Document:

EXHIBIT 10.3

 

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED
FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.

[***] INDICATES THAT INFORMATION HAS BEEN
REDACTED.

 

REINSURANCE TRUST AGREEMENT

(hereinafter referred to as the “Agreement”)

 

entered into by and among

 

Crusader Insurance Company

(hereinafter referred to as the “Grantor”)

and

 

United Specialty Insurance Company

(hereinafter referred to as the “Beneficiary”)

 

Held By

 

Comerica Bank & Trust, National Association

Trustee

(hereinafter referred to as the “Trustee”)

 

SECTION 1.PURPOSE OF AGREEMENT

 

1.1       The
Grantor has assumed all liabilities of Beneficiary arising from insurance business subject to that certain Quota Share Reinsurance
Agreement dated effective April 1, 2020, between the Grantor, Unifax Insurance Systems, Inc. (the “General Agent”)
and the Beneficiary (hereinafter referred to as the “Reinsurance Agreement”).

 

1.2       Grantor
desires to secure the payment of its liabilities and the performance of its Obligations Under The Reinsurance Agreement. Beneficiary
reserves the right to require deposits to secure the payment of Grantor’s liabilities and performance of its Obligations
Under (i) The Reinsurance Agreement, and (ii) that certain General Agency Agreement, both dated effective April 1, 2020, between
Grantor, General Agent and Beneficiary.

 

1.3       Grantor
desires to deliver to Trustee “Securities” (as defined in Section 4.1 hereof) to be held by Trustee as collateral and
security for the sole use and benefit of Beneficiary, which securities may hereinafter be referred to as the “Trust Account,”

 

SECTION 2.SECURITY GRANTED BY GRANTOR

 

2.1       Pursuant
to the terms hereof, the Grantor hereby obligates itself to deliver to and deposit with the Trustee Securities in accordance with
Section 3 hereof as collateral and security for the Grantor’s Obligations Under The Reinsurance Agreement including the obligations
for unearned premiums reserves, if any, and reserves for losses incurred but not reported and losses reported but unpaid. The Loss
Reserves shall include all allocated loss adjustment expenses and appropriate unallocated loss adjustment expenses. For purposes
of this Agreement, the following terms shall have the following meanings:

 

		(a)	“Unearned Premiums” means, as of any given date, the aggregate premium attributable
to the unexpired coverage period of all insurance policies produced under the Reinsurance Agreement, as determined in accordance
with generally accepted accounting principles consistently applied. For this purpose, premium shall be the written premium charged
on the insurance policy for the period such policy is in force irrespective of the subsequent billing and collection of such premium.

 

		(b)	“Loss Reserves” means, as of any given date, the reserve attributable to losses incurred
but not reported and losses reported but not paid with respect to the insurance policies produced under the Reinsurance Agreement,
and shall include provision for both allocated and unallocated loss adjustment expense, in each instance as determined in accordance
with generally accepted accounting principles consistently applied.

 

		(c)	“Obligations Under The Reinsurance Agreement” and “Obligations Of The Grantor
Under The Reinsurance Agreement,” for purposes of this Agreement, share the same meaning as set forth in the Quota Share
Reinsurance Agreement.

 

The Grantor hereby agrees that the
actuarial opinion of the Beneficiary’s internal actuary shall be controlling, in its sole discretion, as to the timing and
determination of the adequacy of loss reserves established for losses incurred and outstanding on business produced under the Reinsurance
and General Agency Agreements unless the Grantor requests that the Beneficiary engage on a semi-annual basis, at the expense of
the Grantor, an independent actuarial opinion, performed by MILLIMAN USA’s Dallas office, attesting to the adequacy of loss
reserves established for losses incurred and outstanding on business produced under the Reinsurance and General Agency Agreements.
If the Grantor requests hereunder the actuarial opinion of MILLIMAN USA’s Dallas office, the Grantor hereby agrees to post
the collateral required hereunder in accordance with the actuarial analysis of the Beneficiary’s internal actuary until an
analysis is completed by MILLIMAN USA’s Dallas office.  At such time, the Grantor shall post the collateral required
hereunder in accordance with the actuarial analysis of MILLIMAN USA’s Dallas office. However, if subsequent to the receipt
of the applicable independent actuarial opinion, the Beneficiary determines in its sole discretion that there has been a significant
change in the loss reserves as compared to the applicable independent actuarial opinion, the Beneficiary’s internal actuary
shall again be controlling, in its sole discretion, as to the timing and determination of the adequacy of loss reserves established
for losses incurred and outstanding on business produced under the Reinsurance and General Agency Agreements until the Beneficiary
again engages, at the expense of the Grantor, an independent actuarial opinion, performed by MILLIMAN USA’s Dallas office,
attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced under the Reinsurance
and General Agency Agreements. Additionally, if the actuarial opinion of the Beneficiary’s internal actuary is not available,
for any reason, the Beneficiary shall engage semi-annually, at the expense of the Grantor, an independent actuarial opinion, performed
by MILLIMAN USA’s Dallas office, attesting to the adequacy of loss reserves established for losses incurred and outstanding
on business produced under the Reinsurance and General Agency Agreements.

 

2.2       During
the term of this Agreement, Grantor hereby agrees that Trustee shall act for the benefit of Beneficiary in taking delivery and
possession of the said securities pursuant to Section 3 hereof and in holding such securities as collateral for the purposes expressed
herein for Beneficiary’s benefit, and Grantor hereby grants to Trustee all powers necessary and reasonable in the performance
hereunder.

 

2.3       The
existence of the Trust Account, as security for obligations of Grantor to Beneficiary, shall not affect Grantor’s Obligations
Under The Reinsurance Agreement, nor shall the securities of the Trust Account be used as a set off by Grantor for any obligations
to Beneficiary, except for Grantor’s right to withdraw securities from the Trust Account in accordance with Section 3 or
to receive any excess securities held by Beneficiary pursuant to Section 5.5.

