Document:

Exhibit 10.1

 

LOAN
AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT is made and
dated as of July 29, 2015 and is entered into by and between IMMUNE PHARMACEUTICALS INC., a Delaware corporation and IMMUNE PHARMACEUTICALS
USA CORP., and each of their subsidiaries (hereinafter collectively with the exception of Guarantor referred to as the “Borrower”),
IMMUNE PHARMACEUTICALS LTD., (“Guarantor”) the several banks and other financial institutions or entities from time
to time parties to this Agreement (collectively, referred to as “Lender”) and HERCULES TECHNOLOGY GROWTH CAPITAL, INC.,
a Maryland corporation, in its capacity as administrative agent for itself and the Lender (in such capacity, the “Agent”).

 

RECITALS

 

A.           Borrower
has requested Lender to make available to Borrower a loan in an aggregate principal amount of up to Nine Million Five Hundred Thousand
Dollars ($9,500,000.00) (the "Term Loan"); and

 

B.           Lender
is willing to make the Term Loan on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, Borrower, Agent and Lender agree
as follows:

 

SECTION
1. DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1           Unless
otherwise defined herein, the following capitalized terms shall have the following meanings:

 

“Account Control Agreement(s)” means
any agreement entered into by and among the Agent, Borrower and a third party Bank or other institution (including a Securities
Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which grants Agent a
perfected first priority security interest in the subject account or accounts.

 

“ACH Authorization” means the ACH
Debit Authorization Agreement in substantially the form of Exhibit H.

 

“Additional
Indication” means ulcerative colitis, non-alcoholic steato-hepatitis, asthma, or another indication.

 

“Advance(s)”
means a Term Loan Advance.

 

“Advance
Date” means the funding date of any Advance.

 

“Advance
Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A.

 

“Agent”
has the meaning given to it in the preamble to this Agreement.

 

    	 

    	 

    

 

“Agreement”
means this Loan and Security Agreement, as amended from time to time.

 

“Amortization
Date” means April 1, 2016; provided however, if Interest Only Milestone 1 is achieved and no default or Event of Default
shall have occurred and be continuing, then July 1, 2016; if Interest Only Milestone 2 is achieved and no default or Event of Default
shall have occurred and be continuing, then October 1, 2016; and if Interest Only Milestone 3 is achieved and no default or Event
of Default shall have occurred and be continuing, then January 1, 2017.

 

“Assignee”
has the meaning given to it in Section 11.13.

 

“Borrower
Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured
or sold by Borrower or which Borrower intends to sell, license, or distribute in the future including any products or service offerings
under development, collectively, together with all products, software, service offerings, technical data or technology that have
been sold, licensed or distributed by Borrower since its incorporation.

 

“BP”
means Bullous Pemphigoid.

 

“Business
Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of New York are
closed for business.

 

“Cash”
means all cash and liquid funds.

 

“Change in Control” means any (i)
reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Borrower,
sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower in which the holders
of Borrower’s outstanding shares immediately before consummation of such transaction or series of related transactions do
not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than
fifty percent (50%) of the combined voting power of the surviving entity of such transaction or series of related transactions
(or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to
whether Borrower is the surviving entity, or (ii) sale or issuance by Borrower of equity securities to a Person not registered
under the Securities and Exchange Act of 1933, as amended, which securities represent, as of immediately following the closing
thereof, more than 50% of the total voting power of the Borrower. .

 

“Claims”
has the meaning given to it in Section 11.10.

 

“Closing
Date” means the date of this Agreement.

 

“Code”
means the U.S. Internal Revenue Code of 1986, as amended. 

 

“Collateral”
means the property described in Section 3.

 

“Common
Stock” means the Common Stock, $0.0001 par value per share, of the Borrower.

 

“Confidential
Information” has the meaning given to it in Section 11.12.

 

    	 

    	 

    

 

“Contingent
Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which
that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate
credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however,
that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course
of business and only to the extent due and payable. The amount of any Contingent Obligation shall be deemed to be an amount equal
to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith;
provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or
other support arrangement.

 

“Copyright
License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter
acquired by a Loan Party or in which a Loan Party now holds or hereafter acquires any interest.

 

“Copyrights”
means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof,
or of any other country.

 

“Deposit
Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account,
savings account, or certificate of deposit.

 

“Domestic
Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.

 

“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“Event
of Default” has the meaning given to it in Section 9.

 

“Excluded Account(s)” shall mean (a)
payroll, disbursement and other zero balance accounts, (b) withholding tax, employee benefit and fiduciary accounts, (c) any trust
or similar account required to be maintained in any jurisdiction in order to comply with any requirements of Laws and (d) other
deposit and securities accounts so long as the amount on deposit in any account referred to in this clause (d) does not exceed
$50,000 in the aggregate.

 

"Excluded Taxes" means any of the following
taxes imposed on or with respect to Lender, Agent or any other recipient of any payment to be made by or on account of any obligation
of Borrower hereunder, or required to be withheld or deducted from a payment to any such recipient, (a) income, net profits, or
capital taxes imposed on or measured by net income, and franchise taxes imposed (1) by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or conducts business, in which its principal office is located or
in which its applicable lending office is located, or (2) that are Other Connection Taxes, (b) any branch profits taxes or any
similar tax imposed by the jurisdiction where Borrower is located, (c) any withholding Taxes imposed on amounts payable to or for
the account of such recipient pursuant to a law in effect on the date on which such Lender becomes a party to this Agreement or
changes its lending office, (except in each case to the extent that, amounts with respect to such Taxes were payable under this
Agreement either to such Lender's assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment
or to such Lender immediately before it changed its lending office), (c) Taxes attributable to such recipient’s failure to
comply with Section 6.4(e) and (d) any U.S. Federal withholding Taxes imposed under FATCA.

 

    	 

    	 

    

 

“Facility
Charge” means $95,000 representing one percent (1.0%) of Maximum Term Loan Amount.

 

FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof
and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“Financial
Statements” has the meaning given to it in Section 7.1.

 

“Foreign
Subsidiary” means any Subsidiary other than a Subsidiary organized under the laws of any state within the United States.

 

“GAAP”
means generally accepted accounting principles in the United States of America, as in effect from time to time.

 

"Governmental
Authority" means the government of any nation or any political subdivision thereof, whether state, local, territory, province
or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational
bodies such as the European Union or the European Central Bank).

 

“Guarantor” means Immune Pharmaceuticals
Ltd., Israeli private company #514471283, and any Foreign Subsidiary of Borrower that from time to time delivers a Guaranty.

 

“Guaranty” means the secured guaranty
of Guarantor in a form reasonably acceptable to Agent, and any written guaranty of a Foreign Subsidiary of the Indebtedness of
Borrower owing to Lender required to be delivered pursuant to the terms of this Agreement, as applicable.

 

“Guarantor Collateral” means the personal
property assets of Guarantor described in Section 3.2.

 

“Guarantor Security Documents” means
the documents described in Section 3.2 including any Hebrew translation required for filing purposes.

 

“Indebtedness”
means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or
services (excluding trade credit entered into in the ordinary course of business due within sixty (60) days), including reimbursement
and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures
or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.

 

    	 

    	 

    

 

"Indemnified Taxes" means (a) Taxes
other than Excluded Taxes imposed on or with respect to payments made by or on account of any obligation of any Loan Party hereunder
or under any Loan Document; and (b) to the extent not otherwise described in (a), Other Taxes.

 

“Initial Advance Funding Condition”
means Borrower’s receipt of at least $9,000,000 in the aggregate in a single
or multiple transactions, from the sale or issuance of its equity securities or from licensing proceeds.

 

“Intellectual
Property” means all of the applicable Loan Party’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions;
mask works; the Loan Party’s applications therefor and reissues, extensions, or renewals thereof; and the Loan Party’s
goodwill associated with any of the foregoing, together with the Loan Party’s rights to sue for past, present and future
infringement of Intellectual Property and the goodwill associated therewith.

 

“Interest
Only Milestone 1” means (a) Borrower’s achievement of Positive BP Phase 2b Data, or (b) Borrower’s receipt, subsequent
to satisfaction of the Initial Advance Funding Condition, of at least $10,000,000 from the sale or issuance of its equity
securities.

 

“Interest
Only Milestone 2” means Borrower’s achievement of (a) Interest Only Milestone 1 and (b) Positive Additional Indication
Phase 2 Data.

 

“Interest
Only Milestone 3” means Borrower’s achievement of (a) Interest Only Milestone 1, (b) Interest Only Milestone 2, (c)
Borrower’s receipt, subsequent to satisfaction of the Initial Advance Funding Condition, of at least $10,000,000 from
the additional sale or issuance of its equity securities and (d) Borrower’s achievement
of Positive BP Phase 2b Data and Positive Additional Indication Phase 2 Data for at least one indication.

 

“Investment”
means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any
loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person.

 

“Joinder
Agreements” means for each Domestic Subsidiary and for each Foreign Subsidiary that is not a Guarantor, a completed and executed
Joinder Agreement in substantially the form attached hereto as Exhibit G.

 

“Lender”
has the meaning given to it in the preamble to this Agreement.

 

“License”
means any Copyright License, Patent License, Trademark License or other license of rights or interests.

 

“Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or
charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional
sale or other title retention agreement, and any lease in the nature of a security interest.

 

“Loan”
means the Advances made under this Agreement.

 

“Loan
Documents” means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements,
all UCC Financing Statements, the Guaranty, the Guarantor Security Documents, the Warrant, the Subordination Agreement and any
other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from
time to time be amended, modified, supplemented or restated.

 

    	 

    	 

    

 

“Loan
Party” means any Borrower or Guarantor.

 

“Material
Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial
condition of any Loan Party and its Subsidiaries taken as a whole; or (ii) the ability of any Loan Party to perform the Secured
Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or Lender to enforce any of its rights
or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority
of such Liens.

 

“Maximum
Term Loan Amount” means Nine Million Five Hundred Thousand and No/100 Dollars ($9,500.000.00). 

 

“Maximum
Rate” shall have the meaning assigned to such term in Section 2.3.

 

“Note(s)”
means a Term Note.

 

“Other
Connection Taxes” means with respect to any Lender or Agent, Taxes imposed as a result of a present or former connection
between such Person and the jurisdiction imposing such Tax (other than connections arising from such Person having executed, delivered,
become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged
in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

"Other
Taxes" means any and all present or future stamp, recording, filing, documentary or similar taxes or any other excise, sales
taxes or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Documents or
from the execution, delivery or enforcement of, or performance under or otherwise with respect to this Agreement or any other Loan
Documents (other than Excluded Taxes imposed with respect to an assignment).

 

“Patent
License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or
a Patent application is pending, in which agreement a Loan Party now holds or hereafter acquires any interest.

 

“Patents”
means all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other
country.

 

Permitted
Acquisitions means any acquisition of all of the capital stock of any Person or any division or business unit of any Person
for which the aggregate cash consideration paid in connection with any such individual acquisition (or group of related acquisitions)
is less than $1,000,000, so long as, to the extent the acquired Person, division or business unit is not merged into Borrower,
such acquired Person, division or business unit promptly enters into a Joinder Agreement or delivers a Guaranty to Agent.

 

    	 

    	 

    

 

“Permitted
Indebtedness” means: (i) Indebtedness of a Loan Party in favor of Lender or Agent arising under this Agreement or any other
Loan Document; (ii) Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness of up to $500,000
outstanding at any time secured by a Lien described in clause (vii) of the defined term “Permitted Liens,”; (iv) Indebtedness
to trade creditors incurred in the ordinary course of business, including Indebtedness incurred in the ordinary course of business
with corporate credit cards, netting services, overdraft protection and other like services; (v) Indebtedness that also constitutes
a Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection with letters of credit
that are secured by cash or cash equivalents and issued on behalf of the Borrower or a Subsidiary thereof in an amount not to exceed
$500,000 at any time outstanding, (viii) Indebtedness not to exceed $250.000 in the aggregate under hedging agreements entered
into in the ordinary course of business by the Borrower or a Subsidiary thereof for the purpose of directly mitigating risks and
not for purposes of speculation, (ix) Indebtedness owing to insurance carriers and incurred to finance insurance premiums of any
Borrower or a Subsidiary thereof in the ordinary course of business in a principal amount not to exceed at any time the amount
of insurance premiums to be paid by such Persons; (x) other Indebtedness in an amount not to exceed $500,000 at any time outstanding,
and (xi) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided
that the principal amount is not increased or the terms modified to impose materially more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

 

“Permitted
Investment” means: (i) Investments existing on the Closing Date which are disclosed in Schedule 1B; (ii) (a) marketable direct
obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof, (b) commercial paper maturing no more than one year from the date of creation thereof
and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors
Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from
the date of investment therein, and (d) money market accounts and (e) other similar financial investments made by a Loan Party
in the ordinary course of business, consistent with a Board approved investment policy provided to Agent for approval; (iii) repurchases
of stock from former employees, directors, or consultants of a Loan Party under the terms of applicable repurchase agreements at
the original issuance price of such securities in an aggregate amount not to exceed $350,000 in any fiscal year, provided that
no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases; (iv) Investments accepted
in connection with Permitted Transfers; (v) Investments (including debt obligations) received in connection with the bankruptcy
or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of a Loan Party’s business; (vi) Investments consisting of notes receivable of,
or prepaid royalties and other credit extensions, to customers and suppliers who are not affiliates, in the ordinary course of
business, provided that this subparagraph (vi) shall not apply to Investments of Borrower in any Subsidiary; (vii) Investments
consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers
or directors relating to the purchase of capital stock of a Loan Party pursuant to employee stock purchase plans or other similar
agreements approved by a Loan Party’s Board of Directors or are otherwise in the ordinary course of business; (viii) Investments
consisting of travel advances in the ordinary course of business; (ix) Investments in newly-formed or currently inactive Domestic
Subsidiaries, provided that each such Domestic Subsidiary enters into a Joinder Agreement promptly after its formation by a Loan
Party and execute such other documents as shall be reasonably requested by Agent; (x) Investments in newly formed or acquired or
previously existing Foreign Subsidiaries (including Immune Pharmaceuticals Ltd.) in an amount not to exceed $250,000 in the aggregate
or as otherwise approved in advance in writing by Agent, provided that each such newly-formed or acquired Foreign Subsidiary enters
into a Guaranty promptly after its formation or acquisition by Borrower and executes such other documents as shall be reasonably
requested by Agent, or as otherwise approved by Agent in its discretion; (xi) joint ventures
or strategic alliances in the ordinary course of a Loan Party’s business consisting of the nonexclusive licensing of technology,
the development of technology or the providing of technical support, provided that any cash Investments by a Loan Party do not
exceed $500,000 in the aggregate in any fiscal year; and (xii) additional Investments that do not exceed $500,000 in the aggregate
in any fiscal year.

