SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of June 15, 2017, between Hancock Jaffe Laboratories,
Inc., a Delaware corporation company (the “Company”), and each purchaser identified on the signature pages
hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).


 


WHEREAS,
the Company is offering Senior Secured Convertible Notes with Warrants to acquire up to that number of Common Shares as is determined
in accordance with the terms of the Warrants (the “Offering”);


 


WHEREAS,
the Company has engaged Alexander Capital for this Offering; and


 


WHEREAS,
the Company is conducting this Offering and shall conduct future offerings with a current intention, subject to a number of factors,
to effectuate an initial public offering of its shares of Common Stock; and


 


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 each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.


 


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 each Purchaser agree as follows:


 


Article
I

DEFINITIONS


 


1.1       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 any Saturday, any 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”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.


 


“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.


 


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


 


“Common
Share” means the common share of the Company, and any other class of securities into which such securities may hereafter
be reclassified or changed.


 


“Common
Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Shares, including, without limitation, any debt, preferred share, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Share.


 


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


 


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


 


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


 


“Effective
Date” means the earliest of the date that (a) a registration statement covering the Underlying Shares has been declared
effective by the Commission, or (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to
Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144
and without volume or manner-of-sale restrictions.


 


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


 


“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 


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


 


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


 


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


 


“Liens”
means a lien, charge, pledge, 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).


 




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


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.15.


 


“Notes”
means the Senior Secured Convertible Notes issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached
hereto.


 


“Interest
Rate” means 15%.


 


“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.


 


“Principal
Amount” means, as to each Purchaser, the principal amount of the Note, set forth below such Purchaser’s signature
block on the signature pages hereto next to the heading “Principal Amount,” in United States Dollars.


 


“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.


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.9.


 


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


 


“Requisite
Holders” shall mean those Purchasers holding Notes having a majority of the aggregate principal amount of all Notes
issued pursuant to this Agreement.


 


“Required
Minimum” means, as of any date, the maximum aggregate number of Common Shares then issued or potentially issuable in
the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion
Price is at all times on and after the date of determination 75% of the then Conversion Price on the Trading Day immediately prior
to the date of determination.


 


“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.


 


“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.


 




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“Securities”
means the Notes, the Warrants, the Warrant Shares 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 Share).


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes and Warrants, which shall equal the Principal
Amount, set forth below such Purchaser’s signature block on the signature pages hereto next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.


 


“Subsidiary”
means a subsidiary of the Company, as set forth in Section 3.1.


 


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


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT (formerly NYSE AMEX), the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, the OTC Bulletin Board or the Pink OTC Markets (or any successors to any of the foregoing).


 


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


 


“Transfer
Agent” means any transfer agent the Company in the future retains with respect to its shares of Common Stock.


 


“Underlying
Shares” means the Common Shares issuable upon conversion or redemption of the Notes and upon exercise of the Warrants.


 


“Warrants”
means, collectively, the Common Share purchase warrants delivered to the Purchasers at the Closing, which Warrants shall be exercisable
immediately following the Closing Date and have a term of exercise equal to five years, in the form of Exhibit B attached
hereto.


 


“Warrant
Shares” means the Common Shares issuable upon exercise of the Warrants.


 




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Article
II

PURCHASE AND SALE


 


2.1       Closing.
On the 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 Purchasers, severally and not jointly,
agree to purchase, the Notes. Each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately
available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such
Purchaser, and the Company shall deliver to each Purchaser its respective Note and a Warrant, as determined pursuant to Section
2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction or waiver of the covenants and conditions set forth in Sections 2.2 and Section 2.3, the Closing shall occur
at the offices of Alexander Capital, 17 State Street, New York, NY 10007, or such other location as the parties shall mutually
agree. At the Closing, the Company shall execute and deliver the Security Agreement (in the form attached hereto as Exhibit
C) and file a UCC-1 financing statement with the appropriate division of the Secretary of State of Delaware and the Company
shall execute, deliver and/or file such other documents as the Purchasers shall reasonably require.