 

SECTION 3.DEPOSITS TO AND INVESTMENT
OF SECURITY

		 	

3.1         
Within 10 business days of the effective date of this Agreement, and within 10 business days prior to the end of each calendar
quarter thereafter, Beneficiary shall provide Grantor with a good faith estimate of the expected sum of [***]% of the Beneficiary’s
ceded Unearned Premium and Loss Reserves as of the end of the forthcoming calendar quarter (the “Estimate”). Each time
(i) the Grantor’s A.M. Best rating or outlook is at any time reduced; or (ii) the Grantor’s A.M. Best rating or outlook
is at any time removed or withdrawn such that the Grantor is not rated or unrated by A.M. Best; or (iii) the Grantor’s capital
and policyholder surplus (or its equivalent) reduces [***]percent ([***]%) or more during any rolling twelve (12) month period
measured quarterly; or (iv) the Grantor fails to maintain its CAT XOL reinsurance with coverage up to [***] dollars ($[***]) with
a [***] dollars ($[***]) retention and its multiline XOL reinsurance with coverage up to [***] ($[***]) with a [***] dollars ($[***])
retention, each provided by the Reinsurer’s reinsurers existing as of the effective date of this Agreement, provided that
the Grantor may add reinsurers with a minimum surplus of at least [***] dollars ($[***]) and an “A” rating by A.M.
Best, the components of the Estimate shall increase by [***]% (i.e. the first time the Estimate shall increase to [***]% of the
Beneficiary’s ceded Unearned Premium and Loss Reserves as of the end of the forthcoming calendar quarter, the second time
the Estimate shall increase to [***]% of the Beneficiary’s ceded Unearned Premium and Loss Reserves as of the end of the
forthcoming calendar quarter, etc.). The Grantor shall, within two business days prior to the commencement of such forthcoming
calendar quarter, fund the Reinsurance Trust in an amount equivalent to [***]% of the Estimate.

 

3.2       The
Grantor shall be entitled at any time to withdraw Securities from the Trust Account if concurrently therewith Securities (as defined
in Section 4.1 hereof) of equal or greater market value are deposited in the Trust Account, and the Trustee is authorized to permit
such substitution of Securities upon receipt of the Beneficiary’s written approval, which shall not be unreasonably withheld.

 

3.3       All
securities deposited by the Grantor (i) shall be free and clear of all encumbrances, and (ii) shall be fully negotiable or in such
form that Trustee may sell, transfer or otherwise deposit the same without any additional signature or agreement from Grantor.

 

SECTION 4.SECURITIES

 

4.1       The
term “Securities” as used herein is defined as any combination of (a) cash, or deposits held, or negotiable certificates
of deposit issued by an institution that is (i) organized or licensed under the laws of the United States or any state thereof,
(ii) is regulated, supervised and examined by U.S. federal or state authorities having regulatory authority over banks and trust
companies, and (iii) appears on the most recently issued list of approved banks published by the Securities Valuation Office of
the National Association of Insurance Commissioners, (b) United States Government issued or guaranteed bonds, bills or notes, or
(c) any other bonds with a Standard & Poor’s or Moody’s quality rating of “A” or better. All securities
and assets held in the Trust Account shall be readily marketable over a national exchange and shall be listed by the Securities
Valuation Office of the National Association of Insurance Commissioners with designations of “1-Highest Quality”. All
securities and assets held in the Trust Account shall be of the type required by the applicable laws or regulations. All such securities
shall be in conformance with the investment requirements described in the applicable laws or regulations.

 

4.2       For
purposes of this Agreement, the market value of the Securities shall be determined as follows: (a) at the time any Securities are
deposited initially with the Trustee, and as respects Securities on deposit at the end of each calendar month, the Trustee shall
in good faith place a tentative market value on the Securities and shall notify the Beneficiary of such valuation by supplement
to the Trustee’s monthly activities report; provided pursuant to Section 8.6; (b) if the Beneficiary disagrees with such
tentative market valuation, it may so notify the Trustee within 30 days after the date it receives the Trustee’s monthly
activities report and the Trustee’s supplement thereto (Beneficiary’s failure to so notify the Trustee within such
30 day period shall signify that Beneficiary agrees with such tentative market value); (c) in the event the parties cannot resolve
any difference with respect to the market value of the Securities, the market value of the security in dispute shall be determined
by the Securities Valuation Office of the National Association of Insurance Commissioners; and (d) With respect to securities on
deposit at the end of each calendar month, the Trustee shall value the securities by utilizing various standard industry pricing
services and brokerage contacts to provide current pricing information for active publicly traded securities.  The Trustee
shall attempt to provide a reasonably accurate current market value for assets not publicly traded.  Many fixed income securities
are priced on a matrix system, resulting in a mathematical approximation of price derived by computer.  Although the Trustee
will make reasonable and good faith efforts to provide accurate pricing, in some instances prices may not reflect the most accurate
pricing readily available or the true value of the asset.  The Trustee shall have no liability for such an occurrence.

 

SECTION 5.BENEFICIARY’S CLAIM ON
THE TRUST ACCOUNT

 

5.1       The
Beneficiary shall have the right to withdraw securities from the Trust Account, without diminution because of the insolvency of
the Grantor, for the purposes and to the extent specified in Sections 5.2 and 5.3 below, with written notice from the Beneficiary
to the Trustee given in accordance with Section 8.1 of this Agreement. Upon such written notice by the Beneficiary, the Trustee
shall immediately take any and all steps necessary to transfer to the Beneficiary absolute and unequivocal right, title and interest
in the requested securities and assets in the Trust Account and to deliver such securities and assets to the Beneficiary and Beneficiary
shall acknowledge to the Trustee receipt of such withdrawn securities and assets. Any dispute between Grantor and Beneficiary regarding
Beneficiary’s claim on the Trust Account shall be resolved by arbitration pursuant to Section 12. Trustee shall strictly
comply with its instructions hereunder without resorting to interpleader. Beneficiary will hold Trustee harmless if acting upon
Beneficiary’s instructions hereunder.

 

5.2 The Beneficiary has the right
to withdraw assets from the Trust Account at any time, without notice to the Grantor, subject only to written notice from the Beneficiary
to the Trustee, the Trustee having no responsibility for such withdrawal, in accordance with the terms of this Agreement. No statement
or document, other than written notice from the Beneficiary to the Trustee, shall be accepted to withdraw assets. The Beneficiary
hereby covenants to the Grantor that it shall use and apply any withdrawn assets, without diminution because of the insolvency
of the Beneficiary or the Grantor, for the following purposes only:

 

		(a)	to pay or reimburse the Beneficiary for the Grantor’s share
under the Reinsurance Agreement regarding any losses and allocated loss expenses paid by the Beneficiary but not recovered from
the Grantor, or for unearned premiums due to the Beneficiary, if not otherwise paid by the Grantor;

 

		(b)	to make payment to the Grantor of any amounts held in the Trust
Account that exceed 102% of the actual amount required to fund the Grantor’s entire Obligations Under The Reinsurance Agreement.
Trustee has no responsibility to determine whether the value of Assets exceeds 102%and may rely on the statement or notice from
Beneficiary certifying as such; or

 

		(c)	where the Beneficiary has received notification of termination of the Trust Account pursuant to
Section 11 of this agreement, and where the Grantor’s entire Obligations Under The Reinsurance Agreement remain unliquidated
and undischarged 10 days prior to the termination date, to withdraw amounts equal to 102% of such obligations and deposit such
amounts in a separate account, in the name of the Beneficiary, in any qualified United States financial institution, apart from
its general assets, in trust for the uses and purposes specified in subparagraphs (a) and (b) of this Section as may remain executory
after such withdrawal and for any period after such termination date.

