EXECUTION


 


WAIVER
AGREEMENT


 


THIS
WAIVER AGREEMENT (this “Agreement”), dated as of March 14, 2017, is entered into by and among VARIATION BIOTECHNOLOGIES
(US), INC., a Delaware corporation (the “Borrower”); the Guarantors identified under the caption “GUARANTORS”
on the signature pages hereto, and Perceptive Credit Holdings, LP, a Delaware limited partnership (the “Lender”).
Terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement defined below.


 


RECITALS


 


WHEREAS,
the Lender, the Borrower and the Guarantors entered into that certain Amended and Restated Credit Agreement and Guaranty dated
as of December 6, 2016, as amended from time to time (the “Credit Agreement”), pursuant to which the Lender
has made certain loans and financial accommodations available to Borrower;


 


WHEREAS,
pursuant to Section 7.1(c) of the Credit Agreement the Borrower is required, among other things, to deliver to the Lender consolidated
financial statements of Parent for each Fiscal Year, which financial statements are to be audited without any Impermissible Qualification;


 


WHEREAS,
EISNERAMPER LLP, the independent public accounting firm (the “Auditor”) retained to audit Parent’s consolidated
financial statements for the Fiscal Year ended December 31, 2016 (the “2016 Audited Financial Statements”),
has informed Parent and the Borrower that its audit opinion letter with respect to such audit will contain an Impermissible Qualification;


 


WHEREAS,
a true and correct copy of the Auditor’s draft audit opinion for the 2016 Audited Financial Statements containing the Impermissible
Qualification is attached hereto as Annex A (the “Proposed Audit Opinion”);


 


WHEREAS,
the Borrower and the Guarantors have requested that the Lender waive the Default that will occur as a result of the Borrower’s
delivery of the 2016 Audited Financial Statements being subject to the Impermissible Qualification contained in the Proposed Audit
Opinion (the “Impermissible Qualification Default”), which the Lender has agreed to do subject to the terms
and provisions hereof.


 


NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Lender, the Borrower and the Guarantors hereby agree as follows.


 


1.       Waiver.
Subject to the terms and conditions set forth herein, and so long as (i) the 2016 Audited Financial Statements are delivered to
the Lender on a timely basis as required pursuant to Section 7.1(c) of the Credit Agreement, (ii) the Proposed Audit Opinion,
in substantially the form as attached as Annex A, is delivered along with the 2016 Audited Financial Statements (without
any material change or modification thereto) and (iii) at the time of delivery of such 2016 Audited Financial Statements and Proposed
Audit Opinion, no other Event of Default shall have occurred and be continuing or, with passage of time, the giving of notice
or both, would occur, the Lender will be deemed to have waived, for all purposes of Sections 9.1.4 and 11.1 of the Credit Agreement,
the Impermissible Qualification Default, all without need of further action or notice of any kind.


 




    	 



    	 	 	 



    

 


2.       Effect
of this Agreement.


 


a.       Except
as otherwise expressly provided herein, nothing contained herein shall prejudice, waive or alter, or be deemed to prejudice, waive
or alter, any of the Lender’s rights and remedies under the Credit Agreement or any of the other Loan Documents against
the Borrower or the Guarantors or any assets of the Guarantors.


 


b.       No
changes or modifications to the Credit Agreement or the other Loan Documents are intended or implied, and, in all respects, the
Credit Agreement and the other Loan Documents shall continue to remain in full force and effect in accordance with their terms
as of the date hereof. Except as specifically set forth herein, nothing contained herein shall evidence (nor is there any intent
to evidence) a waiver by the Lender of any other provision of the Credit Agreement or any of the other Loan Documents nor shall
anything contained herein be construed as a consent by the Lender to any transaction other than those specifically consented to
herein.


 


3.       Successors
and Assigns. The terms and provisions of this Agreement shall be for the benefit of the parties hereto and their respective
successors and assigns; no other person, firm, entity or corporation shall have any right, benefit or interest under this Agreement.


 


4.       Counterparts.
This Agreement may be signed in counterparts, each of which shall be an original and all of which taken together constitute one
and the same document. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart
signed by the party to be charged. This Agreement may be executed and delivered via facsimile or other means of electronic communication
with the same force and effect as if it were a manually executed and delivered counterpart.


 


5.       Choice
of Law. The rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined
in accordance with the internal laws of the State of New York (without giving effect to principles of conflicts of laws).


 


6.       Entire
Agreement. This Agreement sets forth the entire agreement and understanding of the parties with respect to the matters
set forth herein. This Agreement cannot be changed, modified, amended or terminated except in a writing executed by the party
to be charged.


 


[Signature
page follows]


 




    	2



    	 	 	 



    

 


IN
WITNESS WHEREOF, the parties have entered into this Agreement as of the date first above written.


 


	 	PERCEPTIVE
    CREDIT HOLDINGS, LP,
	 	as
    the Lender
	 	 	 
	 	By:	Perceptive
    Credit Opportunities GP, LLC,
	 	its
    general partner


 


	 	By:	/s/
    Sandeep Dixit
	 	Name:	Sandeep
    Dixit
	 	Title:	Chief
    Credit Officer
	 	 	 
	 	By:	/s/ Sam
    Chawla
	 	Name:	Sam Chawla
	 	Title:	Portfolio Manager


 


	ACKNOWLEDGED
    AND ACCEPTED:	 
	 	 
	BORROWER:	 
	 	 
	VARIATION
    BIOTECHNOLOGIES (US), INC.,	 
	as
    the Borrower	 
	 	                              	 
	By:	/s/
    Jeff Baxter	 
	Name:	Jeff
    Baxter	 
	Title:	CEO	 


 


	GUARANTORS:	 
	 	 
	VARIATION
    BIOTECHNOLOGIES, INC.,	 
	as
    Guarantor	 
	 	                             	 
	By:	/s/
    Jeff Baxter	 
	Name:	Jeff
    Baxter	 
	Title:	CEO	 


 


[VBIV
- SIGNATURE PAGE TO PERCEPTIVE WAIVER]


 




    	 



    	 	 	 



    

 


	VBI
    VACCINES INC.,	 
	as
    Guarantor	 
	 	 	 
	By:	/s/
    Jeff Baxter	 
	Name:	Jeff
    Baxter	 
	Title:	CEO	 


 


	VBI
    VACCINES (DELAWARE) INC.,	 
	as
    Guarantor	 
	 	 	 
	By:	/s/
    Jeff Baxter	 
	Name:	Jeff
    Baxter	 
	Title:	 CEO	 


 


	SCIVAC
    LTD,	 
	as
    Guarantor	 
	 	 	 
	By:	/s/
    Jeff Baxter	 
	Name:	Jeff
    Baxter	 
	Title:	CEO	 


 


[VBIV
- SIGNATURE PAGE TO PERCEPTIVE WAIVER]


 




    	 



    	 	 	 



    

 


ANNEX
A


 


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


 


To
the Board of Directors and Shareholders


VBI
Vaccines Inc.


Cambridge,
Massachusetts


 


We
have audited the accompanying consolidated balance sheets of VBI Vaccines Inc. and subsidiaries (“the Company”)
as of December 31, 2016, and the related consolidated statements of comprehensive loss, stockholders’ equity, and cash flows
for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.


 


We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


 


In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of VBI Vaccines Inc. and subsidiaries as of December 31, 2016, and the results of their operations and their cash flows for the
year then ended, in conformity with accounting principles generally accepted in the United States.


 


The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 1 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operations
that raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters
are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.