Document:

Exhibit 10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of August 16, 2017, between P.V. Nano Cell Ltd.,
a corporation formed under the laws of the State of Israel (the “Company”), and each purchaser identified on
the signature pages hereto (each, including its successors and permitted assigns, a “Purchaser” and collectively,
the “Purchasers”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement (the “Offering”).

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE
I.

DEFINITIONS

 

1.1       Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth in
this Section 1.1:

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.

 

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

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board
of Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are required by law or other governmental action to close.

 

“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing
Date” means the Business Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligation to pay the Subscription Amount at such Closing,
and (ii) the Company’s obligations to deliver the Securities to be issued and sold at such Closing, in each case, have been
satisfied or waived, but in no event later than the tenth (10th) Business Day following the date hereof.

 

    

     

    

 

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

 

“Company
Counsel” means, Greenberg Traurig, P.A., 333 S.E. 2nd Avenue, Miami, FL 33131, Attn: Robert L. Grossman,
Esq., facsimile: 305-961-5756, and Primes, Shiloh, Givon, Meir - Law Firm Attn. Meytal Katz, Adv.16 Derech Hayam St., Haifa 3474110,
Israel Tel. +972-4-8388332 Direct. +972-4-6978223 Fax. +972-4-8381401, meytal@pgs-law.co.il.

 

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

 

“Digiflex”
shall mean Digiflex Ltd.

 

“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

“Disqualification
Event” shall have the meaning ascribed to such term in Section 3.1(oo).

 

“Effective
Date” means the earliest of the date that (a) a Registration Statement, has been declared effective by the Commission
with respect to all of the Underlying Shares, or (b) (i) all of the Underlying Shares have been sold pursuant to Rule 144, or
(ii) may be sold by the holders thereof pursuant to Rule 144 without the requirement for the Company to be in compliance with
the current public information requirements of Rule 144 and without volume or manner-of-sale restrictions, and (c) Company counsel
has delivered to the Transfer Agent and Purchasers a standing written unqualified opinion acceptable to the Transfer Agent that
resales may then be made by such holders of the Underlying Shares pursuant to an effective Registration Statement or other registration
statement or the exemption described in (b)(ii) above, which opinion shall be in form and substance acceptable to Purchasers.

 

“Equity
Line of Credit” shall have the meaning ascribed to such term in Section 4.13.

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).

 

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

 

“Exempt
Issuance” means the issuance of (a) Ordinary Shares and options to officers, directors, or employees of the Company,
prior to and after the Closing Date up to the amounts and terms set forth on Schedule 4.13 pursuant to the Stock Option
Plan, (b) except as described below, other securities exercisable or exchangeable for or convertible into Ordinary Shares issued
and outstanding on the date of this Agreement or which the Company is otherwise actually or contingently committed to issue on
the date of this Agreement including securities to be issued in connection with the merger with Digiflex as described in the SEC
Reports as modified by the Disclosure Schedules hereto and to Sunrise or any other broker-dealer involved in the sale of convertible
debt instruments and Ordinary Share purchase warrants to Subsequent Purchasers (as defined in subsection (f) of this paragraph,
provided that such securities and any term thereof have not been amended since the date of this Agreement to increase the number
of such securities or to decrease the issue price, exercise price, exchange price or conversion price of such securities and which
securities and the principal terms thereof are set forth on Schedule 3.1(g), and described in the SEC Reports filed not
later than five (5) days before the Closing Date, (c) securities issued pursuant to acquisitions or strategic transactions approved
by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to
the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in
a business synergistic with the business of the Company and shall be intended to provide to the Company substantial additional
benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities
for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) as otherwise described
on Schedule 3.1(g) as an Exempt Issuance, (e) securities issued or issuable to the Purchasers and their assigns pursuant
to this Agreement, the Notes or the Warrants and other Transaction Documents including without limitation, Section 4.17 and Section
4.23 herein, or upon exercise or conversion of any such securities (subject to adjustment for forward and reverse stock splits
and the like that occur after the date hereof), and (f) convertible debt instruments in the principal amount not exceeding US$1,666,667
and Ordinary Share purchase warrants issued and issuable to other purchasers (“Subsequent Purchasers”) or any
Ordinary Shares issued pursuant to such convertible debt instruments and Ordinary Share purchase warrants on terms in no way more
advantageous or preferable to such other purchasers of Notes and Warrants than the terms of the Offering and Transaction Documents
and which issuances will not be inconsistent with or make burdensome the Company’s compliance with obligations and undertakings
to Purchasers herein (sales of Securities in this Offering and sales of convertible debt instruments and Ordinary Share purchase
warrants to Subsequent Purchasers are hereinafter collectively, the “Aggregate Offering”). The Outstanding Equity
Line is not an Exempt Issuance.

 

    	 	2	 

     

    

 

“Exercise
Price” shall have the meaning ascribed to such term in the Warrants.

 

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

 

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

 

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

 

“Federal
and State Securities Laws” means the federal securities laws of the United States and the states of the United States,
as applicable.

 

“Form
6-K” shall have the meaning ascribed to such term in Section 4.6.

 

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

 

“G&M”
shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.

 

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

 

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

 

“Issuer
Covered Person” shall have the meaning ascribed to such term in Section 3.1(oo).

 

“Legal
Opinion” shall have the meaning ascribed to such term in Section 2.2(a)(ii).

 

“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(d).

 

“Lien”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Listing
Default” shall have the meaning ascribed to such term in Section 4.11(c).

 

“Lockup
Agreement” means the form of Lockup Agreement annexed hereto as Exhibit E.

 

    	 	3	 

     

    

 

“Majority
in Interest” shall have the meaning ascribed to such term in Section 5.5.

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

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

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(gg).

 

“Notes”
means the senior secured convertible notes issuable pursuant to this Agreement, in the form of Exhibit A hereto.

 

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

 

“Outstanding
Equity Line” means the Standby Equity Distribution Agreement between the Company and YA Global entered into on July
9, 2015, and described in the Company’s Form 20-F for the year ended December 31, 2016.

 

“Ordinary
Shares” means the Ordinary Shares of the Company, par value NIS 0.01 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed.

 

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

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.17(a).

 

“Permitted
Indebtedness” means (a) any liabilities or indebtedness existing as of the date hereof described on Schedule 3.1(z),
(b) any liabilities for borrowed money or amounts owed not in excess of $150,000 in the aggregate (other than trade accounts payable
incurred in the ordinary course of business) incurred after the date hereof, (c) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others described on Schedule 1.1, whether or not the same are or should be reflected
in the Company’s consolidated balance sheet (or the notes thereto) not affecting more than $150,000 in the aggregate, except
guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of
business; (c) the present value of any lease payments not in excess of $150,000 due under leases required to be capitalized in
accordance with GAAP and incurred after the date hereof; and (d) any liabilities for borrowed money that are junior to the Notes
pursuant to an intercreditor agreement acceptable to Purchasers and the holders of which are not granted any security interest.

 

    	 	4	 

     

    

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
and (c) Liens in connection with Permitted Indebtedness under clauses (a) and (b) thereunder, and Liens incurred in connection
with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of the Company or
its Subsidiaries other than the assets so acquired or leased.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.17(b).

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Pro-Rata
Portion” shall have the meaning ascribed to such term in Section 4.17(e).

 

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

 

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

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.

 

“Registration
Statement” means an effective registration statement filed with the Commission and covering the resale of all of the
Underlying Shares held or issuable to each Purchaser as provided.

 

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

 

“Required
Minimum” means, as of any date, the maximum aggregate number of Ordinary Shares then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein, and assuming that any previously
unconverted Notes will be held until the third anniversary of the issue date of such Notes.

 

    	 	5	 

     

    

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

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

 

“Securities”
means the Notes, the Warrants, and the Underlying Shares.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Short
Sales” means “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types
of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including
on a total return basis) whether such transactions are made through U.S. or non-U.S. broker dealers or foreign regulated brokers.

 

“Stock
Option Plan” means the unamended P.V. Nano Cell Ltd. 2010 Option Plan identified as exhibit 10.18 to the Company’s
Form 20-F for the year ended December 31, 2016.

 

“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the Notes and Warrants purchased hereunder
at the Closing as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available funds.

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.17(a).

 

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.17(b).

 

“Subsequent
Purchasers” shall have the meaning ascribed to that term in the definition of Exempt Issuance.

 

“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 50% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or
other managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital
or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control
of the Company.

 

“Sunrise”
shall mean Sunrise Securities LLC.

 

“Termination
Date” shall have the meaning ascribed to such term in Section 2.1.

 

“Trading
Day” means a day on which the principal Trading Market is open for trading, and if the Company has no Trading Market,
shall mean a Business Day.

 

“Trading
Market” means any of the following markets or exchanges on which the Ordinary Shares are listed or quoted for trading
on the date in question: the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the
New York Stock Exchange, the OTC Bulletin Board, the OTCQB, or the OTCQX (or any successors to any of the foregoing). As of the
Closing Date, the OTCQB is the principal Trading Market.

