THIS
CERTIFICATE CAN UNDER NO CIRCUMSTANCES CIRCULATE IN FRANCE.


 


***


 


LE
PRESENT CERTlFICAT NE PEUT EN AUCUN CAS ClRCULER EN FRANCE.


 


THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.


 


AN
INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT
OF THE RISKS INVOLVED.


 


	Warrant
    to Purchase	 
	1,100,000
    shares	Warrant
    Number No. 1


 


Warrant
to Purchase American Depositary Shares

of

Flamel Technologies S.A.


 


THIS
CERTIFIES that Eclat Holdings, LLC or any subsequent holder hereof (“Holder”) has the right to purchase from Flamel
Technologies, S.A., a corporation organized under the laws of the Republic of France, one million, one hundred thousand (1,100,000)
American Depositary Shares (“ADSs”) or Restricted ADSs (as defined below), as the case may be, each representing one
Ordinary Share, nominal value 0.122 Euros per share (“Ordinary Shares”), which ADSs or Restricted ADSs, as the case
may be, will be evidenced by American Depositary Receipts (“ADRs”) or Restricted ADRs (as defined below), as the case
may be, and will be issued pursuant to the Deposit Agreement, dated June 6, 1996, as amended and restated as of August 10, 2001
(as amended to date, the “Deposit Agreement”), with the Bank of New York, as Depositary, subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3 below, at any time during the Term (as defined
below). To the extent the Warrant Shares (as defined below) issuable upon exercise of this Warrant shall contain the restrictive
legend substantially in the form set forth in Section 2(e)(i) in accordance with the terms hereof, such Warrant Shares shall be
in the form of “Restricted ADSs” (as defined below) evidenced by Restricted ADRs (as defined below).


 


Each
ADS and Restricted ADS shall represent one Ordinary Share, and such ratio shall be deemed to be maintained for all purposes hereunder,
and to the extent such ratio is not maintained, the adjustments pursuant to Section 5 hereof shall be adjusted to take into account
any such change to such ratio.


 


Attached
hereto as Annex A-1 is an Officer's Certificate attesting that the Warrant is properly registered in the books of the Company
in the name of the initial Holder, as defined in Section 4(c) (the "Warrant Register").


 


Attached
hereto as Annex A-2 is a certificate (“certificat d’inscription en compte”) evidencing ownership
of the BSAs duly executed by the Transfer Agent and the Company and registered in the name of the Holder, together with a certified
copy of the BSAs Register (as defined in Section 4(d) below) (“compte d’actionnaire”), which certificate
shall be executed and delivered to the Holder promptly following the Shareholder Approval Date (as defined below).


 



    	 



    	 



    

 


Holder
agrees with the Company that this Warrant to Purchase ADSs or Restricted ADSs of the Company (this “Warrant” or this
“Agreement”) is issued and all rights hereunder shall be held subject to all of the conditions, limitations and provisions
set forth herein.


 


1.
Date of Issuance and Term.


 


(a)
This Warrant shall be deemed to be issued on March 13, 2012 (“Date of Issuance”). The term of this Warrant
begins on the Date of Issuance and ends at 5:00 p.m., New York City time, on the date that is six (6) years after the Date of
Issuance, provided, however, that if the Shareholder Approval Date (as defined below) has not occurred prior to the second anniversary
of the Date of Issuance, the term shall end at 5:00 p.m., New York City time, on the date that is seven (7) years after the Date
of Issuance (the “Term”). This Warrant was issued in conjunction with that certain Membership Interest Purchase Agreement
by and among the Company, Flamel US Holdings, Inc., Eclat Holdings, LLC and Eclat Pharmaceuticals, LLC dated March 13, 2012 (the
“Purchase Agreement”), the Registration Rights Agreement by and between the Company and Eclat Holdings, LLC dated
March 13, 2012 (“Registration Rights Agreement”) and the Note Agreement (the “Note Agreement”) by and
among the Company, Flamel US Holdings, Inc. and Eclat Holdings, LLC, dated March 13, 2012, entered into in conjunction herewith.


 


(b)
Notwithstanding anything herein to the contrary, during any period that the Company does not qualify as a “foreign
private issuer” as defined under Rule 3b-4 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Company shall not issue to the Holder, and the Holder may not acquire, a number of ADSs or Restricted ADSs upon
exercise of this Warrant to the extent that, upon such exercise, the number of Ordinary Shares (including the ownership of ADSs
or Restricted ADSs) then beneficially owned by the Holder and its Affiliates and any other persons or entities whose beneficial
ownership of Ordinary Shares (including the ownership of ADSs or Restricted ADSs) would be aggregated with the Holder’s
for purposes of Section 13(d) of the Exchange Act (including shares held by any “group” of which the Holder is
a member, but excluding shares beneficially owned by virtue of the ownership of securities or rights to acquire securities that
have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) would exceed 9.985%
of the total number of Ordinary Shares then issued and outstanding (the “9.985% Cap”), provided, however, that the
9.985% Cap shall not apply with respect to the issuance of ADSs or Restricted ADSs pursuant to a Cashless Major Exercise (as defined
below) in connection with a Major Transaction (as defined below) covered by the provisions of Section 5(c)(i)(A) below in which
the Company is not the surviving entity (a “Qualified Change of Control Transaction”) to the extent that the number
of shares beneficially owned by the Holder and its affiliates in the successor entity immediately following consummation of such
Qualified Change of Control Transaction does not exceed 9.985% of the outstanding common stock of such successor entity (or if
the successor entity is a foreign private issuer) and provided, further, that the 9.985% Cap shall only apply to the extent that
the Ordinary Shares (and ADSs or Restricted ADSs in respect of Ordinary Shares) are deemed to constitute “equity securities”
pursuant to Rule 13d-1(i) promulgated under the Exchange Act. For purposes hereof, “group” has the meaning set forth
in Section 13(d) of the Exchange Act and applicable regulations of the Securities and Exchange Commission (the “SEC”),
and the percentage held by the Holder shall be determined in a manner consistent with the provisions of Section 13(d) of
the Exchange Act. Upon the written request of the Holder, the Company shall, within two (2) Trading Days, confirm orally and in
writing to the Holder the number of Ordinary Shares then outstanding. In the event that the Company is not permitted to issue
Warrant Shares to the Holder pursuant to this Warrant because of the provisions of this Section 1(b), the Company shall not be
required to net cash settle or otherwise make any cash payment to the Holder in lieu of such issuance; provided that this sentence
shall not affect any separate obligation hereunder that the Company may have at such time to the Holder.


 


(c)
Notwithstanding anything herein to the contrary, the Company shall not issue to the Holder, and the Holder may not
acquire, a number of ADSs or Restricted ADSs upon exercise of this Warrant to the extent that, upon such exercise, the number
of Ordinary Shares (including the ownership of ADSs and Restricted ADSs) then beneficially owned by the Holder and its Affiliates
and any other persons or entities whose beneficial ownership of Ordinary Shares (including the ownership of ADSs and Restricted
ADSs) would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act (including shares held
by any “group” of which the Holder is a member, but excluding shares beneficially owned by virtue of the ownership
of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) would exceed 19.985% of the total number of Ordinary Shares then issued and outstanding (the “Beneficial
Ownership Cap”), provided, however, that the Beneficial Ownership Cap shall not apply with respect to the issuance of ADSs
or Restricted ADSs pursuant to a Cashless Major Exercise (as defined below) or a Cashless Default Exercise (as defined below).
Upon the written request of the Company, the Company shall, within two (2) Trading Days, confirm orally and in writing to the
Holder the number of Ordinary Shares then outstanding. In the event that the Company is not permitted to issue Warrant Shares
to the Holder pursuant to this Warrant because of the provisions of this Section 1(c), the Company shall not be required to net
cash settle or otherwise make any cash payment to the Holder in lieu of such issuance; provided that this sentence shall not affect
any separate obligation hereunder that the Company may have at such time to the Holder.


 



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(d)
Definitions.


 


“Affiliate”
means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is
under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act
of 1933, as amended (the “Securities Act”). With respect to a Holder of Warrants, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such
Holder.


 


“Holder”
means Eclat Holdings, LLC and any transferee or assignee pursuant to the terms of this Warrant.


 


“Restricted
ADR” means a certificated American Depositary Receipt that includes the restrictive legend substantially in the form set
forth in Section 2(e)(i), evidencing one or more restricted American Depositary Shares (“Restricted ADSs”), with each
Restricted ADS representing one Ordinary Share.


 


“Restricted
ADR Depositary” means The Bank of New York acting as depositary for the Restricted ADRs pursuant to an instruction letter
between the Bank of New York and the Company, and for the Shares acting as intermédiaire inscrit or any successor
depositary for the Restricted ADRs.


 


“Shareholder
Approval Date” shall mean the date, if any, on or prior to the second anniversary of the Date of Issuance on which all approvals
of the holders of Ordinary Shares of the Company are obtained that are necessary (i) to approve for purposes of applicable French
law, the authorization and issuance in favor of the Holder of the total number of “bons de souscription d'actions”
(“BSAs”) giving, upon exercise, the right to subscribe to Ordinary Shares underlying the Warrant Shares that are issuable
following the Shareholder Approval Date upon the exercise of the BSA by the Holder and (ii) to approve under applicable French
law the waiver of all preferential subscription rights of holders of Ordinary Shares (and ADSs) with respect to the Warrant and
the Warrant Shares. For the avoidance of doubt, the foregoing approvals must be obtained on or prior to the second anniversary
of the Date of Issuance, and any approval subsequently obtained shall not be effective for the purpose of determining any rights
or obligations under this Warrant, including, without limitation, whether the Shareholder Approval Date has occurred.


 


“Transfer
Agent” means the Company or any Person the Company may, from time to time, appoint to serve as the Transfer Agent.


 


2.
Exercise; Redemption.


 


(a)
Manner of Exercise. During the Term at any time following the Shareholder Approval Date, this Warrant may be
Exercised as to all or any lesser number of ADSs or Restricted ADSs covered hereby (the “Warrant Shares” or the “Shares”)
upon surrender of this Warrant, with the Exercise Form attached hereto as Exhibit A-1 (the “Exercise Form”)
duly completed and executed, together with the full Exercise Price (as defined below, which may be satisfied by a Cash Exercise
or a Cashless Exercise, as each is defined below) for each ADS or Restricted ADS as to which this Warrant is Exercised, at the
office of the Company, 33, avenue du Dr. Georges Levy – Parc Club du Moulin à Vent, 69693 Vénissieux
Cedex – France; Phone: +33 (0) 472-783-434, Fax: +33 (0) 472-783-435, or at such other office or agency as the Company may
designate in writing, by express mail or, so long as the original Exercise Form is sent by the Holder no later than the date of
such facsimile, via facsimile (such surrender and payment of the Exercise Price hereinafter called the “Exercise”
of this Warrant).


 



    	3



    	 



    

 


(b)
Date of Exercise. The “Date of Exercise” of the Warrant shall be defined as the date that the Exercise
Form attached hereto as Exhibit A-1, completed and executed, is sent by facsimile to the Company and the Transfer
Agent and the payment of the Exercise Price to the Company is satisfied (if the Exercise is a Cash Exercise), provided that the
original Warrant and Exercise Form are received by the Company as soon as practicable thereafter. Alternatively, the Date of Exercise
shall be defined as the date the original Exercise Form is received by the Company, and the Exercise Price is satisfied (if the
Exercise is a Cash Exercise), if Holder has not sent advance notice by facsimile. Upon delivery of the Exercise Form to the Company
by facsimile or otherwise and receipt of the Exercise Price is satisfied (if the Exercise is a Cash Exercise), the Holder shall
be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been Exercised, irrespective of the date such Warrant Shares are credited to the Holder’s Depository Trust Company (“DTC”)
account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be; provided, however, that
in the event of a Cashless Major Exercise in respect of a Qualified Change of Control Transaction, the Holder shall be deemed
to have become the holder of record of the shares issuable upon such exercise immediately prior to the consummation of such Qualified
Change of Control Transaction.