 

    	 

    	 

    

 

“Permitted
Liens” means any and all of the following: (i) Liens in favor of Agent or Lender; (ii)
Liens existing on the Closing Date which are disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided, that the Loan Party
maintains adequate reserves therefor in accordance with GAAP; (iv) Liens securing claims or demands of materialmen, artisans,
mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of the Loan Party’s business
or are being contested in good faith and by appropriate proceedings;
provided, that the payment thereof is not yet more than thirty (30) days overdue; (v) Liens arising from judgments, decrees
or attachments in circumstances which do not constitute an Event of Default hereunder; (vi) the following deposits, to the
extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or
surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (vii) Liens on Equipment (financed or
leased) or software or other intellectual property constituting purchase money Liens and
Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;
(viii) Liens incurred in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and
licenses granted in the ordinary course of business; (x) Liens arising out of consignment or similar arrangements for the sale
of goods or bills of lading, in each case of the foregoing, entered into by a Borrower or any Subsidiary in the ordinary course
of business; (xi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties
that are promptly paid on or before thirty (30) days past the date they become due; (xii) Liens on insurance proceeds securing
the payment of financed insurance premiums that are promptly paid on or before thirty (30) days past the date they become due (provided
that such Liens extend only to such insurance proceeds and not to any other property or assets); (xiii) Liens and statutory and
common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository
institutions and brokerage firms; (xiv) easements, zoning restrictions, rights-of-way and similar encumbrances on real property
(and minor irregularities in the title thereto) imposed by law or arising in the ordinary course of business so long as they do
not materially impair the value or marketability of the related property; ) Liens on cash or cash equivalents securing obligations
permitted under clause (vii) of the definition of Permitted Indebtedness; and (xv) Liens incurred in connection with the
extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (i) through (xi) above;
provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and
the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any payment thereon)
does not increase.

 

    	 

    	 

    

 

“Permitted
Transfers” means (i) sales of Inventory in the ordinary course of business, (ii) non-exclusive licenses and similar arrangements
for the use of Intellectual Property in the ordinary course of business and licenses that could not result in a legal transfer
of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory
only as to discreet geographical areas outside of the United States in the ordinary course of business,
or (iii) dispositions of worn-out, obsolete or surplus Equipment in the ordinary course of business, (iv) Transfers from
Borrower to Guarantor, and (v) other Transfers of assets having a fair market value of not more than $100,000 in the aggregate
in any fiscal year.

 

“Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, other entity or government.

 

“Positive
BP Phase 2b Data” means data from the BP Phase 2b clinical trial showing positive indications, reasonably acceptable to Lender;

 

“Positive
Additional Indication Phase 2 Data” means data from the Phase 2 clinical trial for any one of the Additional Indications
showing positive indications, reasonably acceptable to Lender;

 

“Preferred
Stock” means at any given time any equity security issued by Borrower that has any rights, preferences or privileges senior
to Borrower’s Common Stock.

 

“Prepayment Charge” shall have the
meaning assigned to such term in Section 2.5.

 

“Receivables” means (i) all of the
applicable Loan Party’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds
of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto,
in each case, as defined under the UCC, to the extent applicable.

 

“Required Lenders” means at any time,
the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans then outstanding.

 

“SEC”
means the Securities and Exchange Commission.

 

“Secured
Obligations” means the Loan Parties’ obligations under this Agreement and any Loan Document, including any obligation
to pay any amount now owing or later arising under the terms of any Loan Document.

 

“Subordinated Indebtedness” means
Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions reasonably satisfactory to Agent in
its sole discretion.

 

“Subordination
Agreement” means any written subordination agreement among a Loan Party, Agent and the subordinating creditor thereunder
regarding specific Subordinated Indebtedness, as applicable.

 

“Subsequent
Financing” means the closing by Borrower of any institutionally led round of equity financing which becomes effective after
the Closing Date and results in aggregate proceeds to Borrower of at least $10,000,000, in the form of a single or multiple transactions.

 

    	 

    	 

    

 

“Subsidiary”
means an entity, whether corporate, partnership, limited liability company, joint venture or otherwise, in which a Loan Party or
a subsidiary of a Loan Party owns or controls more than 50% of the outstanding voting securities, including each entity listed
on Schedule 1 hereto.

 

"Taxes"
means any and all present or future income, stamp or other taxes, levies, imposts, duties, deductions, charges, fees or withholdings
imposed, levied, withheld or assessed by any Governmental Authority on Agent or Lender, together with any interest, additions to
tax or penalties imposed thereon and with respect thereto.

 

“Term Commitment” means as to any
Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed
the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Term
Loan Advance” means any Term Loan funds advanced under this Agreement.

 

“Term
Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) 10.00% plus the Prime
Rate as reported in The Wall Street Journal on such date, minus 5.25%, and (ii) 10.00%.

 

“Term
Loan Maturity Date” means: September 1, 2018 if the Amortization Date is April 1, 2016; December 1, 2018 if the Amortization
Date is July 1, 2016; March 1, 2019 if the Amortization Date is October 1, 2016; and June 1, 2019 if the Amortization Date is January
1, 2017.

 

“Term
Note” means a Promissory Note in substantially the form of Exhibit B.

 

“Trademark
License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter
acquired by a Loan Party or in which a Loan Party now holds or hereafter acquires any interest. 

 

“Trademarks”
means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof.

 

“Tranche
A Term Loan Advance” means the initial Term Loan Advance of $4,500,000 funded under this Agreement on the Closing Date, subject
to satisfaction of the Initial Advance Funding Condition.

 

“Tranche
B Performance Milestone” means Borrower’s achievement of (a) Positive BP Phase 2b Data, and (b) receipt of either (i)
at least $15,000,000 in the aggregate from single or multiple transactions, from the sale or issuance of its equity securities
subsequent to satisfaction of the Initial Advance Funding Condition, or (ii) Positive Additional
Indication Phase 2 Data.

 

“Tranche
B Term Loan Advance” means the second Term Loan Advance of $5,000,000 available under this Agreement from the date of Borrower’s
achievement of the Tranche B Performance Milestone through and including June 15, 2016, subject to Borrower’s achievement
of the Tranche B Performance Milestone.

 

    	 

    	 

    

 

“UCC”
means the Uniform Commercial Code as the same is, from time to time, in effect in the State of New York; provided, that in the
event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time,
in effect in a jurisdiction other than the State of New York, then the term “UCC” shall mean the Uniform Commercial
Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. 

 

“Warrant”
means the warrant agreement dated as of the date hereof between Lender and Borrower, and any other warrant entered into in connection
with the Loan Documents, as may be amended, restated or modified from time to time. 

 

Unless otherwise specified, all references in
this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,”
or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement.
Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have
the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other
Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given
to them in the UCC.

 

SECTION
2. THE LOAN

 

2.1           [Intentionally
Omitted.]

 

2.2           Term
Loan.

 

(a)          Advances.
Subject to the terms and conditions of this Agreement, Lender will severally (and not jointly) make in an amount not to exceed
its respective Term Commitment, and Borrower agrees to draw, the Tranche A Term Loan Advance of $4,500,000 on the Closing Date.
Beginning on the Closing Date, and continuing through June 15, 2016, Borrower may request the Tranche B Term Loan Advance of $5,000,000.
The aggregate Term Loan Advances may be up to the Maximum Term Loan Amount.

 

(b)          Advance
Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least five (5) Business
Days before the Advance Date) to Agent. Lender shall fund the Term Loan Advance in the manner requested by the Advance Request
provided that each of the conditions precedent to such Term Loan Advance is satisfied on or prior to the requested Advance Date.

 

(c)          Interest.
The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate
based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. The Term Loan
Interest Rate may float and change on the day the Prime Rate changes from time to time, in accordance with the terms hereof.

 

    	 

    	 

    

 

(d)          Payment.
Borrower will pay interest on each Term Loan Advance on the first Business day of each month, beginning on September 1,
2015. Borrower shall repay the aggregate Term Loan principal balance that is outstanding on the Business Day immediately
preceding the Amortization Date, in 30 equal monthly installments of principal and interest (mortgage style) beginning on the
Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations are repaid.
The entire Term Loan principal balance and all accrued but unpaid interest hereunder, shall be due and payable on Term Loan
Maturity Date. Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless
of any counterclaim or defense. Lender will initiate debit entries to the Borrower’s account as authorized on the ACH
Authorization (i) on each payment date of all periodic obligations payable to Lender
under each Term Advance and (ii) such other amounts, if any, in connection with Section 11.11 of this Agreement.

 

2.3           Maximum
Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract
for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction
shall deem applicable hereto (which under the laws of the State of New York shall be deemed to be the laws relating to permissible
rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine
that Borrower has actually paid to Lender an amount of interest in excess of the amount that would have been payable if all of
the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower
shall be applied as follows: first, to the payment of the Secured Obligations consisting of the outstanding principal; second,
after all principal is repaid, to the payment of Lender’s accrued interest, reasonable and documented (redacted, to remove
attorney client privilege work description, as appropriate) out-of-pocket costs, expenses, professional fees and any other Secured
Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.

 

2.4           Default
Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to four percent (4%) of the past
due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder,
all Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate
per annum equal to the rate set forth in 2.2(c), plus four percent (4%) per annum. In the event any interest is not paid when due
hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth
in Section 2.2(c) or Section 2.4, as applicable.

 

2.5           Prepayment.
At its option upon at least seven (7) Business Days prior notice to Agent, Borrower may prepay all, but not less than all, of the
outstanding Advances by paying the entire principal balance, all accrued and unpaid interest thereon, together with a prepayment
charge equal to the following percentage of the Advance amount being prepaid: if such Advance amounts are prepaid in any of the
first twelve (12) months following the Closing Date, 3.0%; after twelve (12) months but prior to twenty four (24) months, 2.0%;
and thereafter, 1.0% (each, a “Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable calculation
of Lender’s lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early
repayment of the Advances. Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment
date and the Prepayment Charge upon the occurrence of a Change in Control.

 

    	 

    	 

    

 

2.6           End
of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding
Secured Obligations in full, or (iii) the date that the Secured Obligations become due and payable in full, Borrower shall pay
Lender a charge of $498,750. Notwithstanding the payment date of such charge, it shall be deemed earned by Lender as of the Closing
Date.

 

2.7           Notes.
If so requested by Lender by written notice to Borrower, then Borrower shall execute and deliver to Lender (and/or, if applicable
and if so specified in such notice, to any Person who is an assignee of Lender pursuant to Section 11.13) (promptly after the Borrower’s
receipt of such notice) a Note or Notes to evidence Lender’s Loans.

 

2.8           Pro
Rata Treatment. Each payment (including prepayment) on account of any fee and any reduction
of the Term Loans shall be made pro rata according to the Term Commitments of the relevant Lender.

 

SECTION
3. SECURITY INTEREST

 

3.1           As
security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured
Obligations, Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in and to the following
personal property whether now owned or hereafter acquired (collectively, the “Collateral”): (a) Receivables; (b) Equipment;
(c) Fixtures; (d) General Intangibles (excluding Intellectual Property to the extent provided for below); (e) Inventory; (f) Investment
Property (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and intangible personal property of Borrower whether
now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of
Borrower’s property in the possession or under the control of Agent; and, to the extent
not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing; provided, however, that at all times the Collateral
shall include all Accounts and General Intangibles that consist of rights to payment and proceeds from the sale, licensing
or disposition of all or any part, or rights in, the Intellectual Property (the “Rights to Payment”); and provided,
further, that the Collateral shall automatically and immediately include Intellectual Property from and after February 1, 2016,
and Borrower shall promptly, at the request of Agent or Lender, execute and deliver an Intellectual Property Security Agreement
in form and substance satisfactory to Lender and Agent confirming the grant to Agent a security interest in all of Borrower’s
right, title and interest in and to the Intellectual Property, if subsequent to the satisfaction of the Initial Advance Funding
Condition but prior to February 1, 2016, Borrower does not raise at least $10,000,000 from the sale or issuance of its equity securities;
provided, however, that notwithstanding any of the other provisions set forth in this Section 3.1, no security interest
is hereby granted in any of the following (the “Borrower Excluded Property”): (i) any permit, license, contract or
lease to the extent that (and in each case only for so long as) such grant of a security interest is prohibited by any applicable
laws or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to a right on
the part of the parties thereto other than Borrower to terminate, such permit, license, contract or lease, except to the extent
that such laws or the term in such permit, license, contract or lease providing for such prohibition, breach, default or right
of termination are ineffective or rendered unenforceable under applicable laws (including the UCC), (ii) any property owned by
Borrower on the date hereof or hereafter acquired that is subject to a Lien securing a purchase money or capital or finance lease
obligation permitted to be incurred pursuant to this Agreement if (and in each case only for so long as) the contract or other
agreement in which such Lien is granted (or the documentation providing for such purchase money, capital or finance lease obligation)
prohibits the creation of any other Lien on such property, except to the extent that the term in such contract or other agreement
providing for such prohibition is ineffective or rendered unenforceable under applicable laws (including the UCC), (iii) Borrower’s
Excluded Accounts, and (iv) Letter-of-Credit rights less than $50,000 in the aggregate; provided, further, that, notwithstanding
the foregoing, a security interest shall be, and is hereby, granted in (A) any property immediately upon such property ceasing
to be Borrower Excluded Property and (B) any and all proceeds, products, substitutions and replacements of Borrower Excluded Property
to the extent such proceeds, products, substitutions and replacements do not themselves constitute Borrower Excluded Property.