 

5.3         
In the event the Beneficiary takes control of the securities pursuant to Section 5.2, such securities shall be maintained
by the Beneficiary for the purpose of securing the Obligations Under The Reinsurance Agreement, and otherwise securing the Beneficiary
under the terms of this Agreement, in the manners provided in subsection (a) or (b) of this subsection 5.3 only:

 

		(a)	such securities shall be held by the Beneficiary as an asset and maintained, on the books and records
of the Beneficiary, in an identifiable manner as “Funds Held By the Beneficiary Under the Quota Share Reinsurance Treaty”
(hereinafter referred to as “Funds Held”), to use and disburse the Funds Held for purposes described in Section 5.4.
An amount equal to the market value of the Funds Held shall be carried by the Beneficiary as a liability under its financial statement
denominated “Funds Held by Beneficiary Under Reinsurance Treaties,” and all amounts paid out of such Funds Held by
the Beneficiary shall reduce the liability of the Grantor. Any securities in excess of the amount required to pay or reimburse
Beneficiary for the purposes described herein shall be returned to Grantor, its successor or legal representative, upon the conclusion
of all further Obligations Of Grantor Under The Reinsurance Agreement.

 

		(b)	Such Securities shall be deposited in a New York Insurance Regulation 114 trust (“114 Trust”)
for the benefit of the Beneficiary, provided the Grantor's approval is not required for the Beneficiary to use and disburse funds
held in such trust for purposes described in Section 5.4.

 

5.4       The
Beneficiary may disburse amounts from the Funds Held or 114 Trust assets for the payment of losses and refunds through the Reinsurance
Agreement pursuant to the terms of its General Agency Agreement with the Beneficiary, or to any successor appointed by the Beneficiary
to act as general agent in connection with the business subject to the Reinsurance Agreement. Also, the Beneficiary may use such
Funds Held or 114 Trust assets to reimburse itself for any amounts the Grantor is obligated under the Reinsurance Agreement, including,
but not be limited to, any losses paid, and unearned premiums refunded by the Beneficiary, and for actual costs of administration
incurred by the Beneficiary in the event the Beneficiary is required to assume control of the servicing and claims handling of
the business subject to the Reinsurance Agreement.

 

5.5       In
the event the Beneficiary takes control of the securities pursuant to Section 5.3, the Grantor shall remain obligated for amounts
due under the Reinsurance Agreement and shall be obligated to maintain, in the Funds Held by Beneficiary or 114 Trust, a value
at least equal to the Unearned Premium and Loss Reserves in accordance with Section 3.1. The Grantor’s rights and obligations
to withdraw and deposit securities from the Funds Held shall be the same as when the securities were held in the Trust Account
by the Trustee as provided in Section 3.

 

SECTION 6.INTEREST, DIVIDENDS AND EXPENSES

 

6.1       Any
interest, dividends or other investment income generated from the securities held by Trustee shall remain in the Trust Account,
subject, however, to Grantor’s right to withdraw assets from the Trust Account in accordance with Sections 3.2 and 3.3. Grantor
shall be liable for reporting and paying any income taxes arising therefrom.

 

6.2       Also,
Grantor will receive the benefit of the interest, dividends or other investment income generated from any securities taken and
held by the Beneficiary pursuant to Section 5.3.

 

6.3       All
fees and expenses charged by the Trustee for its services under the terms of this Agreement shall be paid by the Grantor. The Grantor
shall pay or reimburse the Trustee for all of the Trustee’s expenses and disbursements in connection with its duties under
this Agreement (including reasonable attorney's fees and expenses), except any such expense or disbursement as may arise from the
Trustee‘s negligence, willful misconduct, or lack of good faith. The Trustee shall be entitled to deduct its compensation
and expenses from the aggregate market value of the Trust Account should it be over the amount required in Section 3.1, subject
to the Beneficiary's prior written approval which shall not be unreasonably withheld, except that such compensation shall not be
greater than 1.0% of the corpus per annum. The Grantor and the Beneficiary jointly and severally hereby indemnify the Trustee for,
and holds it harmless against, any loss, liability, costs or expenses (including reasonable attorney's fees and expenses) incurred
or made without negligence, willful misconduct or lack of good faith on the part of the Trustee, arising out of or in connection
with the performance of its obligations in accordance with the provisions of this Agreement, including any loss, liability, costs
or expenses arising out of or in connection with the status of the Trustee and its nominee as the holder of record of the Securities
in the Trust Account. The Grantor and the Beneficiary hereby acknowledges that the foregoing indemnities shall survive the resignation
or discharge of the Trustee or the termination of this Agreement and hereby grants the Trustee a lien, right of set-off and security
interest in the portion of the aggregate market value of the Trust Account that is over the amount required in Section 3.1 for
the payment of any claim for compensation, reimbursement or indemnity hereunder.

 

SECTION 7. SECURITY INTEREST

 

7.1       The
Grantor and Beneficiary acknowledge and agree that the Assets held by the Trustee in the Trust Account hereunder have been deposited
in said Trust Account for the sole benefit of the Beneficiary and pledged by the Grantor to the Beneficiary as security for the
Grantor’s Obligations Under The Reinsurance Agreement. In furtherance of the foregoing, the Grantor hereby pledges with,
assigns to, and grants the Beneficiary a continuing first security interest in, and a lien upon the Trust Account, all Assets (and
after-acquired proceeds of all Assets) in the Trust Account, all financial assets and cash from time to time credited thereto and
all security entitlements in respect thereof pursuant to the Uniform Commercial Code as in effect from time to time in the State
of Texas (the "UCC"). The Grantor and Beneficiary are entering into this Trust to perfect the deposit of the Trust Account
Assets for the sole benefit of the Beneficiary, as well as the security interest in and lien on such collateral. Trustee acknowledges
that a security interest has been granted by the Grantor to the Beneficiary in the Trust Account and the Assets held therein. Except
as otherwise expressly stated herein, the terms defined in the UCC have the same meanings herein. In addition to whatever other
rights and remedies the Beneficiary may have thereunder, the Beneficiary shall also have all rights and remedies of an Entitlement
Holder under the UCC. Subject to the terms and conditions of this Agreement, the Trustee agrees to comply with any timely entitlement
order originated by the Beneficiary and relating to cash, financial asset credited thereto or any other Assets in the Trust Account
without further consent by the Grantor or any other person.