 

    	 	6	 

     

    

 

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

 

“Transfer
Agent” means VStock Transfer, LLC and any successor transfer agent of the Company.

 

“Underlying
Shares” means the Ordinary Shares issued and issuable upon conversion of the Notes and upon exercise of the Warrants
and issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes and any
other Ordinary Shares issued or issuable to a Purchaser in connection with or pursuant to the Securities or Transaction Documents.

 

“Unlegended
Shares” shall have the meaning ascribed to such term in Section 4.1(d).

 

“Variable
Priced Equity Linked Instruments” shall have the meaning ascribed to such term in Section 4.13.

 

“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary Shares are then
listed or quoted on a Trading Market, the daily volume weighted average price of the Ordinary Shares for such date (or the nearest
preceding date) on the Trading Market on which the Ordinary Shares are then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if any of the NASDAQ markets or exchanges
is not a Trading Market, the volume weighted average price of the Ordinary Shares for such date (or the nearest preceding date)
on the OTC Bulletin Board, (c) if the Ordinary Shares are not then listed or quoted for trading on the OTC Bulletin Board and
if prices for the Ordinary Shares are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets
Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average
price of the Ordinary Shares on the first such facility (or a similar organization or agency succeeding to its functions of reporting
prices), or (d) in all other cases, the fair market value of a share of Ordinary Shares as determined by an independent appraiser
selected in good faith by the Purchasers of a Majority in Interest then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.

 

“Warrants”
means the Ordinary Shares purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof
in the form of Exhibit B attached hereto.

 

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

 

    	 	7	 

     

    

 

ARTICLE
II.

PURCHASE AND SALE

 

2.1       Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, an aggregate of up to US$333,333 principal amount of Notes and Warrants as determined pursuant to Section 2.2(a)
(such purchase and sale being the “Closing”). Each Purchaser shall deliver to the Company such Purchaser’s
Subscription Amount, and the Company shall deliver to such Purchaser its respective Note and Warrants, as determined pursuant
to Section 2.2(a), and the Company and Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of
G&M or such other location as the parties shall mutually agree. Notwithstanding anything herein to the contrary, the Closing
Date shall occur on or before August 29, 2017 (the “Termination Date”). If the Closing is not held on or before
the Termination Date, the Company shall cause all subscription documents and funds to be returned, without interest or deduction
to each prospective Purchaser.

 

2.2       Deliveries.

 

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

 

(i)       this Agreement duly executed by the Company;

 

(ii)       a
legal opinion of Company Counsel, substantially in the form of Exhibit C attached hereto;

 

(iii)       a
Note with a principal amount of $1.00 for each $0.90 of Subscription Amount paid by each Purchaser registered in the name of such
Purchaser;

 

(iv)       Warrants
in the form of Exhibit B hereto registered in the names of such Purchaser to purchase up to a number of Ordinary Shares
equal to 100% of such Purchaser’s principal Note amount divided by the Conversion Price in effect on the Closing Date with
a per share Exercise Price of $1.20, subject to adjustment as provided therein;

 

(v)       the
Lockup Agreement signed by each of the holders of the Company’s securities identified on Schedule 2.2(a)(v);

 

(vi)       a
certificate of the Principal Executive Officer and Chief Executive Officer (each as defined in the Exchange Act) of the Company,
dated as of the Closing Date, in which such officer shall certify that the conditions set forth in Section 2.3(b) have been fulfilled;
and

 

(vii)       Secretary’s
certificate containing (i) copies of the text of the resolutions by which the corporate action on the part of the Company necessary
to approve this Agreement and the other Transaction Documents and the transactions and actions contemplated hereby and thereby,
which shall be accompanied by a certificate of the corporate secretary or assistant corporate secretary of the Company dated as
of the Closing Date certifying to the Purchasers that such resolutions were duly adopted and have not been amended or rescinded,
(ii) an incumbency certificate dated as of the Closing Date executed on behalf of the Company by its corporate secretary or one
of its assistant corporate secretaries certifying the office of each officer of the Company executing this Agreement, or any other
agreement, certificate or other instrument executed pursuant hereto, and (iii) copies of (A) the Company’s Articles of Association
in effect on the Closing Date, and (B) the certificate evidencing the existence of Company as of a day within five (5) Business
Days prior to the Closing Date; and

 

    	 	8	 

     

    

 

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

 

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

 

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

 

2.3       Closing
Conditions.

 

(a)       The
obligations of the Company hereunder to effect Closing, unless waived by the Company, are subject to the following conditions
being met:

 

(i)       the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific
date therein in which case they shall be accurate as of such date);

 

(ii)       all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and

 

(iii)       the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b)       The
respective obligations of a Purchaser hereunder to effect a Closing, unless waived by such Purchaser, are subject to the following
conditions being met:

 

(i)       the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);

 

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

 

(iii)       the
Company shall have received executed signature pages to this Agreement with an aggregate cash Subscription Amount of up to $300,000
prior to the Closing;

 

(iv)       the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(v)       there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

(vi)       from
the date hereof to the Closing Date, trading in the Ordinary Shares shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.

 

    	 	9	 

     

    

 

ARTICLE
III.

REPRESENTATIONS AND WARRANTIES

 

3.1       Representations
and Warranties of the Company. Except as set forth in the SEC Reports or the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify a representation made herein only to the extent of the disclosure contained in
the corresponding section of the Disclosure Schedules the Company hereby makes the following representations and warranties to
each Purchaser:

 

(a)       Subsidiaries.
All of the direct and indirect subsidiaries of the Company and the Company’s ownership interests therein are set forth on
Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

(b)       Organization
and Qualification. The 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, with the requisite power and authority
to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary
is in violation nor default of any of the provisions of its respective articles of association, certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the 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: (i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, or condition (financial
or otherwise) of the Company and each Subsidiary, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii)
or (iii), a “Material Adverse Effect”) and, no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

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

 

    	 	10	 

     

    

 

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

 

(e)       Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other Israeli federal, state, local, foreign or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws, and (iii) the filings to be made under the Israeli
Companies Law as described on Schedule 3.1(e). The Company represents that neither the Company nor any Subsidiary nor licensor
of any Intellectual Property Rights or other rights or assets to the Company requires or will require the approval of the Israel
Innovation Authority or similar or other agency to enter into and fulfill the Company’s obligations pursuant to the Transaction
Documents.

 

(f)       Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens except those created by
Purchaser and restrictions on transfer arising pursuant to applicable securities laws. The Company has reserved from its duly
authorized capital stock a number of Ordinary Shares for issuance of the Underlying Shares at least equal to the Required Minimum
on the date hereof.

 

    	 	11	 

     

    

 

(g)       Capitalization.
The capitalization of the Company is as set forth in Schedule 3.1(g). The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange Act. Except as set forth on Schedule 3.1(g), 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. Except as disclosed on Schedule 3.1(g), there are no outstanding options, employee
or incentive stock option plans, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire any Ordinary Shares, or contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional Ordinary Shares or Ordinary Shares Equivalents. The Company represents
and warrants that as of the Closing Date, there is no outstanding equity line or similar arrangement passed by any Person which
may be exercised by any Person or granting such Person the right to acquire Ordinary Shares or Ordinary Share Equivalents except
for the Outstanding Equity Line. Except as set forth on Schedule 3.1(g), the issuance and sale of the Securities will not
obligate the Company to issue Ordinary Shares or other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.
All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in material compliance with all Israeli, 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. Except as contemplated
by Section 3.1(e), no further approval or authorization of any stockholder, the Board of Directors or any other Person is required
for the issuance and sale of the Securities. Except as set forth on Schedule 3.1(g), there are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party
or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(h)       SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, the exhibits thereto and documents incorporated by reference therein filed not later than
five (5) days prior to the date hereof, being collectively referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC 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
the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in
the SEC Reports 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 United
States generally accepted accounting principles applied on a consistent basis during the periods involved (“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 the 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. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to be in compliance with all its reporting requirements
under the Securities Act and Exchange Act.

 

    	 	12	 

     

    

 

(i)       Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof : (i) there
has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii)
the Company has not altered its method of accounting, (iv) the Company has not declared or made any 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 (v) the Company has not issued any equity securities to any officer, director or Affiliate except pursuant to
the Stock Option Plan as set forth on Schedule 3.1(i). The Company does not have pending before the Commission any request
for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement and the contemplated
merger with Digiflex, as described in the SEC Reports, no event, liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least
two Trading Days prior to the date that this representation is made.

 

(j)       Litigation.
Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Except as set forth in the SEC Reports, neither the Company
nor any Subsidiary, nor, to our knowledge, any director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under Israeli, federal or state securities laws or a claim of breach of fiduciary duty. Except
as set forth in the SEC Reports, there has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities Act.

 

(k)       Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company or any Subsidiary, which would reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement except
for collective bargaining agreements applicable to the Company under Israeli Law (extension orders), and the Company and its Subsidiaries
believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company
or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are
in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

    	 	13	 

     

    

 

(l)       Compliance.
To the Company’s knowledge, neither the Company nor any Subsidiary, except as disclosed on Schedule 3.1(l): (i) is
in default under or in 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 the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority
or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except in each case as would not reasonably be expected to result
in a Material Adverse Effect.