 

    	 

    	 

    

 

3.2           As
security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the
Secured Obligations, Guarantor shall execute or issue the Guaranty, together with pledge, debenture and related documents
(collectively, the “Guarantor Security Documents”) granting Agent a first ranking floating charge security
interest in all of Guarantor’s personal property assets other than Guarantor’s Intellectual Property
(collectively, the “Guarantor Collateral”), to be delivered in accordance with Section 7.16 hereof; provided,
however, that at all times the Guarantor Collateral shall include all Accounts and General Intangibles
that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or
rights in, Guarantor’s Intellectual Property (the “Rights to Payment”); and provided,
further, that the Collateral shall automatically and immediately include Guarantor’s Intellectual Property from and
after February  1, 2016, and Guarantor shall promptly, at the request of Agent or Lender, execute and deliver an
Intellectual Property Security Agreement, to the extent requested by the Agent or Lender and an amendment to the Guarantor
Security Documents in form and substance satisfactory to Lender and Agent confirming the grant to Agent of a first ranking
fixed charge security interest in all of Guarantor’s right, title and interest in and to its Intellectual Property
including evidence of registration with the Israeli Registrar of Companies and any other registrar reasonably requested by
the Agent, if subsequent to the satisfaction of the Initial Advance Funding Condition but prior to February 1, 2016, Borrower
does not raise at least $10,000,000 from the sale or issuance of its equity securities; provided, however, that
notwithstanding any of the other provisions set forth in this Section 3.2, no security interest is hereby granted in any
of the following (the “Guarantor Excluded Property”): (i) any permit, license, contract or lease to the extent
that (and in each case only for so long as) such grant of a security interest is prohibited by any applicable laws or is
prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to a right on the part
of the parties thereto other than Guarantor to terminate, such permit, license, contract or lease, except to the extent that
such laws or the term in such permit, license, contract or lease providing for such prohibition, breach, default or right of
termination are ineffective or rendered unenforceable under applicable laws, (ii) any property owned by a Guarantor on the
date hereof or hereafter acquired that is subject to a Lien securing a purchase money or capital or finance lease obligation
permitted to be incurred pursuant to this Agreement if (and in each case only for so long as) the contract or other agreement
in which such Lien is granted (or the documentation providing for such purchase money, capital or finance lease obligation)
prohibits the creation of any other Lien on such property, except to the extent that the term in such contract or other
agreement providing for such prohibition is ineffective or rendered unenforceable under applicable laws, (iii)
Guarantor’s Excluded Accounts, and (iv) Letter-of-Credit rights less than $50,000 in the aggregate; provided, further,
that, notwithstanding the foregoing, a security interest shall be, and is hereby, granted in (A) any property immediately
upon such property ceasing to be Guarantor Excluded Property and (B) any and all proceeds, products, substitutions and
replacements of Guarantor Excluded Property to the extent such proceeds, products, substitutions and replacements do not
themselves constitute Guarantor Excluded Property.

 

    	 

    	 

    

 

3.3           As
security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured
Obligations, Borrower and Guarantor shall deliver and pledge to the Agent all certificated securities and interests held in its
Subsidiaries; if such securities and interests are uncertificated, Borrower and Guarantor pledge not to certificate them, and,
to the extent applicable shall provide Agent with appropriate control agreements, as applicable, providing the Agent with control
over such securities and interests and first priority of its Liens in such Collateral.

 

SECTION
4. CONDITIONS PRECEDENT TO LOAN

 

The obligations of Lender to make the Loan hereunder
are subject to the satisfaction by Borrower of the following conditions:

 

4.1           Initial
Advance. On or prior to the Closing Date, Borrower shall have delivered to Agent the following:

 

(a)          executed
originals of the Loan Documents, Account Control Agreements and all other documents and instruments reasonably required by Agent
to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral,
in all cases in form and substance reasonably acceptable to Agent;

 

(b)          certified
copy of resolutions of Borrower’s and Guarantor's board of directors evidencing approval of (i) the Loan and other transactions
evidenced by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby;

 

(c)          certified
copies of the Certificate of Incorporation and the Bylaws, if applicable, as amended through the Closing Date, of Borrower and
Guarantor;

 

(d)          a
certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions
in which it does business and where the failure to be qualified would have a Material Adverse Effect;

 

(e)          payment
of the Facility Charge and reimbursement of Agent’s and Lender’s current expenses reimbursable pursuant to this Agreement,
which amounts may be deducted from the initial Advance;

 

(f)          evidence
of satisfaction of the Initial Advance Funding Condition;

 

(g)          copies
of any licenses to use Intellectual Property between or among any of the Loan Parties in existence on the Closing Date; and

 

(h)          such
other documents as Agent may reasonably request.

 

    	 

    	 

    

 

4.2           All
Advances. On each Advance Date:

 

(a)          Agent
shall have received (i) an Advance Request for the relevant Advance as required by 2.2(b), each duly executed by Borrower’s
Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request.

 

(b)          The
representations and warranties set forth in this Agreement and in Section 5 and in the Warrant shall be true and correct in
all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date.

 

(c)          Borrower
shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed
or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.

 

(d)          Each
Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the
matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.

 

4.3           No
Default. As of the Closing Date and each Advance Date, (i) no fact or condition exists that would (or would, with the passage of
time, the giving of notice, or both) constitute an Event of Default and (ii) no event that could reasonably be expected to have
a Material Adverse Effect has occurred and is continuing.

 

SECTION
5. REPRESENTATIONS AND WARRANTIES OF BORROWER

 

Borrower represents and warrants that:

 

5.1           Corporate
Status. Borrower is a corporation duly organized, legally existing and in good standing under the laws of the State of Delaware,
and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties
require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect.
Borrower’s present name, former names (if any), locations, place of formation, tax identification number, organizational
identification number and other information are correctly set forth in Exhibit C, as may be updated by Borrower in a written notice
(including any Compliance Certificate) provided to Agent after the Closing Date.

 

5.2           Collateral.
Borrower owns or has the right to use the Collateral and the Intellectual Property, free of all Liens, except for Permitted Liens.
Borrower has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations . 

 

    	 

    	 

    

 

5.3           Consents.
Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents, and Borrower’s execution
of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in
the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement
and the other Loan Documents, (iii) do not violate any provisions of Borrower’s Certificate or Articles of Incorporation
(as applicable), bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject where
such violation could reasonably be expected to have a Material Adverse Effect and (iv)  do not violate any contract or agreement
or require the consent or approval of any other Person which has not already been obtained, in either case, where such violation
could reasonably be expected to have a Material Adverse Effect. The individual or individuals executing the Loan Documents and
the Warrant are duly authorized to do so.

 

5.4           Material
Adverse Effect. No event that would reasonably be expected to have a Material Adverse Effect has occurred and is continuing. Borrower
is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect.

 

5.5           Actions
Before Governmental Authorities. Except as described on Schedule 5.5, there are no actions, suits or proceedings at law or in equity
or by or before any Governmental Authority now pending or, to the knowledge of Borrower, threatened against or affecting Borrower
or its property.

 

5.6           Laws.
Borrower is not in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree
of any Governmental Authority, where such violation or default is reasonably expected to result in a Material Adverse Effect. Borrower
is not in default in any manner under any material provision of any material agreement or instrument evidencing Indebtedness, or
any other material agreement to which it is a party or by which it is bound.

 

5.7           Information
Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf
of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained, contains
or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are or will be made, not misleading at the time such
statement was made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Agent, whether
prior to or after the Closing Date, shall be (i) provided in good faith and based on the most current data and information available
to Borrower, and (ii) the most current of such projections provided to Borrower’s Board of Directors.

 

5.8           Tax
Matters. Borrower (a) has filed all material federal, state and local tax returns that it is required to file, (b) has duly paid
or fully reserved for all taxes or installments thereof (including any interest or penalties) as and when due, which have or may
become due pursuant to such returns, and (c) has paid or fully reserved for any tax assessment received by Borrower for the three
(3) years preceding the Closing Date, if any (including any taxes being contested in good faith and by appropriate proceedings).

 

5.9           Intellectual
Property Claims. Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property. Except as described
on Schedule 5.9, (i) to the Borrower’s Knowledge, each of the material Copyrights, Trademarks and Patents is valid and enforceable,
(ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) no
claim has been made to Borrower that any material part of the Intellectual Property violates the rights of any third party. Exhibit D
is a true, correct and complete list of each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material
agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses), together
with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date.
Borrower is not in material breach of, nor has Borrower failed to perform any material obligations under, any of the foregoing
contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement
is in material breach thereof or has failed to perform any material obligations thereunder.

 

    	 

    	 

    

 

5.10         Intellectual
Property. Except as described on Schedule 5.10, Borrower has, or in the case of any proposed business, will have, all material
rights with respect to Intellectual Property necessary in the operation or conduct of Borrower’s business as currently conducted
and proposed to be conducted by Borrower. Without limiting the generality of the foregoing, and in the case of Licenses, except
for restrictions that are unenforceable under Division 9 of the UCC, Borrower has the right, to the extent required to operate
Borrower’s business, to freely transfer, license or assign Intellectual Property without condition, restriction or payment
of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right
to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software
and other items that are used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution
of Borrower Products.

 

5.11         Borrower
Products. Except as described on Schedule 5.11, no Intellectual Property owned by Borrower or Borrower Product has been or is subject
to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding in the United States
Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement
or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that may affect the validity,
use or enforceability thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered
into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future
Intellectual Property related to the operation or conduct of the business of Borrower or Borrower Products. Borrower has not received
any written notice or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s
ownership in any Intellectual Property (or written notice of any claim challenging or questioning the ownership in any licensed
Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with
respect thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim. To the knowledge of the Borrower,
neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products infringes the Intellectual
Property or other rights of others.

 

5.12         Financial
Accounts. Exhibit E, as may be updated by the Borrower in a written notice provided to Agent after the Closing Date, is a true,
correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains
Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property,
and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which
the account is held, a description of the purpose of the account, and the complete account number therefor.

 

    	 

    	 

    

 

5.13         Employee
Loans. Except as described on Schedule 5.13, Borrower has no outstanding loans to any employee, officer or director of the Borrower
nor has Borrower guaranteed the payment of any loan made to an employee, officer or director of the Borrower by a third party.

 

5.14         Capitalization
and Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto. Borrower
does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached as Schedule
5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of
each Subsidiary.

 

SECTION
6. INSURANCE; INDEMNIFICATION

 

6.1           Coverage.
Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks
customarily insured against in Borrower’s line of business. Such risks shall include the risks of bodily injury, including
death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement
found in Section 6.3. Borrower must maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence.
Borrower has and agrees to maintain a minimum of $10,000,000 directors’ and officers’ insurance. So long as there are
any Secured Obligations outstanding, Borrower shall also cause to be carried and maintained insurance upon the Collateral, insuring
against all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral,
provided that such insurance may be subject to standard exceptions and deductibles.

 

6.2           Certificates.
Prior to the Closing Date, and at each policy renewal, Borrower shall deliver to Agent certificates of insurance that evidence
Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2.
Borrower’s insurance certificate shall state Agent (shown as “Hercules Technology Growth Capital, Inc., as Agent”)
is an additional insured for commercial general liability, a loss payee for all risk property damage insurance, subject to the
insurer’s approval, and a loss payee for property insurance and additional insured for liability insurance for any future
insurance that Borrower may acquire from such insurer. Attached to the certificates of insurance will be additional insured endorsements
for liability and lender’s loss payable endorsements for all risk property damage insurance. All certificates of insurance
will provide for a minimum of thirty (30) days advance written notice to Agent of cancellation or any other change adverse to Agent’s
interests. Any failure of Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s
rights, all of which are reserved.

 

6.3           Indemnity.
Borrower agrees to indemnify and hold Agent, Lender and their officers, directors, employees, agents, in-house attorneys, representatives
and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims, costs, expenses, damages
and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability
in tort), including reasonable attorneys’ fees and disbursements and other costs of investigation or defense (including those
incurred upon any appeal) (collectively, “Liabilities”), that may be instituted or asserted against or incurred by
such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other
Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder
and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of
the Collateral, excluding in all cases Liabilities to the extent resulting solely from any Indemnified Person’s gross negligence
or willful misconduct. In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including any loss of profits, business or anticipated savings).

 

    	 

    	 

    

 

6.4           Tax
Indemnity.

 

(a)          Borrower
agrees to pay, and to save Agent and Lender harmless from, any and all liabilities with respect to, or resulting from any delay
in paying, any and all Indemnified Taxes and other Taxes that may be payable or determined to be payable with respect to any of
the Collateral or this Agreement. Any and all payments by or on account of any obligation of a Loan Party hereunder or under any
other Loan Documents shall be made free and clear of and without deduction or withholding for any Taxes; provided that if the Loan
Party is required by applicable law to deduct or withhold any Taxes from such payments, then: (i) if such Tax is an Indemnified
Tax, the amount payable by the Loan Party shall be increased so that after making all required deductions or withholdings (including
deductions or withholdings applicable to additional amounts payable under this Section), Agent or Lender receives an amount equal
to the amount it would have received had no such deductions or withholdings been made, and (ii) the Loan Party shall make such
deductions or withholdings and timely pay and remit the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law.