 

7.2       To
the extent that securities (as defined by the UCC) are deposited in the Trust Account, the parties hereto agree that (i) the Trust
Account shall be deemed a securities account; (ii) the Trustee is a securities intermediary with respect to the Trust Account;
(iii) the Trustee shall, subject to the terms of this Agreement, treat the Beneficiary as the entitlement holder with respect to
the Trust, entitled to exercise the rights that comprise all financial assets from time to time credited to the Trust Account;
(iv) each item of property (whether Securities, investment property, security, instrument, or other property, but not cash which
shall not be a financial asset for the purposes of this Agreement) credited to the Trust Account shall be treated as a financial
asset; and (v) the State of New York shall be deemed to be the securities intermediary’s jurisdiction for purposes of the
UCC.

 

7.3       The
Trustee waives, except as set forth in Section 6.3, any security interest, lien, or right to make deductions or setoffs that it
may now have or hereafter acquire in or with respect to the Trust, any financial asset credited thereto or any security entitlement
in respect thereof. Neither the financial assets credited to the Trust nor the security entitlements in respect thereof will be
subject to deduction, set-off, banker’s lien, or any other right in favor of any person other than the Beneficiary.

 

7.4       The
Trustee has not entered into, and until the termination of this Agreement will not enter into, any agreement with any person (other
than the Beneficiary and Grantor) relating to the Trust Account and/or any financial asset credited thereto pursuant to which it
has agreed, or will agree, to comply with entitlement orders of such person. The Trustee has not entered into any other agreement
with the Beneficiary or the Grantor purporting to limit or condition the obligation of the Trustee to comply with entitlement orders
as agreed above.

 

7.5       Except
for the claims and interests of the Beneficiary and the Grantor, the person executing this Agreement on behalf of the Trustee does
not know of any claim to, or interest in, the Trust Account, any financial asset credited thereto or any security entitlement in
respect thereof. If any person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, attachment,
execution or similar process) against the Trust Account, any financial asset credited thereto or any security entitlement in respect
thereof, the Trustee will promptly notify the Beneficiary and the Grantor in writing thereof.

 

7.6       In
the event of any conflict between the duties and responsibilities of the Trustee under this Section 7 and the duties and responsibilities
of the Trustee under the other Sections of this Agreement, the duties and responsibilities under this Section 7 shall govern and
control.

 

 

SECTION 8.TRUSTEE’S AGREEMENT

 

8.1       The
Trustee agrees to hold and disburse the Trust Account in accordance with the provisions expressed herein. Trustee shall disburse
securities to the Beneficiary upon receipt of a duly executed and completed Affidavit by Beneficiary in accordance with the form
attached hereto as Exhibit “A”. Trustee is authorized and directed by both parties to act upon such instructions in
compliance herewith without inquiry as to the accuracy of the facts and statements made in any such affidavit and without regard
to protest by any party; provided, however, Trustee would not be expected to act contrary to any court order or any arbitration
directive pursuant to Section 12, supported by the affidavit of two of the three arbitrators.

 

8.2       The
Trust Account shall be (i) in the possession of Trustee at its offices in Detroit, Michigan, (ii) kept separate and apart from
any assets of the Trustee and any other securities held by the Trustee for whomever and for whatsoever purpose, (iii) clearly identifiable
as securities subject to this Agreement at all times while in the possession of the Trustee, and (iv) in such form that the Beneficiary
or the Trustee upon the direction of the Beneficiary may, whenever necessary, negotiate any securities in the Trust Account, without
the consent or signature from the Grantor or any other person or entity.

 

8.3       The
Trustee shall not deposit any securities of the Trust Account with correspondent banks, investment bankers, brokers or any other
third-party nor shall such securities be pledged or hypothecated by the Trustee in any manner nor shall such securities be used
by the Trustee in any manner for the benefit of the Trustee.

 

8.4       The
Trustee shall on request of the Beneficiary, or the Grantor certify in writing the securities held by the Trustee for the Beneficiary.
That certification shall include the name of the issuer of each security, the class of security, the “CUSIP” number
of each security, the number of shares of units, and the face amounts of such securities.

 

8.5       The
Trustee shall fully and completely respond to any direct inquiries of any duly authorized insurance regulatory agency of any state
concerning the Trust Account, including, but not limited to detailed inventories of securities or funds, and the Trustee will permit
the representative of any such regulatory agency to examine and audit all securities or funds held hereunder.

 

8.6       The
Trustee agrees to provide copies of monthly activities reports to the Beneficiary and the Grantor as soon as possible following
the end of each month, which reports shall show all deposits, withdrawals, substitutions and a listing of securities in the Trust
Account as of the end of the month. If neither the Grantor, nor the Beneficiary files with the Trustee written objection to any
such report within 60 days of receipt, the Grantor and Beneficiary shall be deemed to have approved such report, and the Trustee
shall be released and discharged with respect to all matters set forth in such report as though the same had been judicially settled.
The Trustee agrees to notify the Grantor and the Beneficiary within 10 days of any deposits to, or withdrawals from the Trust Account.
The Grantor and Beneficiary agree that such notice shall be provided by access to Trust Account information via Comerica Trust
Online or another transmission method selected by the Trustee and communicated to the Grantor and Beneficiary by the Trustee.

 

8.7       The
Trustee hereby waives any right of offset and all other rights and remedies against or affecting the Trust Account.

 

8.8       The
Trustee may at any time resign from, and terminate its capacity hereunder by written notice of resignation, effective not less
than 90 days after receipt by both the Beneficiary and the Grantor. However, no such resignation by the Trustee shall be effective
until a successor to the Trustee shall have been duly appointed as provided in this Agreement and all the securities and assets
in the Trust Account have been duly transferred to such successor. The Beneficiary, upon receipt of such notice, shall undertake
to obtain the agreement of a qualified, successor depository, agreeable to the Grantor, to act in accordance with all agreements
of the Trustee herein. A qualified depository shall be any United States financial institution member of the Federal Reserve System.
Grantor agrees not to unreasonably withhold approval if the depository so chosen has capital and surplus of at least $100,000,000.
Upon the Trustee’s delivery of the Trust Account to the qualified, successor depository, along with a closing statement showing
all activities (as contemplated in Section 8.6) from the last monthly report, the Trustee shall be discharged of further responsibilities
hereunder.