 


2.2       Deliveries.


 


(a)       On
or prior to 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)       a
Note with a principal amount equal to such Purchaser’s Principal Amount, registered in the name of such Purchaser; and


 


(iii)       a
Warrant registered in the name of such Purchaser with an exercise price per share equal to the lesser of (a) $7.20 or (b) 120%
of the Conversion Price, and to purchase up to a number of Common Shares equal to 50% of the number of Common Shares issuable
upon conversion of such Purchaser’s Note at a conversion price per share determined in accordance with the terms of the
Note; provided, however, in the event (a) the Company does not consummate an IPO or become public in some other manner on or before
January 11, 2018 or (b) an Event of Default (as defined in the Note) occurs and is not cured, the Warrant coverage shall increase
from 50% to 75%.


 


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


 


(i)       this
Agreement duly executed by the Purchaser; and


 


(ii)       such
Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company.


 




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2.3       Closing
Conditions.


 


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


 


(i)       the
accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)       all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the 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
respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being
met:


 


(i)       the
accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)       all
obligations, covenants and agreements of the Company required to be performed at or prior to the 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; and


 


(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 Schedule attached hereto (including the exhibits attached
to the Disclosure Schedule, collectively, the “Disclosure Schedule”), which Disclosure Schedule shall be deemed
a part hereof, the Company hereby makes the following representations and warranties to each Purchaser as of the Closing Date:


 


(a)       Subsidiaries.
The Company owns, directly or indirectly, all of the Common Shares or other equity interests of each Subsidiary free and clear
of any Liens, and all of the issued and outstanding Common Shares 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.


 




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(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,
operating agreements, 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 material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”; and provided, that
changes in the trading price of the Common Share shall not, in and of itself, constitute 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.


 


(c)       Authorization;
Enforcement. The Company has the requisite power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other 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 shareholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other 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 this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the 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, operating agreement (including the Operating Agreement), 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 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 of this Agreement and (ii) 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 Securities are duly authorized 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 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.


 


(g)       Capitalization.
Set forth as Schedule 3.1(g) in the Disclosure Schedule is the capitalization of the Company. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. No further approval or authorization of any shareholder, the Board of Directors or others is required for
the issuance and sale of the Securities. There are no shareholder agreements, voting agreements or other similar agreements with
respect to the Company’s Common Shares to which the Company is a party or, to the knowledge of the Company, between or among
any of the Company’s shareholders


 


(h)       Financial
Statements. The Company has delivered to each Purchaser its (i) audited financial statements for the years ended December
31, 2014 and 2015 (the “Audited Financials”), and (ii) its unaudited financial statements for the year ended
December 31, 2016 (the “Unaudited Financials,” and together with the Audited Financials, collectively, the
“Financial Statements”). The Audited Financial Statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the periods indicated. The Audited
Financial Statements fairly present in all material respects the financial condition and operating results of the Company as of
the dates, and for the periods, indicated therein. Except as set forth in the Financial Statements, the Company has no material
liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent
to December 31, 2016; (ii) obligations under contracts and commitments incurred in the ordinary course of business; and (iii)
liabilities and obligations of a type or nature not required under GAAP to be reflected in the Financial Statements, which, in
all such cases, individually and in the aggregate would not reasonably be expected to have a Material Adverse Effect.


 




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(i)       Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest Financial Statements, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof: (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 or made any distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements
to purchase or redeem any Common Shares, and (v) the Company has not issued any equity securities to any officer, director or
Affiliate. 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 or as set forth on no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets 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.


 


(j)       Litigation.
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 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 (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 or officer 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.
Except as set forth on Schedule 3.1(j), 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)       Compliance.
Neither the Company nor any Subsidiary: (i) has 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 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), (ii) is in violation of any judgment, decree
or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters,
except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.


 




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(l)       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 as currently conducted, 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.


 


(m)       Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) 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 (ii)
Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with
GAAP and, the payment of which is neither delinquent nor subject to penalties. 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.


 


(n)       Intellectual
Property. To the Company’s knowledge, 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 necessary or required for use in connection with their respective
businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”).


 


(o)       Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.


 


(p)       Transactions
With Affiliates and Employees. None of the officers or directors of the Company or any Subsidiary and, to the knowledge of
the Company, none of the employees of the Company or any Subsidiary 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 providing for
the borrowing of money from or lending of money to, 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, shareholder, shareholder or partner, in each case in excess of $150,000 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.


 




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(q)       Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby.