 

(m)       Regulatory
Permits. The 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 SEC Reports,
except where the failure to possess such permits would not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

 

(n)       Title
to Assets. Except as disclosed on Schedule 3.1(n) and in the SEC Reports, the Company and each Subsidiary have good
and marketable title in fee simple to all real property (if any) owned by them and good and marketable title in all personal property
owned by them that is material to the business of the Company and each Subsidiary, in each case free and clear of all Liens, except
for Permitted Liens and (i) Liens as do not materially affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company and each Subsidiary and (ii) Liens for the payment of federal,
state or other taxes, for which appropriate reserves have been made in accordance with GAAP and, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and each Subsidiary are
held by them under valid, subsisting and enforceable leases with which the Company and each Subsidiary are in compliance.

 

(o)       Intellectual
Property. All of the Company’s and Subsidiary’s material Intellectual Property Rights are disclosed as required
in the SEC Reports.

 

(i)       The
term “Intellectual Property Rights” means:

 

		1.	the
                                         name of the Company and each Subsidiary, all fictional business names, trading names,
                                         registered and unregistered trademarks, service marks, and applications of the Company
                                         and each Subsidiary (collectively, “Marks’’);

 

    	 	14	 

     

    

 

		2.	all
                                         patents and patent applications of the Company and each Subsidiary (collectively, “Patents’’);

 

		3.	all
                                         copyrights in both published works and unpublished works of the Company and each Subsidiary
                                         (collectively, “Copyrights”);

 

		4.	all
                                         rights in mask works of the Company and each Subsidiary (collectively, “Rights
                                         in Mask Works’’); and

 

		5.	all
                                         know-how, trade secrets, confidential information, customer lists, software, technical
                                         information, data, process technology, plans, drawings, and blue prints (collectively,
                                         “Trade Secrets’’); owned, used, or licensed by the Company and
                                         each Subsidiary as licensee or licensor.

 

(ii)       Agreements.
Except as set forth in the SEC Reports, there are no outstanding and, to Company’s knowledge, no threatened disputes or
disagreements with respect to any agreements relating to any Intellectual Property Rights to which the Company is a party or by
which the Company is bound.

 

(iii)       Know-How
Necessary for the Business. Except as set forth in the SEC Reports, the Intellectual Property Rights are all those necessary
for the operation of the Company’s and Subsidiaries’ businesses as currently conducted or as represented to the Purchaser
to be conducted. Each of the Company and each Subsidiary is the owner of all right, title, and interest in and to each of their
respective Intellectual Property Rights, free and clear of all Liens, and adverse claims, and has the right to use all of the
Intellectual Property Rights. To the Company’s knowledge, no employee of the Company or any Subsidiary has entered into
any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning his work to anyone other than the Company or a Subsidiary.

 

(iv)       Patents.
Except as set forth in the SEC Reports, the Company and each Subsidiary is the owner of all right, title and interest in and to
each of the Patents, free and clear of all Liens and adverse claims. All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid
and enforceable, and, except as set forth on Schedule 3.1(o), are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date. No Patent has been or is now involved in any interference, reissue, reexamination,
or opposition proceeding. Except as set forth in the SEC Reports, to the Company’s knowledge: (1) there is no potentially
interfering patent or patent application of any third party, and (2) no Patent is infringed or has been challenged or threatened
in any way. To the Company’s knowledge, none of the products manufactured and sold, nor any process or know-how used, by
the Company or any Subsidiary infringes or is alleged to infringe any patent or other proprietary right of any other Person.

 

    	 	15	 

     

    

 

(v)       Trademarks.
The Company and each Subsidiary is the owner of all right, title, and interest in and to each of the Marks, free and clear of
all Liens and adverse claims. All Marks that have been registered with the United States Patent and Trademark Office are currently
in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability
and renewal applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling
due within ninety days after the Closing Date. No Mark has been or is now involved in any opposition, invalidation, or cancellation
and, to the Company’s knowledge, no such action is threatened with respect to any of the Marks. To the Company’s knowledge:
(1) there is no potentially interfering trademark or trademark application of any third party, and (2) no Mark is infringed or
has been challenged or threatened in any way. To the Company’s knowledge, none of the Marks used by the Company and each
Subsidiary infringes or is alleged to infringe any trade name, trademark, or service mark of any third party.

 

(vi)       Copyrights.
The Company and each Subsidiary is the owner of all right, title, and interest in and to each of the Copyrights, free and clear
of all Liens and adverse claims. All the Copyrights have been registered and are currently in compliance with formal requirements,
are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after
the Closing Date. To the Company’s knowledge, no Copyright is infringed or has been challenged or threatened in any way.
To the Company’s knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a third party. All works encompassed by the Copyrights
have been marked with the proper copyright notice.

 

(vii)       Trade
Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory
of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its
Trade Secrets. The Company and each Subsidiary has good title and an absolute (but not necessarily exclusive) right to use the
Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and, to the Company’s knowledge, have
not been used, divulged, or appropriated either for the benefit of any Person (other the Company and each Subsidiary) or to the
detriment of the Company and each Subsidiary. No Trade Secret is subject to any adverse claim or has been challenged or threatened
in any way.

 

(p)       Insurance.
The 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 the Company and each Subsidiary are engaged, including,
but not limited to, directors and officers insurance coverage and all insurance required by applicable law. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant
increase in cost.

 

    	 	16	 

     

    

 

(q)       Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $50,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company or any Subsidiary, and (iii) other employee benefits, including stock option agreements under
the Stock Option Plan or any other plan of the Company except as disclosed on Schedule 3.1(g).

 

(r)       Sarbanes-Oxley;
Internal Accounting Controls. The Company and each Subsidiary are in material compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and each Subsidiary
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and each Subsidiary have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and each Subsidiary and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and each Subsidiary as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since
the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the
Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.

 

(s)       Certain
Fees. Except as set forth on Schedule 3.1(s), no brokerage, finder’s fees, commissions or due diligence fees
are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers
shall have no obligation with respect to any such fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section 3.1(s) that may be due in connection with the transactions contemplated by the Transaction
Documents.

 

    	 	17	 

     

    

 

(t)       Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

 

(u)       Registration
Rights. Except as set forth on Schedule 3.1(u), no Person has any right to cause the Company or any Subsidiary to effect
the registration under the Securities Act of any securities of the Company or any Subsidiary, except for the Purchasers.

 

(v)       Reporting
Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Sections 12(b)
and 13 of the Exchange Act. Pursuant to the provisions of the Exchange Act, the Company has timely filed all reports and other
materials required to be filed by the Company thereunder with the SEC during the twelve months preceding the date of this Agreement.
As of a Closing Date, the Company is not a “shell company” (as defined in Rule 405) of the Securities Act nor a “former
shell company”.

 

(w)       Application
of Takeover Protections. The Company and the Board of Directors will have taken as of the Closing Date 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 the Company’s articles of association (or similar
charter documents) or the laws of its jurisdiction of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership
of the Securities.

 

(x)       Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, when taken
together as a whole, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole
did not, at the time when disseminated, contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(y)       No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering
of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.

 

    	 	18	 

     

    

 

(z)       Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, and the Company’s good faith estimate
of the fair market value of its assets, after giving effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be
paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as
they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current
cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities
when such amounts are required to be paid. The Company does not intend to 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 Company has no
knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities
for borrowed money or amounts owed in excess of $150,000 in the aggregate (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $150,000 due under leases required to
be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
Neither the Company nor any Subsidiary is in default with respect to any Indebtedness except as set forth on Schedule 3.1(z).

 

(aa)       Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all federal, state and local income and all
foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary
know of no basis for any such claim.

 

(bb)       Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any
provision of FCPA.

 

    	 	19	 

     

    

 

(cc)       Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(cc) of the Disclosure Schedules. To the knowledge and
belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii)
shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the
fiscal year ending December 31, 2017. There are no disagreements of any kind presently existing, or reasonably anticipated by
the Company to arise, between the Company and such accountants.

 

(dd)       Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents
to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been
based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ee)       Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(e) and 4.16 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Ordinary Shares and (iv) each Purchaser shall not be deemed to have any affiliation
with or control over any arm’s length counter-party in any “derivative” transaction. The Company further
understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period
that the Securities are outstanding, including, without limitation, during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of
the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. 
The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
The Company acknowledges that anything to the contrary in the Transaction Documents
notwithstanding, Purchaser may sell long any Underlying shares it anticipates receiving after conversion of any part of a Note
or exercise of a Warrant.

 

    	 	20	 

     

    

 

(ff)       Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company.

 

(gg)       Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.

 

(hh)       Stock
Option Plans. Each stock option and similar security granted by the Company was granted (i) in accordance with the terms of
the Stock Option Plan and (ii) with an exercise price at least equal to the fair market value of the Ordinary Shares on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Stock Option Plan
or any other stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company
policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with,
the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.