 


(c)
Delivery of ADSs or Restricted ADSs Upon Exercise. (i) Within five (5) business days after any Date of Exercise,
or in the case of a Cashless Major Exercise or a Cashless Default Exercise (each as defined in Section 5(c) below), within the
period provided in Section 5(c)(iv) or Section 3(c), as applicable (the “Delivery Period”), the Company shall (i)
cause Ordinary Shares representing the number of Exercise Shares to be issued and deposited with the Depositary or the Restricted
ADR Depositary, as applicable and (ii) use commercially reasonable best efforts to cause ADSs or Restricted ADSs , as the case
may be, representing the number of shares purchased hereunder upon exercise (collectively, “Exercise Shares”) to be
transmitted and delivered to the Holder in accordance with the terms hereof. Upon the Exercise of this Warrant or any part hereof,
the Company shall, at its own cost and expense, use its commercially reasonable hest efforts, including obtaining and delivering
an opinion of counsel, to assure that the requisite certificates shall be issued in the name of Holder (or its nominee) or such
other persons as designated by Holder and in such denominations to be specified at such Exercise representing the number of ADSs
issuable upon such Exercise. Without limiting the foregoing, during the Delivery Period, the Company shall deposit the corresponding
number of Ordinary Shares underlying the ADSs or Restricted ADSs pursuant to the Deposit Agreement and pay by wire transfer to
the Depositary’s account, or, if applicable the Restricted ADR Depositary’s account, all ADS and Restricted ADS issuance
fees provided for under the Deposit Agreement, together with all applicable taxes and expenses otherwise payable under the terms
of the Deposit Agreement for the deposit of Ordinary Shares and issuance of ADSs or Restricted ADSs (including, without limitation,
confirmation that any French stock transfer taxes in respect of such deposit (if any) have been paid by the Company), and the
Company shall otherwise comply with and use commercially reasonable best efforts to cause any other necessary party to comply
with all the terms of the Deposit Agreement. The Company shall pay any and all taxes, fees and charges (excluding any taxes on
the income of the Holder) which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this
Warrant; provided, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon exercise in a name other than that of the Holder of this Warrant or
any holder of equity interests in the Holder and the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid. Appropriate and equitable adjustment to the terms
and provisions of this Warrant shall be made in the event of any change to the ratio of ADSs and Restricted ADSs to Ordinary Shares
represented thereby. The Company warrants that no instructions contrary to these instructions have been or will be given to the
Depositary or the Transfer Agent and that, unless waived by the Holder, this Warrant and the Exercise Shares will be free-trading,
and freely transferable, and will not contain a legend restricting the resale or transferability of the Exercise Shares if the
Unrestricted Conditions (as defined below) are met.


 


(ii)
In the event that the Company’s Board of Directors should determine that the Company shall transform itself (whether by
re-incorporation in the United States or otherwise) from a "foreign private issuer" to a domestic U.S. issuer, or that
the Company otherwise determines to cease causing Ordinary Shares to be represented by ADSs, then all references to ADRs and Restricted
ADRs, or ADSs or Restricted ADSs, shall be deemed references to whatever shares are then issued by the re-domiciled Company and
all other provisions of this Agreement shall be equitably adjusted by the parties hereto to the extent necessary or appropriate
to reflect such new country of incorporation.


 



    	4



    	 



    

 


(d)
Delivery Failure. In addition to any other remedies which may be available to the Holder, in the event that
the Company fails for any reason to effect delivery of the Exercise Shares to the Holder or to effect the issuance and deposit
of the corresponding Ordinary Shares to the Depositary or the Restricted ADR Depositary, as applicable, by the end of the Delivery
Period or to deliver the Redemption Exercise Price to the Holder in accordance with subsection 2(j) below (a “Delivery Failure”),
the Holder will be entitled to revoke all or part of the relevant Exercise Form or Redemption Form, as applicable, by delivery
of a notice to such effect to the Company and the Transfer Agent whereupon the Company and the Holder shall each be restored to
their respective positions immediately prior to the delivery of such notice, except that the liquidated damages described herein
shall be payable through the date notice of revocation or rescission is given to the Company.


 


(e)
Legends.


 


(i)
Restrictive Legend. The Holder understands that until such time as the sale of this Warrant, the Exercise Shares
and the Failure Payment Shares have been registered under the Securities Act (including to the extent contemplated by the Registration
Rights Agreement) or this Warrant, the Exercise Shares and the Failure Payment Shares, as applicable, otherwise may be sold pursuant
to Rule 144 under the Securities Act or an exemption from registration under the Securities Act without any restriction as to
the number of securities as of a particular date that can then be immediately sold, this Warrant, the Exercise Shares and the
Failure Payment Shares, as applicable, may bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such securities):


 


“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE EFFECTED
UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE, SUBJECT
TO DELIVERY OF AN OPINION, AS PROVIDED IN THE WARRANT DATED AS OF MARCH 13, 2012 AND ISSUED BY THE COMPANY.”


 


“THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 13, 2012, AS AMENDED FROM TIME TO TIME,
AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”


 


(ii)
Removal of Restrictive Legends. The Company shall use commercially reasonable best efforts to cause the Depositary
to remove any legend restricting the transfer (including the legend set forth above in subsection 2(e)(i)) of this Warrant and
the certificates evidencing the Exercise Shares and the Failure Payment Shares, as applicable: (A) while a registration statement
(including a Registration Statement, as defined in the Registration Rights Agreement) covering the sale or resale of such security
is effective under the Securities Act, or (B) following any sale of such Warrant, Exercise Shares and/or Failure Payment
Shares pursuant to Rule 144 of the Securities Act, or (C) if such Warrant, Exercise Shares and/or Failure Payment Shares
are eligible for sale under Rule 144(b)(1) of the Securities Act, or (D) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC) (collectively,
the “Unrestricted Conditions”). If the Unrestricted Conditions are met at the time of issuance of the Exercise Shares
or the Failure Payment Shares, then the Company shall use commercially reasonable best efforts to cause the Depositary to issue
such Exercise Shares or Failure Payment Shares, as applicable, free of all legends. The Company agrees that following such time
as the Unrestricted Conditions are met or such legend is otherwise no longer required under this Section 2(e), it will, no
later than three (3) Trading Days following the delivery by the Holder to the Company or the Transfer Agent of a certificate representing
Exercise Shares and/or Failure Payment Shares, as applicable, issued with a restrictive legend, use its commercially reasonable
best efforts to cause the Depositary to deliver to such Holder a certificate (or electronic transfer) representing such shares
that is free from all restrictive and other legends. The Company shall cause its counsel to issue a legal opinion to the Transfer
Agent promptly after the Effective Date if required by the Transfer Agent to effect the issuance of the Exercise Shares or the
Failure Payment Shares, as applicable, without a restrictive legend or removal of the legend hereunder. For purposes hereof, “Effective
Date” shall mean the date that the Registration Statement that the Company is required to file pursuant to the Registration
Rights Agreement has been declared effective by the SEC.


 



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(iii)
Removal of Legends from Restricted ADRs. A Restricted ADS may be surrendered by the holder thereof to the Restricted
ADR Depositary for cancellation, and the Depositary shall issue and deliver an unrestricted ADR with respect to the Restricted
ADS formerly represented by such Restricted ADR, provided that such Restricted ADR is surrendered in connection with a transfer
of the related ADS and provided further that (a) one of the Unrestricted Conditions is met and (b) the deposit of such Ordinary
Shares in an unrestricted depositary facility and the sale of any related ADSs by that person are not otherwise restricted under
the Securities Act. If the removal of the legend, as described in the preceding sentence, is effected in connection with the transfer
of the Restricted ADS pursuant to Rule 144 of the Securities Act, the Holder shall, if requested by the Company or the Restricted
ADR Depositary, deliver an opinion of counsel addressed and reasonably satisfactory to the requesting party. Any reasonable fees
(with respect to the Restricted ADR Depositary, the Depositary or otherwise) associated with the issuance of such opinion or the
removal of the legend shall be borne by the Holder. In the event that only a portion of the Restricted ADSs represented by a Restricted
ADR have been transferred by the holder thereof, the Restricted ADR Depositary shall issue a Restricted ADR that includes the
legend in Section 2(e)(i) above with respect to the Restricted ADSs that continue to be held by such holder. While a Registration
Statement is effective or at such earlier time as a legend is no longer required for the Restricted ADRs, the Company will cooperate
with the Restricted ADR Depositary, and shall use its commercially reasonable efforts, to facilitate the issuance of unrestricted
ADRs as described above no later than three (3) Trading Days following the delivery by such Holder to the Restricted ADR Depositary
(with notice to the Company) of a Restricted ADR (endorsed or with applicable powers attached, signatures guaranteed, and otherwise
in form necessary to effect the reissuance and/or transfer and an opinion of counsel to the extent required by Section 8(b)) .


 


(iv)
Sale of Unlegended Shares. Holder agrees that the removal of the restrictive legend from any certificates representing
securities as set forth in Section 2(e) above is predicated upon the Company’s reliance that the Holder will sell,
transfer, assign, pledge, hypothecate or otherwise dispose of the Exercise Shares and/or any Failure Payment Shares, as applicable,
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if such securities are sold pursuant to a Registration Statement, they will be sold in compliance
with the plan of distribution set forth therein.


 


(f)
Cancellation of Warrant. This Warrant shall be canceled upon the full Exercise or redemption of this Warrant,
and, as soon as practical after the Date of Exercise or the Redemption Exercise Date, Holder shall be entitled to receive ADSs
or Restricted ADSs for the number of shares purchased upon such Exercise of this Warrant or cash for the portion of this Warrant
subject to redemption, and if this Warrant is not Exercised or redeemed in full, Holder shall be entitled to receive a new Warrant
(containing terms identical to this Warrant) representing any unexercised portion of this Warrant in addition to such ADSs or
Restricted ADSs or cash payment, as the case may be. In the event of a Major Transaction (as defined below) in which all shares
of Common Stock are canceled and/or converted or exchanged into the right to receive cash and/or securities of Another Entity
(as defined below), then, any portion of this Warrant that the Holder has not elected to exercise or be redeemed pursuant to the
terms of this Warrant prior to the consummation of such Major Transaction (a “Share Conversion Major Transaction”),
shall automatically and immediately be deemed to have been exercised pursuant to a Cashless Exercise, immediately prior to the
consummation of such Share Conversion Major Transaction, and this Warrant shall be deemed cancelled upon consummation of any Share
Conversion Major Transaction.


 


(g)
Holder of Record. Each person in whose name any Warrant for Warrant Shares is issued shall, for all purposes,
be deemed to be the Holder of record of such shares on the Date of Exercise of this Warrant, irrespective of the date of delivery
of the Warrant Shares purchased upon the Exercise of this Warrant.