 

SECTION 9.TRUSTEE’S RESPONSIBILITY

 

9.1       The
Trustee shall in no way be responsible for determining the amount of securities required to be deposited by the Grantor or monitoring
whether or not the securities conform to investment requirements.

 

9.2       The
Trustee is not a party to, and is not bound by or charged with notice of the Reinsurance Agreement or any other agreement out of
which this Agreement may arise.

 

9.3       The
Trustee is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the
subject matter of this Agreement or any part thereof, or for the form or execution thereof, for the identity or authority of any
person executing or depositing it.

 

9.4       The
Trustee shall be protected in acting upon any written notice, request, affidavit, waiver, consent, certificate, receipt, authorization,
power of attorney or other paper or document which the Trustee in good faith believes to be genuine and that purports to be from
the Beneficiary or the Grantor.

 

9.5       The
Trustee shall be indemnified and not held liable for anything which it may do or refrain from doing in connection herewith, except
its own negligence, willful misconduct, lack of good faith, or breach of fiduciary duty. Trustee shall further be indemnified and
not held liable for transferring the Trust assets to another institution, when jointly directed to do so by the Grantor and the
Beneficiary.

 

9.6       Notwithstanding
anything else contained herein to the contrary, the Trustee acknowledges liability for any certificates lost due to theft or any
error or omission or other comparable act of the Trustee, or authorized representative thereof, and Trustee agrees that it shall
maintain fidelity or other insurance coverage applicable to such liability which shall be in addition to the full faith and credit
of the Trustee therefor.

 

SECTION 10.ACCESS TO RECORDS

 

10.1       The
Beneficiary and the Grantor shall have the right at any reasonable time to examine all papers in the possession of each other,
or with the Trustee, applicable to this Agreement and the Trust Account deposited and maintained hereunder.

 

SECTION 11.TERMINATION

 

11.1       Termination
of this Agreement shall only occur upon at least thirty (30) days written notice via certified mail from the Trustee to the Beneficiary
and Reinsurance Division of the Texas State Board of Insurance located at 333 Guadalupe Street Austin TX 78701, and the Trustee
shall release and deliver to the Grantor all securities held pursuant to this Agreement upon receipt by the Trustee of written
notice from the Beneficiary that the Grantor’s Obligations Under The Reinsurance Agreement for Unearned Premium and Loss
Reserves have been discharged, including obligations for the “run-off” of any business subject to the Reinsurance Agreement.

 

11.2       The
termination of the Reinsurance Agreement shall not terminate this Agreement, but Grantor shall continue to pay claims under the
terms of the Reinsurance Agreement as if there were no security provided under this Agreement, subject, however, to Grantor’s
right to withdraw securities from the Trust Account in accordance with Section 3, or to receive any excess securities held by Beneficiary
pursuant to Section 5.5.

 

SECTION 12.ARBITRATION

 

12.1       It
is agreed between Beneficiary and Grantor that any disagreement between such parties regarding the construction, application, or
implementation of this Agreement may be submitted to arbitration pursuant to arbitration provisions contained in the Reinsurance
Agreement. However, questions arising out of Section 3 or Section 5 require an expedited resolution pursuant to these provisions.

 

12.2       The
party invoking arbitration with respect to Section 3 or Section 5 shall notify the other party and shall provide the name of its
designated arbitrator at that time. The second party shall have 15 days from receipt of notice to designate its arbitrator, who
shall contact the first arbitrator to select a third arbitrator. Both arbitrators shall use their best efforts to obtain a third
arbitrator within 30 days. Once chosen, the three arbitrators should expeditiously resolve the issues presented by the parties.
If the party receiving notice of intent to arbitrate does not provide notice of its arbitrator within the 15 day period required,
such party shall be deemed to have waived its right to designate the second arbitrator and the arbitrator first designated shall
designate the second arbitrator. The arbitrators shall be disinterested, active or retired officers of property and casualty insurance
companies. The arbitration provisions of the Reinsurance Agreement may be referred to for guidance as to matters not specifically
provided herein.

 

12.3       The
Beneficiary and the Grantor agree to be bound by the final or any interim findings and directives of the arbitrators, including
the immediate deposit or return of securities or assets to the Trust Account if so directed.

 

SECTION 13.CONSTRUCTION AND EFFECT

 

13.1       This
Agreement and all proceedings pursuant hereto shall be governed by the laws of the State of Texas.

 

13.2       This
Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

 

13.3(a)In the event of the
failure of the Grantor to perform its Obligations Under The Reinsurance Agreement or the terms of this Agreement, Grantor, at the
request of the Beneficiary, shall submit to the jurisdiction of any court of competent jurisdiction in any State of the United
States, will comply with all requirements necessary to give such court jurisdiction, and will abide by the final decision of such
court or of any Appellate Court in the event of an appeal.

(b)       The
parties, after consulting (or having had the opportunity to consult) with counsel of their choice, each knowingly and voluntarily
waives its right to trial by jury in any action, proceeding or counterclaim brought by any of the parties hereto against another
party on any matters whatsoever arising out of or in any way connected with this Agreement. 

 

13.4       The
Grantor shall be deemed to have designated the State Board of Insurance in any state in which business is produced, or a designated
attorney, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted
by or on behalf of the Beneficiary. This provision, however, is not intended to conflict with or override the obligation of the
parties to arbitrate their disputes.

 

13.5       This
Agreement is not subject to any conditions or qualifications outside of this Agreement and is not conditioned upon any other agreements
or documents.

 

SECTION 14.NOTICES

 

14.1       Unless
otherwise specifically provided herein, every notice required or permitted to be given under this Agreement shall be given in writing
to an officer of the party to whom it is directed by actual delivery to the address, or by telecopy message to the number, as follows:

 

Grantor:

 

Crusader Insurance Company

Attn: Michael Budnitsky

26050 Mureau Road

Calabasa, CA 91302-3171

 

Beneficiary:

 

United Specialty
Insurance Company

1900 L. Don Dodson Drive

Bedford, Texas 76021

 

Trustee:

Comerica Bank & Trust, N.A.