 

(ii)       Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer,
agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”).

 

(jj)       Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(kk)       No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(ll)       Indebtedness
and Seniority. As of the date hereof, all Indebtedness and Liens of the Company and the principal terms thereof are set forth
on Schedule 3.1(ll). Except as set forth on Schedule 3.1(ll), as of the Closing Date, no Indebtedness or other equity
of the Company is or will be senior to the Notes in right of payment, whether with respect to interest or upon liquidation or
dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying
assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).

 

    	 	21	 

     

    

 

(mm)       Listing
and Maintenance Requirements. The Ordinary Shares are listed on the OTCQB maintained by the OTC Markets Group Inc. under the
symbol PVNNF. Except as set forth in the SEC Reports, the Company has not, in the twelve (12) months preceding the date hereof,
received notice from any Trading Market on which the Ordinary Shares are or has been listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements of such Trading Market.

 

(nn)       FDA.
The Company has no applications pending before the jurisdiction of the U.S. Food and Drug Administration (“FDA”)
and none of the Company’s products are subject to nor require the approval of the FDA.

 

(oo)       No
Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the
Securities Act, to the Company’s knowledge, none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of
the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term
is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable,
with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.

 

(pp)       Regulatory
Matters. The Company and its Subsidiaries have complied in all material respects with all statutes and regulations related
to the research, manufacture and sale of its products to the extent applicable to the Company’s and its Subsidiaries’
activities. Items manufactured or under investigation by the Company and its Subsidiaries comply with all applicable manufacturing
practices regulations and other requirements established by government regulators in the jurisdictions in which the Company or
its Subsidiaries manufacture or sell their products. Except as disclosed in the SEC Reports, the Company is not and its Subsidiaries
are not the subject of any investigation by any competent authority with respect to the development, testing, manufacturing and
distribution of their products, nor has any investigation, prosecution, or other enforcement action been threatened by any regulatory
agency. Except as disclosed in the SEC Reports, neither the Company nor any of its Subsidiaries has received from any regulatory
agency any letter or other document asserting that the Company or any Subsidiary has violated any statute or regulation enforced
by that agency with respect to the development, testing, manufacturing and distribution of their products. To the Company’s
knowledge, research conducted by or for the Company and its Subsidiaries has complied in all material respects with all applicable
legal requirements.

 

(qq)       Other
Covered Persons. Except as set forth on Schedule 3.1(s) or to attorneys for legal services, the Company is not aware
of any person that has been or will be paid (directly or indirectly) remuneration in connection with the sale of any Regulation
D Securities pursuant to this Agreement.

 

(rr)       Survival.
The foregoing representations and warranties shall survive the Closing.

 

    	 	22	 

     

    

 

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

 

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

 

(b)       Understandings
or Arrangements. Such Purchaser understands that the Securities are “restricted securities” and have not been
registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its
own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state
securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to
any registration statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business.

 

(c)       Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any Notes it will be either: (i) an “accredited investor” as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer”
as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act. Such Purchaser has the authority and is duly and legally qualified to purchase and own the Securities.
Such Purchaser is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. Such
Purchaser has provided the information in the Accredited Investor Questionnaire attached hereto as Exhibit F (the “Investor
Questionnaire”). The information set forth on the signature pages hereto and the Investor Questionnaire regarding such
Purchaser is true and complete in all respects as of the date of this Agreement. Except as disclosed in the Investor Questionnaire,
such Purchaser has had no position, office or other material relationship within the past three years with the Company or Persons
(as defined below) known to such Purchaser to be affiliates of the Company, and is not a member of the Financial Industry Regulatory
Authority or an “associated person” (as such term is defined under the FINRA Membership and Registration Rules Section
1011).

 

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

 

    	 	23	 

     

    

 

(e)       Information
on Company. Such Purchaser has been furnished with or has had access to the EDGAR Website of the Commission to the Company’s
filings made with the Commission during the period from the date that is two years preceding the date hereof through the tenth
(10th) business day preceding the Closing Date, including the Company’s Annual Report on Form 20-F filed with the Commission
on May 16, 2017 (hereinafter referred to collectively as the “SEC Reports”).  Such Purchaser was afforded
(i) the opportunity to ask such questions as such Purchaser deemed necessary of, and to receive answers from, representatives
of the Company concerning the merits and risks of acquiring the Securities; (ii) the right of access to information about the
Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable
such Purchaser to evaluate the Securities; and (iii) the opportunity to obtain such additional information that the Company possesses
or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to
acquiring the Securities.

 

(f)       Compliance
with Securities Act; Reliance on Exemptions. Such Purchaser understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require
registration under the 1933 Act, and that such Securities must be held indefinitely unless a subsequent disposition is registered
under the 1933 Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands and
agrees that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration
requirements of federal and state securities laws and regulations and that the Company is relying in part upon the truth and accuracy
of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser
to acquire the Securities.

 

(g)       Communication
of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation” or “general
advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the internet
or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general advertisement.

 

(h)       No
Governmental Review. Such Purchaser understands that no federal or state agency or any other governmental or state agency
has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the Securities
nor have such authorities passed upon or endorsed the merits of the Offering.

 

(i)       No
Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents,
if applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become
a default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided
that for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.

 

    	 	24	 

     

    

 

(j)       Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a written term sheet from the Company or any other Person representing the Company setting forth the material terms
of the transactions contemplated hereby and ending immediately prior to the execution hereof.

 

(k)       Limitation
of Representations. Anything to the contrary herein notwithstanding the Purchaser makes no representations or warranties with
regard to any laws, rules or regulation except with respect to the United States and its subdivisions and the jurisdiction of
its formation.

 

(l)       Survival.
The foregoing representations and warranties shall survive the Closing.

 

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

 

ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1       Transfer
Restrictions.

 

(a)       The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company,
at the Company’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the
form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under
this Agreement and the other Transaction Documents.

 

    	 	25	 

     

    

 

(b)       Legend.
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the
following form:

 

[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT
IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

(c)       Pledge.
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions
of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledge or secure Securities
to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall
be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the
Securities.

 

(d)       Legend
Removal. Certificates evidencing the Underlying Shares shall not be required to contain any legend (“Unlegended Shares”)
(including the legend set forth in Section 4.1(b) hereof): (i) while any registration statement (including the Registration Statement)
covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Underlying Shares
pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company
to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume
or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel or other
counsel reasonably acceptable to Purchaser to issue a legal opinion to the Transfer Agent during the time any of the aforedescribed
conditions apply, to effect the removal of the legend hereunder. If all or any Notes are converted or any portion of a Warrant
is exercised at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying
Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no longer required under
this Section 4.1(d), it will, no later than five Trading Days following the delivery by a Purchaser to the Company or the Transfer
Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such fifth Trading Day,
the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends (however, the Corporation shall use reasonable best efforts to deliver
such shares within three Trading Days after delivery by Purchaser of such unlegended Share certificate). The Company may not make
any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in
this Section 4.1. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer
Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System
as directed by such Purchaser.

 

    	 	26	 

     

    

 

(e)       Legend
Removal Default. In addition to such Purchaser’s other available remedies, provided the conditions for legend removal
set forth in Section 4.1(d) exist, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty,
for each $1,000 of Underlying Shares (based on the higher of the actual purchase price or VWAP of the Ordinary Shares on the date
such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(d),
$10 per Trading Day for each Trading Day commencing the first Trading Day after the Legend Removal Date (increasing to $20 per
Trading Day after such fifth Trading Day) until such certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities
as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law
or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(f)DWAC.
In lieu of delivering physical certificates representing the Unlegended Shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Purchaser’s
prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Ordinary Shares is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.

 

(g)       Injunction.
In the event a Purchaser shall request delivery of Unlegended Shares as described in this Section 4.1 and the Company is required
to deliver such Unlegended Shares, the Company may not refuse to deliver Unlegended Shares based on any claim that such Purchaser
or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction
Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining
and or enjoining delivery of such Unlegended Shares shall have been sought and obtained by the Company and the Company has posted
a surety bond for the benefit of such Purchaser in the amount of the greater of (i) 120% of the amount of the aggregate purchase
price of the Underlying Shares to be subject to the injunction or temporary restraining order, or (ii) the VWAP of the Ordinary
Shares on the trading day before the issue date of the injunction multiplied by the number of Unlegended Shares to be subject
to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.

 

    	 	27	 

     

    

 

(h)       Buy-In.
In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser Unlegended Shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) Ordinary Shares to deliver in satisfaction of a sale by such Purchaser of the Ordinary
Shares which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”), then the
Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser) the
amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the Ordinary
Shares so purchased exceeds (B) the aggregate purchase price of the Ordinary Shares delivered to the Company for reissuance as
Unlegended Shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser purchases
Ordinary Shares having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase price of Shares
delivered to the Company for reissuance as Unlegended Shares, the Company shall be required to pay the Purchaser $1,000, plus
interest, if any. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser in respect
of the Buy-In.

 

(i)       Plan
of Distribution. Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser
will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will
be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon
this understanding.