 



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(h)
Delivery of Electronic Shares. In lieu of delivering physical certificates representing the ADSs or Restricted
ADSs, as applicable, issuable upon Exercise or legend removal, or representing Failure Payment Shares, provided the DTC Fast Automated
Securities Transfer (“FAST”) program is available with respect to the ADSs or Restricted ADSs, upon written request
of the Holder, the Company shall use its commercially reasonable best efforts to cause the ADSs or Restricted ADSs issuable upon
Exercise to be electronically transmitted to the Holder by crediting the account of the Holder’s prime broker with DTC through
its Deposit Withdrawal Agent Commission (DWAC) system. The time periods for delivery and penalties described herein shall apply
to the electronic transmittals described herein. Any delivery not effected by electronic transmission shall be effected by delivery
of physical certificates.


 


(i)
Buy-In. In addition to any other rights available to the Holder, if the Company fails to transmit to the Holder
a certificate or certificates, or electronic shares through DWAC, representing the Exercise Shares pursuant to an Exercise on
or before the Delivery Period (other than a failure caused by any incorrect or incomplete information provided by the Holder to
the Company hereunder), and if after such date the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases ADSs or Ordinary Shares to deliver in satisfaction of a
sale by the Holder of Exercise Shares which the Company was required to deliver to Holder upon such Exercise (a “Buy-In”),
then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the ADSs or Ordinary Shares so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Exercise Shares that the Company was required to deliver to the Holder in connection with the
Exercise at issue times and (B) the price at which the sell order giving rise to such purchase obligation was executed, and
(2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Exercise Shares for
which such Exercise was not honored or deliver to the Holder the number of ADSs or Restricted ADSs that would have been issued
had the Company timely complied with its Exercise and delivery obligations hereunder. For example, if the Holder purchases ADSs
having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted Exercise to cover the sale of ADSs with
an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice, which notice
will be within two Trading Days of the occurrence of the Buy-In, indicating the amounts payable to the Holder in respect of the
Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing ADSs upon Exercise of the Warrant as required pursuant to the terms hereof.


 


(j)
Redemption. In the event the Shareholder Approval Date has not occurred on or prior to the second anniversary
of the Date of Issuance, then at any time during the Term that is on or after the second anniversary of the Date of Issuance,
the Holder may cause the Company to redeem all or any portion of this Warrant. The "Redemption Exercise Date” shall
be defined as the date the Redemption Form, attached hereto as Exhibit A-2 (the "Redemption Form"), duly completed and
executed, is sent by facsimile to the Company and the Transfer Agent, provided that the original Warrant and Redemption Form are
received by the Company, each as soon as practicable thereafter. Alternatively, the Redemption Exercise Date shall be defined
as the date the original Redemption Form is received by the Company, if Holder has not sent advance notice by facsimile. The Company
shall redeem the portion of this Warrant subject to redemption pursuant to the Redemption Form at a price (the "Redemption
Exercise Price") equal to the amount determined using the following formula, with the terms included
in the formula being defined as provided in Section 3(a)(ii) below: X = Y(A–B). The Redemption Exercise Price shall
be satisfied by the delivery to the Holder within 10 days following the Redemption Exercise Date of a cash payment and/or a promissory
note, dated the Redemption Exercise Date, substantially in the form attached as Exhibit D hereto in the principal amount of the
Redemption Exercise Price (or portion thereof in the case of a mixed cash/note payment).


 


3.
Payment of Warrant Exercise Price for Cash Exercise or Cashless Exercise; Cashless Major Exercise and Cashless Default
Exercise.


 


(a)
Exercise Price. The Exercise Price (“Exercise Price”) shall initially equal $11.00 per share, subject
to adjustment pursuant to the terms hereof, including but not limited to Section 5 below.


 



    	7



    	 



    

 


Payment
of the Exercise Price may be made by either of the following, or a combination thereof, at the election of Holder:


 


(i)
Cash Exercise: The Holder may exercise this Warrant in cash, bank or cashier’s check, wire transfer or, from
and after the occurrence of a Threshold (as defined in the Note Agreement), through a reduction of an amount of principal outstanding
under the Note (as defined in the Note Agreement) or any replacement note issued to a transferee of any portion of the Note, which
is then held by the Holder (a “Cash Exercise”); or


 


(ii)
Cashless Exercise: The Holder, at its option, may exercise this Warrant in a cashless exercise transaction, provided,
however, that, except as provided in Section 2(f) above, in the event that the Company has an effective registration statement
under the Securities Act covering the resale by the Holder of all Warrant Shares issuable upon such Cashless Exercise of this
Warrant that the Holder is then exercising, then the Holder shall not be permitted to exercise this Warrant as a Cashless Exercise
under this Section 3(a)(ii) with respect to the Warrant Shares issuable upon such exercise. In order to effect a Cashless Exercise,
the Holder shall surrender this Warrant at the principal office of the Company together with notice of cashless election, in which
event the Company shall issue to the Holder a number of ADSs or, if at the time of such exercise none of conditions listed in
Sections 2(e)(ii)(B), (C) or (D) have been met, Restricted ADSs, in each case, computed using the following formula (a “Cashless
Exercise”):


 


X
= Y (A–B)/A


 


where:   X
= the number of ADSs and Restricted ADSs to be issued to Holder or the amount of cash to be paid as the Redemption Exercise Price.


 


Y
= the number of ADSs and Restricted ADSs for which this Warrant is being Exercised or the number of ADSs and Restricted ADSs underlying
the portion of this Warrant subject to redemption.


 


A
= the Market Price of one (1) ADS, where “Market Price,” as of any date, means the Volume Weighted Average Price (as
defined herein) of the Company’s ADS during the ten (10) consecutive Trading Day period immediately preceding the Date of
Exercise or Redemption Exercise Date, as the case may be.


 


B
= the Exercise Price.


 


As
used herein, the “Volume Weighted Average Price” for any security as of any date means the volume weighted average
sale price on The NASDAQ Global Market (“NASDAQ”) as reported by, or based upon data reported by, Bloomberg Financial
Markets or an equivalent, reliable reporting service mutually acceptable to and hereafter designated by holders of a majority
in interest of the Warrants and the Company (“Bloomberg”) or, if NASDAQ is not the principal trading market for such
security, the volume weighted average sale price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, or, if no volume weighted average sale price is reported for such
security, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported
for such security by Bloomberg, the average of the bid prices of any market makers for such security that are listed in the over
the counter market by the Financial Industry Regulatory Authority, Inc. or in the “pink sheets” by the OTC Markets
Group, Inc. If the Volume Weighted Average Price cannot be calculated for such security on such date in the manner provided above,
the volume weighted average price shall be the fair market value as mutually determined by the Company and the Holders of a majority
in interest of the Warrants being Exercised for which the calculation of the volume weighted average price is required in order
to determine the Exercise Price of such Warrants.  “Trading Day” shall mean any day on which the
ADSs are traded for any period on NASDAQ, or on the principal securities exchange or other securities market on which the ADSs
are then being traded.


 


(b)
Cashless Major Exercise. If the Holder, at its option, exercises this Warrant or any permissible portion thereof
in a Cashless Major Exercise pursuant to Section 5(c)(i) below, the Holder shall surrender this Warrant at the principal office
of the Company together with the Exercise Form indicating that the Holder is exercising this Warrant (or such permissible portion
thereof) pursuant to a Cashless Major Exercise, in which event the Company shall issue to the Holder a number of ADSs or Restricted
ADSs, as applicable, equal to (i) in the event the Major Transaction is consummated prior to the two-year anniversary of the Date
of Issuance, the “Intrinsic Value” (as determined in accordance with the definition below) of the Warrant (or such
applicable portion being exercised) divided by the closing price of the ADSs on the principal securities exchange or other securities
market on which the ADSs are then traded on the Trading Date immediately preceding the date on which the applicable Major Transaction
is consummated, and (ii) in the event the Major Transaction is consummated from or after the two-year anniversary of the Date
of Issuance, the Black Scholes Value (as defined in Section 5(c)(iii) below) of the Warrant (or such applicable portion being
exercised) divided by the closing price of the ADSs on the principal securities exchange or other securities market on which the
ADSs are then traded on the Trading Day immediately preceding the date on which the applicable Major Transaction is consummated.


 



    	8



    	 



    

 


For
purposes herein, “Intrinsic Value” shall be determined using the formula Y(SP–EP) where Y is as defined in Section
3(a)(ii) above, SP equals the Stock Price (as defined below) and EP equals the prevailing Exercise Price at the time of calculation.


 


“Stock
Price” shall mean the greater of (1) the closing price of the ADSs on NASDAQ, or, if that is not the principal trading market
for the ADSs, such principal market on which the ADSs are traded or listed (the “Closing Market Price”) on the trading
day immediately preceding the date on which a Major Transaction is consummated, or (2) the first Closing Market Price following
the date of the definitive agreement with respect to a Major Transaction.


 


(c)
Cashless Default Exercise. To the extent the Holder exercises this Warrant as a Cashless Default Exercise pursuant to Section
11(b)(i) below, the Holder shall surrender this Warrant to the principal office of the Company together with the Exercise Form
indicating that the Holder is exercising this Warrant pursuant to a Cashless Default Exercise, in which event the Company shall
issue to the Holder, within five (5) Trading Days of the applicable Default Notice, a number of ADSs or Restricted ADSs, as applicable
(which shares shall be valued at the Volume Weighted Average Price for the five (5) Trading Days prior to the applicable Default
Notice) equal to the greater of (A) the Black-Scholes value (determined by use of the Black-Scholes Option Pricing Model using
the criteria set forth on Schedule I hereto) of the remaining unexercised portion of this Warrant on the date of such Default
Notice and (B) the Black-Scholes value (determined by use of the Black-Scholes Option Pricing Model using the criteria set forth
on Schedule I hereto) of the remaining unexercised portion of this Warrant on the Trading Day immediately preceding the date that
the Exercise Shares in respect of such Cashless Default Exercise are issued to the Holder.


 


(d)
Dispute Resolution. In the case of a dispute as to the determination of the closing price or the Volume Weighted
Average Price of the Company’s ADSs or the arithmetic calculation of the Exercise Price, Market Price or any Major Transaction
Warrant Early Termination Price, the Company shall submit the disputed determinations or arithmetic calculations via facsimile
within two (2) business days of receipt, or deemed receipt, of the Exercise Notice or Major Transaction Early Termination Notice,
or other event giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree
upon such determination or calculation within two (2) business days of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within two (2) business days submit via facsimile (i) the disputed determination
of the closing price or the Volume Weighted Average Price of the Company’s ADSs to an independent, reputable investment
bank selected by the Company and approved by the Holder, which approval shall not be unreasonably withheld or delayed or (ii) the
disputed arithmetic calculation of the Exercise Price, Market Price or any Major Transaction Warrant Early Termination Price to
the Company’s independent, outside accountant or another accounting firm of United States national standing selected by
the Company. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations
or calculations and notify the Company and the Holder of the results no later than five (5) business days from the time it receives
the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation,
as the case may be, shall be binding upon all parties absent demonstrable error.