411 West Lafayette Boulevard

Detroit, MI 48226

Attn: Sandy Truman-Swayne,
MC 3462

 

Any party to this Agreement may change
the address and telecopy number above set out by giving the other parties notice of such change in the manner specified for notice
in this Agreement.

 

SECTION 15.EFFECTIVE DATE

 

15.1       This
Agreement shall be effective April 1, 2020.

 

 

[Balance of page intentionally
left blank. Signatures appear on next page.]

    	 

    	 

    

 

IN WITNESS WHEREOF, the
parties hereto by their respective duly authorized officers have executed this Agreement.

 

BENEFICIARY

UNITED SPECIALTY INSURANCE COMPANY

 

 

By: /s/ David Cleff

Its: EVP

Date:4-3-2020

 

 

GRANTOR

CRUSADER INSURANCE COMPANY

 

 

By: /s/ Cary L. Cheldin

Its: President

Date:4-1-20

 

 

Trustee

Comerica
Bank & Trust, National Association

 

 

By: /s/ Sandra Swayne

Its: Vice President

Date:April 6, 2020

 

 

 

    	 

    	 

    

EXHIBIT A

 

CERTIFICATION OF WITHDRAWAL OF SECURITIES

 

 

Reference is made to that
certain Reinsurance Trust Agreement dated effective April 1, 2020, by and among Crusader Insurance Company, as “Grantor,”
United Specialty Insurance Company, as “Beneficiary,” and Comerica Bank & Trust, National Association, as “Trustee”
(the “Agreement”). Section 5 of the Agreement sets forth circumstances under which the Beneficiary may withdraw securities
from the Trust Account. Beneficiary hereby certifies to Trustee, pursuant to Section 8 of the Agreement that the following event
has occurred which entitles Beneficiary to withdraw securities from the Trust Account:

 

.

 

Capitalized terms used herein
and not otherwise defined shall have the respective meanings ascribed to such terms in the Agreement.

 

 

Dated: UNITED
SPECIALTY INSURANCE COMPANY

 

 

 

By:

Its:

 

 

THE STATE OF TEXAS§

§

COUNTY OF TARRANT§

 

I, , a Notary Public, do hereby
certify that on this the  day of  , 20__, personally appeared before me , who declared that he
is  of the corporation executing the foregoing instrument, and being by me first duly sworn, acknowledged that he signed
the foregoing document in the capacity therein set forth and declared that the statements therein contained are true.

 

IN WITNESS WHEREOF, I hereunder set my hand
and seal of office, the date and year before written.

 

 

 

Notary Public in and

for the State of Texas

 

My Commission expires: 

 

    	 

    	 

    

Comerica Bank

New Account Client Questionnaire

 

 

	 

Account Name:

 

 

	 

Anticipated Conversion Date:

 

 

		A.	Due Diligence Questions:

 

		q	Please state the nature of your business:

	 
	 

 

 

		q	What is the primary geographic market area where you conduct business?

	 

 

 

	 

		q	Please provide your Taxpayer Identification Number:

 

 

		q	Please provide the following documents (those that apply):

		-	Certified Articles of Incorporation

		-	IRS Letter regarding tax-exempt status

		-	Trust Agreement

		-	Government issued business license

		-	Partnership Agreement

		-	Financial Statements and/or Annual Reports

		-	IRS Form W-9

 

	 

		q	Where will the assets/funds be coming from?

 

	 

		q	What will be the market value of the initial funding?

 

	 

		q	If frequent deposits will be made, what do you anticipate the market value to be after 12 months?

 

 

		q	Are there third party deposits into or withdrawals from the account (e.g., checks, wire transfers, etc.)?

	Yes	 	No	 

 

 

		q	Will the account be sending wire transfers to and/or receiving wire transfers from a foreign entity? 

	Yes	 	No	 

 

 

 

 

		B.	Captive Insurance Accounts Only

 

	 

		q	Account Domicile

 

 

	 

		q	What is the captive structure?

 

 

	 

		q	Name of Parent Company (if applicable) 

 

 

		q	Has the company taken a 953(d) election? 

	Yes	 	No	 

 

 

If yes, please provide a copy of
the IRS approval letter

If no, please provide an IRS Form W-8BEN

 

	 

		q	Captive Manager

 

	 

		q	Contact Name 

	 

 

		q  Phone Number	

	 

 

		q	E-mail Address

 

		q	Is the account a Reinsurance Trust? 

	Yes	 	No	 

 

 

If yes, please provide contact details
for the beneficiary:

 

 

	 

Firm Name

 

	 

Contact Name 

 

	 

Phone Number

	 

 

E-mail Address

 

 

 

 

 

 

 

 

 

 

 

		C.	Account Set-Up Questions (for all accounts):

 

		q	Who should receive statements?

 

	 

Name:

 

	 

Address: 

	 

 

 

 

	 	Monthly	 	Quarterly	 	Annually

How Often:

 

 

	 

 

Name:

 

	 

Address: 

	 

 

 

 

	 	Monthly	 	Quarterly	 	Annually

How Often:

 

 

	 

		q	Do you need a consolidated statement to combine all accounts?

 

 

		q	Do you require paper copies of statements mailed to you or will you be retrieving statements from Custody On-line?

	 	Mail paper statements
	 	Custody On-line will be utilized for statement retrieval

 

 

 

 

		q	Please provide the following information for the individual at your current custodian who will be handling the transfer of
assets to Comerica (if applicable).

	 

 

Contact Name 

 

	 

Firm Name

 

	 

Phone Number 

 

	 

Fax Number

	 

 

E-mail Address

 

 

 

 

 

		q	Please provide the following information for the main contact at your organization (individual who will handle day to day issues).

 

	 

Name 

 

	 

Phone Number 

	 

 

Fax Number

	 

 

E-mail Address

 

 

 

		q	Cash Accounting

	 	Dual Cash Accounting (principal and income cash separated)
	 	Single Cash Accounting (principal and income cash combined)

 

 

 

 

 

		q	If cost basis and tax acquisition dates will be supplied to us by someone other than the current custodian, please provide
the details:

	 

 

 

		q	What write-down method should be used on your account for sale transactions?

	 

(i.e., LIFO, FIFO, Average, etc.)
NOTE: The default option is FIFO

 

 

	 

		q	Is amortization/accretion reporting required?