 

4.2       Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding Ordinary
Shares, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the
Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive
effect that such issuance may have on the ownership of the other stockholders of the Company.

 

4.3       Furnishing
of Information; Public Information; Domestic Issuances; Filing Requirements.

 

(a)       Until
the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to file
all required periodic reports with the Commission pursuant to Section 15(d) of the Exchange Act and under Section 12(b) or 12(g)
of the Exchange Act, maintain the registration of the Ordinary Shares under Section 12(b) or 12(g) of the Exchange Act and to
timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed
by the Company after the date hereof pursuant to the Exchange Act and file such reports even if the Company is not then subject
to the reporting requirements of the Exchange Act.

 

(b)       At
any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144,
if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”), with respect to those securities that cannot be so sold, then, in addition to such Purchaser’s
other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to one percent (1%) of
the aggregate principal amount of Notes and accrued interest thereon, aggregate Exercise Price of Warrant Shares held by such
Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than
thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such
public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar
month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event
or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

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(c)       The
Company agrees to file a form 10-Q for the quarter ending September 30, 2017 in compliance with the substance and filing time
such Form 10-Q would be required to be filed by a company subject to the filing requirements of Section 13 and 15(d) of the Exchange
Act; or a Form 6-K if not required to file such Form 10-Q and file such Form 6-K by the time and in the form otherwise applicable
to a company filing a Form 10-Q pursuant to Section 15(d) of the Exchange Act.

 

4.4       Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of
the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval
prior to the closing of such other transaction or to effectuate such other transaction unless shareholder approval is obtained
before the earlier of the closing of such subsequent transaction or effectuation of such other transaction.

 

4.5       Conversion
and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion
included in the Notes set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or
convert the Notes. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise
their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall
deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.6       Securities
Laws Disclosure; Publicity. The Company shall on or before the fourth Trading Day following the Closing Date, file a Current
Report on Form 6-K including the Transaction Documents as exhibits thereto with the Commission (“Form 6-K”).
A form of the Form 6-K is annexed hereto as Exhibit D. Such Exhibit D will be identical to the Form 6-K which will
be filed with the Commission except for the omission of signatures thereto by the Company and auditors providing the financial
statements. From and after the filing of the Form 6-K, the Company represents to the Purchasers that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchasers by the Company or any Subsidiary, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company
and each Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby,
and neither the Company nor any Purchaser shall issue any press release nor otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser,
with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market unless
the name of such Purchaser is already included in the body of the Transaction Documents, without the prior written consent of
such Purchaser, except: (a) as required by applicable federal securities law in connection with the filing of final Transaction
Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

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4.7       Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that
any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the
Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.8       Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser
or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

 

4.9       Use
of Proceeds. The Company shall use the net proceeds from the sale of the Offering hereunder substantially for the purposes
set forth on Schedule 4.9 hereto and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt except as disclosed on Schedule 4.9 (other than payment of trade payables in the ordinary course of the Company’s
business and consistent with prior practices and repayment of certain debt as identified and in the amounts set forth on Schedule
4.9), (b) for the redemption of any Ordinary Shares or Ordinary Shares Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA or OFAC regulations

 

4.10       Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel for all Purchaser
Parties. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the
extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of
its material representations, warranties or covenants under the Transaction Documents. The indemnification required by this Section
4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills
are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar
right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

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4.11       Reservation
and Listing of Securities.

 

(a)       The
Company shall maintain a reserve from its duly authorized Ordinary Shares for issuance pursuant to the Transaction Documents in
such amount as may then be required to fulfill its obligations in full under the Transaction Documents, but not less than the
Required Minimum.

 

(b)       If,
on any date, the number of authorized but unissued (and otherwise unreserved) Ordinary Shares is less than the Required Minimum
on such date, then the Board of Directors shall amend the Company’s certificate or articles of incorporation to increase
the number of authorized but unissued Ordinary Shares to at least the Required Minimum at such time, as soon as possible and in
any event not later than the 60th day after such date.

 

(c)       The
Company shall prior to the Closing, if applicable: (i) in the time and manner required by the principal Trading Market, prepare
and file with such Trading Market an additional shares listing application covering a number of Ordinary Shares at least equal
to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such Ordinary Shares to be approved
for listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such
listing or quotation and (iv) maintain the listing or quotation of such Ordinary Shares on any date at least equal to the Required
Minimum on such date on such Trading Market or another Trading Market. The Company will take all action necessary to continue
the listing or quotation and trading of its Ordinary Shares on a Trading Market until the later of (i) at least five years after
the Closing Date, and (ii) for so long as the Notes or Warrants are outstanding, and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Trading Market. In the event the aforedescribed listing
is not continuously maintained for five years after the Closing Date and for so long as Notes or Warrants are outstanding (a “Listing
Default”), then in addition to any other rights the Purchasers may have hereunder or under applicable law, on the first
day of a Listing Default and on each monthly anniversary of each such Listing Default date (if the applicable Listing Default
shall not have been cured by such date) until the applicable Listing Default is cured, the Company shall pay to each Purchaser
an amount in cash, as partial liquidated damages and not as a penalty, equal to one percent (1%) of the aggregate principal amount
of Notes, conversion price of Conversion Shares, and purchase price of Warrant Shares held by such Purchaser or which may be acquired
upon exercise of Warrants on the day of a Listing Default and on every thirtieth day (pro-rated for periods less than thirty days)
thereafter until the date such Listing Default is cured. If the Company fails to pay any liquidated damages pursuant to this Section
in a timely manner, the Company will pay interest thereon at a rate of 1.5% per month (pro-rated for partial months) to the Purchaser.

 

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4.12       Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at a Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.

 

4.13       Subsequent
Equity Sales. From the date hereof until such time as the Notes are no longer outstanding, the Company will not, without the
consent of a Majority in Interest, enter into nor allow the exercise of any Equity Line of Credit or similar agreement including
the Outstanding Equity Line, which shall remain inactive through such date, issue or agree to issue floating or Variable Priced
Equity Linked Instruments nor issue or agree to issue any of the foregoing or equity with price reset rights (subject to adjustment
for stock splits, distributions, dividends, recapitalizations and the like) (collectively, a “Variable Rate Transaction”).
For purposes hereof, “Equity Line of Credit” shall include any transaction involving a written agreement between
the Company and an investor or underwriter or an investor or underwriter has the right to “call” the Company’s
securities whereby the Company has the right to “put” its securities to the investor or underwriter over an agreed
period of time and at an agreed price or price formula, and “Variable Priced Equity Linked Instruments” shall
include: (A) any debt or equity securities which are convertible into, exercisable or exchangeable for, or carry the right to
receive additional Ordinary Shares or Ordinary Shares Equivalents or any of the foregoing at a price that can be reduced either
(1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or
quotations for Ordinary Shares at any time after the initial issuance of such debt or equity security, or (2) with a fixed conversion,
exercise or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt
or equity security due to a change in the market price of the Company’s Ordinary Shares since date of initial issuance,
or upon the issuance of any debt, equity or Ordinary Shares Equivalent, and (B) any amortizing convertible security which amortizes
prior to its maturity date, where the Company is required or has the option to (or any investor in such transaction has the option
to require the Company to) make such amortization payments in Ordinary Shares which are valued at a price that is based upon and/or
varies with the trading prices of or quotations for Ordinary Shares at any time after the initial issuance of such debt or equity
security (whether or not such payments in stock are subject to certain equity conditions).  For purposes of determining the
total consideration for a convertible instrument (including a right to purchase equity of the Company) issued, subject to an original
issue or similar discount or which principal amount is directly or indirectly increased after issuance, the consideration will
be deemed to be the actual net cash amount received by the Company in consideration of the original issuance of such convertible
instrument. For so long as the Notes are outstanding, the Company will not, without the consent of a Majority in Interest, issue
any Ordinary Shares or Ordinary Shares Equivalents to officers, directors, and employees of the Company unless such issuance is
an Exempt Issuance or in the amounts and on the terms set forth on Schedule 4.13. For so long as any Notes are outstanding,
the Company will not amend the terms of any securities or Ordinary Shares Equivalents or of any agreement outstanding or in effect
as of the date of this Agreement pursuant to which same were or may be acquired without the consent of a Majority in Interest,
if the result of such amendment would be at an effective price per share of Ordinary Shares less than the lower of the Conversion
Price or Warrant Exercise Price in effect at the time of such amendment. The restrictions and limitations in this Section 4.13
are in addition to and shall apply whether or not a Purchaser exercises its rights pursuant to Section 4.17 and Section 4.23.
Unless otherwise specifically set forth in the Transaction Documents, these Transaction Documents shall not restrict the Company
from issuing any equity.

 

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4.14       Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration
is also offered on a ratable basis to all of the parties to this Agreement. For clarification purposes, this provision constitutes
a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group
with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.15       Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Ordinary Shares without ten (10) days prior written notice to the Purchasers.