 

(b)          In
addition, the Loan Party shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

 

(c)          The
Loan Parties shall indemnify Agent and Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed on or attributable to amounts payable or deemed payable hereunder) paid by Agent or Lender
on or with respect to an amount payable or deemed payable by Borrower under or in respect of this Agreement or under any other
Loan Documents together with any penalties, interest and reasonable expenses arising in connection therewith and with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate
from Agent or Lender as to the amount of such payment or liability delivered to the Loan Party shall be conclusive absent manifest
error.

 

(d)          Promptly
after any payment of Indemnified Taxes by a Loan Party to a Governmental Authority (but in any event within 30 days after the date
of such payment), the Loan Party shall deliver to Agent the original or certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the relevant return reporting such payment or other evidence of such payment reasonably
satisfactory to Agent or Lender.

 

    	 

    	 

    

 

(e)

 

(i)          Any
Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document
shall deliver to the Borrower and Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly
completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made
without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the
Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Agent
as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information
reporting requirements.

 

(ii)         Without
limiting the generality of the foregoing, any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior
to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup
withholding tax;

 

(iii)        any
Lender that is not a United States person as defined under the Code shall, to the extent it is legally entitled to do so, deliver
to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the
date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower or the Administrative Agent), whichever of the following is applicable:

 

		1.	in the case of a Lender claiming the benefits of an income
tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals
of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the "interest"
article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing
an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the "business profits" or "other income"
article of such tax treaty;

 

		2.	executed originals of IRS Form W-8ECI;

 

		3.	in the case of a Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially to the effect that such Lender is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign corporation" described in Section 881(c)(3)(C)
of the Code (a "U.S. Tax Compliance Certificate") and (y) executed originals of IRS Form W-8BEN; or

 

		4.	to the extent a Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by the appropriate underlying forms;

 

    	 

    	 

    

 

(iv)        any Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and Agent (in such number of copies as
shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower or Agent), executed originals of any other form prescribed
by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together
with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or Agent to determine the withholding
or deduction required to be made; and

 

(v)         if
a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code, as applicable), such Lender shall deliver to the Borrower and Agent at the time or times prescribed by law and at
such time or times reasonably requested by the Borrower or Agent such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or Agent
as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine
that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of this clause (v), "FATCA" shall include any amendments made to FATCA after the date
of this Agreement.

 

(vi)        Each
Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect,
it shall update such form or certification or promptly notify the Borrower and Agent in writing of its legal inability to do so.

 

(f)          If
Agent or Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes as to which it has been
indemnified by the Loan Parties or with respect to which a Loan Party has paid additional amounts pursuant to this Section, it
shall pay over such refund (or the amount of any credit in lieu of refund) to the applicable Loan Party (but only to the extent
of indemnity payments made, or additional amounts paid, by the Loan Party under this Section with respect to the Indemnified Taxes
giving rise to such refund or credit in lieu of refund), net of all out-of-pocket expenses of Agent and Lender, and without interest
(other than any interest paid by the relevant Governmental Authority with respect to such refund or credit in lieu of refund),
provided that the Loan Party, upon the request of Agent or Lender, agrees to repay the amount paid over to the Loan Party (plus
any interest, penalties or other charges imposed by the relevant Governmental Authority) to Agent or Lender in the event Agent
or Lender is required to repay such refund or credit in lieu of refund to such Governmental Authority. Notwithstanding the foregoing,
neither Agent nor Lender shall be required to make available its tax returns or any other information relating to its taxes that
it deems confidential to a Loan Party or any other Person.

 

    	 

    	 

    

 

SECTION
7. COVENANTS OF BORROWER

 

Borrower agrees as follows:

 

7.1           Financial
Reports. Borrower shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):

 

(a)          as
soon as practicable (and in any event within 30 days) after the end of each month, unaudited interim and year-to-date financial
statements as of the end of such month (prepared on a consolidated and consolidating basis, if applicable), including balance sheet
and related statements of income accompanied by a report detailing any material contingencies (including the commencement of any
material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse
Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been
prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year end adjustments,
and (iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements;

 

(b)          as
soon as practicable (and in any event within 45 days) after the end of each calendar quarter, unaudited interim and year-to-date
financial statements as of the end of such calendar quarter (prepared on a consolidated and consolidating basis, if applicable),
including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies
(including the commencement of any material litigation by or against Borrower) or any other occurrence that would reasonably be
expected to have a Material Adverse Effect, certified by Borrower’s Chief Executive Officer or Chief Financial Officer to
the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are
subject to normal year end adjustments; as well as the most recent capitalization table for Borrower, including the weighted average
exercise price of employee stock options;

 

(c)          as
soon as practicable (and in any event within one hundred fifty (150) days) after the end of each fiscal year, unqualified (other
than a qualification as to going-concern for the fiscal years ending December 31, 2015 and December 31, 2016), audited financial
statements as of the end of such year (prepared on a consolidated and consolidating basis, if applicable), including balance sheet
and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding
fiscal year, certified by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to
Agent, accompanied by any management report from such accountants;

 

(d)          as
soon as practicable (and in any event within 30 days) after the end of each month, a Compliance Certificate in the form of Exhibit
F;

 

(e)          as
soon as practicable (and in any event within 30 days) after the end of each month, a report showing agings of accounts payable;

 

(f)          promptly
after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports that Borrower
has made available to holders of its Preferred Stock and copies of any regular, periodic and special reports or registration statements
that Borrower files with the Securities and Exchange Commission or any Governmental Authority that may be substituted therefor,
or any national securities exchange;

 

    	 

    	 

    

 

(g)          within
45 days after the end of each quarter, copies of all notices, minutes, consents and other materials that Borrower provides to its
directors in connection with meetings of the Board of Directors during the immediately preceding quarter, and, minutes of such
meetings, provided that in all cases Borrower may exclude any information or materials relating to executive compensation, executive
sessions, debt refinancings, confidential merger activities, attorney-client privilege materials and other similar confidential
or sensitive information; and

 

(h)          financial
and business projections promptly following their approval by Borrower’s Board of Directors, and in any event, within 45
days following the end of Borrower’s fiscal year, as well as budgets, operating plans and other financial information reasonably
requested by Agent.

 

  Borrower shall not (without the consent of Agent, such consent not to be unreasonably withheld or delayed), make any change in its (a) accounting policies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on December 31.

 

Notwithstanding anything to the contrary
in this Section 7.1, the Borrower shall not be required to deliver any financial statements to the Agent under clause (a) or clause
(b) above with respect to any period for which it has timely filed its Form 10-K or Form 10-Q, as the case may be, with the SEC;
provided, that such Form 10-K or Form 10-Q, as the case may be, is publicly available on the SEC’s website (or a similar
website) within the time periods permitted by this Section 7.1 and the Borrower promptly notifies Agent in writing (which may be
by electronic mail) of the posting of any such documents. To the extent any documents required to be delivered pursuant to the
terms hereof are included in materials otherwise filed with the SEC, Borrower may electronically deliver such documents by e-mailing
a link to the applicable filing posted on the SEC website currently located at http://www.sec.gov.The
executed Compliance Certificate may be sent via facsimile to Agent at (650) 473-9194 or via e-mail to hbhalla@herculestech.com.
All Financial Statements required to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to financialstatements@herculestech.com
with a copy to hbhalla@herculestech.com provided, that if e-mail is not available or sending such Financial Statements via e-mail
is not possible, they shall be sent via facsimile to Agent at: (866) 468-8916, attention Chief Credit Officer.

 

7.2           Management
Rights. Borrower shall permit any representative that Agent or Lender authorizes, including its attorneys and accountants, to inspect
the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and
upon reasonable notice during normal business hours; provided however, that unless an Event of Default has occurred and is continuing,
such Inspection shall be limited to twice per calendar year. Borrower shall reimburse Agent or Lender, as applicable, for its reasonable
and documented out-of-pocket costs incurred in connection with such inspections. In addition, any such representative shall have
the right to meet with management and officers of Borrower to discuss such books of account and records. In addition, Agent or
Lender shall be entitled at reasonable times and intervals to consult with and advise the management and officers of Borrower concerning
significant business issues affecting Borrower. Such consultations shall not unreasonably interfere with Borrower’s business
operations. The parties intend that the rights granted Agent and Lender shall constitute “management rights” within
the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Agent or Lender
with respect to any business issues shall not be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender of,
control over Borrower’s management or policies.

 

    	 

    	 

    

 

7.3           Further
Assurances. Until the Secured Obligations have been satisfied (other than contingent indemnification obligations not then due and
owing), Borrower shall from time to time, upon the reasonable request by Agent or Lender, execute, deliver and file, alone or with
Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, or other documents to
perfect or give a first priority to Agent’s Lien on the Collateral. Borrower shall from time to time procure any instruments
or documents as may be reasonably requested by Agent, and take all further action that may be necessary or desirable, or that Agent
may reasonably request, to perfect and protect the Liens granted hereby and thereby. In addition, and for such purposes only, Borrower
hereby authorizes Agent to execute and deliver on behalf of Borrower and to file such financing statements, collateral assignments,
notices, control agreements, security agreements and other documents without the signature of Borrower either in Agent’s
name or in the name of Agent as agent and attorney-in-fact for Borrower. Borrower shall protect and defend Borrower’s title
to the material Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent
other than Permitted Liens. Guarantor promptly shall obtain the approval of the Office of the Chief Scientist of Israel’s
Ministry of Economy to pledge to Agent a security interest in Guarantor’s Intellectual Property at all times when such pledge
is required under the provisions of Section 3.2 hereof.

 

7.4           Indebtedness.
Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary
so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation
to prepay any Indebtedness, except for the conversion of Indebtedness into equity securities and the payment of cash in lieu of
fractional shares in connection with such conversion.

 

7.5           Collateral.
Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets used in Borrower’s
business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except
for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting the Collateral, the Intellectual
Property, such other property and assets, or any Liens thereon, provided however, that the Collateral and such other property and
assets may be subject to Permitted Liens except that there shall be no Liens whatsoever on Intellectual Property. Borrower shall
cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming
any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s
property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens, provided however, that
there shall be no Liens whatsoever on Intellectual Property), and shall give Agent prompt written notice of any legal process affecting
such Subsidiary’s assets. Borrower shall not agree with any Person other than Agent or Lender not to encumber its material
property. 

 

7.6           Investments.
Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries
so to do, other than Permitted Investments.

 

    	 

    	 

    

 

7.7           Distributions.
Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other equity interest
other than pursuant to employee, director or consultant repurchase plans or other similar agreements, provided, however, in each
case the repurchase or redemption price does not exceed the original consideration paid for such stock or equity interest, or (b)
unless otherwise consented to by Lender in its discretion upon request of Borrower, declare or pay any cash dividend or make a
cash distribution on any class of stock or other equity interest, except that a Subsidiary may pay dividends or make distributions
to Borrower, or (c) lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a
third party in excess of $100,000 in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees, officers
or directors in excess of $100,000 in the aggregate.

 

7.8           Transfers.
Except for Permitted Transfers, Borrower shall not and shall not allow any Subsidiary voluntarily or involuntarily to transfer,
sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of
its assets. Except as disclosed on Schedule 5.10, no Intellectual Property or Licenses of a Loan Party shall prohibit collateral
assignments thereof to Lender or Agent. For the avoidance of doubt, no Loan Party shall be restricted from entering into any inbound
licensing agreements.

 

7.9           Mergers
or Acquisitions. Except for Permitted Acquisitions not exceeding an aggregate cash amount of $1,000,000 in any fiscal year, Borrower
shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization
(other than mergers or consolidations of (a) a Subsidiary which is not a Borrower into another Subsidiary or into Borrower or (b)
a Borrower into another Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital
stock or property of another Person.

 

7.10         Taxes.
Borrower and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against Borrower, Agent, Lender or the Collateral or upon Borrower’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.
Borrower shall file on or before the due date therefor all personal property tax returns in respect of the material Collateral.
Notwithstanding the foregoing, Borrower may contest, in good faith and by appropriate proceedings, taxes for which Borrower maintains
adequate reserves therefor in accordance with GAAP.

 

7.11         Corporate
Changes. Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without twenty
(20) days’ prior written notice to Agent. Neither Borrower nor any Subsidiary shall suffer a Change in Control. Neither Borrower
nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior
written notice to Agent; and (ii) such relocation shall be within the continental United States. Neither Borrower nor any Subsidiary
shall relocate any item of Collateral (other than (x) sales of Inventory in the ordinary course of business, (y) relocations of
Equipment having an aggregate value of up to $150,000 individually in any fiscal year and $500,000 in the aggregate in any fiscal
year, and (z) relocations of material Collateral from a location described on Exhibit C to another location described on Exhibit
C) unless (i) it has provided prompt written notice to Agent, (ii) such relocation is within the continental United States and,
(iii) if such relocation is to a third party bailee, it has delivered a bailee agreement in form and substance reasonably acceptable
to Agent.

 

    	 

    	 

    

 

7.12         Deposit
Accounts. Neither Borrower nor any Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment Property, except
with respect to which Agent has an Account Control Agreement, other than Excluded Accounts.

 

7.13         Borrower
shall notify Agent of each Subsidiary formed, reactivated or acquired subsequent to the Closing Date and, within 15 days of formation,
activation or acquisition, as applicable, shall cause any such Domestic Subsidiary to execute and deliver to Agent a Joinder Agreement
and cause any such newly formed or acquired Foreign Subsidiary to execute and deliver to Agent a Guaranty and appropriate guaranty
security documents

 

7.14         Borrower
shall not permit the Foreign Subsidiaries that are not a Guarantor to hold more than $250,000 USD in cash in the aggregate, including
without limitation cash held in Excluded Accounts, at any given time.