If yes, using which method: 

	 	Constant Yield (default option)
	 	Straight Line

 

 

 

 

 

	 

		q	What is the Fiscal Year End? 

 

 

		q	If your account holds mutual funds, please specify your preferred method for income and capital gains distributions:

 

	Dividends	 	Cash
	 	 	Reinvest
	 	 	 
	Capital Gains	 	Cash
	 	 	Reinvest

 

 

		q	Select party responsible for proxy voting (usually determined by agreement or contract with investment management firm):

	 	Client
	 	Appointed Investment Manager
	 	Comerica
	 	Other

 

 

 

		q	If applicable, please provide contact information for outside Investment Managers

 

	 

Contact Name 

	 

 

Firm Name

 

	 

Phone Number

 

	 

E-mail Address

 

 

		q	Please provide any special reporting requirements

	 
	 
	 
	 
	 

 

		D.	Other 

 

		q	Will Comerica be maintaining records for outside collective funds or other investments that will not be held at one of Comerica’s
depositories? If so, please provide the details:

	 
	 
	 

 

		q	If applicable, please provide contact information for your investment consultant, actuary or other service providers we may
work with in servicing your account:

 

	 

Contact Name 

	 

 

Firm Name

 

	 

Phone Number

 

	 

E-mail Address

 

 

 

 

	 

Contact Name 

	 

 

Firm Name

 

	 

Phone Number

 

	 

E-mail Address

 

 

 

 

		q	We direct charge the account for our services on a quarterly basis. Please provide the name and address of the person to receive
a copy of our invoice:

 

	 

Name:

 

	 

Address: 

	 

 

 

 

	   
	
         

         

 

Client Signature:

 

Date Signed:Exhibit 10.3

 

THIS NOTE AND THE COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER 

 

US $[Principal Amount] 

 

 

HUMANIGEN, INC.

7% CONVERTIBLE REDEEMABLE NOTE

DUE
MARCH [l], 2021

 

 

FOR
VALUE RECEIVED, HUMANIGEN, INC. (the “Company”) promises to pay to the order of [Name of Holder] and its authorized
successors and permitted assigns ("Holder"), the aggregate principal face amount of [l]
Dollars exactly (U.S. $[l])
on MARCH [l], 2021
("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 7% per annum
commencing on March [l],
2020 (“Issuance Date”). This Note shall contain an original issue discount of $[10% of Principal Amount]
such that the purchase price is $[l].
The principal of, and interest on, this Note are payable at [l],
initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time
to time. The Company will pay the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required
by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address
appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding
principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented
by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

 

This Note is subject
to the following additional provisions:

 

1.       This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.

 

    	 	 	 

    	 	 

    

 

2.       The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

3.       This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act"), and
applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior
to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue,
and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing
to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a),
and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being
converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including
receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

4.       
(a)       Subject to the provisions of Section 4(b), beginning on the 6th monthly anniversary of the Issuance
Date, the Holder of this Note is entitled, at its option, to convert all or any amount of the principal amount of this
Note then outstanding, together with the accrued and unpaid interest on such portion of the Note proposed to be converted,
into shares of the Company's common stock (the "Common Stock") at a price ("Conversion
Price") equal to $.25 per share (the “Fixed Price”). After the 9th month anniversary of this Note,
the Conversion Price shall be equal to the lower of the Fixed Price or 68% of the lowest of
either the trading price or closing bid of the Common Stock as reported on the National
Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common
Stock may be traded in the future ("Exchange"), for the ten prior trading days
including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of
Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M.
Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). In the event the
Company has a closing price of its Common Stock equal to $0.30 or less for 5 consecutive days prior to the 9th
monthly anniversary, then, beginning on the 6th monthly anniversary of the Issuance Date, the Holder may elect in
its Notice of Conversion to use the lower of the Fixed Price or the variable conversion price set forth above. Such
conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of
receipt by the Company of the Notice of Conversion. If the shares have not been delivered within 3 business days, the Notice
of Conversion may be rescinded. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the
nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value
per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to
the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the
event the Company experiences a DTC “Chill” on its shares, the Conversion Price shall be decreased to 58% instead
of 68% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if
such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates
would exceed 4.99% of the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60
days’ prior written notice by the Holder). The conversion discount, look back period and other terms will be adjusted
on a ratchet basis if the Company offers a more favorable conversion discount, interest rate, (whether through a straight
discount or in combination with an original issue discount), look back period or other more favorable term to another party
for any financings while this Note is in effect.

 

    	 	 2	 

    	 	 

    

 

(b)       Commencing
on the 6th month anniversary of the Issuance Date, the Company shall have the right, but not the obligation, to elect
to make fixed monthly amortizing payments to Holder as provided in this Section 4(b). If the Company elects to make such payments,
Holder shall not be entitled to convert all or any amount of the principal amount of this Note then outstanding if and for so long
as the Company is current in respect of the payments set forth in this Section 4(b). If the Company elects to make such payments,
it will provide notice to the Holder of its election, which notice shall be revocable in the Company’s sole discretion, not
less than five trading days before the 6th month anniversary of the Issuance Date. If it so elects, the Company shall
pay to Holder, by wire transfer of immediately available funds or other payment method reasonably acceptable to Holder, $[l]
on the 6th month anniversary of the Issuance Date and monthly thereafter; provided that if any monthly payment date
is not a day on which banks in New York City are open for business (a “Business Day”), such payment shall be
made on the next succeeding Business Day. Each payment will comprise $[l]
of principal amount of this Note, $[l]
of accrued but unpaid interest thereon, and $[l]
of premium. For avoidance of doubt, the Company confirms that Holder shall be entitled to exercise the conversion right set forth
in Section 4(a) if the Company either (x) elects not to make the monthly amortizing payments provided in this Section 4(b), or
(y) fails to make such payments when due. Holder acknowledges that its ability to exercise its conversion right under Section 4(a)
shall be its only remedy under this Note for the Company’s election or failure to make monthly amortizing payments under
this Section 4(b).

 

(c)       The Notes may be
prepaid or redeemed by the Company with the following penalties/premiums:

 

	PREPAY DATE	PREPAY AMOUNT
	≤ 60 days	110% of principal plus accrued interest
	61-120 days	120% of principal plus accrued interest
	121-270 days	130% of principal plus accrued interest

 

Any prepayment or redemption must be closed
and funded within 3 days of giving notice of redemption. Any partial prepayments will be made in accordance with the formula set
forth in the chart above with respect to principal, premium and interest.