 

4.16       Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on such Purchaser’s behalf or pursuant to any understanding with such Purchaser will execute
any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced
pursuant to a press release or Form 6-K as described in Section 4.6.  Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by
the Company pursuant to a press release or Form 6-K as described in Section 4.6, such Purchaser will maintain the confidentiality
of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.
Further, each Purchaser severally and not jointly with the other Purchasers covenants that neither it, nor any of its Affiliates
will engage in any Short Sale transactions at any time while it beneficially owns any Securities. Notwithstanding the foregoing,
and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i)
no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to a
press release or Form 6-K as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to a press release or Form 6-K, and (iii) no Purchaser shall
have any duty of confidentiality to the Company or its Subsidiaries after the filing of the Form 6-K.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made
by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply
with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement.

 

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4.17       Participation
in Future Financing.

 

(a)       Until
eighteen (18) months after the Closing Date upon any proposed issuance by the Company or any of its Subsidiaries of Ordinary Shares,
Ordinary Shares Equivalents, Indebtedness or a combination thereof, other than (i) a rights offering to all holders of Ordinary
Shares (which may include extending such rights offering to holders of Notes on an as-converted basis), or (ii) an Exempt Issuance
(each such proposed issuance other than (a) (i) and (ii), a “Subsequent Financing”), the Purchasers and the
Subsequent Purchasers shall have the right to participate up to an amount of the Subsequent Financing equal to 50% of the Subsequent
Financing (the “Participation Maximum”) pro rata to each other in proportion to principal amounts of indebtedness
issued on the Closing Date and any other applicable closing dates pursuant to which Subsequent Purchasers purchased securities
on the same terms, conditions and price provided for in the Subsequent Financing, unless the Subsequent Financing is an underwritten
public offering, in which case the Company shall notify each Purchaser of such public offering when it is lawful for the Company
to do so, but no Purchaser shall be entitled to purchase any particular amount of such public offering without the approval of
the lead underwriter of such underwritten public offering.

 

(b)       At
least ten (10) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
requesting Purchaser shall be deemed to have acknowledged that the Subsequent Financing Notice may contain material non-public
information. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.

 

(c)       Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the tenth (10th) Trading Day after all of the Purchasers have received the Pre-Notice
that the Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation,
and representing and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set
forth in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as of such tenth (10th)
Trading Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate.

 

(d)       If
by 5:30 p.m. (New York City time) on the tenth (10th ) Trading Day after all of the Purchasers have received the Pre-Notice,
notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may affect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice and the Purchasers
shall simultaneously affect their portion of such Subsequent Financing as set forth in their notifications to the Company consistent
with the terms set forth in the Subsequent Financing Notice.

 

(e)       If
by 5:30 p.m. (New York City time) on the tenth (10th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of
the Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the principal amount of Notes purchased
hereunder by a Purchaser participating under this Section 4.17 and (y) the sum of the aggregate principal amounts of Notes purchased
hereunder by all Purchasers participating under this Section 4.17.

 

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(f)       The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.18, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within sixty (60) Trading Days after
the date of the initial Subsequent Financing Notice.

 

(g)       The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree
to any restrictions on trading as to any of the Securities purchased hereunder (for avoidance of doubt, the securities purchased
in the Subsequent Financing shall not be considered securities purchased hereunder) or be required to consent to any amendment
to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior
written consent of such Purchaser.

 

(h)       Notwithstanding
anything to the contrary in this Section 4.17 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the seventeenth (17th) Business Day following
delivery of the Subsequent Financing Notice. If by such seventeenth (17th) Business Day, no public disclosure regarding
a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction
has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed
to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.

 

4.18       Purchaser’s
Exercise Limitations. The Company shall not effect exercise of the rights granted in Sections 4.17 and 4.23 of this Agreement,
and a Purchaser shall not have the right to exercise any portion of such rights granted in Sections 4.17 and 4.23 only to the
extent that after giving effect to such exercise, the Purchaser, would beneficially own in excess of the Beneficial Ownership
Limitation (as defined in the Note), applied in the manner set forth in the Note. In such event the right by Purchaser to benefit
from such rights or receive shares in excess of the Beneficial Ownership Limitation shall be held in abeyance until such times
as such excess shares shall not exceed the Beneficial Ownership Limitation, provided the Purchaser complies with the Purchaser’s
other obligations in connection with the exercise by Purchaser of its rights pursuant to Sections 4.17 and 4.23.

 

4.19       Maintenance
of Property. The Company shall and cause each Subsidiary to keep all of its property, which is necessary or useful to the
conduct of its business, in good working order and condition, ordinary wear and tear excepted.

 

4.20       Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.

 

4.21       DTC
Program. At all times that Notes or Warrants are outstanding, the Company shall employ as the transfer agent for its Ordinary
Shares and Underlying Shares a participant in the Depository Trust Company Automated Securities Transfer Program and cause the
Ordinary Shares and Underlying Shares to be transferable pursuant to such program.

 

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4.22       Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company,
the Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.

 

4.23       Registration
Rights. Until twenty (20) months after the Closing Date and during the pendency of an Event of Default (as defined in the
Note), if any, or while an event which with the giving of notice or the passage of time could become an Event of Default is extant,
and only so long as Purchaser own any of the Securities, the Company will not grant any registration rights, allow the exercise
of any registration rights or file any registration statement (including Form S-3 or its equivalent) on behalf of any holder or
prospective holder of any securities of the Company unless the Company has previously filed a registration statement on behalf
of Purchasers with respect to all of the Underlying Shares and such registration statement had been continuously effective for
the sale of all the outstanding Underlying Shares for not less than six months.

 

4.24       Indebtedness.
For so long as any amount of Note principal is outstanding, the Company will not incur any new Indebtedness other than Permitted
Indebtedness, and will not issue convertible debt instruments described in subpart (f) of the definition of Exempt Issuance having
a principal amount of more than US$1,666,667, in the aggregate, without the consent of the Majority in Interest.

 

4.25       Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person not otherwise disclosed herein or in the SEC Reports.

 

4.26       No
Exercise of Variable Priced Equity Linked Instruments. For so long as Notes are outstanding, the Company will not have outstanding
any exercisable Variable Priced Equity Linked Instruments, nor any debt or equity with anti-dilution, ratchet or reset rights,
except as set forth and described on Schedule 4.26.

 

4.27       Maintenance
of Property and Insurance. Until the End Date, the Company shall keep all of its property, which is necessary or useful to
the conduct of its business, in good working order and condition or in no worse condition than on the date hereof, if not in good
working order and condition, ordinary wear and tear excepted. Until the End Date, the Company will maintain insurance coverage
of the type customary for its industry and not less than the amount in effect as of the Closing Date.

 

    	 	36	 

     

    

 

4.28
Most Favored Nation Provision.  From the date hereof and for so long as a Purchaser holds any Securities, in the event
that the Company issues or sells any Ordinary Shares or Ordinary Shares Equivalents pursuant to the Exempt Issuance described
in subpart (f) of the definition of Exempt Issuance and if a Purchaser then holding outstanding Securities reasonably believes
that any of the terms and conditions appurtenant to such issuance or sale are more favorable to such Subsequent Purchaser than
are the terms and conditions granted to the Purchasers hereunder, upon notice to the Company by such Purchaser within ten (10)
Trading Days after written notice (as described below) to Purchaser of such issuance or sale (which shall include a copy of all
agreements and documents employed in connection with such issuance), the Company shall amend the terms of this transaction as
to such Purchaser only, so as to give such Purchaser the benefit of such more favorable terms or conditions. The Company shall
provide each Purchaser with notice of any such proposed issuance or sale not later than ten (10) Trading Days before such issuance
or sale.

 

4.29       Duration
of Undertakings. Unless otherwise stated in this Article IV or pursuant to applicable law, all of the Company’s undertakings,
obligations and responsibilities set forth in Article IV of this Agreement shall remain in effect for at least so long as any
Securities remain outstanding.

 

ARTICLE
V.

MISCELLANEOUS

 

5.1       Termination. 
This Agreement may be terminated by any Purchaser or the Company, as to such Purchaser’s or the Company’s obligations
hereunder with respect to such Purchaser that have not yet been consummated, only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated
on or before August 29, 2017; provided, however, that such termination will not affect the right of any party to
sue for any breach by any other party (or parties).

 

5.2       Fees
and Expenses. At the Closing, the Company has agreed to pay G&M for the legal fees in connection with G&M’s
representation of Alpha Capital Anstalt (and no other Purchasers) and the Closing in the amount of $18,000. Except as expressly
set forth in the Transaction Documents and on Schedule 3.1(s), each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation,
any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice
delivered by a Purchaser) and stamp taxes and other taxes and duties (other than income and similar taxes), if any, levied in
connection with the delivery of any Securities to the Purchasers. All of the Purchasers are advised to seek the advice of their
own attorneys.