 


(r)       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 an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.


 


(s)       Registration
Rights. Subject to the lead underwriter, the Company shall use its best efforts to register the Conversion Shares.


 


(t)       Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and proposed
business and the transactions contemplated hereby, including the Disclosure Schedule, to the knowledge of the Company 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 taken as a whole 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 no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.


 


(u)       No
Integrated Offering. Assuming the accuracy of the Purchasers’ 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.


 


(v)       Solvency.
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 Disclosure Schedules
set forth 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 $50,000 (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 $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any Subsidiary received notice of a claim that it is in default with respect to any Indebtedness.


 




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(w)       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 its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations and (iii) has no material tax obligations for periods subsequent to the periods
to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.


 


(x)       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 Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(y)       Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, 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 any Subsidiary (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 FCPA.


 


(z)       No
Disagreements with Accountants and Lawyers. 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 current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.


 


(aa)        Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers 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 any 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 Purchasers’ purchase of the Securities. The Company further represents
to each 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.


 




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(bb)        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 or any Subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(cc)        No
Bad Actor Disqualifying Event. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the
Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge,
any Company Covered Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.


 


3.2       Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):


 


(a)       Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar 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 such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such 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. Such 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 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 in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.


 




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(c)       Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or 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. Such Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.


 


(d)       Experience
of Such Purchaser. Such 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. Such Purchaser is able to bear the economic risk
of an investment in the Securities and is able to afford a complete loss of such investment.


 


(e)       General
Solicitation. Such 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.


 


(f)       Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall
only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).


 


(g)       No
Bad Actor. Such Purchaser hereby represents that neither it nor any of its Rule 506(d) Related Parties is a “bad actor”
within the meaning of Rule 506(d). For purposes of this Agreement, “Rule 506(d) Related Party” shall mean a person
or entity covered by the “Bad Actor disqualification” provision of Rule 506(d).


 




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(h)       Foreign
Purchaser. If Purchaser is not a United States person, such Purchaser represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of the Notes, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and
other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Notes. Such
Purchaser further represents that its payment for, and its continued beneficial ownership of the Notes, will not violate any applicable
securities or other laws of its jurisdiction.


 


(i)       Access
to Information. Purchaser acknowledges that it has carefully and fully reviewed the Disclosure Schedule and has been afforded:
(i) the opportunity to ask such questions as it has deemed necessary of representatives of the Company concerning, among other
items, those set forth in “ii” below of this Section 3.2(i), that the Purchaser deemed relevant in making a decision
to purchase the Securities, the terms and conditions of the offering of the Securities and the merits and risks of investing in
the Securities; (ii) access to all information about the Company including, but not limited to, the terms of the Securities, the
Offering, the Company’s business and proposed business, its FDA status with regard to the Company’s products, clinical
trials and related items (and any other information regarding the same), its capitalization, the Disclosure Schedule (including
exhibits thereto), the Company’s products, the Financial Statements, the financial status and conditions of the Company,
the Company’s prospects, management and controlling shareholders and the terms of its outstanding securities to enable it
to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment
including with regard to the items in “ii” above. Purchaser acknowledges that no third party has made or will make
any representation or warranty to such Purchaser regarding the adequacy or completeness for such Investor’s purpose of the
information such Purchaser as requested.


 


The
Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any express representations
and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transaction contemplated hereby.


 


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 to an Affiliate of a Purchaser, the
Company may require the transferor thereof to provide to the Company an opinion of corporate 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 shall make the representations
set forth in Section 3.2, and then shall have the rights and obligations of a Purchaser under this Agreement.


 




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(b)       The
Purchasers agree to the imprinting, 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 ANY SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE 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 CORPORATE COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO
THE COMPANY.


 


4.2       Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding number
of Common Shares, 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 any Purchaser and regardless of the dilutive
effect that such issuance may have on the ownership of the other shareholders of the Company.


 


4.3       Furnishing
of Information; Public Information.


 


(a)       Until
the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, and so long as the Company is
a reporting company pursuant to the Exchange Act, the Company covenants to maintain the registration of the Common Shares under
Section 12(b) or 12(g) of the Exchange Act and 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 thereof pursuant to the Exchange Act even if the
Company subsequently is no longer then subject to the reporting requirements of the Exchange Act.