 



    	9



    	 



    

(e)
Mandatory Exercise. Subject to the provisions of this Section 3(e), at any time and from time to time after
the Shareholder Approval Date, the Company may give written notice (a “Mandatory Exercise Notice”) to the Holder of
its intent to require a mandatory exercise of this Warrant. The Mandatory Exercise Notice may only be given by the Company if
(i) the closing price of the ADSs on NASDAQ, or if that is not the principal trading market for the ADSs, such principal market
on which the ADSs are traded or listed (the “Closing Market Price”), for each of the 20 consecutive Trading Days immediately
prior to the Mandatory Exercise Notice Date (as hereinafter defined) has equaled or exceeded 400% of the Exercise Price, (ii)
an effective registration statement is on file with the Securities and Exchange Commission (“SEC”) covering the resale
of the Warrant Shares issuable upon exercise of the Warrant, (iii) the Company certifies in the Mandatory Exercise Notice that
the Company (A) is not engaged in any negotiations, and (B) has not entered into any agreement or arrangement, in each case, with
respect to any transaction that would constitute a Major Transaction and (iv) the Company certifies in the Mandatory Exercise
Notice that an Event of Default (as defined in Section 11) has not occurred, and that the issuance of Shares upon the exercise
of this Warrant will not violate, or be prohibited by, any applicable laws, the requirements of NASDAQ or any other trading market
on which the ADSs are traded, or any other provisions of this Warrant. Following receipt of a Mandatory Exercise Notice, the Holder
shall be required to exercise the Warrant in full pursuant to the provisions of Section 3(a)(i) or 3(a)(ii) on or prior to the
30th Trading Day (the “Mandatory Exercise Date”) following the Mandatory Exercise Notice Date; provided, however,
that the Holder shall not be required to exercise the Warrant, and the Mandatory Exercise Notice shall be of no further force
and effect, if following delivery of the Mandatory Exercise Notice and prior to the Holder’s exercise of this Warrant (i)
the Closing Market Price on any two Trading Dates (including the Mandatory Exercise Notice Date) falls below 400% of the Exercise
Price, (ii) the Company is required to deliver to the Holder a Major Transaction Notice, (iii) the Warrant Shares are no longer
registered for resale pursuant to an effective registration statement or (iv) an Event of Default has occurred. In order to be
effective, a Mandatory Exercise Notice must be sent to the Holder by overnight mail, with an advance copy sent by facsimile and
e-mail (the date of facsimile and e-mail transmission is referred to as “Mandatory Exercise Notice Date”).


 


4.
Transfer and Registration.


 


(a)
Transfer Rights. Subject to the provisions of Section 8 of this Warrant, this Warrant may be transferred
on the books of the Company, in whole or in part, in person or by attorney, upon surrender of this Warrant properly completed
and endorsed together with any funds sufficient to pay any transfer tax in connection with such transfer. This Warrant shall be
canceled upon such surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be entitled
to receive a new Warrant or Warrants as to the portion of this Warrant transferred, and Holder shall be entitled to receive a
new Warrant as to the portion hereof retained.


 


(b)
Registrable Securities. The ADSs and Restricted ADSs issuable upon the Exercise of this Warrant have registration
rights pursuant to the Registration Rights Agreement.


 


(c)
Warrant Register. The Transfer Agent shall register this Warrant, upon records to be maintained by the Transfer
Agent for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. Prior
to due presentment for transfer to the Company of this Warrant, the Company and any agent of the Company may treat the Person
in whose name this Warrant is duly registered on the Warrant Register as the owner hereof for the purpose of any exercise hereof
or any distribution, and for all other purposes, and neither the Company nor any such agent shall be affected by notice to the
contrary. A Warrant may be assigned or sold in whole or in part only by registration of such assignment or sale on the Warrant
Register. Upon its receipt of a request in the form attached as Exhibit B to assign or sell all or part of a Warrant by
the Holder, the Transfer Agent shall record the information contained therein in the Warrant Register and the Company shall issue
or cause to be issued one or more new Warrants in compliance with Section 4(a) above.


 


(d)
BSAs Register. The Transfer Agent shall register the BSAs, upon records to be maintained by the Transfer Agent
for that purpose (the “BSAs Register” “Compte d'Actionnaire”), in the name of the record Holder
hereof from time to time. Prior to due presentment for transfer to the Company of the BSAs, the Company and any agent of the Company
may treat the Person in whose name the BSAs are duly registered on the BSAs Register as the owner hereof for the purpose of any
exercise hereof or any distribution, and for all other purposes, and neither the Company nor any such agent shall be affected
by notice to the contrary. A BSA may be assigned or sold in whole or in part only by registration of such assignment or sale on
the BSAs Register. Upon its receipt of a request in the form attached as Exhibit B to assign or sell all or part of a BSA
by the Holder, the Transfer Agent shall record the information contained therein in the BSAs Register and the Company shall issue
or cause to be issued one or more new BSAs in compliance with Section 4(a) above.


 



    	10



    	 



    

 


5.
Adjustments Upon Certain Events.


 


(a)
Participation. The Holder, as the holder of this Warrant, shall be entitled to receive an amount payable in
cash that is equivalent to all dividends paid and distributions of any kind made to the holders of Ordinary Shares of the Company
or ADSs to the same extent as if the Holder had Exercised this Warrant into ADSs or Restricted ADSs (without regard to any limitations
on exercise herein or elsewhere, without regard to whether the Shareholder Approval Date has occurred and without regard to whether
or not a sufficient number of shares are authorized and reserved to effect any such exercise and issuance) and had held such ADSs
or Restricted ADSs on the record date for such dividends and distributions. Payments under the preceding sentence shall be made
concurrently with the dividend or distribution to the holders of ADSs. The provisions of this Section 5(a) shall not apply to
stock dividends covered by the provisions of Section 5(b) below. This provision is included as one of the agreed upon contractual
terms of the Purchase Agreement.


 


(b)
Recapitalization or Reclassification. If the Company shall at any time effect a stock split, payment of stock
dividend, recapitalization, reclassification or other similar transaction of such character that the Ordinary Shares shall be
changed into or become exchangeable for a larger or smaller number of shares, then upon the effective date thereof, the number
of Ordinary Shares underlying the Warrant Shares which Holder shall be entitled to purchase upon Exercise of this Warrant or receive
value with respect to in a redemption shall be increased or decreased, as the case may be, in direct proportion to the increase
or decrease in the number of Ordinary Shares by reason of such stock split, payment of stock dividend, recapitalization, reclassification
or similar transaction, and the Exercise Price shall be, in the case of an increase in the number of shares, proportionally decreased
and, in the case of decrease in the number of shares, proportionally increased. The Company shall give Holder the same notice
it provides to holders of Ordinary Shares of any transaction described in this Section 5(b).


 


(c)
Rights Upon Major Transaction.


 


(i)
Major Transaction. In the event that a Major Transaction (as defined below) occurs on or prior to the Shareholder Approval Date,
then the Holder, at its option, may require the Company to redeem in cash the Holder’s outstanding Warrants in accordance
with Section 5(c)(iii) below. In the event that a Major Transaction (as defined below) occurs following the Shareholder Approval
Date, then (1) in the case of a Cash-Out Major Transaction and in the case of a Mixed Major Transaction to the extent of the percentage
of the cash consideration in the Mixed Major Transaction (determined in accordance with the definition of a Mixed Major Transaction
below), the Holder, at its option, may require the Company to redeem the Holder’s outstanding Warrants in accordance with
Section 5(c)(iii) below and (2) in the case of all other Major Transactions and in the case of a Mixed Major Transaction
to the extent of the percentage of the consideration represented by securities of a Successor Entity in the Mixed Major Transaction,
the Holder shall have the right to exercise this Warrant as a Cashless Major Exercise in accordance with Section 3(b). The Holder
may waive its rights under this Section 5(c) with respect to such Major Transaction. Consummation of each of the following events
shall constitute a “Major Transaction”:


 


(A)
a consolidation, merger, exchange of shares, recapitalization, reorganization, business combination or other similar event,
following which the holders of Ordinary Shares (including holders of ADSs attributable to underlying Ordinary Shares) immediately
preceding such consolidation, merger, exchange, recapitalization, reorganization, combination or event either (a) no longer
hold a majority of the Ordinary Shares (including ADSs attributable to such Ordinary Shares) or the shares of the Successor Entity
(or the Parent Entity of a Successor Entity) or (b) no longer have the ability to elect a majority of the board of directors
of the Company or the Successor Entity (collectively, a “Change of Control Transaction”);


 


(B)
a sale or transfer of all or substantially all of the Company’s assets;


 


(C)
a purchase, tender or exchange offer, made to the holders of outstanding Ordinary Shares or ADSs, such that following the
consummation of such purchase, tender or exchange offer a Change of Control Transaction shall have occurred;


 


(D)
[Intentionally Omitted]


 



    	11



    	 



    

 


(E)
the liquidation, bankruptcy, insolvency, dissolution or winding-up (or the occurrence of any analogous proceeding) affecting
the Company; or


 


(F)
[Intentionally Omitted]


 


(G)
[Intentionally Omitted]


 


(ii)
[Intentionally Omitted]


 


(iii)
Notice; Major Transaction Early Termination Right; Notice of Cashless Major Exercise. At least twenty (20) days
prior to the consummation of any Major Transaction, but, in any event, within five (5) business days following the first to occur
of (x) the date of the public announcement of such Major Transaction if such announcement is made before 4:00 p.m., New York
City time, or (y) the day following the public announcement of such Major Transaction if such announcement is made on and
after 4:00 p.m., New York City time, the Company shall deliver written notice thereof via facsimile and overnight courier to the
Holder (a “Major Transaction Notice”). Other than in respect of all or a portion of the Warrant that is eligible for
a Cashless Major Exercise (without taking into consideration the 9.985% Cap or the Beneficial Ownership Cap), the Holder may,
by delivery of written notice (“Major Transaction Early Termination Notice”) to the Company and the Transfer Agent
at any time during the period beginning after the Holder’s receipt of a Major Transaction Notice and ending five (5) Trading
Days prior to the consummation of such Major Transaction (the “Early Termination Period”), require the Company to
redeem (an “Early Termination Upon Major Transaction”), effective immediately prior to the consummation of such Major
Transaction, all or any portion of this Warrant not eligible to be exercised as a Cashless Major Exercise (without taking into
consideration the 9.985% Cap or the Beneficial Ownership Cap). The Major Transaction Early Termination Notice shall indicate the
portion of the Warrant that the Holder is electing to have redeemed in accordance with the terms hereof. Such portion of this
Warrant (the “Redeemable Portion”) shall be redeemed by the Company at a price (the “Major Transaction Warrant
Early Termination Price”) payable in cash equal to (i) in the event of a Major Transaction occurring prior to the two-year
anniversary of the Date of Issuance, the Intrinsic Value of the Redeemable Portion, and (ii)  in the event of a Major Transaction
occurring from and after the two-year anniversary of the Date of Issuance, the “Black Scholes Value” of the Redeemable
Portion determined by use of the Black Scholes Option Pricing Model using the criteria set forth in Schedule 1 hereto (the “Black
Scholes Value”), provided, however, that in the event of a Major Transaction specified in Section 5(c)(i)(A), (B) or (C)
occurring from and after the two-year anniversary of the Date of Issuance that is with Holder, the original Holder or any of their
respective Affiliates, the formula in the preceding clause (i) shall apply.


 


To
the extent the Holder shall elect to effect a Cashless Major Exercise in respect of a Major Transaction, the Holder shall deliver
its exercise notice in accordance with Section 3(b), within the Early Termination Period. In the event of a Major Transaction,
Holders of Restricted ADSs shall be deemed to be holders of ADSs with respect to such Major Transaction.


