investor in such
transaction has the option to require the Company to) make such amortization payments in shares of Common Stock which are valued
at a price that is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after the initial
issuance of such debt or equity security (whether or not such payments in stock are subject to certain equity conditions).  For
purposes of determining the total consideration for a convertible instrument (including a right to purchase equity of the Company)
issued, subject to an original issue or similar discount or which principal amount is directly or indirectly increased after issuance,
the consideration will be deemed to be the actual net cash amount received by the Company in consideration of the original issuance
of such convertible instrument. For so long as the Notes are outstanding, the Company will not, without the consent of Purchaser,
issue any Common Stock or common stock equivalents to officers, directors, and employees of the Company unless such issuance is
an Exempt Issuance pursuant to items (a) or (d) of the definition of Exempt Issuance or in the amounts and on the terms set forth
on Schedule 4.21. For so long as the Notes are outstanding, the Company will not amend the terms of any securities or common
stock equivalents or of any agreement outstanding or in effect as of the date of this Agreement pursuant to which same were or
may be acquired nor amend the terms of the Form S-3 registration statement, as amended, included in the SEC Reports, nor issue
any Common Stock or common stock equivalents, without the consent of Purchaser, if such issuance or the result of such amendment
would be at an effective price per share of Common Stock less than Conversion Price.


 



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ARTICLE V.


MISCELLANEOUS


 


5.1           Termination.
This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the Purchaser, by written notice to the Company, if the Initial Closing has
not been consummated on or before November __, 2016; provided, however, that such termination will not affect the
right of any party to sue for any breach by the other party (or parties).


 


5.2           Fees
and Expenses. Except as set forth on Schedule 3.1(t) or except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay to Purchaser’s counsel a legal fee of $35,000. The Company shall pay all transfer agent fees, stamp
taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.


 


5.3           Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.4           Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Immune Pharmaceuticals, Inc, 430 East 29th Street, Suite 940,
New York, NY 10016, Attn: Daniel Teper, CEO, fax: 917-398-1922, and (ii) if to the Purchaser, to: the address and fax number indicated
on the signature page hereto, with an additional copy by fax only to (which shall not constitute notice): Grushko & Mittman,
P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, fax: (212) 697-3575.


 



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5.5           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right. At the request of the Purchaser after the Closing, if the Other Notes have terms
that are more favorable to the Purchaser of those Notes than these Notes, subject to applicable securities laws, the Company will
amend this Note if requested by the Purchaser.


 


5.6           Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.


 


5.7           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom
the Purchaser assigns or transfers any Securities, provided that such transfer complies with all applicable federal and state securities
laws and that such transferee agrees in writing with the Company to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the Purchaser.


 


5.8           No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.10.


 


5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action,
suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations
of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.


 



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5.10         Survival.
The representations and warranties shall survive each Closing and the delivery of the Notes until, with respect to the Purchaser,
the Notes held by the Purchaser has been paid in full or converted into Underlying Shares, at which time they shall expire such
respect to Purchaser and shall no longer be of any force or effect.


 


5.11         Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together 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, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature 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 facsimile or “.pdf”
signature page were an original thereof.


 


5.12         Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


5.13         Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of a conversion of a Notes, the Purchaser shall be required to return any shares of Common Stock subject to
any such rescinded conversion or exercise notice.


 



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5.14         Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.


 


5.15         Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.16         Payment
Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document
or the Purchaser enforces or exercises its rights 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, 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.


 


5.17         Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward,
unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum
Rate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall
be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at the Purchaser’s election.


 



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5.18         Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.


 


5.19         Saturdays,
Sundays, Holidays, etc.         If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken
or such right may be exercised on the next succeeding Business Day.


 


5.20         Construction.
The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.


 


5.21         WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 


 


(Signature Pages Follow)


 




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IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.


 


	IMMUNE PHARMACEUTICALS INC. 	 	
        Address for Notice:

        430 East 29th Street, Suite 940

        New York, NY 10016

		 	 
	By:	/s/ Daniel G. Teper	 	Fax:
	 	Name: Daniel G. Teper	 	 
	 	Title: CEO	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 




 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 




    	 	35	 



     


    

 


[PURCHASER
SIGNATURE PAGES TO IMMUNE PHARMACEUTICALS, INC. SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.


 


Name of Purchaser: ________________________________________________________


 


Signature of Authorized Signatory of
Purchaser: __________________________________


 


Name of Authorized Signatory: ____________________________________________________


 


Title of Authorized Signatory: _____________________________________________________


 


Email Address of Authorized Signatory:
_____________________________________________


 


Facsimile Number of Authorized Signatory: __________________________________________


 


Address for Notice of Purchaser: 


 


Address for Delivery of Securities for Purchaser (if not same
as address for notice): 


 


Subscription Amount: _____________


 


EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]


 


[SIGNATURE PAGES CONTINUE]


 




    	 	36	 



     


    

 


	IMMUNE PHARMACEUTICALS INC.	 
	 	 	 
	By:	/s/ Daniel G. Teper	 
	 	Name: Daniel G. Teper	 
	 	Title: CEO	 
	 	 	 
	By:	 	 
	 	Name:     	 
	 	Title:	 




 


[Closing Statement Signature Page]


 




    	 	37	 



     


    

 


SCHEDULE 3.1(a)


 


List of Subsidiaries


 


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




 




    	 	38	 



     


    

 


SCHEDULE 3.1(g)


Capitalization


 


None 


 


2015 Equity Inventive Plan -5,000,000
Shares


 



    	 	39	 



     


    

 


SCHEDULE 3.1(h)


SEC Reports 


 


None.


 


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


 




    	 	40	 



     


    

 


SCHEDULE 3.1(i)


Material Changes


 


None


 



    	 	41	 



     


    

 


SCHEDULE 3.1(t)


Certain Fees


 


Due Diligence Fee and other expenses of $40,000


 




    	 	42	 



     


    

 


SCHEDULE 3.1(v)


Registration Rights


 


The Company currently intends to prepare and file a Form S-3
Registration Statement covering the shares underlying its pre-merger warrants, which warrants are priced at $0.50 or higher and
which expire on December 31, 2106.


 




    	 	43	 



     


    

 


SCHEDULE 3.1(w)


Listing and Maintenance Requirements


 


The Company has received notification from NASDAQ that they
are reviewing the financings completed with Regatta Select Healthcare LLC in April and June 2016 and certain other financings completed
in June 2016 to determine whether or not to aggregate the securities sold in such placements for purposes of NASDAQ Marketplace
Rule 4350(i)(i)(D). The Company has made a submission to NASDAQ as to why it believes that such issuances should not be aggregated.
NASDAQ has preliminarily responded that it believes that the financings should be integrated, and the Company has proposed to make
certain revisions to other financings completed in the June 2016, which would address NASDAQ’s concerns, which NASDAQ is
currently considering. The Company further believes, and intends to submit to NASDAQ, its further position that the other financings
completed in the June 2016 should not be counted against the same share cap tas that which was applied to the Regatta financings.
No final determination has been made with respect to this issue.




 



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