 

5.3       Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4       Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to the Company, to: P.V. Nano Cell Ltd., c/o Corporation Service Company
1180 Avenue of the Americas, Suite 210, New York, NY 10036 with an additional copy by fax only to (which shall not constitute
notice): Greenberg Traurig, P.A., 333 S.E. 2nd Avenue, Miami, FL 33131, Attn: Robert L. Grossman, Esq., facsimile:
305-961-5756, and (ii) if to the Purchasers, to: the addresses and fax numbers indicated on the signature pages hereto, with an
additional copy by fax only to (which shall not constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream,
New York 11581, fax: (212) 697-3575. For so long as any notice may or be required to be given to the Company pursuant to the
transaction documents, the Company will maintain an address for notice purposes in New York, New York or Miami, Florida. Any notice
required to be given to the Company pursuant to the Transaction Documents will also be given via email to fernando@pvnanocell.com.
Failure to give such email notice or failure of such notice to be received shall under no circumstances be deemed a defect in
the giving of the required notice. 

 

    	 	37	 

     

    

 

5.5       Amendments;
Waivers. No provision of this Agreement or the other Transaction Document may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the Company and Purchasers holding at least a majority
in interest of the Securities issued pursuant to this Agreement then outstanding which must include Alpha Capital Anstalt for
so long as Alpha Capital Anstalt owns Notes having a principal amount of not less than $100,000 and/or Ordinary Shares into which
such amount of Notes have been converted (the “Majority in Interest”), or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. Whenever the term “consent of the Purchasers”
or a similar term is employed herein, it shall mean the consent of a Majority in Interest. No waiver of any default with respect
to any provision, condition or requirement of this Agreement or the other Transaction Document shall 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 shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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

 

5.7       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Following a Closing, any Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any Securities in compliance with this Agreement and applicable law,
provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of
the Transaction Documents that apply to the “Purchasers.”

 

5.8       No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.10.

 

    	 	38	 

     

    

 

5.9       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any action, suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the
obligations of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

5.10       Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

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

 

5.12       Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

5.13       Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may, at any time prior to the Company’s performance of such obligations, rescind or withdraw, in its sole discretion from
time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice
to its future actions and rights; provided, however, that in the case of a rescission of a conversion of a Note
or exercise of a Warrant, the applicable Purchaser shall be required to return any Ordinary Shares subject to any such rescinded
conversion or exercise notice concurrently with the return to such Purchaser of the aggregate Exercise Price paid to the Company
for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

    	 	39	 

     

    

 

5.14       Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.

 

5.15       Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.

 

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

 

5.17       Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order
to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to
the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof,
the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from
the Closing Date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at such Purchaser’s election.

 

    	 	40	 

     

    

 

5.18       Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through G&M. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required
or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement
and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among the Purchasers.

 

5.19       Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.

 

5.20       Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

5.21       Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and Ordinary Shares in any Transaction Document shall be subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of the Ordinary Shares that occur after
the date of this Agreement.

 

5.22       WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

5.23       Currency.
Unless indicated otherwise, references to currency and money shall mean currency of the United States of America.

 

5.24       Equitable
Adjustment. Trading volume amounts, price/volume amounts, the amount of Warrants, the amount of Ordinary Shares identified
in this Agreement, Conversion Price, Exercise Price, Underlying Shares and similar figures in the Transaction Documents shall
be equitably adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described
in this Agreement, Note and Warrants.

 

(Signature
Pages Follow)

 

    	 	41	 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

	P.V. NANO CELL LTD.	 	
        Address for Notice: 

         

        P.V. Nano Cell Ltd., c/o Corporation Service Company 1180 Avenue
        of the Americas, Suite 210, New York, NY 10036

	By:	/s/ Fernando de la Vega	 	 
	 	Name: Dr. Fernando de la Vega	 	 
	 	Title: CEO	 	 
	 	 	 	 
	
        With a copy to (which shall not constitute notice): 

        Greenberg Traurig, P.A. 

        333 S.E. 2nd Avenue 

        Miami, FL 33131 

        Attn: Robert L. Grossman, Esq. 

        Fax: 305-961-5756
	 	 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

    	 	42	 

     

    

  

[PURCHASER
SIGNATURE PAGE TO P.V. NANO CELL LTD.

 

SECURITIES
PURCHASE AGREEMENT]

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

Name of Purchaser: _____Alpha Capital
Anstalt______________________________________________________

 

Signature of Authorized Signatory
of Purchaser: _/s/ Konrad Ackermann__________________________________

 

Name of Authorized Signatory: __Konrad
Ackermann____________________________________________

 

Title of Authorized Signatory: _____Director______________________________________________

 

Email Address of Authorized Signatory:
___________________________________________________________

 

Facsimile Number of Authorized Signatory: ___212-586-8244______________________________________

 

State of Residence of Purchaser: ___Liechtenstein______________________________________________

 

Address for Notice to Purchaser: % LH Financial Services,
510 Madison Ave., Suite 1400, New York, NY 10022

 

Address for Delivery of Securities to Purchaser (if not same
as address for notice):

 

Subscription Amount: US$___300,000_____________

 

Note principal amount: ____333,000_______________

 

Warrants: __333,333_________________

 

EIN Number, if applicable, will be provided under separate
cover: ________________________

 

Date: ____8/15/17_______________________ 

 

 

[SIGNATURE
PAGES CONTINUE]

 

    	 	43	 

     

    

 

FORM OF LOCK-UP AGREEMENT

 

August __, 2017

 

[Purchaser]

 

Sir:

 

The undersigned signatory
of this Lock-Up agreement (the “Lock-Up Agreement”) understands that certain Purchasers (the “Purchasers”)
propose to enter into a Securities Purchase Agreement (as the same may be amended from time to time, the “Purchase Agreement”)
with P.V. Nano Cell Ltd., an Israeli Company (PVN), and in connection therewith acquire a convertible Note and Ordinary Share Purchase
Warrants from PVN. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchaser Agreement.

 

As
a material inducement to the Purchasers to enter into the Purchase Agreement and to consummate the contemplated transactions, and
for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby
irrevocably agrees that, subject to the exceptions set forth herein, without the prior written consent of a Majority in Interest,
the undersigned will not, during the period commencing upon the Closing Date and ending on the date that is 270 days after the
Effective Date (the “Restricted Period”):

 

		(i)	offer, pledge, sell, contract to sell, sell any option, warrant or contract to purchase, purchase
any option, warrant or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly
or indirectly, any PVN Ordinary Shares or any securities convertible into or exercisable or exchangeable for PVN Ordinary Shares
(including without limitation, Ordinary Shares or such other securities which may be deemed to be beneficially owned by the undersigned
in accordance with the rules and regulations of the Commission and securities of PVN which may be issued upon exercise of a stock
option or warrant) or any other PVN Ordinary shares owned by the undersigned except as specifically excluded hereunder, in each
case, that are currently or hereafter owned of record or beneficially (including holding as a custodian) by the undersigned as
described on the signature page hereto and identifies and describes all of the foregoing adhering to the undersigned (collectively,
the “Undersigned’s Shares”), or publicly disclose the intention to make any such offer, sale, pledge,
grant, transfer or disposition;

 

		(ii)	enter into any swap, short sale, hedge or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Undersigned’s Shares regardless of whether any such transaction described
in clause (i) above or this clause (ii) is to be settled by delivery of PVN Ordinary Shares or such other securities, in cash or
otherwise; or

 

		(iii)	make any demand for or exercise any right with respect to the registration of any PVN Ordinary
Shares or any security convertible into or exercisable or exchangeable for PVN Ordinary Shares.

   

    	 	44	 

     

    

 

The restrictions and obligations contemplated
by this Lock-Up Agreement shall not apply to:

 

(a)           transfers
of the Undersigned’s Shares:

 

		(i)	if the undersigned is a natural person, (A) to any person related to the undersigned by
blood or adoption who is an immediate family member of the undersigned, or by marriage or domestic partnership (a “Family
Member”), or to a trust formed for the benefit of the undersigned or any of the undersigned’s Family Members, (B)
to the undersigned’s estate, following the death of the undersigned, by will, intestacy or other operation of law, (C) as
a bona fide gift to a charitable organization, (D) by operation of law pursuant to a qualified domestic order or in connection
with a divorce settlement or (E) to any partnership, corporation or limited liability company which is controlled by the undersigned
and/or by any such Family Member(s);

 

		(ii)	if the undersigned is a corporation, partnership or other business entity, (A) to another
corporation, partnership or other business entity that is an affiliate (as defined under Rule 12b-2 of the Exchange Act) of the
undersigned, including investment funds or other entities under common control or management with the undersigned, (B) as a distribution
or dividend to equity holders (including, without limitation, general or limited partners and members) of the undersigned (including
upon the liquidation and dissolution of the undersigned pursuant to a plan of liquidation approved by the undersigned’s equity
holders) or (C) as a bona fide gift to a charitable organization; or

 

		(iii)	if the undersigned is a trust, to any grantors
or beneficiaries of the trust;

 

provided
that, in the case of any transfer or distribution pursuant to this clause (a), such transfer is not for value and each
donee, heir, beneficiary or other transferee or distributee shall sign and deliver to Purchasers a Lock-Up agreement in the form
of this Lock-Up Agreement with respect to the PVN Ordinary Shares or such other securities that have been so transferred or distributed;

 