 


(iv)
Escrow; Payment of Major Transaction Warrant Early Termination Price. Following the receipt of a Major Transaction
Early Termination Notice or a notice of a Cashless Major Exercise from the Holder, the Company shall not effect a Major Transaction
that is being treated as an Early Termination Upon Major Transaction or in connection with which this Warrant is eligible to be
exercised as a Cashless Major Exercise unless it either (a) obtains the written agreement of the Successor Entity that payment
of the Major Transaction Warrant Early Termination Price and/or issuance of the applicable Cashless Major Shares shall be made
to the Holder prior to consummation of such Major Transaction and such issuance or payment shall be a condition precedent to consummation
of such Major Transaction or (b) it shall first place into an escrow account with an independent escrow agent, at least three
(3) business days prior to the closing date of such Major Transaction (the “Major Transaction Escrow Deadline”), an
amount in ADSs or cash, as applicable, equal to the Major Transaction Warrant Early Termination Price and/or applicable Exercise
Shares. If an escrow account is required to be established pursuant to the preceding sentence, concurrently upon closing of such
Major Transaction, the Company shall pay or shall instruct the escrow agent to pay the Major Transaction Warrant Early Termination
Price and/or to deliver the applicable Cashless Major Shares to the Holder. For purposes of determining the amount, if any, required
to be placed in escrow pursuant to the provisions of this subsection (iv) and without affecting the amount of the actual Major
Transaction Warrant Early Termination Price and/or the number of applicable Cashless Major Shares, the calculation of the “Stock
Price” referred to in Schedule 1 hereto shall be determined based on the Closing Market Price (as defined on Schedule I)
of the ADSs on the Trading Day immediately preceding the date that the funds and/or applicable Exercise Shares, as applicable,
are deposited with the escrow agent.


 



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(v)
Injunction. Following the receipt of a Major Transaction Early Termination Notice or notice of a Cashless Major
Exercise from the Holder, in the event that the Company attempts to consummate a Major Transaction without either (1) placing
the Major Transaction Warrant Early Termination Price, or applicable Exercise Shares, as applicable, in escrow in accordance with
subsection (iv) above, (2) payment of the Major Transaction Warrant Early Termination Price or issuance of the applicable Exercise
Shares, as applicable, to the Holder prior to consummation of such Major Transaction or (3) obtaining the written agreement of
the Successor Entity described in subsection (iv) above, the Holder shall have the right to apply for an injunction in any state
or federal courts sitting in the City of New York, borough of Manhattan to prevent the closing of such Major Transaction until
the Major Transaction Warrant Early Termination Price is paid to the Holder, in full or the applicable Exercise Shares are delivered,
as applicable.


 


An
early termination required by this Section 5(c) shall be made in accordance with the provisions of Section 12 and shall have priority
to payments to holders of Ordinary Shares and ADSs in connection with a Major Transaction to the extent an early termination required
by this Section 5(c)(iii) are deemed or determined by a court of competent jurisdiction in the United States to be prepayments
of the Warrant by the Company, such early termination shall be deemed to be voluntary prepayments. Notwithstanding anything to
the contrary in this Section 5, until the Major Transaction Warrant Early Termination Price is paid in full, this Warrant may
be exercised, in whole or in part, by the Holder into ADSs or Restricted ADSs, as applicable, or in the event the Exercise Date
is after the consummation of the Major Transaction, shares of publicly traded common stock or American Depositary Shares (or their
equivalent) of the Successor Entity pursuant to Section 5(c). The parties hereto agree that in the event of the Company’s
early termination of any portion of the Warrant under this Section 5(c), the Holder’s damages would be uncertain and difficult
to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of
a suitable substitute investment opportunity for the Holder. Accordingly, any premium due under this Section 5(c) is intended
by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity
and not as a penalty.


 


For
purposes hereof:


 


“Another
Entity” shall mean an entity in which the holders of a majority of the Ordinary Shares of the Company immediately prior
to the consummation of a Major Transaction do not hold a majority of the equity securities in such entity.


 


“Cash-Out
Major Transaction” means a Major Transaction in which the consideration payable to holders of Ordinary Shares in connection
with the Major Transaction consists solely of cash.


 


“Cashless
Default Exercise” shall mean an exercise of this Warrant as a “Cashless Default Exercise” in accordance with
Section 3(c) and 11(b) hereof.







“Cashless Major Exercise” shall mean an exercise of this
Warrant or portion thereof as a “Cashless Major Exercise” in accordance with Section 3(b) and 5(c)(i) hereof.


 


“Cashless
Major Shares” means ADSs or Restricted ADSs issued or issuable pursuant to a Cashless Major Exercise.


 


“Eligible
Market” means the over the counter Bulletin Board, the New York Stock Exchange, Inc., the NYSE Arca, the NASDAQ Capital
Market, the NASDAQ Global Market, the NASDAQ Global Select Market or the NYSE Alternext U.S.


 



    	13



    	 



    

 


“Mixed
Major Transaction” means a Major Transaction in which the consideration payable to the shareholders of the Company consists
partially of cash and partially of securities of a Successor Entity. If the Successor Entity is a Publicly Traded Successor Entity,
the percentage of consideration represented by securities of such Successor Entity shall be equal to the percentage that the value
of the aggregate anticipated number of shares of the Publicly Traded Successor Entity to be issued to holders of Ordinary Shares
of the Company represents in comparison to the aggregate value of all consideration, including cash consideration, in such Mixed
Major Transaction, as such values are set forth in any definitive agreement for the Mixed Major Transaction that has been executed
at the time of the first public announcement of the Major Transaction or, if no such value is determinable from such definitive
agreement, based on the average of the closing market prices for shares of the Publicly Traded Successor Entity on its principal
securities exchange for the five (5) Trading Day period commencing on the second Trading Day preceding the first public announcement
of the Mixed Major Transaction. If the Successor Entity is a Private Successor Entity, the percentage of consideration represented
by securities of such Successor Entity shall be determined in good-faith by the Company's Board of Directors


 


“Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of a Major Transaction.


 


“Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency thereof.


 


“Private
Successor Entity” means a Successor Entity that is not a Publicly Traded Successor Entity.


 


“Publicly
Traded Successor Entity” means a Successor Entity that is a publicly traded corporation whose common stock is quoted on
or listed for trading on an Eligible Market (as defined above).


 


“Successor
Entity” means any Person purchasing the Company’s assets or Ordinary Shares, or any successor entity resulting from
such Major Transaction, or if the Warrant is to be exercisable for shares of capital stock of its Parent Entity (as defined above),
its Parent Entity.


 


(d)
Exercise Price Adjusted. As used in this Warrant, the term “Exercise Price” shall mean the purchase
price per share specified in Section 3(a) of this Warrant, until the occurrence of an event stated in this Section 5
or otherwise set forth in this Warrant, and thereafter shall mean said price as adjusted from time to time in accordance with
the provisions of said subsection.


 


(e)
Adjustments: Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment
made pursuant to this Section 5 or otherwise, Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than ADSs or Restricted ADSs) then, wherever appropriate, all references herein to ADSs
or Restricted ADSs shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number
of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as
nearly equivalent as practicable to the provisions of this Section 5.


 


(f)
Notice of Adjustments. Whenever the Exercise Price is adjusted pursuant to the terms of this Warrant, the Company
shall promptly mail to the Holder a notice (an “Exercise Price Adjustment Notice”) setting forth the Exercise Price
after such adjustment and setting forth a statement of the facts requiring such adjustment. The Company shall, upon the written
request at any time of the Holder, furnish to such Holder a like Warrant setting forth (i) such adjustment or readjustment,
(ii) the Exercise Price at the time in effect and (iii) the number of ADSs or Restricted ADSs and the amount, if any,
of other securities or property which at the time would be received upon Exercise of the Warrant. For purposes of clarification,
whether or not the Company provides an Exercise Price Adjustment Notice pursuant to this Section 5(f), upon the occurrence
of any event that leads to an adjustment of the Exercise Price, the Holder would be entitled to receive a number of Exercise Shares
based upon the new Exercise Price, as adjusted, for exercises occurring on or after the date of such adjustment, regardless of
whether the Holder accurately refers to the adjusted Exercise Price in the Exercise Form.


 



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6.
Fractional Interests.


 


No
fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of this Warrant, but on Exercise
of this Warrant, Holder may purchase only a whole number of ADSs or Restricted ADSs. If, on Exercise of this Warrant, Holder would
be entitled to a fractional ADS or Restricted ADS or a right to acquire a fractional ADS or Restricted ADS, such fractional share
shall be disregarded and the number of ADSs or Restricted ADSs issuable upon Exercise shall be the next higher whole number of
shares.


 


7.
Reservation of Shares.


 


The
Company covenants and agrees that upon the Exercise of this Warrant, all ADSs and Restricted ADSs issuable upon such Exercise
and all underlying Ordinary Shares shall be duly and validly issued, fully paid and nonassessable and not subject to preemptive
rights, rights of first refusal or similar rights of any Person (the “Issuance Conditions”). The Company will take
all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of NASDAQ, or such other principal trading market upon which ADSs
may be listed if no longer on NASDAQ. For so long as the Warrant is outstanding and the Company’s Board of Directors has
not taken an action consistent with Section 2(c)(ii), the Company shall use commercially reasonable best efforts to maintain the
Deposit Agreement, and shall not terminate the Deposit Agreement nor allow it to lapse due to the Company's failure to appoint
a successor Depositary upon the resignation of the Deposit in accordance with the provisions of the Deposit Agreement. Upon the
termination of Bank of New York as Depositary or Restricted ADR Depositary, the Company shall promptly appoint a successor Depositary
or Restricted ADR Depositary, as the case may be, and all references herein to Depositary or Restricted ADR Depositary, as the
case may be, shall thereafter refer to such successor Depositary or Restricted ADR Depositary, as the case may be. Without the
consent of the Holder, the Company shall not amend either the BSA Agreement or the Deposit Agreement in a manner that adversely
affects the rights of the Holder in a materially disproportionate manner to the rights of other ADS holders.


 


8.
Restrictions on Transfer.


 


(a)
Registration or Exemption Required. This Warrant has been issued in a transaction exempt from the registration
requirements of the Securities Act by virtue of Regulation D and exempt from state registration or qualification under applicable
state laws. None of the Warrant, the Exercise Shares or Failure Payment Shares may be pledged, transferred, sold or assigned except
pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act and applicable
state laws including, without limitation, a so-called “4(1) and a half” transaction.


 


(b)
Assignment. Subject to Section 8(a) and the requirement of compliance with applicable law, the Holder may
sell, transfer, assign, pledge, or otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a written notice
to Company, substantially in the form of the Assignment attached hereto as Exhibit B, indicating the Person or Persons
to whom the Warrant shall be assigned and the respective number of warrants to be assigned to each assignee. The Company shall
effect the assignment within three (3) business days (the “Transfer Delivery Period”), and shall deliver to the assignee(s)
designated by Holder a Warrant or Warrants of like tenor and terms for the appropriate number of shares. This Warrant and the
rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Holder. The provisions
of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable
by any such Holder. For avoidance of doubt, in the event Holder notifies the Company that such sale or transfer is a so called
“4(1) and half” transaction, the parties hereto agree that a legal opinion from outside counsel for the Holder delivered
to counsel for the Company substantially in the form attached hereto as Exhibit C shall be required and shall be the
only requirement to satisfy an exemption from registration under the Securities Act to effectuate such “4(1) and half”
transaction.


 



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9.
Noncircumvention.


 


The
Company hereby covenants and agrees that the Company will not, by amendment of its memorandum and articles of association, bylaws
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, take any action for the purpose of avoiding or seeking to avoid the observance or performance
of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant. Without
limiting the generality of the foregoing, the Company (i) shall not increase the nominal value of any Ordinary Shares underlying
ADSs or Restricted ADSs receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) shall
take all such actions as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Ordinary Shares in respect of ADSs and Restricted ADSs issued upon the exercise of this Warrant.


 


10.
Events of Failure; Definition of Black Scholes Value.


 


(a)
Definition. 


 


The
occurrence of each of the following shall be considered to be an “Event of Failure.”