 

7.15         Notification
of Event of Default. Borrower shall notify Agent immediately upon becoming aware of the occurrence of any Event of Default.

 

7.16         Post-Closing
Conditions.

 

(a)          Within
30 days of the Closing Date, Borrower shall cause Guarantor to deliver to Agent the fully executed Guaranty and the Guarantor Security
Documents satisfactory to Agent, and with respect to the Guarantor Security Documents, including evidence of filing and registration
with the Israeli Registrar of Companies and with any other applicable registrar reasonably requested by the Agent.

 

(b)          Within
30 days of the Closing Date, Borrower shall deliver to Agent certificate(s) representing all of the outstanding share capital of
the Guarantor pledged by Borrower, as evidenced by a pledge registration certificate issued by the Israeli Registrar of Pledges,
together with a share transfer deed, duly executed by Borrower in blank.

 

(c)          Borrower
shall use its commercially reasonable efforts to deliver or cause to be delivered the documents listed on Schedule 7.16 on or before
the corresponding dates set forth on Schedule 7.16.

 

    	 

    	 

    

 

SECTION
8. RIGHT TO CONVERT

 

8.1           Lender
shall have the right, in its discretion to convert in any Subsequent Financing (other than a Subsequent Financing occurring pursuant
to the Stock Purchase Agreement dated July 28, 2015 (the “Stock Purchase Agreement”)) after the Closing Date, an amount
of up to $1,000,000 of the principal amount of the Term Loan on the same terms, conditions and pricing afforded to others participating
in any such Subsequent Financing; provided that such conversion does not have a Material Adverse Effect on Borrower.

 

SECTION
9. EVENTS OF DEFAULT

 

The occurrence of any one or more of the following
events shall be an Event of Default:

 

9.1           Payments.
Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents on the due date, provided, however,
that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of
Agent in auto-debiting Borrower’s account, or of any depositary institution that is crediting by ACH or wiring such payment
if Borrower had the funds to make the payment when due and makes the payment within three (3) days following Borrower’s knowledge
of such failure to pay; or

 

9.2           Covenants.
Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other
Loan Documents or any other agreement among Borrower, Agent and Lender, and (a) with respect to a default under any covenant
under this Agreement (other than under Sections 6.1, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15 and 7.16), any other Loan Document
or any other agreement among Borrower, Agent and Lender, such default continues for more than ten (10) days after the earlier of
the date on which (i) Agent or Lender has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such
default or (b) with respect to a default under any of Sections 6.1, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15 and 7.16, the occurrence
of such default; or

 

9.3           Material
Adverse Effect. A circumstance has occurred that would reasonably be expected to have a Material Adverse Effect; or

 

9.4           Representations.
Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have been false or misleading in any
material respect; or

 

9.5           Insolvency.
Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they
become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary
petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent
to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator
of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (vi) shall
cease operations of its business as its business has normally been conducted, or terminate substantially all of its employees;
or (vii) Borrower or its directors or majority shareholders shall take any action initiating any of the foregoing actions
described in clauses (i) through (vi); or (B) either (i) sixty (60) days shall have expired after the commencement of
an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or
proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such order
or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower
shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings;
or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such
proceedings; or (v) sixty (60) days shall have expired after the appointment, without the consent or acquiescence of Borrower,
of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such
appointment being vacated; or

 

    	 

    	 

    

 

9.6           Attachments;
Judgments. Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a judgment
or judgments is/are entered for the payment of money, individually or in the aggregate, of at least $250,000, or Borrower is enjoined
or in any way prevented by court order from conducting any part of its business; or

 

9.7           Other
Obligations. The occurrence of any default under any agreement or obligation of Borrower (a) involving any Indebtedness in excess
of $250,000, (b) under the Stock Purchase Agreement dated July 28, 2015 that is not cured within 10 days, or (c) that could reasonably
be expected to have a Material Adverse Effect.

 

9.8           Guaranty.
If the any guaranty of the Secured Obligations, including without limitation the Guaranty, ceases for any reason to be in full
force and effect, or if any guarantor thereof, including without limitation Guarantor, fails to perform any obligation under such
guaranty or under any of the security documents applicable thereto, including without limitation the Guarantor Security Documents,
or any event of default occurs under such guaranty or such guarantor security documents or any guarantor revokes or purports to
revoke its guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation
set forth any guaranty or the applicable guarantor security documents or in any certificate delivered to Agent in connection with
such guaranty or such guarantor security documents, or if any of the circumstances described in Sections 9.3 through 9.7 occur
with respect to any guarantor.

 

SECTION
10. REMEDIES

 

10.1         General.
Upon the occurrence and continuance of any one or more Events of Default, (i) Agent may, at its option, accelerate and demand payment
of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable
(provided, that upon the occurrence and continuance of an Event of Default of the type described in Section 9.5, all of the Secured
Obligations shall automatically be accelerated and made due and payable, in each case without any further notice or act), (ii)
Agent may, at its option, sign and file in Borrower’s name any and all collateral assignments, notices, control agreements,
security agreements and other documents it deems necessary or appropriate to perfect or protect the repayment of the Secured Obligations,
and in furtherance thereof, Borrower hereby grants Agent an irrevocable power of attorney coupled with an interest, and (iii) Agent
may notify any of Borrower’s account debtors to make payment directly to Agent, compromise the amount of any such account
on Borrower’s behalf and endorse Agent’s name without recourse on any such payment for deposit directly to Agent’s
account. Agent may exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available
to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon,
or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral.
All Agent’s rights and remedies shall be cumulative and not exclusive.

 

    	 

    	 

    

 

10.2         Collection;
Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, at any time or from time to time,
apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then
condition or following any commercially reasonable preparation or processing, in such order as Agent may elect. Any such sale may
be made either at public or private sale at its place of business or elsewhere. Borrower agrees that any such public or private
sale may occur upon ten (10) calendar days’ prior written notice to Borrower. Agent may require Borrower to assemble the
Collateral and make it available to Agent at a place designated by Agent that is reasonably convenient to Agent and Borrower. The
proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the
following order of priorities:

 

  First, to Agent and Lender in an amount sufficient to pay in full Agent’s and Lender’s costs and professionals’ and advisors’ fees and expenses as described in Section 11.11;

 

  Second, to Lender in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order and priority as Agent may choose in its sole discretion; and

 

  Finally, after the full, final, and indefeasible payment in Cash of all of the Secured Obligations, to Borrower or its representatives or as a court of competent jurisdiction may direct.

 

Agent shall be deemed to have acted reasonably in the custody, preservation
and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.

 

10.3         No
Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person, and
Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.

 

10.4         Cumulative
Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute
or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein shall not
be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.

 

SECTION
11. MISCELLANEOUS

 

11.1         Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective
only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

    	 

    	 

    

 

11.2         Notice.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with
respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and
received upon the earlier of: (i) the day of transmission by facsimile or hand delivery or delivery by an overnight express
service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States mails, with
proper first class postage prepaid, in each case addressed to the party to be notified as follows:

 

		(a)	If to Agent:

 

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Himani Bhalla

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

 

		(b)	If to Lender:

 

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Himani Bhalla

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

 

		(c)	If to Borrower:

 

IMMUNE PHARMACEUTICALS INC.

 

Attention: Gad Berdugo,

Chief Financial Officer-Executive VP Finance and Administration,
Secretary

430 East 29th Street, Suite 940

New York, NY 10016

Facsimile: 917-398-1915

Telephone: 646-440-9310

 

or to
such other address as each party may designate for itself by like notice.

 

    	 

    	 

    

 

11.3         Entire
Agreement; Amendments.

 

(a)          This
Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure
or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to
the subject matter hereof or thereof (including Agent’s revised proposal letter dated June 1, 2015 and accepted by Borrower
on June 2, 2015).

 

(b)          Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance
with the provisions of this Section 11.3(b). The Required Lenders and Borrower party to the relevant Loan Document may, or, with
the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document may, from time to time,
(i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any default or Event of Default
and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive
the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization
payment in respect of any Term Loan, reduce the stated rate of any interest or fee payable hereunder) or extend the scheduled date
of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce
the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a
Borrower from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend,
modify or waive any provision of Section 11.17 without the written consent of the Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each Lender and shall be binding upon Borrower, the Lender, the Agent and all
future holders of the Loans.

 

11.4         No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.

 

11.5         No
Waiver. The powers conferred upon Agent and Lender by this Agreement are solely to protect its rights hereunder and under the other
Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or Lender to exercise any such powers.
No omission or delay by Agent or Lender at any time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy
to which Agent or Lender is entitled, nor shall it in any way affect the right of Agent or Lender to enforce such provisions thereafter.

 

11.6         Survival.
All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered
pursuant hereto or thereto shall be for the benefit of Agent and Lender and shall survive the execution and delivery of this Agreement
and the expiration or other termination of this Agreement.

 

    	 

    	 

    

 

11.7         Successors
and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on Borrower
and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement or any of the other Loan Documents
without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect. Agent and
Lender may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower,
and all of such rights shall inure to the benefit of Agent’s and Lender’s successors and assigns; notwithstanding the
above, prior to the occurrence and the continuance of any Event of Default, neither Agent nor Lender shall assign, transfer, or
endorse its rights hereunder and under the other Loan Documents to any party other than an Affiliate of Agent or Lender without
Borrower’s prior written consent which shall not be unreasonably withheld, conditioned or delayed.

 

11.8         Governing
Law. This Agreement and the other Loan Documents (excluding the Guarantor Security Documents) shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.

 

11.9         Consent
to Jurisdiction and Venue. All judicial proceedings (to the extent that the arbitration requirement of Section 11.10 is not applicable)
arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court
located in the City of New York, Borough of Manhattan, State of New York. By execution and delivery of this Agreement, each party
hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in the City of New York, Borough
of Manhattan, State of New York; (b) waives any objection as to jurisdiction or venue in the State of New York; (c) agrees
not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents. Service of process on any
party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements
for notice set forth in Section 11.2, and shall be deemed effective and received as set forth in Section 11.2. Nothing
herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to
bring proceedings in the courts of any other jurisdiction.

 

11.10       Mutual
Waiver of Jury Trial / Arbitration.

 

(a)          Because
disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced
and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER, AGENT AND LENDER SPECIFICALLY
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY
OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY ANY PARTY AGAINST ANOTHER PARTY HERETO. This waiver extends to all
such Claims, including Claims that involve Persons other than Agent, Borrower and Lender; Claims that arise out of or are in any
way connected to the relationship among Borrower, Agent and Lender; and any Claims for damages, breach of contract, tort, specific
performance, or any equitable or legal relief of any kind, arising out of this Agreement, or any other Loan Document.

 

    	 

    	 

    

 

(b)          Arbitration.
If the mutual waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims
shall be submitted to binding arbitration in accordance with the commercial arbitration rules of JAMS (the “Rules”),
such arbitration to occur before one arbitrator, which arbitrator shall be a retired New York state judge or a retired Federal
court judge. Such proceeding shall be conducted in Manhattan, State of New York, with New York rules of evidence and discovery
applicable to such arbitration. The decision of the arbitrator shall be binding on the parties, and shall be final and nonappealable
to the maximum extent permitted by law. Any judgment rendered by the arbitrator may be entered in a court of competent jurisdiction
and enforced by the prevailing party as a final judgment of such court.

 

(c)          Pre-arbitration
Relief. In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction identified
in Section 11.9, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to
the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by binding arbitration.

 

11.11       Professional
Fees. Borrower promises to pay Agent’s and Lender’s reasonable and documented out-of-pocket fees and expenses necessary
to finalize the loan documentation, including but not limited to reasonable attorneys fees, UCC searches, filing costs, translation
costs associated with filings for translations required in connection with this Agreement and the Loan Documents, and other miscellaneous
expenses. In addition, Borrower promises to pay any and all reasonable and documented out-of-pocket attorneys’ and other
professionals’ fees and expenses (including fees and expenses of in-house counsel) incurred by Agent and Lender after the
Closing Date in connection with or related to: (a) the Loan; (b) the administration, collection, or enforcement of the
Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under
the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral
or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out
of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (g) any
bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related
to Borrower, the Collateral, the Loan Documents, including representing Agent or Lender in any adversary proceeding or contested
matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.

 

    	 

    	 

    

 

11.12       Confidentiality.
Agent and Lender acknowledge that certain items of Collateral and information provided to Agent and Lender by Borrower are confidential
and proprietary information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower
at the time of disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”).
Accordingly, Agent and Lender agree that any Confidential Information it may obtain in the course of acquiring, administering,
or perfecting Agent’s security interest in the Collateral shall not be disclosed to any other Person or entity in any manner
whatsoever, in whole or in part, without the prior written consent of Borrower, except that Agent and Lender may disclose any such
information: (a) to its own directors, officers, employees, accountants, counsel and other professional advisors and to its
affiliates if Agent or Lender in their sole discretion determines that any such party should have access to such information in
connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient
of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise
subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information to the same
extent or greater than the confidentiality provisions hereunder; (b) if such information is generally available to the public
other than by unlawful disclosure by the Agent or Lender or their Affiliate; (c) if required in any report, statement or testimony
submitted to any Governmental Authority having or claiming to have jurisdiction over Agent or Lender; (d) if required in response
to any summons or subpoena or in connection with any litigation, to the extent permitted; (e) to comply with any legal requirement
or law applicable to Agent or Lender; (f) to the extent reasonably necessary in connection with the exercise of any right
or remedy under any Loan Document, including Agent’s sale, lease, or other disposition of Collateral after an Event of Default
that has occurred and is continuing; (g) to any participant or assignee of Agent or Lender or any prospective participant
or assignee; provided, that such participant or assignee or prospective participant or assignee agrees in writing to be bound by
this Section prior to disclosure, and further provided, that prior to an Event of Default, such participant or assignee or prospective
participant or assignee shall not be a competitor of Borrower in Borrower’s industry; or (h) otherwise with the prior
consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower
or any of its affiliates or any guarantor under this Agreement or the other Loan Documents.

