THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT.
THE LENDER SHOULD BE AWARE THAT HE MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.


 


PROMISSORY
NOTE - LINE OF CREDIT





 






 


This Promissory Note Payable on Demand (the "Note")
is made and effective the 3rd of November, 2010.


 


	BETWEEN:	Steven C. Quay, MD, PhD (the "Lender"), an individual with his main address located at:
	 	 
	 	4105 E Madison St, Suite 320
	 	Seattle, WA 98112
	 	 
	AND:	Atossa Genetics, Inc. (the "Borrower"), a corporation organized and existing under the laws of the State of Delaware, with its principal office located at:
	 	 
	 	Seattle Life Sciences Building 

1124 Columbia Street, Suite 621 

Seattle, WA 98104


 


RECITALS


 


FOR VALUE RECEIVED, Borrower promises to pay to the order
of Lender, the principal sum of up to $500,000, or so much thereof as may be disbursed to, or for the benefit of the Borrower
by Lender as set forth below. It is the intent of the Borrower and Lender hereunder to create a line of credit agreement
between Borrower and Lender whereby Borrower may borrow up to $500,000 hereunder from Lender. To the extent that Borrower
wishes to draw down a portion of the Note, Borrower shall provide the Lender with at least 10 days prior written notice (the
"Notice Period"). At the end of the Notice Period, the Lender shall deliver to the Borrower the additional
principal amount, provided that the aggregate amounts borrowed hereunder shall not exceed $500,000.


 


1.  INTEREST & PRINCIPAL


 


The unpaid principal of this line of credit shall bear simple
interest at the rate of 10% per annum. Interest shall be calculated based on the principal balance as may be adjusted from time
to time to reflect additional advances made hereunder. Interest on the unpaid balance of this Note shall accrue monthly but shall
not be due and payable until such time as when the principal balance of this Note becomes due and payable. The principal balance
of this Note shall be due and payable on December 31, 2011. There shall be no penalty
for early repayment of all or any part of the principal.


 


2.  SECURITY 


 


This Note shall be unsecured.


 


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3.  DEFAULT


 


The Borrower shall be in default of this Note on the occurrence
of any of the following events: (i) the Borrower shall fail to meet its obligation to make the required principal or interest payments
hereunder; (ii) the Borrower shall be dissolved or liquidated; (iii) the Borrower shall make an assignment for the benefit of creditors
or shall be unable to, or shall admit in writing their inability to pay their debts as they become due; (iv) the Borrower shall
commence any case, proceeding, or other action under any existing or future law of any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief of debtors, or any such action shall be commenced against the undersigned; (v) the Borrower shall suffer
a receiver to be appointed for it or for any of its property or shall suffer a garnishment, attachment, levy or execution.


 


4.  REMEDIES


 


Upon default of this Note, Lender may declare the entire amount
due and owing hereunder to be immediately due and payable. Lender may also use all remedies in law and in equity to enforce and
collect the amount owed under this Note. Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting,
grace and notice of protest.


 


5.  GOVERNING LAW


 


This Note shall be governed by and construed in accordance with
the internal laws of the State of Washington, without reference to principles of conflict of laws or choice of laws.


 


IN WITNESS WHEREOF, the undersigned has caused this Promissory
Note to be duly executed as of the date first written above.


 


	LENDER	 	BORROWER
	 	 	 
	/s/ Steven C. Quay	 	/s/ Steven C. Quay
	Authorized Signature	 	Authorized Signature
	 	 	 
	Steven C Quay MD, PhD	 	Steven C Quay, MD PhD, CEO
	Print Name and Title	 	Print Name and Title


 


	Promissory Note Line of Credit	Page 2 of 2