 


(i)
A Delivery Failure occurs, where a “Delivery Failure” shall be deemed to have occurred if the Company fails to deliver
Ordinary Shares satisfying the Issuance Conditions to the Depositary or fails to cause the Exercise Shares satisfying the Issuance
Conditions to be delivered to the Holder within any applicable Delivery Period or if the Company fails to deliver the cash and/or
promissory note in respect of the Redemption Exercise Price within ten (10) business days following a Redemption Exercise Date
or fails to satisfy any payment required under such promissory note in accordance with the terms thereof;


 


(ii)
a Transfer Delivery Failure occurs, where a “Transfer Delivery Failure” shall be deemed to have occurred if the Company
fails to use its commercially reasonable best efforts to deliver a Warrant within any applicable Transfer Delivery Period; and


 


(iii)
a Registration Failure (as defined below).


 


For
purpose hereof, “Registration Failure” means that (A) the Company fails to file with the SEC on or before the
Filing Deadline (as defined in the Registration Rights Agreement) any Registration Statement required to be filed pursuant to
the terms and conditions of the Registration Rights Agreement, (B) the Company fails to use its commercially reasonable efforts
to obtain effectiveness with the SEC, prior to the Registration Deadline (as defined in the Registration Rights Agreement), and
if such Registration Statement is not so filed prior to the Registration Deadline, as soon as possible thereafter, of any Registration
Statement (as defined in the Registration Rights Agreement) that are required to be filed pursuant to the terms and conditions
of the Registration Rights Agreement, or fails to use commercially reasonable efforts to keep such Registration Statement current
and effective as required in the Registration Rights Agreement, (C) The Company fails to file any additional Registration Statements
required to be filed pursuant to the terms and conditions of the Registration Rights Agreement on or before the Additional Filing
Deadline (as defined in the Registration Rights Agreement) or fails to use its commercially reasonable efforts to cause such new
Registration Statement to become effective on or before the Additional Registration Deadline, and if such effectiveness does not
occur within such period, as soon as possible thereafter, (D) the Company fails to file any amendment to any Registration
Statement, or any additional Registration Statement required to be filed pursuant to the terms and conditions of the Registration
Rights Agreement within twenty (20) days of the applicable Registration Trigger Date (as defined in the Registration Rights
Agreement), or fails to use its commercially reasonable efforts to cause such amendment and/or new Registration Statement to become
effective within sixty (60) days of the applicable Registration Trigger Date, and, if such effectiveness does not occur within
such period, as soon as possible thereafter, (E) any Registration Statement required to be filed under the Registration Rights
Agreement, after its initial effectiveness and during the Registration Period (as defined in the Registration Rights Agreement),
lapses in effect or sales of all of the Registrable Securities (as defined in the Registration Rights Agreement) cannot otherwise
be made thereunder (whether by reason of the Company’s failure to amend or supplement the prospectus included therein in
accordance with the Registration Rights Agreement, or the Company’s failure to file and, use commercially reasonable efforts
to obtain effectiveness with the SEC of an additional Registration Statement or amended Registration Statement required, in each
case, pursuant to terms and conditions of the Registration Rights Agreement), or (F) the Company fails to provide a written response
to any comments to any Registration Statement submitted by the SEC within twenty (20) days of the date that such SEC comments
are received by the Company. For the avoidance of doubt, with respect to any event set forth in the definition of Registration
Failure, in no event shall a Registration Failure occur in respect of the Company's failure to cause such event to occur where
the Company has used the requisite standards, if any, to cause such event to occur, in accordance with the definition of Registration
Failure.


 



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(b)
Failure Payments; Black-Scholes Determination. The Company understands that any Event of Failure (as defined above) could
result in economic loss to the Holder. In the event that any Event of Failure occurs, as compensation to the Holder for such loss,
the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder an amount (“Failure Payments”),
payable, at the Company’s option, either (i) in cash or (ii) in ADSs or Restricted ADSs, as applicable ( the “Failure
Payment Shares”), that are valued for these purposes at the Volume Weighted Average Price on the date of such calculation,
in each case equal to 18% per annum (or the maximum rate permitted by applicable law, whichever is less) of the Black-Scholes
value (as determined below) of the remaining unexercised portion of this Warrant on the date of such Event of Failure (as recalculated
on the first business day of each month thereafter for as long as Failure Payments shall continue to accrue), which shall accrue
daily from the date of such Event of Failure until the Event of Failure is cured, accruing daily and compounded monthly, provided,
however, that during any period that the Company does not qualify as a “foreign private issuer” as defined under Rule
3b-4 promulgated under the Exchange Act, the Holder shall only receive up to such amount of ADSs or Restricted ADSs in respect
of Failure Payments such that the Holder and any other persons or entities whose beneficial ownership (including the ownership
of ADSs) would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act (including shares held
by any “group” of which the Holder is a member, but excluding shares beneficially owned by virtue of the ownership
of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) shall not collectively beneficially own greater than 9.985% of the total number of Ordinary Shares
(including through ownership of ADSs) then issued and outstanding. Notwithstanding the above, Failure Payments made in respect
of Events of Failure occurring on or prior to the Shareholder Approval Date shall be made only in cash (without regard to the
9.985% restriction described in the immediately preceding sentence). For purposes of clarification, it is agreed and understood
that Failure Payments shall continue to accrue following any Event of Default until the applicable Default Amount is paid in full.


 


In
the event that the Company (i) has, by the Filing Deadline (as defined the Registration Rights Agreement) filed a Registration
Statement (as defined in the Registration Rights Agreement) covering the number of shares required by the Registration Rights
Agreement, and (ii) has responded in writing to any comments to the Registration Statement that the Company has received from
the SEC, within seven (7) Business Days of such receipt, and nevertheless the SEC has not declared effective a Registration Statement
covering the full number of Warrant Shares issuable upon exercise of the Warrants by the Registration Deadline (as defined in
the Registration Rights Agreement) then, the Failure Payments attributable to such late Registration Effectiveness shall be reduced
from 18% to 15% (calculated as set forth above). For the avoidance of doubt, nothing in the immediately preceding sentence shall
be construed to increase the obligations of the Company under the definition of “Registration Failure” above. The
Company shall satisfy any Failure Payments under this Section pursuant to Section 10(c) below. Failure Payments are in addition
to any shares that the Holder is entitled to receive upon Exercise of this Warrant.


 


For
purposes hereof, the “Black-Scholes” value of a Warrant shall be determined by use of the Black Scholes Option Pricing
Model using the criteria set forth on Schedule 1 hereto.


 


(c)
Payment of Accrued Failure Payments. The Failure Payments for each Event of Failure shall be delivered (and, if applicable,
issued) on or before the fifth (5th) business day of each month following a month in which Failure Payments accrued. Nothing
herein shall limit the Holder’s right to pursue actual damages (to the extent in excess of the Failure Payments) for the
Company’s Event of Failure, and the Holder shall have the right to pursue all remedies available at law or in equity (including
a decree of specific performance and/or injunctive relief). Notwithstanding the above, if a particular Event of Failure results
in an Event of Default pursuant to Section 11 hereof, then the Failure Payment, for that Event of Failure only, shall be
considered to have been satisfied upon payment to the Holder of an amount equal to the greater of (i) the Failure Payment,
or (ii) the Default Amount, payable in accordance with Section 11.


 


(d)
Maximum Interest Rate. Nothing contained herein or in any document referred to herein or delivered in connection herewith
shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted
by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to
the Holder and thus refunded to the Company.


 



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11.
Default.


 


(a)
Events Of Default. Each of the following events shall be considered to be an “Event of Default,” unless waived
by the Holder:


 


(i)
Failure To Effect Registration. With respect to all Registration Failures, a Registration Failure occurs and remains
uncured for a period of more than thirty (30) days (or forty-five (45) days in the case where the Company (i) has, by
the Filing Deadline (as defined the Registration Rights Agreement) filed a Registration Statement (as defined in the Registration
Rights Agreement) covering this Warrant and the number of shares required by the Registration Rights Agreement, and (ii) has
responded in writing to any comments to the Registration Statement that the Company has received from the SEC, within twenty (20) days
of such receipt, and nevertheless the SEC has not declared effective a Registration Statement covering this Warrant and the Shares
by the Registration Deadline (as defined in the Registration Rights Agreement)), and such Registration
Failure relates solely to the Company’s failure to have the Registration Statement declared effective by the Registration
Deadline (as defined in the Registration Rights Agreement) and with respect to a Registration Failure provided in clause (E) of
the definition of “Registration Failure”, such Registration Failure occurs and remains uncured for a period of more
than thirty (30) days. For the avoidance of doubt, nothing in the immediately preceding sentence shall be construed to
increase the obligations of the Company under the definition of “Registration Failure” above.


 


(ii)
Continuing Delivery Failure. A Delivery Failure (as defined above) occurs and remains uncured for a period of more
than twenty (20) days; or at any time, the Company announces or states in writing that it will not honor its obligations to cause
the issuance of Ordinary Shares to the Depositary or the Restricted ADR Depositary, as applicable and ADSs or Restricted ADS,
as applicable, to the Holder upon Exercise by the Holder of the Exercise rights of the Holder or, if applicable, to deliver cash,
in accordance with the terms of this Warrant.


 


(iii)
Legend Removal Failure. A Legend Removal Failure (as defined below) occurs and remains uncured for a period of twenty
(20) days; and


 


(iv)
Corporate Existence; Major Transaction. The Company has failed to either (1) place the Major Transaction Warrant
Early Termination Price or the Exercise Shares issuable upon exercise of a Cashless Major Exercise, as the case may be, into escrow
or (2) obtain the written agreement of the Successor Entity as described in Section 5(c)(iv) or the Company has failed to instruct
the escrow agent to release such amount or such shares, as the case may be, to the Holder pursuant to Section 5(c)(iv).


 


A
“Legend Removal Failure” shall be deemed to have occurred if the Company fails to use its commercially reasonable
best efforts to issue this Warrant and/or Exercise Shares without a restrictive legend, or fails to use its commercially reasonable
best efforts to cause the Depositary to remove a restrictive legend, when and as required under Section 2(e) hereof;


 


(b)
Mandatory Early Termination.


 


(i)
Mandatory Early Termination Amount; Cashless Default Exercise. If any Events of Default shall occur then, unless
waived by the Holder, upon the occurrence and during the continuation of any Event of Default, at the option of the Holder, such
option exercisable through the delivery of written notice to the Company by such Holder (the “Default Notice”), the
Company shall have the right to terminate the outstanding amount of this Warrant and pay to the Holder (a “Mandatory Early
Termination”), in full satisfaction of its obligations hereunder by delivery of a notice to such effect to the Holder within
two (2) Business Days following receipt of the Default Notice, an amount payable in cash (the “Mandatory Early Termination
Amount” or the “Default Amount”) equal to the greater of (i) the Black-Scholes value (as determined in
accordance with Section 10(b)) of the remaining unexercised portion of this Warrant on the date of such Default Notice and
(2) the Black-Scholes value (also as determined in accordance with Section 10(b)) of the remaining unexercised portion
of this Warrant on the Trading Day immediately preceding the date that the Mandatory Early Termination Amount is paid to the Holder.
In the event the Company does not exercise its right to consummate
a Mandatory Early Termination, then the Holder shall have the right to exercise this Warrant pursuant to a Cashless Default Exercise
in accordance with Section 3(c) above.