 

11.13      
Assignment of Rights. Borrower acknowledges and understands that Agent or Lender may sell and assign all or part of its interest
hereunder and under the Loan Documents to any Person or entity (an “Assignee”), subject to the provisions of Section
11.7 hereof. After such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean
and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and Lender hereunder
with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and Lender shall retain
all rights, powers and remedies hereby given. No such assignment by Agent or Lender shall relieve Borrower of any of its obligations
hereunder. Lender agrees that in the event of any transfer by it of the Note(s)(if any), it will endorse thereon a notation as
to the portion of the principal of the Note(s), which shall have been paid at the time of such transfer and as to the date to which
interest shall have been last paid thereon.

 

11.14       Revival
of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective
if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment
for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets,
or if any payment or transfer of Collateral is recovered from Agent or Lender. The Loan Documents and the Secured Obligations and
Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment
and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or
avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise,
all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations
shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full,
final, and indefeasible payment to Agent or Lender in accordance with the terms hereunder.

 

    	 

    	 

    

 

11.15       Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.

 

11.16       No
Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lender and Borrower unless specifically
provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely
among Agent, the Lender and the Borrower.

 

11.17       Agency.

 

(a)          Lender
hereby irrevocably appoints Hercules Technology Growth Capital, Inc. to act on its behalf as the Agent hereunder and under the
other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to
the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

 

(b)          Lender
agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting the obligation
of Borrower to do so), according to its respective Term Commitment percentages (based upon the total outstanding Term Loan Commitments)
in effect on the date on which indemnification is sought under this Section 11.17, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any
time be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of, this Agreement, any of
the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby
or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; The agreements in this
Section shall survive the payment of the Loans and all other amounts payable hereunder.

 

(c)          Agent
in Its Individual Capacity. The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as
a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” shall,
unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder
in its individual capacity.

 

(d)          Exculpatory
Provisions. The Agent shall have no duties or obligations except those expressly set forth herein and in the other Loan Documents.
Without limiting the generality of the foregoing, the Agent shall not:

 

    	 

    	 

    

 

		(i)	be subject to any fiduciary or other implied duties, regardless
of whether any default or any Event of Default has occurred and is continuing;

 

		(ii)	have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents
that the Agent is required to exercise as directed in writing by the Lender, provided that the Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any
Loan Document or applicable law; and

 

		(iii)	except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and the Agent shall not be liable for the failure to disclose, any information relating
to the Borrower or any of its affiliates that is communicated to or obtained by any Person serving as the Agent or any of its
affiliates in any capacity.

 

(e)          The
Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lender or as the
Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross negligence,
fraud or willful misconduct.

 

(f)          The
Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any default or Event of
Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other
agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to the Agent.

 

(g)          Reliance
by Agent. Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe
to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies
and telexes, to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct, Agent
may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates
or opinions furnished to Agent and conforming to the requirements of the Loan Agreement or any of the other Loan Documents. Agent
may consult with counsel, and any opinion or legal advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith. Agent
shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent
jurisdiction. Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by this Agreement,
the Loan Agreement and the other Loan Documents at the request or direction of Lenders unless Agent shall have been provided by
Lender with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance
with such request or direction.

 

    	 

    	 

    

 

11.18       Publicity.
None of the parties hereto nor any of its respective member businesses and affiliates shall, without the other parties’ prior
written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party's name (including a
brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately
or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations
materials or on its web site (together, the " Publicity Materials"); (b) the names of officers of such other parties
in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning
such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to the extent
necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party (including the SEC),
pursuant to any listing agreement with any national securities exchange (so long as such party provides prior notice to the other
party hereto to the extent reasonably practicable) and (ii) to comply with Section 11.12.

 

(SIGNATURES
TO FOLLOW)

 

    	 

    	 

    

IN WITNESS WHEREOF, Borrower, Guarantor, Agent
and Lender have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.

 

	BORROWER:	 
	 	 
	IMMUNE PHARMACEUTICALS INC.	 
	 	 
	Signature:	/s/ Gad Berdugo	 
	 	Gad Berdugo, Chief Financial Officer-Executive VP Finance and Administration, Secretary	 
	 	 
	IMMUNE PHARMACEUTICALS USA CORP.	 
	 	 
	Signature:	/s/ Gad Berdugo	 
	 	Gad Berdugo, Chief Financial Officer-Executive VP Finance and Administration, Secretary	 

 

	GUARANTOR:	 
	 	 
	IMMUNE PHARMACEUTICALS LTD.	 
	 	 	 
	Signature:	/s/ Gad Berdugo	 
	 	Gad Berdugo, Chief Financial  Officer-Executive VP Finance and Administration, Secretary	 

 

Accepted in Palo Alto, California:

 

	AGENT:	 	LENDER:
	 	 	 
	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
	 	 	 
	By:	/s/ Ben Bang	 	 	By:	/s/ Ben Bang	 
	 	Ben Bang, Associate General Counsel	 	 	Ben Bang, Associate General CounselExhibit 10.2

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement
(“Agreement”) is made and entered into on July 28, 2015 (“Effective Date”), by and between
Immune Pharmaceuticals Inc., a Delaware corporation (“Company”), and the investor whose name appears on the
signature page hereto (“Investor”).

 

Recitals

 

A.           The
parties desire that, upon the terms and subject to the conditions herein, Investor will purchase $4.2 million in shares of Series
D Redeemable Convertible Preferred Stock of the Company, which is convertible into Common Stock at $2.50 per share; and

 

B.           The
offer and sale of the Preferred Shares provided for herein are being made pursuant to an effective Registration Statement on Form
S-3 under the Act, File No. 333-198647.

 

Agreement

 

In consideration of the
foregoing, the receipt and adequacy of which are hereby acknowledged, Company and Investor agree as follows:

 

I.           Definitions.
In addition to the terms defined elsewhere in this Agreement and the Transaction Documents, capitalized terms that are not otherwise
defined have the meanings set forth in the Glossary of Defined Terms attached hereto as Exhibit 1.

 

II.          Purchase
and Sale.

 

A.           Purchase
Amount. Subject to the terms and conditions herein and the satisfaction of the conditions to Closing set forth below,
Investor hereby irrevocably agrees to purchase 444 Preferred Shares of Company at $10,000.00 per share with a 5.0% original issue
discount for the sum of $4,217,412.00 (“Purchase Amount”) in cash.

 

B.           Deliveries.
The following documents will be fully executed and delivered at the Closing:

 

1.          Certificate
of Designations (“Certificate of Designations”), in the form attached hereto as Exhibit 2, as filed with
and accepted by the Secretary of State of Company’s state of incorporation;

 

2.          Transfer
Agent Instructions, in the form attached hereto as Exhibit 3;

 

3.          Legal
Opinion, in the form attached hereto as Exhibit 4;

 

4.          Officer’s
Certificate, in the form attached hereto as Exhibit 5;

 

5.          Secretary’s
Certificate, in the form attached hereto as Exhibit 6;

 

6.          Voting
Agreements, in the form attached hereto as Exhibit 7, from ten or fewer stockholders that in the aggregate beneficially
own more than 50% of the total voting power of Common Stock and preferred stock voting together with the Common Stock as a single
class outstanding as of the record date for Company’s next meeting of stockholders; and

 

    	 

    	 

    

  

7.          Stock
certificate for 444 Preferred Shares in the name of Investor.

 

C.           Closing
Conditions. The consummation of the transactions contemplated by this Agreement (“Closing”) is subject to
the satisfaction of each of the following conditions:

 

1.          All
documents, instruments and other writings required to be delivered by Company to Investor pursuant to any provision of this Agreement
or in order to implement and effect the transactions contemplated herein have been fully executed and delivered, including without
limitation those enumerated in Section II.B above;

 

2.          The
Common Stock is listed for and currently trading on the same or higher Trading Market and, subject to Section IV.L below,
Company is in compliance with all requirements to maintain listing on the Trading Market, and there is no notice of any suspension
or delisting with respect to the trading of the shares of Common Stock on such Trading Market;

 

3.          The
representations and warranties of Company and Investor set forth in this Agreement are true and correct in all material respects
as if made on such date (except for representations and warranties expressly made as of a specified date, which shall be true as
of such date);

 

4.          No
material breach or default has occurred under any Transaction Document or any other agreement between Company and Investor;

 

5.          Company
has the number of duly authorized shares of Common Stock reserved for issuance as required pursuant to the terms of this Agreement;

 

6.          There
is not then in effect any law, rule or regulation prohibiting or restricting the transactions contemplated in any Transaction Document,
or requiring any consent or approval which will not have been obtained except for the Approval, nor is there any pending or, to
Company’s knowledge threatened, proceeding or investigation which may have the effect of prohibiting or adversely affecting
any of the transactions contemplated by this Agreement; no statute, rule, regulation, executive order, decree, ruling or injunction
will have been enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits
the transactions contemplated by this Agreement, and no actions, suits or proceedings will be in progress, pending or, to Company’s
knowledge threatened, by any person other than Investor or any Affiliate of Investor, that seek to enjoin or prohibit the transactions
contemplated by this Agreement;

 

7.          Any
rights of first refusal, preemptive rights, rights of participation, or any similar right to participate in the transactions contemplated
by this Agreement, if any, have been waived in writing; and

 

8.          The
Registration Statement is current and effective, and a Prospectus Supplement with regard to the offer and sale of all Shares pursuant
to this Agreement has been filed with the Commission within two Trading Days of the Effective Date.

 

    	2

    	 

    

 

D.           Closing.
Immediately when all conditions set forth in Section II.C have been fully satisfied, Company will issue and sell to Investor
and Investor will purchase 444 Preferred Shares by payment to Company of $4,217,412.00 in cash, by wire transfer of immediately
available funds to an account designated by Company.

 

III.         Representations
and Warranties.

 

A.           Representations
Regarding Transaction. Except as set forth under the corresponding section of the Disclosure Schedules, if any, Company
hereby represents and warrants to, and as applicable covenants with, Investor as of the Closing:

 

1.          Organization
and Qualification. Company and each Subsidiary is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, as applicable, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither Company
nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents, except as would not reasonably be expected to result in a Material Adverse
Effect. Each of Company and each Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected
to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing
or seeking to revoke, limit or curtail such power and authority or qualification.

 

2.          Authorization;
Enforcement. Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by each of the Transaction Documents and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery
of each of the Transaction Documents by Company and the consummation by it of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of Company and no further consent or action is required by Company. Each
of the Transaction Documents has been, or upon delivery will be, duly executed by Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of Company, enforceable against Company in accordance with its
terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (c) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

    	3

    	 

    

 

3.          No
Conflicts. The execution, delivery and performance of the Transaction Documents by Company, the issuance and sale of the
Shares and the consummation by Company of the other transactions contemplated thereby do not and will not (a) conflict with or
violate any provision of Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational
or charter documents, (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become
a default) under, result in the creation of any Lien upon any of the properties or assets of Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other instrument (evidencing Company or Subsidiary debt or otherwise) or other
understanding to which Company or any Subsidiary is a party or by which any property or asset of Company or any Subsidiary is bound
or affected, (c) conflict with or result in a violation of any material law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which Company or a Subsidiary is subject (including U.S. federal
and state securities laws and regulations), or by which any property or asset of Company or a Subsidiary is bound or affected,
or (d) conflict with or violate the terms of any material agreement by which Company or any Subsidiary is bound or to which any
property or asset of Company or any Subsidiary is bound or affected; except in the case of each of clauses (b), (c) and (d), such
as would not reasonably be expected to result in a Material Adverse Effect.

 

4.          Litigation.
 There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of Company,
threatened against or affecting Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”),
which would reasonably be expected to adversely affect or challenge the legality, validity or enforceability of any of the Transaction
Documents or the issuance of any Shares hereunder. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by Company or any Subsidiary under the Exchange Act or the Act.

 

5.          Filings,
Consents and Approvals. Neither Company nor any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by Company of the Transaction Documents, other
than the Approval and required federal and state securities filings and such filings and approvals as are required to be made or
obtained under the applicable Trading Market rules in connection with the transactions contemplated hereby, each of which has been,
or if not yet required to be filed will be, timely filed.

 

6.          Issuance
of Shares. The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. Company has reserved and will continue
to reserve from its duly authorized capital stock sufficient shares of its Common Stock for issuance pursuant to the Transaction
Documents.

 

7.          Disclosure;
Non-Public Information. Company will timely file a current report on Form 8-K within two Trading Days of the Effective
Date describing the material terms and conditions of this Agreement. Notwithstanding any other provision, except with respect to
information that must be, and only to the extent that it actually is, timely publicly disclosed by Company pursuant to the foregoing
sentence, neither Company nor any other Person acting on its behalf has provided Investor or its representatives, agents or attorneys
with any information that constitutes or might constitute material, non-public information, including without limitation this Agreement
and the Exhibits and Disclosure Schedules hereto. No information contained in the Disclosure Schedules constitutes material non-public
information. There is no adverse material information regarding Company that has not been publicly disclosed prior to the Effective
Date. Company understands and confirms that Investor will rely on the foregoing representations and covenants in effecting transactions
in securities of Company. All disclosure provided to Investor regarding Company, its business and the transactions contemplated
hereby, including without limitation the Prospectus Supplement and Disclosure Schedules, taken as a whole, furnished by or on behalf
of Company with respect to the representations and warranties made herein are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading.