 




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(b)       Following
the date that the Company becomes a reporting company pursuant to the Exchange Act and the Securities are eligible to be resold
pursuant to Rule 144 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, 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 reduction of its ability to sell Underlying Shares,
an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Securities 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. The Company shall promptly notify Purchaser of the occurrence
of a Public Information Failure.


 


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 Common Share holder
approval prior to the closing of such other transaction unless Common Share holder approval is obtained before the closing of
such subsequent transaction.


 


4.5       Conversion
and Exercise Procedures. The form of Notice of Exercise included in the Warrants and the conversion feature included in the
Notes set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert the Notes.
No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants
or convert their Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents. Each Purchaser agrees
and acknowledges that upon written consent of the Company and the Requisite Holders, the aggregate principal amount of all the
outstanding Notes shall convert into Common Shares at the Conversion Price. For clarity, such consent by the Requisite Holders
shall be binding upon all Purchasers.


 




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4.6       Securities
Laws Disclosure; Publicity. The Company and each Purchaser shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each 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, the
Company shall not issue a press release disclosing the name of any Purchaser, or include the name of any Purchaser in any filing
with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a)
as required by state or federal securities laws, (b) to the extent requested by the Commission and (c) to the extent such disclosure
is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of
such disclosure permitted under this clauses (b) and (c).


 


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
any 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 hereafter adopted
by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.


 


4.8       
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital and
general corporate purposes and expenses including related to any IPO the Company is able to undertake. The Company shall not use
such proceeds: (a) for 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), (b) for the redemption of any Common Share or Common Share
Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.


 




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4.9       Indemnification
of Purchasers. Subject to the provisions of this Section 4.9, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, shareholders, 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 such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, shareholders, 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 persons (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 (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
the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any shareholders of the Company who is
not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such shareholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any 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 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. The indemnification
required by this Section 4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, in a commercially reasonable manner. The indemnity agreements contained herein shall be in addition to any cause of action
or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant
to law. For the avoidance of doubts, no officers, directors, employees, or shareholders of the Company shall be held personally
liable under this Section 4.9.


 


4.10       Reservation
and Listing of Securities. 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 Common Shares listing application covering a number of Common
Shares at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such Common
Shares to be approved for listing or quotation on such Trading Market as soon as commercially reasonable thereafter, (iii) provide
to the Purchasers evidence of such listing or quotation and (iv) maintain the listing or quotation of such Common Shares on any
date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market.


 




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4.11       Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. Further, the Company shall not make any payment of principal or interest
on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable
time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.


 


4.12       Short
Sales and Confidentiality After the Date Hereof. Each Purchaser, severally and not jointly with the other Purchasers, represents
and covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, has executed any
purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution
of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced. Each
Purchaser, severally and not jointly with the other Purchasers, represents and covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of the
existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.


 


4.13       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 any 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 Purchasers
at the 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 any Purchaser.


 


4.14       Initial
Public Offering; Resale Registration Rights. The parties acknowledge that the Company intends to file a registration statement
on a confidential basis for its underwritten initial public offering (“IPO”), which it intends to pursue as soon as
reasonably practicable and subject to applicable legal requirements and market conditions. Promptly following the date of the
Company’s IPO or the date of the Company’s public listing but no later than 90 days following such date (subject further
to any required underwriter lock-ups or restrictions but in no event later than 180 days following the date of the Company’s
IPO or the date of the Company’s public listing), the Company shall prepare and file with the U.S. Securities and Exchange
Commission a registration statement on Form S-1 or other applicable form (the “Registration Statement”) providing
for the resale of all of the Underlying Shares. The Company will pay all expenses associated with such registration, including
filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Underlying
Shares for sale under applicable state securities laws, listing fees, fees and expenses of one counsel to the Holders up to a
maximum amount of $5,000 and the Holders’ reasonable expenses in connection with the registration, but excluding discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect
to the Underlying Shares being sold. The Company shall use commercially reasonable efforts to have the Registration Statement
declared effective as promptly as practicable. The Company shall notify the Holders by facsimile or e-mail as promptly as practicable,
and in any event, within forty-eight (48) hours, after any Registration Statement is declared effective and shall simultaneously
provide the Holders with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities
covered thereby.