 



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Notwithstanding
anything in this subsection 11(b)(i) to the contrary, in the event the Default Notice is delivered by the Holder on or prior to
the Shareholder Approval Date, the Company shall be required to pay to the Holder the Mandatory Early Termination Amount
in cash and/or a promissory note, dated the date of the Default Notice, substantially in the form of Exhibit D hereto, and payment
of such amount and in such manner shall not be at the option of the Company.


 


The
Mandatory Early Termination Amount shall be payable within five (5) Business Days following the date of the applicable Default
Notice.


 


(ii)
Liquidated Damages. The parties hereto acknowledge and agree that the sums payable as Failure Payments or pursuant
to a Mandatory Early Termination shall give rise to liquidated damages and not penalties. The parties further acknowledge that
(i) the amount of loss or damages likely to be incurred by the Holder is incapable or is difficult to precisely estimate,
(ii) the amounts specified bear a reasonable proportion and are not plainly or grossly disproportionate to the probable loss
likely to be incurred by the Holder, and (iii) the parties are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement at arm’s length.


 


The
Default Amount, together with all other amounts payable hereunder, shall immediately become due and payable, all without demand,
presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal
fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law
or in equity.


 


(c)
Intentionally omitted.


 


(d)
Injunction. In the event that an Event of Default pertains to a Legend Removal Failure, the Company may not
refuse such unlegended share delivery based on any claim that such Holder or any one associated or affiliated with such Holder
has been engaged in any violation of law, unless, within sixty (60) days of the applicable Default Notice an injunction from a
United States court, on prior notice to Holder, restraining and or enjoining Exercise of all or part of said Warrant shall have
been sought and obtained by the Company.


 


(e)
Remedies, Other Obligations, Breaches And Injunctive Relief. The remedies provided in this Warrant shall be
cumulative and in addition to all other remedies available under this Warrant, the Purchase Agreement and the Registration Rights
Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to seek an injunction restraining
any breach, without the necessity of showing economic loss and without any bond or other security being required.


 


12.
Holder’s Early Terminations.


 


Mechanics
of Holder’s Early Terminations. In the event that the Company does not deliver the applicable Redemption Exercise Price,
Major Transaction Warrant Early Termination Price or Default Amount or the Exercise Shares in respect of a Cashless Major Exercise
or a Cashless Default Exercise, as the case may be, to the Holder within the time period or as otherwise required pursuant to
the terms hereof, at any time thereafter the Holder shall have the option, upon notice to the Company, in lieu of redemption,
early termination, Cashless Major Exercise or Cashless Default Exercise, as the case may be, to require the Company to promptly
return to the Holder all or any portion of this Warrant that was submitted for redemption, early termination or exercise. Upon
the Company’s receipt of such notice, (x) the redemption, applicable early termination or exercise, as the case may be,
shall be null and void with respect to such applicable portion of this Warrant, (y) the Company shall immediately return this
Warrant, or issue a new Warrant to the Holder representing the portion of this Warrant that was submitted for redemption, early
termination or exercise and (z) the Exercise Price of this Warrant or such new Warrant shall be adjusted to the lesser of (A)
the Exercise Price as in effect on the date on which the applicable redemption, early termination, default or exercise notice,
as the case may be, is voided and (B) the lowest closing price for the ADSs on NASDAQ, or, if NASDAQ is not the principal trading
market for the ADSs, the principal securities exchange or other securities market on which the ADSs are then being traded, during
the period beginning on and including the date on which the applicable redemption, early termination, default or exercise notice,
as the case may be, is delivered to the Company and ending on and including the date on which the applicable redemption, early
termination or exercise is voided. The Holder’s delivery of a notice voiding a redemption, early termination or exercise
and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Failure
Payments which have accrued prior to the date of such notice with respect to the Warrant subject to such notice.


 



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13.
Benefits of this Warrant.


 


Nothing
in this Warrant shall be construed to confer upon any person other than the Company and Holder any legal or equitable right, remedy
or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Company and Holder.


 


14.
Governing Law.


 


Other
than Section 17 and the relevant provisions of the definition of Shareholder Approval Date contained in Section 1 which shall
be governed by French law, all questions concerning the construction, validity, enforcement and interpretation of this Warrant
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 (whether brought against a party hereto or its respective affiliates,
directors, officers, 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, 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. The parties
hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of
this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action
or proceeding. The Company irrevocably waives its rights under the provisions of Article 14 and Article 15 of the French Civil
Code.


 


15.
Loss of Warrant.


 


Upon
receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft
or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of this Warrant,
if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date.


 


16.
Notice or Demands.


 


Notices
or demands pursuant to this Warrant to be given or made by Holder to or on the Company shall be sufficiently given or made if
sent by certified or registered mail, return receipt requested, postage prepaid or via express delivery with a nationally recognized
courier, and addressed, until another address is designated in writing by the Company, to the address set forth in Section 2(a)
above. Notices or demands pursuant to this Warrant to be given or made by the Company to or on Holder shall be sufficiently given
or made if sent by certified or registered mail, return receipt requested, postage prepaid or via express delivery with a nationally
recognized courier, and addressed, to the address of Holder set forth in the Company’s records, until another address is
designated in writing by Holder.


 



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17.
Maintenance of the Rights of a Holder of a Warrant Under French Anti-Dilution Statutes. Effective upon the Shareholder
Approval Date and to the extent not already covered by Section 5, the French anti-dilution provisions of paragraph 1 or 3 (excluding
2) of Article L.228-99 of the French Commercial Code shall apply.


 


18.
Currency. All amounts owing under the Warrant that, in accordance with its terms, are paid in cash shall be paid
in United States dollars. “Exchange Rate” means, in relation to any amount of currency to be converted from United
States dollars pursuant to Section 20 of the Warrant, the United States dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over,
a period of time, the date of calculation shall be the final date of such period of time).


 


19.
Taxes. The purchase of ADSs or Restricted ADSs upon the exercise in whole or in part of the Warrant will not be
subject to withholding tax in France.


 


20.
Judgment Currency.


 


(a)
If, for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction, it becomes
necessary to convert into any other currency (such other currency being hereinafter in this Section 20(a) referred to as the “Judgment
Currency”) an amount due in United States dollars under the Warrant, the exercise shall be made at the Exchange Rate prevailing
on the business day immediately preceding:


 


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


 


(ii)
the date on which the French or any other non U.S. court determines, in the case of any proceeding in the courts of any other
jurisdiction (the date as of which such exercise is made pursuant to this Section 20(a)(ii) being hereinafter referred to as the
"Judgment Exercise Date").


 


(b)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 20(a)(ii) above, there is
a change in the Exchange Rate prevailing between the Judgment Exercise Date and the date of actual payment of the amount due,
the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency,
when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of United States dollars which
could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate
prevailing on the Judgment Exercise Date.


 


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


 


21.
No Third-Party Beneficiaries.  


 


This
Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder,
permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable
right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.


 


22.
Headings.  


 


The
headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.


 



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24.
Amendment and Modification; Waiver.  


 


Except
as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by
the Company and the Holder. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly
set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect
of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character,
and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or
privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise
of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.


 


25.
Severability.  


 


If
any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term
or provision in any other jurisdiction.


 


26.
Limitation on Issuance of Shares.


 


Notwithstanding
anything herein to the contrary, the maximum number of Warrant Shares issued or issuable pursuant to the Warrant Agreements issuable
under Section 1.2 of the Purchase Agreement, and any subsequent warrant certificates issued as a result of any Exercise, Redemption
or transfer of this or any such warrants, may not exceed, 4,925,433 Shares in the aggregate (as appropriately adjusted to reflect
any stock splits).


 



    	22



    	 



    

 


IN
WITNESS WHEREOF, the undersigned has executed this Warrant as of the 13th day of March, 2012.


 


	 	FLAMEL
    TECHNOLOGIES S.A.
	 	 	 
	 	By:	/s/ Stephen H. Willard
	 	 	 Name: Stephen H. Willard
	 	 	Title:
    Chief Executive Officer


 



    	23



    	 



    

 


ANNEX
A-1


 


OFFICER'S
CERTIFICATE


 


To
: Eclat Holdings, LLC


On
March 13, 2012


 


Dear
Sir :


 


You
will find attached a "certificat d'inscription du Warrant" issued by Flamel Technologies S.A. and a copy of the Warrant
Register.


 


We
hereby confirm that the securities being the subject of such certificate and being recorded in the Warrant Register is the Warrant
to purchase ADSs, the terms and conditions of which are attached hereto.


 


Yours
sincerely,


 


	Flamel
    Technologies S.A.	 
	 	 
	/s/ Stephen H. Willard	 
	 	 
	Name:
    Stephen H. Willard	 
	Title:
    Chief Executive Officer	 


 



    	24



    	 



    

 


ANNEX
A-2


 


OFFICER'S
CERTIFICATE


 


To
: [Holder]


On
[_______] ][__], 20[__]


 


Dear
Sir :


 


You
will find attached a "certificat d'inscription en compte" issued by [ ], Flamel Technologies SA’s Transfer Agent
and a copy of the BSAs Register ("compte d' actionnaire").


 


We
hereby confirm that the securities being the subject of such certificate and being recorded in the BSAs Register are the bons
de souscription d'actions, the terms and conditions of which are attached hereto.


 


	Yours
    sincerely,	 
	 	 
	 	 
	In
    the name and for the account of Flamel Technologies SA	 
	Name:	 
	Title:	 


 



    	25



    	 



    

 


EXHIBIT
A-1


 


EXERCISE
FORM FOR WARRANT


 


TO:
[                     ]


 


CHECK
THE APPLICABLE BOX:


 


		 ̈	Cash
                                                                                                                             Exercise
                                                                                                                             or
                                                                                                                             Cashless
                                                                                                                             Exercise





 


The
undersigned hereby irrevocably exercises the attached warrant (the “Warrant”) with respect to _____ American Depositary
Shares (“ADSs”) each representing one Ordinary Share, nominal value 0.122 Euros of Flamel Technologies, S.A., a corporation
organized under the laws of the Republic of France (the “Company”), and, if pursuant to a Cashless Exercise, herewith
makes payment of the Exercise Price with respect to such shares in full, all in accordance with the conditions and provisions
of said Warrant.


 


[IF
APPLICABLE: The undersigned hereby encloses $____ as payment of the Exercise Price.]


 


[IF
APPLICABLE: The undersigned hereby agrees to cancel $____ of principal outstanding under Notes of the Company held by the Holder.]


 


		 ̈	Cashless Major Exercise








 





The
undersigned hereby irrevocably exercises the Warrant with respect to ____% of the Warrant currently outstanding pursuant to a
Cashless Major Exercise in accordance with the terms of the Warrant.


  


		 ̈	Cashless
                                                                                                                                                                              Default
                                                                                                                                                                              Exercise





 


The
undersigned hereby irrevocably exercises the Warrant pursuant to a Cashless Default Exercise, in accordance with the terms of
the Warrant.


 


1.
The undersigned requests that any certificates for such shares be issued free of any restrictive legend, if appropriate, and a
warrant representing any unexercised portion hereof be issued, pursuant to the Warrant in the name of the undersigned and delivered
to the undersigned at the address set forth below.


 


2.
Capitalized terms used but not otherwise defined in this Exercise Form shall have the meaning ascribed thereto in the Warrant.


 


Dated:
_______________


 


	 
	Signature
	 
	 
	Print
    Name
	 
	 
	Address


 


NOTICE


 


The
signature to the foregoing Exercise Form must correspond to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.