 

    	4

    	 

    

 

8.          No
Integrated Offering. Neither Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would
cause this offering to be integrated with prior offerings by Company that cause a violation of the Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations of the Trading Market.

 

9.          Financial
Condition. Based on the financial condition of Company and its projected operating and capital requirements, effective
as of the Effective Date, the Company will require additional capital to carry on its business as now conducted and as proposed
to be conducted. Company does not incur debts beyond its ability to pay such debts as they mature, taking into account the timing
and amounts of cash to be payable on or in respect of its debt. The Public Reports set forth as of the dates thereof all outstanding
secured and unsecured Indebtedness of Company or any Subsidiary, or for which Company or any Subsidiary has commitments, and any
material default with respect to any Indebtedness.

 

10.         Section
5 Compliance. No representation or warranty or other statement made by Company in the Transaction Documents contains any
untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was
made, not misleading. Company is not aware of any facts or circumstances that would cause the transactions contemplated by the
Transaction Documents, when consummated, to violate Section 5 of the Act or other federal or state securities laws or regulations.

 

11.         Investment
Company. Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Preferred Shares,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. Company will conduct its business in a manner so that it will not become subject to the Investment Company Act.

 

12.         Acknowledgments
Regarding Investor. Company’s decision to enter into this Agreement has been based solely on the independent evaluation
of Company and its representatives, and Company acknowledges and agrees that:

 

a.           Investor
is not, has never been, and as a result of the transactions contemplated by the Transaction Documents will not become an officer,
director, insider, control person, to Company’s knowledge 10% or greater shareholder, or otherwise an affiliate of Company
as defined under Rule 12b-2 of the Exchange Act;

 

    	5

    	 

    

 

b.           Investor
does not make or has not made any representations, warranties or agreements with respect to the Shares, this Agreement, or the
transactions contemplated hereby other than those specifically set forth in Section III.C below;

 

c.           The
conversion of Preferred Shares and resale of Conversion Shares will result in dilution, which may be substantial; the number of
Conversion Shares will increase in certain circumstances; and Company’s obligation to issue and deliver Conversion Shares
in accordance with this Agreement and the Certificate of Designations is absolute and unconditional regardless of the dilutive
effect that such issuances may have; and

 

d.           Investor
is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated
hereby; neither Investor nor any of its Affiliates, agents or representatives has or is acting as a legal, financial, investment,
accounting, tax or other advisor to Company, or fiduciary of Company, or in any similar capacity; neither Investor nor any of its
Affiliates, agents or representatives has provided any legal, financial, investment, accounting, tax or other advice to Company;
any statement made in connection with this Agreement or the transactions contemplated hereby is not advice or a recommendation,
and is merely incidental to Investor’s purchase of the Shares.

 

13.         Registration
Statement. The Registration Statement is current and effective, and a Prospectus Supplement with regard to the offer and
sale of all Shares pursuant to this Agreement will be filed with the Commission within two Trading Days of the Effective Date.

 

B.           Representations
Regarding Company. Except as set forth in any Public Reports and attached exhibits, or under the corresponding section
of the Disclosure Schedules, if any, Company hereby represents and warrants to, and as applicable covenants with, Investor as
of the Closing:

 

1.          Capitalization.
The capitalization of the Company as of the Effective Date is as described in the Public Reports. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by
the Transaction Documents which has not been waived or satisfied. Except as a result of the purchase and sale of the Shares, there
are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which Company or any Subsidiary
is or may become bound to issue additional shares of Common Stock or securities convertible into or exercisable for shares of Common
Stock. The issuance and sale of the Shares will not obligate Company to issue shares of Common Stock or other securities to any
Person, other than Investor, and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange, or reset price under such securities. All of the outstanding shares of capital stock of Company are validly issued, fully
paid and nonassessable, have been issued in material compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors of Company or others is required for the issuance and sale of the Shares
except for the Approval. There are no stockholders agreements, voting agreements or other similar agreements with respect to Company’s
capital stock to which Company is a party or, to the knowledge of Company, between or among any of Company’s stockholders.

 

    	6

    	 

    

 

2.          Subsidiaries.
All of the direct and indirect subsidiaries of Company are set forth in the Public Reports or the corresponding section of
the Disclosure Schedules. Company owns, directly or indirectly, all of the capital stock or other equity interests of each
Subsidiary, and all of such directly or indirectly owned capital stock or other equity interests are owned free and clear of any
Liens. All the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

3.          Public
Reports; Financial Statements. Company has filed all required Public Reports for the one year preceding the Effective Date.
As of their respective dates or as subsequently amended, the Public Reports complied in all material respects with the requirements
of the Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none
of the Public Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Company included in the Public Reports, as amended, comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of Company and its consolidated subsidiaries as of
and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

4.          Material
Changes. Since the end of the most recent year for which an Annual Report on Form 10-K has been filed with the Commission,
(a) there has been no event, occurrence or development that has had, or that would reasonably be expected to result in, a Material
Adverse Effect, (b) Company has not incurred any liabilities (contingent or otherwise) other than (i) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice, and (ii) liabilities not required to be reflected
in Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (c) Company
has not altered its method of accounting, (d) Company has not declared or made any dividend or distribution of cash or other property
to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (e)
Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company equity
incentive plans. Company does not have pending before the Commission any request for confidential treatment of information.

 

    	7

    	 

    

 

5.          Litigation.
 There is no Action pending or, to the knowledge of the Company, threatened, which would reasonably be expected to result in
a Material Adverse Effect. Neither Company nor any Subsidiary, nor to the knowledge of Company any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to the knowledge of Company, there is not pending or contemplated,
any investigation by the Commission involving Company or any current or former director or officer of Company.

 

6.          No
Bankruptcy. There has not been any petition or application filed, or any judicial or administrative proceeding commenced
which has not been discharged, by or against the Company or any Subsidiary or with respect to any of the properties or assets of
Company or any Subsidiary under any applicable law relating to bankruptcy, insolvency, reorganization, fraudulent transfer, compromise,
arrangement of debt, creditors’ rights and no assignment has been made by the Company or any Subsidiary for the benefit of
creditors.

 

7.          Labor
Relations. No material labor dispute exists or, to the knowledge of Company, is imminent with respect to any of the employees
of Company, which would reasonably be expected to result in a Material Adverse Effect.

 

8.          Compliance.
Neither Company nor any Subsidiary (a) is in material default under or in material violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by Company or any Subsidiary under),
nor has Company or any Subsidiary received notice of a claim that it is in material default under or that it is in material violation
of, any indenture, loan or credit agreement or any other similar agreement or instrument to which it is a party or by which it
or any of its properties is bound (whether or not such default or violation has been waived), (b) is in violation of any order
of any court, arbitrator or governmental body, or (c) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its business, except in each case
as would not reasonably be expected to have a Material Adverse Effect.

 

9.          Regulatory
Permits. Company and each Subsidiary possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the Public Reports,
except where the failure to possess such permits would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither Company nor any Subsidiary has received any notice
of proceedings relating to the revocation or modification of any Material Permit.

 

10.         Title
to Assets. Company and each Subsidiary have good and marketable title in fee simple to all real property owned by them
that is material to the business of Company and each Subsidiary and good and marketable title in all personal property owned by
them that is material to the business of Company and each Subsidiary, in each case free and clear of all Liens, except for Liens
that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made
of such property by Company and each Subsidiary and Liens for the payment of federal, state or other taxes, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease by Company and each Subsidiary
are held by them under valid, subsisting and enforceable leases of which Company and each Subsidiary are in compliance.

 

    	8

    	 

    

  

11.         Patents
and Trademarks. Company and each Subsidiary have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material
for use in connection with their respective businesses as described in the Public Reports and which the failure to so have would
have a Material Adverse Effect (collectively, “Intellectual Property Rights”). Neither Company nor any Subsidiary
has received a written notice that the Intellectual Property Rights used by Company or any Subsidiary violates or infringes upon
the rights of any Person. To the knowledge of Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of Company or each Subsidiary.

 

12.         Insurance.
 Company and each Subsidiary are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which Company and each Subsidiary are engaged, including but
not limited to directors and officers insurance coverage at least equal to the Purchase Amount. To Company’s knowledge, such
insurance contracts and policies are accurate and complete in all material respects. Neither Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business without an increase in cost that would constitute
a Material Adverse Effect.

 

13.         Transactions
with Affiliates and Employees. None of the officers or directors of Company and, to the knowledge of Company, none of the
employees of Company is presently a party to any transaction with Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director
or such employee or, to the knowledge of Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of Company and (iii) for other employee
benefits, including stock option agreements under any equity incentive plan of Company.

 

14.         Sarbanes-Oxley;
Internal Accounting Controls. Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002,
which are applicable to it as of the date of the Closing. Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the ineffectiveness of Company’s disclosure controls and procedures
based on their evaluations as of the evaluation date. Since the date of the most recently filed periodic report under the Exchange
Act, there have been no significant changes in Company’s internal accounting controls or its disclosure controls and procedures
or, to Company’s knowledge, in other factors that could materially affect Company’s internal accounting controls or
its disclosure controls and procedures.

 

    	9

    	 

    

 

15.         Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.
Notwithstanding any other provision, Investor will have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions
contemplated by this Agreement or the other Transaction Documents.

 

16.         Registration
Rights. No Person has any right to cause Company to effect the registration under the Act of any securities of Company.

 

17.         Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12 of the Exchange Act, and Company has
taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has Company received any notification that the Commission is contemplating terminating such registration.
Company has not, in the 12 months preceding the Effective Date, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that Company is not in compliance with the listing or maintenance requirements of
such Trading Market. Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

 

18.         Application
of Takeover Protections. Company and its Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under Company’s Certificate of Incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become applicable to Investor as a result of Investor and Company fulfilling
their obligations or exercising their rights under the Transaction Documents, including without limitation Company’s issuance
of the Shares and Investor’s ownership of the Shares.

 

19.         Tax
Status. Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that Company
and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported
taxes). Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of
any foreign, federal, statute or local tax. None of Company’s tax returns is presently being audited by any taxing authority.
Company would not be classified as a PFIC for its most recently completed taxable year, and does not expect to be classified as
a PFIC for its current taxable year.

 

20.         Foreign
Corrupt Practices. Neither Company, nor to the knowledge of Company, any agent or other person acting on behalf of Company,
has (a) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (b) made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from corporate funds, (c) failed to disclose fully any contribution
made by Company, or made by any person acting on its behalf of which Company is aware, which is in violation of law, or (d) violated
in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

    	10

    	 

    

 

21.         Accountants.
Company’s accountants are set forth in the Public Reports and such accountants are an independent registered public accounting
firm.

 

22.         No
Disagreements with Accountants or Lawyers. There are no material disagreements presently existing, or reasonably anticipated
by Company to arise, between Company and the accountants or lawyers formerly or presently employed by Company.

 

23.         Powers
of Attorney. There are no outstanding powers of attorney executed on behalf of the Company or any Subsidiary.

 

C.           Representations
and Warranties of Investor. Investor hereby represents and warrants to Company as of the Closing as follows:

 

1.          Organization;
Authority. Investor is an entity validly existing and in good standing under the laws of the jurisdiction of its organization
with full right, company power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution, delivery and performance by Investor of the transactions
contemplated by this Agreement have been duly authorized by all necessary company or similar action on the part of Investor. Each
Transaction Document to which it is a party has been, or will be, duly executed by Investor, and when delivered by Investor in
accordance with the terms hereof, will constitute the valid and legally binding obligation of Investor, enforceable against it
in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

2.          Investor
Status.  At the time Investor was offered the Shares, it was, and at the Effective Date it is: (a) an accredited investor
as defined in Rule 501(a) under the Act; and (b) not a registered broker-dealer, member of FINRA, or an affiliate thereof.

 

3.          Experience
of Investor. Investor, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares,
and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment in the
Shares and, at the present time, is able to afford a complete loss of such investment.

 

4.          Ownership.
 Investor is acquiring the Preferred Shares as principal for its own account. Investor will not engage in hedging transactions
with regard to the Shares unless in compliance with the Act, and will resell the Shares only pursuant to registration under the
Act or an available exemption therefrom.

 

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5.          No
Short Sales. Neither Investor nor any Affiliate holds any short position in, nor has engaged in any Short Sales of the
Common Stock, or engaged in any hedging transactions with regard to the Shares prior to the Effective Date.  

 

IV.          Securities
and Other Provisions.

 

A.           Investor
Due Diligence. Investor will have the right and opportunity to conduct customary due diligence with respect to any Registration
Statement or Prospectus in which the name of Investor or any Affiliate of Investor appears.

 

B.           Furnishing
of Information. As long as Investor owns any Shares, Company will timely file all reports required to be filed by Company
after the Effective Date pursuant to the Exchange Act. As long as Investor owns any Shares, Company will prepare and make publicly
available such information as is required for Investor to sell its Conversion Shares under Rule 144. Company further covenants
that, as long as Investor owns any Shares, Company will take such further action as Investor may reasonably request, all to the
extent required from time to time to enable Investor to sell its Conversion Shares without registration under the Act within the
limitation of the exemptions provided by Rule 144.

 

C.           Integration.
Company will not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security, as defined in
Section 2 of the Act, that would be integrated with the offer or sale of the Shares to Investor for purposes of the rules and
regulations of any Trading Market such that it would require stockholder approval prior to the closing of such other transaction
unless stockholder approval is obtained before the closing of such subsequent transaction.

 

D.           Disclosure
and Publicity. Company will notify Investor prior to issuing any current report, press release, public statement or communication
with respect to the transactions contemplated hereby.