 

    	 	 3	 

    	 	 

    

 

(d)        Notwithstanding
the foregoing limitations on conversion set forth in Section 4(b), upon (i) a transfer of all or substantially all of the assets
of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization
or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend,
or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items
(i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, then, in each case, the Company shall,
upon request of the Holder, redeem this Note in cash for 130% of the principal amount, plus accrued but unpaid interest through
the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together
with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the then-effective
Conversion Price.

 

(e)        In
case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which
this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note
shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of
stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the
Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash,
the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

5.       No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6.       The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7.       The
Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder
in collecting any amount due under this Note.

 

8.       If
one or more of the following described "Events of Default" shall occur:

 

(a)     The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or

 

(b)     Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or

 

    	 	 4	 

    	 	 

    

 

(c)     The
Company shall fail to perform or observe, in any material respect, any covenant, term, provision, condition, agreement or obligation
of the Company under this Note or any other note issued to the Holder; or

 

(d)     The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or

 

(e)     A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within sixty (60) days after such appointment; or

 

(f)     Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control
of the whole or any substantial portion of the properties or assets of the Company; or

 

(g)     One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or

 

(h)     The
Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered
and failed to cure such default within the appropriate grace period; or

 

(i)     The
Company shall have its Common Stock delisted from an exchange (including the OTC Market exchange) or, if the Common Stock trades
on an exchange, the trading in the Common Stock shall be suspended for more than 10 consecutive days, or the Company shall cease
to file reports with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the rules of the SEC promulgated
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or shall fail to be “current”
in respect of such filings, taking into account any extensions of its obligations that may be claimed pursuant to Rule 12b-25 under
the Exchange Act; or

 

(j)     The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 Business
Days of its receipt of a Notice of Conversion; or

 

(k)     The
Company shall not replenish the reserve set forth in Section 12, within 3 Business Days of the request of the Holder; or

 

    	 	 5	 

    	 	 

    

 

(l)    The
Company shall lose the “bid” price for its stock and a market (including the OTC marketplace or other exchange)

 

Then, or at any time thereafter, unless
cured within 5 Business Days, and in each and every such case, unless such Event of Default shall have been waived in writing by
the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), at the option of the Holder and in the
Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or
(further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration
of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies
afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is
usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section
8(j), the penalty shall be $250 per day the Conversion Shares are not issued beginning on the 4th day after the Conversion
Notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty
for a breach of Section 8(l) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i),
the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal
due under this Note shall increase by 15%. Further, if a breach of the last clause of Section 8(i) occurs and is continuing after
the 6 month anniversary of the Issuance Date, then while such breach continues the Holder shall be entitled to use the lowest closing
bid price during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during
the delinquency period is $0.01 per share and the conversion discount is 50% the Holder would be entitled to elect to convert this
Note at $0.005 per share.

 

 

If the Holder shall commence an action
or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails
in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.

 

Make-Whole for Failure
to Deliver Loss. At the Holder’s election, in addition to applicable the remedy set forth in the preceding paragraph of this
Section 8, if (x) Holder shall have properly delivered a Notice of Conversion to the Company, (y) an Event of Default shall have
occurred pursuant to paragraph (j) of this Section 8, and (z) the Holder shall have incurred a Failure to Deliver Loss, then at
any time the Holder may provide the Company written notice indicating that a Failure to Deliver Loss shall have occurred and setting
forth Holder’s calculation of the amount of the Failure to Deliver Loss, and thereupon the Company shall make prompt payment
by wire transfer of immediately available funds or other payment method reasonably acceptable to the Holder of such amount. For
purposes of the foregoing, a “Failure to Deliver Loss” shall be calculated as the product of (i) the difference
between (A) the highest volume-weighted average price of a share of Common Stock as reported on the applicable Exchange for the
ten prior trading days prior to and including the trading day upon which a Notice of Conversion is received
by the Company, and (B) the then-effective Conversation Price, multiplied by (ii) the number of Conversion Shares that the
Holder would have received upon the conversion of the portion of the Note for which conversion was requested in the Notice of Conversion
at the then-effective Conversion Price.

 

    	 	 6	 

    	 	 

    

 

9.       In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

 

10.     Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.

 

11.     The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported Form 10 type information
indicating it is no longer a “shell” issuer.

12.     The
Company shall issue irrevocable transfer agent instructions reserving 3,235,000 shares of its Common Stock for conversions under
this Note and shall at all times thereafter reserve a minimum of three times the number of shares of Common Stock required if the
Note were to be fully converted (the “Share Reserve”). Upon conversion or repayment or other extinguishment
of this Note, a ratable portion of any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer
agent and legal costs associated with issuing and delivering the share certificates to the Holder, as well as maintaining the Share
Reserve. If such amounts are to be paid by the Holder, it may deduct such amounts from the principal amount being converted. The
Holder may reasonably request increases from time to time to ensure the Share Reserve is sufficient. The Company will instruct
its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.

 

13.     The
Company will give the Holder prompt and direct notice of any corporate actions, including but not limited to name changes, stock
splits, recapitalizations, and Sale Events, etc.

 

14.     If
it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage
of any law that would prohibit or forgive the Company from paying all or a portion of the principal or interest on this Note.

 

    	 	 7	 

    	 	 

    

 

15.     This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York or in
the Federal courts sitting in the county or city of New York, or the Federal courts within
the districts of New York. This Note may be executed and delivered in .PDF format, and the facsimile or electronic transmission
of a signature page to this Note shall be effective as an original.

 

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by an officer
thereunto duly authorized.

 

 

Dated:
March [l], 2020

 

 

	 	HUMANIGEN, INC.
	 	 	 
	 	 	 
	 	 	 
	 	By:	 	        
	 	 	 
	 	Title: Chief Executive Officer

 

    	 	 8	 

    	 	 

    

 

EXHIBIT A

 

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder
in order to Convert the Note)

 

The undersigned hereby
irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of HUMANIGEN, INC. (“Shares”)
according to the conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with
respect thereto.

 

	Date of Conversion:  	 

	Applicable Conversion Price:  	 

	Signature:   	 
	[Print Name of Holder and Title of Signer]

	Address:  	 
	 	 

 

	SSN or EIN:   	 

	Shares are to be registered in the following name:  	 

 

	Name:  	 

	Address:  	 

	Tel:   	 

	Fax:   	 

	SSN or EIN:  	 

 

Shares
are to be sent or delivered to the following account: 

 

	Account Name:  	 

	Address:   	 

 

 

9

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