 



    	26



    	 



    

 


EXHIBIT
A-2


 


REDEMPTION
FORM FOR WARRANT


 


TO:
[                     ]


 


The
undersigned hereby irrevocably elects to require Flamel Technologies S.A., a corporation organized under the laws of the Republic
of France (the "Company"), to redeem ___% (or a portion of the Warrant representing ___ out of ____ underlying ADSs
and Restricted ADSs) of the attached warrant (the "Warrant") of the Company currently outstanding, in accordance with
Section 2(j) and all other applicable terms of said Warrant.


 


The
undersigned requests that a warrant representing any unredeemed portion hereof be issued, pursuant to the Warrant in the name
of the undersigned and delivered to the undersigned at the address set forth below.


 


Capitalized
terms used but not otherwise defined in this Exercise Form shall have the meaning ascribed thereto in the Warrant.


 


Dated:
_______________


 


	 
	Signature
	 
	 
	Print
    Name
	 
	 
	Address


 


NOTICE


 


The
signature to the foregoing Redemption Form must correspond to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.


 



    	27



    	 



    

 


EXHIBIT
B


 


ASSIGNMENT


 


(To
be executed by the registered holder

desiring to transfer the Warrant or the BSAs as the case may be)


 


FOR
VALUE RECEIVED, the undersigned holder of the attached warrant or the BSAs as the case may be (the “Warrant” or the
”BSAs” as the case may be”) hereby sells, assigns and transfers unto the person or persons below named the right
to purchase __________ American Depositary Shares (“ADSs”) each representing one Ordinary Share, nominal value 0.122
Euros of Flamel Technologies, S.A., a corporation organized under the laws of the Republic of France , evidenced by the attached
Warrant or the BSAs as the case may be and does hereby irrevocably constitute and appoint __________ attorney to transfer the
said Warrant or the BSAs as the case may be on the books of the Company, with full power of substitution in the premises.


 


	Dated: 
    _______________	 
	 	Signature


 


Fill
in for new registration of Warrant or the BSAs as the case may be: 


	 	 
	 	 
	Name	 
	 	 
	 	 
	Address	 
	 	 
	 	 
	Please
    print name and address of assignee	 
	(including
    zip code number)	 


 


NOTICE


 


The
signature to the foregoing Assignment must correspond to the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.


 



    	28



    	 



    

 


EXHIBIT
C


 


FORM
OF OPINION


 


______,
20__


 


[___________]


 


		Re:	[                ] (the
                                                                                                                           “Company”)



 


Dear
Sir:


 


[___________]
(“[__________]”) intends to transfer _______ Warrants (the “Warrants”) of the Company to __________ (“________”)
without registration under the Securities Act of 1933, as amended (the “Securities Act”). In connection therewith,
we have examined and relied upon the truth of representations contained in an Investor Representation Letter attached hereto and
have examined such other documents and issues of law as we have deemed relevant.


 


Based
on and subject to the foregoing, we are of the opinion that the transfer of the Warrants by _______ to ______ may be effected
without registration under the Securities Act, provided, however, that the Warrants to be transferred to _______ contain a legend
restricting its transferability pursuant to the Securities Act and that transfer of the Warrants is subject to a stop order.


 


The
foregoing opinion is furnished only to ____________ and may not be used, circulated, quoted or otherwise referred to or relied
upon by you for any purposes other than the purpose for which furnished or by any other person for any purpose, without our prior
written consent.


 


Very
truly yours,


 



    	29



    	 



    

 


[FORM
OF INVESTOR REPRESENTATION LETTER]


 


_____,
20__


 


[_________________]


 


Gentlemen:


 


_________
(“___”) has agreed to purchase _________ Warrants (the “Warrants”) of [                 ] (the “Company”)
from [___________] (“[_________]”). We understand that the Warrants are “restricted securities.” We represent
and warrant that ______ is a sophisticated institutional investor that would qualify as an “Accredited Investor” as
defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).


 


________
represents and warrants as of the date hereof as follows:


 


1.
That it is acquiring the Warrants and the American Depositary Shares underlying such Warrants (the “Exercise Shares”)
solely for its account for investment and not with a view to or for sale or distribution of said Warrants or Exercise Shares or
any part thereof. ________ also represents that the entire legal and beneficial interests of the Warrants and Exercise Shares
_________ is acquiring is being acquired for, and will be held for, its account only;


 


2.
That the Warrants and the Exercise Shares have not been registered under the Securities Act on the basis that no distribution
or public offering of the stock of the Company is to be effected. _______ realizes that the basis for the exemption may not be
present if, notwithstanding its representations, _______ has a present intention of acquiring the securities for a fixed or determinable
period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing
the securities. _______ has no such present intention;


 


3.
That the Warrants and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. ________ recognizes that the Company has no obligation to register the
Warrants, or to comply with any exemption from such registration;


 


4.
That neither the Warrants nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities Act unless certain
conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain
current public information about Company, the resale following the required holding period under Rule 144 and the number of shares
being sold during any three month period not exceeding specified limitations;


 


5.
That it will not make any disposition of all or any part of the Warrants or Exercise Shares in any event unless and until:


 


(i)          The
Company shall have received a letter secured by _________ from the Securities and Exchange Commission stating that no action will
be recommended to the Securities and Exchange Commission with respect to the proposed disposition;


 


(ii)         There
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is
made in accordance with said registration statement; or


 


(iii)        _________
shall have notified the Company of the proposed disposition and, in the case of a sale or transfer in a so called “4(1)
and a half” transaction, shall have furnished counsel to the Company with an opinion of counsel, reasonably satisfactory
to counsel to the Company.


 



    	30



    	 



    

 


We
acknowledge that the Company will place stop orders with respect to the Warrants and the Exercise Shares, and if a registration
statement is not effective, the Exercise Shares shall bear the following restrictive legend:


 


“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE EFFECTED
UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE, SUBJECT
TO DELIVERY OF AN OPINION, AS PROVIDED IN THE WARRANT DATED AS OF [XX], 2012 AND ISSUED BY THE COMPANY.”


 


“THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 13, 2012, AS AMENDED FROM TIME TO TIME,
AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”


 


At
any time and from time to time after the date hereof, _________ shall, without further consideration, execute and deliver to [________]
or the Company such other instruments or documents and shall take such other actions as they may reasonably request to carry out
the transactions contemplated hereby.


 


Very
truly yours,


 



    	31



    	 



    

 


EXHIBIT
D


 


PROMISSORY
NOTE (Section 2(j) or Section 11(b))


 


[Date
of Issuance]


 


FOR
VALUE RECEIVED, Flamel Technologies, SA, a societe anonyme organized under the laws of the Republic of France (the “Maker”),
by means of this Note (this “Note”), hereby unconditionally promises to pay to [      ]
(the “Payee”), on [Insert 120 days after the Redemption Exercise Date] (the “Maturity Date”),
$[insert applicable Redemption Exercise Price or portion thereof in case of a mixed cash/note payment] in lawful money of the
United States of America and in immediately available funds.


 


This
Note is the “note” referred to in [Section 2(j)] [Section 11(b)] of the Warrant to Purchase American Depositary Shares
of the Maker issued on March 13, 2012 to Eclat Holdings, LLC (as modified and supplemented and in effect from time to time, the
“Warrant”).


 


The
outstanding principal amount of this Note shall bear interest, payable on the Maturity Date, at the rate of three percent (3%)
simple interest per annum. Without limiting the remedies available to the Payee under the Warrant or otherwise, to the maximum
extent permitted by applicable law, if Maker fails to make any payment of principal or interest on the Maturity Date, Maker shall
pay on demand interest on the outstanding principal amount and accrued and unpaid interest thereon at the Maturity Date, accruing
at the rate of 20 percent (20%) simple interest per annum from and after the Maturity Date until such payment is made.


 


If
a Major Transaction (as defined in the Warrant) has occurred, the outstanding principal amount of this Note and accrued interest
thereon shall become immediately due and payable.


 


All
payments due to the Payee from the Maker pursuant to this Note shall be made in the full face amount thereof. This Note may be
prepaid in full or in part at any time without penalty or premium. The Maker shall pay all and any reasonable costs (administrative
or otherwise) imposed by the Maker’s banks, clearing houses, or any other financial institution, in connection with making
any payments hereunder.


 


The
Maker and every endorser of this Note, or the obligations represented hereby, expressly waives presentment, protest, demand, notice
of dishonor or default, and notice of any kind with respect to this Note or the performance of the obligations under this Note.
No renewal or extension of this Note, no release of any Person primarily or secondarily liable on this Note including the Maker
and any endorser, no delay in the enforcement of payment of this Note and no delay or omission in exercising any right or power
under this Note affect the liability of the Maker or any endorser of this Note (other than the payment in full of the amounts
due under this Note).


 


The
provisions of this Note may be waived only in a writing signed by the Payee.


 


[THE
IMMEDIATELY FOLLOWING PARAGRAPH WILL ONLY BE INSERTED IF PROMISSORY NOTE ISSUED PRIOR TO SHAREHOLDER APPROVAL DATE]


 


This
Note is secured by the Security Agreement (as such term is defined in the Note Agreement).


 


The
provisions of Sections 5.1, 5.2, 5.3, 5.4, 5.6, 5.7, 5.10, 5.11, 5.12, 5.14 and 5.15 of the Note Agreement dated as of March 13,
2012 are incorporated by reference herein and made applicable to this Note, mutatis mutandis. Such incorporation shall
survive any termination of the Note Agreement.


 


IN
WITNESS WHEREOF, an authorized representative of the Maker has executed this Note as of the date first written above.


 


	 	 	FLAMEL
    TECHNOLOGIES S.A.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 



    	 



    	 



    

 


Schedule 1


 


Black-Scholes
Value


 


	 	 	Calculation
    Under Section 5(c)(iii)	 	Calculation
    Under Section 10(b) or 11(b)
	 	 	 	 	 
	Remaining
    Term	 	Number
    of calendar days from date of public announcement of the Major Transaction until the last date on which the Warrant may be
    exercised.	 	Number
    of calendar days from date of the determination until the last date on which the Warrant may be exercised.
	 	 	 	 	 
	Interest
    Rate	 	A risk-free
    interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Term.	 	A risk-free
    interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Term.
	 	 	 	 	 
	Volatility	 	If
        the first public announcement of the Major Transaction is
        made at or prior to 4:00 p.m., New York City time, the arithmetic mean of the historical volatility for the 10, 30 and 50
        Trading Day periods ending on the date of such first public
        announcement, obtained from the HVT or similar function on
        Bloomberg.
 
 

        If
the first public announcement of the Major Transaction is made
after 4:00 p.m., New York City time, the arithmetic mean of the historical volatility for the 10, 30 and 50 Trading Day periods
ending on the next succeeding Trading Day following the date of
such first public announcement, obtained from the HVT or similar function on Bloomberg.
	 	The
    arithmetic mean of the historical volatility for the 10, 30 and 50 Trading Day periods ending on the date of such first public
    determination, obtained from the HVT or similar function on Bloomberg.
	 	 	 	 	 
	Stock
    Price	 	The
    greater of (1) the closing price of the ADSs on NASDAQ, or, if that is not the principal trading market for the ADSs,
    such principal market on which the ADSs are traded or listed (the “Closing Market Price”) on the trading day immediately
    preceding the date on which a Major Transaction is consummated, or (2) the first Closing Market Price following the first
    public announcement of entry into definitive documents for a Major Transaction.	 	The
    volume Weighted Average Price on the date of such calculation.
	 	 	 	 	 
	Dividends	 	Zero.	 	Zero.
	 	 	 	 	 
	Strike
    Price	 	Exercise
    Price as defined in section 3(a).	 	Exercise
    Price as defined in section 3(a).


 



    	2