 




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Article
V

MISCELLANEOUS


 


5.1       Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before June 30, 2017; provided, however, that such termination will not affect the
right of any party to sue for any breach by any other party (or parties).


 


5.2       Fees
and Expenses. 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 all Transfer Agent fees (including, without limitation, any fees required for same-day processing
of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes
and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.


 


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 thereof 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.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via e-mail or facsimile at the e-mail address or facsimile number set forth on the signature pages attached hereto at or prior
to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via e-mail or facsimile at the e-mail address or facsimile number set forth on the signature pages
attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as
set forth on the signature pages attached hereto.


 






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5.5       Amendments;
Waivers. The Transaction Documents shall not be amended, and no provision of the Transaction Documents may be waived, except
upon written consent of the Company and the Requisite Holders. Each Purchaser acknowledges that (i) in the event of a conflict,
this provision controls all Transaction Documents regarding the subject matter hereof, and (ii) an amendment of the Transaction
Documents (or waiver of any provision of the Transaction Documents) may occur by consent of the Requisite Holders and shall be
binding upon all Purchasers.


 


5.6       No
Short Sales. For as long as any Purchaser holds Securities, neither the Purchaser nor any of its Affiliates nor any entity
managed or controlled by each such Purchaser will, directly or indirectly, or cause or assist any Person to (x) enter into any
Short Sale or (y) trade in derivative securities to the same effect. For instance, no Purchaser shall engage in any Short Sale
which would prevent the Company from exercising its rights under Section 6 of the Note.


 


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
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”


 


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 4.9 and this Section 5.8.


 


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, shareholders, 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 suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is 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.


 




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5.10       Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities until the earlier
of (i) one year following the Closing Date and (ii) the date the Notes are no longer outstanding.


 


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 each other party, it being
understood that the 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       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 and an indemnification relating thereto. 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.


 


5.14       Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers 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 agree 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.


 




    	 	 23	 



    	 		 



    

 


5.15       Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a 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.


 


5.16       
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 any 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 thereof 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 any Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by such 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 such Purchaser’s election.


 


5.17       Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents.


 




    	 	 24	 



    	 		 



    

 


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 have 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 thereto. In addition, each and
every reference to Common Share prices and Common Shares in any Transaction Document shall be subject to adjustment for reverse
and forward Common Share splits, Common Share combinations and other similar transactions of the Common Shares that occur after
the date of this Agreement.


 


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)


 




    	 	 25	 



    	 		 



    

 


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.


 


	HANCOCK
    JAFFE LABORATORIES, INC	 	Address
    for Notice:
	 	 	 	 
	 	 	 	70
    Doppler
	 	 	 	Irvine,
    CA 92618
	By:	/S/
    WILLIAM ABBOTT	 	Fax:
    (949) 261-2992
	 	William
    Abbott	 	Email:
    billabbott@hjlinc.com
	 	Chief
    Financial Officer	 	 


 


	with a copy to (which shall not constitute notice):	 	 
	Michael Hedge	 	1
    Park Plaza, 12th Floor
	K&L Gates, LLP	 	Irvine,
    CA 92614
	 	 	 	Fax:
    (949) 623-4454
	 	 	 	Email:
    michael.hedge@klgates.com


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 




    	 	 26	 



    	 		 



    

 


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 to Purchaser:   _____________________________________________________________________


 


Address
for Delivery of Securities to Purchaser


(if
not same as address for notice):   ____________________________________________________________________


 


Subscription
Amount (dollar amount paid for the Notes): $ _________________________________________________


 


Principal
Amount (Subscription Amount): $   _____________________


 


Conversion
Shares: (Principal Amount / $6.00): __________________Conversion Shares


 


Warrant
Shares: (50% of Conversion Shares):________________ Warrant Shares


 




    	 	 27	 



    	 		 



    

 


[INSERT
DISCLOSURE SCHEDULE HERE]


 




    	 	 28	 



    	 		 



    

 


Exhibit
A


 


Form
of Note


 




    	 	 29	 



    	 		 



    

 


Exhibit
B


 


Form
of Warrant


 




    	 	 30	 



    	 		 



    

 


Exhibit
C


 


Form
of Security Agreement


 




    	 	 31