 

E.           Shareholders
Rights Plan. No claim will be made or enforced by Company or, to the knowledge of Company, any other Person that Investor
is an “Acquiring Person” under any shareholders rights plan or similar plan or arrangement in effect or hereafter
adopted by Company, or that Investor could be deemed to trigger the provisions of any such plan or arrangement, in either such
case, by virtue of receiving Shares under the Transaction Documents or under any other agreement between Company and Investor.
Company will conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

 

F.           No
Non-Public Information. Company covenants and agrees that neither it nor any other Person acting on its behalf will, provide
Investor or its agents or counsel with any information that Company believes or reasonably should believe will constitute material
non-public information after Closing. On and after Closing, neither Investor nor any Affiliate of Investor will have any duty
of trust or confidence that is owed directly, indirectly, or derivatively, to Company or the stockholders of Company, or to any
other Person who is the source of material non-public information regarding Company. Company understands and confirms that Investor
will be relying on the foregoing in effecting transactions in securities of Company, including without limitation sales of the
Shares.

 

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G.           Indemnification
of Investor.

 

1.          Obligation
to Indemnify. Subject to the provisions of this Section IV.G, Company will indemnify and hold Investor, its Affiliates, managers
and advisors, and each of their officers, directors, shareholders, partners, employees, representatives, agents and attorneys,
and any person who controls Investor within the meaning of Section 15 of the Act or Section 20 of the Exchange Act (collectively,
“Investor Parties” and each a “Investor Party”), harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, reasonable costs and expenses, including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any Investor Party may
suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements
made by Company in this Agreement or in the other Transaction Documents, (b) any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, Prospectus, Prospectus Supplement, or any information incorporated by
reference therein, or arising out of or based upon any omission or alleged omission to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (c) any action
by a creditor or stockholder of Company who is not an Affiliate of an Investor Party, challenging the transactions contemplated
by the Transaction Documents; provided, however, that Company will not be obligated to indemnify any Investor Party for any Losses
finally adjudicated to be caused solely by (i) a false statement of material fact contained within written information provided
by such Investor Party expressly for the purpose of including it in the applicable Registration Statement, Prospectus, Prospectus
Supplement, or (ii) such Investor Party’s unexcused material breach of an express provision of this Agreement or another
Transaction Document.

 

2.          Procedure
for Indemnification. If any action will be brought against an Investor Party in respect of which indemnity may be sought
pursuant to this Agreement, such Investor Party will promptly notify Company in writing, and Company will have the right to assume
the defense thereof with counsel of its own choosing. Investor Parties will have the right to employ separate counsel in any such
action and participate in the defense thereof, but the reasonable fees and expenses of such counsel will be at the expense of Investor
Parties except to the extent that (a) the employment thereof has been specifically authorized by Company in writing, (b) Company
has failed after a reasonable period of time to assume such defense and to employ counsel or (c) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict with respect to the dispute in question on any material issue
between the position of Company and the position of Investor Parties such that it would be inappropriate for one counsel to represent
Company and Investor Parties. Company will not be liable to Investor Parties under this Agreement (i) for any settlement by an
Investor Party effected without Company’s prior written consent, which will not be unreasonably withheld or delayed; or (ii)
to the extent, but only to the extent that a loss, claim, damage or liability is either attributable to Investor’s breach
of any of the representations, warranties, covenants or agreements made by Investor in this Agreement or in the other Transaction
Documents. In no event will the Company be liable for the reasonable fees and expenses for more than one separate firm of attorneys
(plus local counsel as applicable) to represent all Investor Parties.

 

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3.          Other
than the liability of Investor to Company for uncured material breach of the express provisions of this Agreement, no Investor
Party will have any liability to Company or any Person asserting claims on behalf of or in right of Company as a result of acquiring
the Shares under this Agreement.

 

H.           Reservation
of Shares. Company will at all times maintain a reserve from its duly authorized Common Stock for issuance pursuant to
the Transaction Documents authorized shares of Common Stock in an amount equal to thrice the number of shares sufficient to immediately
issue all Conversion Shares potentially issuable at such time.

 

I.           Activity
Restrictions. For so long as Investor or any of its Affiliates holds any Shares, except with regard to the Voting Agreements,
neither Investor nor any Affiliate will: (1) vote any shares of Common Stock owned or controlled by it, sign or solicit any proxies,
or seek to advise or influence any Person with respect to any voting securities of Company; (2) engage or participate in any actions,
plans or proposals which relate to or would result in (a) acquiring additional securities of Company, alone or together with any
other Person, which would result in beneficially owning or controlling more than 9.99% of the total outstanding Common Stock or
other voting securities of Company, (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation,
involving Company or any of its Subsidiaries, (c) a sale or transfer of a material amount of assets of Company or any of its Subsidiaries,
(d) any change in the present board of directors or management of Company, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board, (e) any material change in the present capitalization or
dividend policy of Company, (f) any other material change in Company’s business or corporate structure, including but not
limited to, if Company is a registered closed-end investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act of 1940, (g) changes in Company’s charter,
bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of Company by any Person,
(h) a class of securities of Company being delisted from a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of Company
becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act, or (j) any action, intention, plan
or arrangement similar to any of those enumerated above; or (3) request Company or its directors, officers, employees, agents
or representatives to amend or waive any provision of this section.

 

J.           No
Shorting. Provided no Trigger Event under Sections I.H.(1), (5), (6), (7), (8), or (9) of the Certificate of Designations
has occurred, for so long as Investor holds any Shares, neither Investor nor any of its Affiliates will engage in or effect, directly
or indirectly, any Short Sale of Common Stock. For the avoidance of doubt, selling against delivery of Conversion Shares after
delivery of a Conversion Notice is not a Short Sale. There will be no restriction or limitation of any kind on Investor’s
right or ability to sell or transfer any or all of the Conversion Shares at any time, in its sole and absolute discretion. Investor
may not sell, transfer or assign any Preferred Shares or any of its rights under this Agreement.

 

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K.          Stock
Splits. If Company at any time on or after the Effective Date subdivides (by any stock split, stock dividend, recapitalization
or otherwise) or combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater or lesser number of shares, the share numbers, prices and other amounts set forth in this Agreement,
as in effect immediately prior to such subdivision or combination, will be proportionately reduced or increased, as applicable,
effective at the close of business on the date the subdivision or combination becomes effective.

 

L.           Subsequent
Financings. As long as Investor holds any Preferred Shares, Company will not enter into any agreement that in any way
restricts its ability to enter into any agreement, amendment or waiver with Investor, including without limitation any agreement
to offer, sell or issue to Investor any preferred stock, common stock or other securities of Company. Until six months after Closing,
Company will not enter into any financing that uses a shelf registration or contains registration rights, other than: (a) with
Investor, (b) in connection with a strategic transaction, (c) the sale of Common Stock at a fixed price of $3.50 per share or
greater, or (d) a debt and warrant financing up to $10,000,000 with Hercules Growth Capital or its Affiliates. For the avoidance
of doubt, Company may enter into an unregistered financing of debt or restricted stock with no registration rights.

 

M.           Approval.
Company will use its best efforts to obtain shareholder approval of this Agreement in accordance with the requirements of
NASDAQ Listing Rule 5635(d) or a waiver from NASDAQ of Listing Rule 5635(d) (“Approval”) as soon as practicable after
the Effective Date. Company will not issue any additional shares of Common Stock until after the record date for its next meeting
of stockholders, and will seek Approval by such meeting. Company, its board of directors, and each of its directors will vote
all proxies given to them in favor of Approval.

 

N.           Principal
Market Regulation. Company will not issue any Conversion Shares if the issuance of shares of Common Stock would exceed
the aggregate number of shares of Common Stock the Company may issue upon conversion of Preferred Shares, collectively with certain
additional shares of Common Stock issued or issuable pursuant other Company’s transactions that are aggregated under the
NASDAQ Rules, without breaching Company’s obligations under NASDAQ Listing Rule 5635(d), except that such limitation will
not apply (1) following Approval or (2) if Investor or Company obtains a written opinion from counsel that such Approval is not
required.

 

V.            Intentionally Omitted.

 

VI.          General
Provisions.

 

A.           Notice.
Unless a different time of day or method of delivery is specifically provided in the Transaction Documents, any and all notices
or other communications or deliveries required or permitted to be provided hereunder will be in writing and will be deemed given
and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or
electronic mail prior to 5:00 p.m. Eastern time on a Trading Day and an electronic confirmation of delivery is received by the
sender, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered later than 5:00
p.m. Eastern time or on a day that is not a Trading Day, (c) the next Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such notices and communications are such other address as may be designated in writing, in the same manner,
by such Person.

 

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B.           Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of
an amendment, by Company and Investor or, in the case of a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement will be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor will any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any
such right.

 

C.           No
Third-Party Beneficiaries. Except as otherwise set forth in Section IV.G, this Agreement and the Transaction Documents
will inure solely to the benefit of the parties hereto, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person. A Person who is not a party to this Agreement shall not have any rights under the Contracts (Rights of Third
Parties) Law, 2014 of the Cayman Islands to enforce any term of this Agreement or any Transaction Document.

 

D.           Fees
and Expenses. Company has paid a flat rate documentation fee to Investor’s counsel incurred in connection with drafting
this Agreement and the other Transaction Documents. Except as otherwise provided in this Agreement, each party will pay the fees
and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. Company acknowledges
and agrees that Investor’s counsel solely represents Investor, and does not represent Company or its interests in connection
with the Transaction Documents or the transactions contemplated thereby. Company will pay all stamp and other taxes and duties,
if any, levied in connection with the sale or issuance of the Shares to Investor.

 

E.           Severability.
If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement will not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, will incorporate
such substitute provision in this Agreement.

 

F.           Replacement
of Certificates. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed,
Company will issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances will also pay any reasonable third-party costs associated with the issuance of such replacement certificates.

 

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G.           Governing
Law. All matters between the parties, including without limitation questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents will be governed by and construed and enforced in accordance with the laws of
the Cayman Islands, without regard to the principles of conflicts of law that would require or permit the application of the laws
of any other jurisdiction, except for corporation law matters applicable to Company which will be governed by the corporate law
of its jurisdiction of formation. The parties hereby waive all rights to a trial by jury. In any action, arbitration or proceeding,
including appeal, arising out of or relating to any of the Transaction Documents or otherwise involving the parties, the prevailing
party will be awarded its reasonable attorneys’ fees and other costs and expenses reasonably incurred in connection with
the investigation, preparation, prosecution or defense of such action or proceeding.

 

H.           Arbitration.
Any dispute, controversy, claim or action of any kind arising out of, relating to, or in connection with this Agreement, or
in any way involving Company and Investor or their respective Affiliates, including any issues of arbitrability, will be resolved
solely by final and binding arbitration in English before a retired judge at JAMS International, or its successor, in the Territory
of the Virgin Islands, pursuant to the most expedited and Streamlined Arbitration Rules and Procedures available. Any interim
or final award may be entered and enforced by any court of competent jurisdiction. The final award will include the prevailing
party’s reasonable arbitration, expert witness and attorney fees, costs and expenses.

 

I.           Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
Investor and Company will be entitled to specific performance under the Transaction Documents, and equitable and injunctive relief
to prevent any actual or threatened breach under the Transaction Documents, to the full extent permitted under applicable laws.

 

J.           Payment
Set Aside. To the extent that Company makes a payment or payments to Investor pursuant to any Transaction Document or
Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to Company, a trustee, receiver or any other person under any
law, including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action, then to
the extent of any such restoration the obligation or part thereof originally intended to be satisfied will be revived and continued
in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

K.          Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and will not be deemed to limit or affect
any of the provisions hereof

 

L.           Time
of the Essence. Time is of the essence with respect to all provisions of this Agreement.

 

M.           Survival.
The representations and warranties contained herein will survive the Closing and the delivery of the Shares until all Preferred
Shares issued to Investor have been converted or redeemed.

 

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N.           Construction.
The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party will not be employed in the interpretation of the Transaction Documents or any amendments hereto. The language used in this
Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction
will be applied against any party. All currency references in any Transaction Document are to U.S. dollars.

 

O.           Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together will be considered one and the same
agreement and will become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by portable document
format, facsimile or electronic transmission, such signature will create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

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P.           Entire
Agreement. This Agreement, including the Exhibits hereto, which are hereby incorporated herein by reference, contains
the entire agreement and understanding of the parties, and supersedes all prior and contemporaneous agreements, term sheets, letters,
discussions, communications and understandings, both oral and written, which the parties acknowledge have been merged into this
Agreement. No party, representative, advisor, attorney or agent has relied upon any collateral contract, agreement, assurance,
promise, understanding, statement or representation not expressly set forth herein. The parties hereby absolutely, unconditionally
and irrevocably waive all rights and remedies, at law and in equity, directly or indirectly arising out of or relating to, or
which may arise as a result of, any Person’s reliance on any such statement or assurance.

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their respective authorized signatories on the Effective Date.

 

	Company:	 
	 	 
	IMMUNE PHARMACEUTICALS INC.	 
	 	 	 
	By:	/s/ Daniel G. Teper	 	 
	Name:	Daniel G. Teper	 	 
	Title:	Chief Executive Officer	 	 

 

	By:	/s/ Gad Berdugo	 	 
	Name:	Gad Berdugo	 	 
	Title:	Chief Financial Officer –	 	 
	 	Executive VP Finance and Administration	 	 

 

	Investor:	 
	 	 
	/s/ Discover Growth Fund	 	 
	Investor Name	 	 
	 	 	 

 

	By:	/s/ Miles Walton 	 
	Name:	Miles Walton	 
	Title:	on behalf of Osiris Management Services Ltd., Director 	 
	 	 	 
	By:	/s/ Stacey Olson	 
	Name:	Stacey Olson	 
	Title:	on behalf of Osiris Management Services Ltd., Director 	 

 

    	19

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