(b)           the
exercise of an option (including a net or cashless exercise of an option) to purchase PVN Ordinary Shares, and any related transfer
of PVN Ordinary Shares to PVN for the purpose of paying the exercise price of such options or any related transfer of PVN Ordinary
Shares for paying taxes (including estimated taxes) due as a result of the exercise of such options (or the disposition to PVN
of any shares of restricted stock granted pursuant to the terms of any employee benefit plan or restricted stock purchase agreement);
provided that, for the avoidance of doubt, the underlying PVN Ordinary Shares shall continue to be subject to the
restrictions on transfer set forth in this Lock-Up Agreement;

 

(c)           transfers
by the undersigned of PVN Ordinary Shares purchased by the undersigned on the open market following the Closing Date; or

 

(d)           transfers
or distributions pursuant to a bona fide third party tender offer, merger, consolidation or other similar transaction made to all
holders of PVN Ordinary Shares involving a change of control of PVN (including entering into any lock-up, voting or similar agreement
pursuant to which the undersigned may agree to transfer, sell, tender or otherwise dispose of PVN Ordinary Shares (or any security
convertible into or exercisable for PVN Ordinary Shares), or voting any PVN Ordinary Shares in favor of any such transaction or
taking any other action in connection with any such transaction), provided that the restrictions set forth in this Lock-Up Agreement
shall continue to apply to the Undersigned's Shares should such tender offer, merger, consolidation or other transaction not be
completed;

  

    	 	45	 

     

    

 

and provided, further,
that, with respect to each of (a) and (b) above, no filing by any party (including any donor, donee, transferor, transferee, distributor
or distributee) under the Exchange Act (other than (i) a filing at any time on a Form 5 or (ii) a filing after the expiration of
the Restricted Period on a Schedule 13D or Schedule 13G (or Schedule 13D/A or Schedule 13G/A)), or other public announcement shall
be required or shall be made voluntarily in connection with such transfer or disposition during the Restricted Period (other than
in respect of a required filing under the Exchange Act in connection with the exercise of an option to purchase PVN Ordinary Shares
following such individual’s termination of service relationship (including service as a director) with PVN that would otherwise
expire during the Restricted Period, provided that reasonable notice shall be provided to PVN prior to any such filing).

 

Any attempted transfer
in violation of this Lock-Up Agreement will be of no effect and null and void, regardless of whether the purported transferee has
any actual or constructive knowledge of the transfer restrictions set forth in this Lock-Up Agreement, and will not be recorded
on the share register of PVN. In furtherance of the foregoing, the undersigned and PVN agree that PVN and any duly appointed transfer
agent for the registration or transfer of the securities described herein are hereby authorized to and will decline to make any
transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Agreement. PVN will cause the legend
set forth below, or a legend substantially equivalent thereto, to be placed upon any certificate(s) or other documents, ledgers
or instruments evidencing the undersigned’s ownership of PVN Ordinary Shares:

 

THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO AND MAY ONLY BE TRANSFERRED IN COMPLIANCE WITH A LOCK-UP AGREEMENT, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICE OF PVN.

 

The undersigned hereby
represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement. All authority herein
conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs
or personal representatives of the undersigned.

 

The undersigned and
PVN acknowledge that this Lock-Up Agreement is being entered into for the benefit of the Purchasers who are parties to the Purchase
Agreement and their permitted assigns, and who are hereby made third party beneficiaries of this Lock-Up Agreement. This Lock-Up
Agreement may be enforced by the Purchasers and may not be amended without the consent of the Majority in Interest, which consent
may be withheld for any reason.

 

The undersigned acknowledges
and agrees that PVN is required to enforce the terms and provisions of this Lock-Up Agreement for the benefit of the Purchasers.

 

The undersigned understands
that if the Purchaser Agreement is terminated for any reason, or if the Closing does not occur, the undersigned shall automatically
be released from all restrictions and obligations under this Lock-Up Agreement. The undersigned understands that the Purchasers
are proceeding with the transactions described in the Purchase Agreement in reliance upon this Lock-Up Agreement.

  

    	 	46	 

     

    

 

Any and all remedies
herein expressly conferred upon the Purchasers will be deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity, and the exercise by the Purchasers of any one remedy will not preclude the exercise of any other remedy. The
undersigned agrees that irreparable damage would occur to the Purchasers in the event that any provision of this Lock-Up Agreement
were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the Purchasers
shall be entitled to an injunction or injunctions to prevent breaches of this Lock-Up Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States including but not limited to Federal and State courts in New York
City, New York or any state having jurisdiction, this being in addition to any other remedy to which the Purchasers are entitled
at law or in equity, and the undersigned waives any bond, surety or other security that might be required of the Purchasers with
respect thereto.

 

This Agreement shall
be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of
laws. Any action concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York
or in the federal courts located in the state of New York. The undersigned and PVN hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens. The parties executing this Lock-Up Agreement and other agreements referred to herein or delivered in connection
herewith agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing
party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision
of this Lock-Up Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of any agreement. Notices hereunder shall be given
in the same manner as set forth in the Purchase Agreement. Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection with this Lock-Up Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Lock-Up Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. The undersigned irrevocably appoints PVN its true and lawful agent for service of
process upon whom all processes of law and notices may be served and given in the manner described above; and such service and
notice shall be deemed valid personal service and notice upon the undersigned with the same force and validity as if served upon
the undersigned.

 

This Lock-Up Agreement
may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the
same instrument. The exchange of a fully executed Lock-Up Agreement (in counterparts or otherwise) by PVN, the Purchasers and the
undersigned by facsimile or electronic transmission in .pdf format shall be sufficient to bind such parties to the terms and conditions
of this Lock-Up Agreement.

  

(Signature Page Follows)

  

    	 	47	 

     

    

 

Signature Page

 

	 	Print Name of Stockholder:	 
	 	Signature (for individuals):	 

  

	 	Signature (for entities):
	 	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 

 

Number of Ordinary Shares directly owned by Stockholder: ___________

 

Number of Ordinary Shares Equivalents directly owned by Stockholder:
_______________

 

Consisting of ______________________________________________________________

 

_________________________________________________________________________________________

 

Number of Ordinary Shares beneficially owned by Stockholder:___

 

Presently held as follows: __ _______________________________

 

_________________________________________________________________________________________

 

Number of Ordinary Shares Equivalents beneficially owned by
Stockholder: ____

 

Consisting of _____________________________________________________________________________

 

_________________________________________________________________________________________

 

Excluded Securities: ____________________________________________________

 

_________________________________________________________________________________________

 

	 	AGREED, APPROVED AND ACKNOWLEDGED:
	 	P.V. NANO CELL LTD.
	 	 
	 	By: 	 
	 	 	Name: Dr. Fernando de la Vega
	 	 	Title: CEO

 

 

[Signature Page
to Lock-Up Agreement]

 

 

48Exhibit
10.2

 

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO BORROWER.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

Original
Issue Date: August 16, 2017

 

Principal
Amount: US$333,333

 

Purchase
Price: US$300,000

 

Original
Conversion Price (subject to adjustment herein): US$1.00

 

CONVERTIBLE
NOTE

DUE OCTOBER 16, 2018

 

THIS
CONVERTIBLE NOTE is one of a series of duly authorized and validly issued Notes of P.V. NANO CELL LTD., a company formed under
the laws of the State of Israel, (the “Borrower”), having its principal place of business at c/o Corporation Service
company, 1180 Avenue of the Americas, Suite 210, New York, NY 10036, due October 16, 2018 (this note, the “Note”
and, collectively with the other notes of such series, the “Notes”).

 

FOR
VALUE RECEIVED, Borrower promises to pay to Alpha Capital Anstalt or its registered assigns (the “Holder”),
with an address at: Lettstrasse 32, 9490 Vaduz, Liechtenstein, or shall have paid pursuant to the terms hereunder, the principal
sum of three hundred thirty-three thousand and three hundred and thirty-three Dollars ($333,333) on October 16, 2018 (the “Maturity
Date”) or such earlier date as this Note is required or permitted to be repaid or such later date if extended by the
Holder as provided hereunder, and to pay interest, if any, to the Holder on the aggregate unconverted and then outstanding principal
amount of this Note in accordance with the provisions hereof.

 

This
Note is subject to the following additional provisions:

 

Section
1.      Definitions. For the purposes hereof, in addition to the terms defined elsewhere
in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and
(b) the following terms shall have the following meanings:

 

“Alternate
Consideration” shall have the meaning set forth in Section 5(d).

 

     

     

    

 

“Bankruptcy
Event” means any of the following events: (a) Borrower or any Subsidiary thereof commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction relating to Borrower or any Subsidiary thereof, (b) there is commenced against Borrower or
any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) Borrower or any
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered, (d) Borrower or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) Borrower or any Subsidiary
thereof makes a general assignment for the benefit of creditors, (f) Borrower or any Subsidiary thereof calls a meeting of its
creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) Borrower or any Subsidiary thereof,
by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes
any corporate or other action for the purpose of effecting any of the foregoing.

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are required by law or other governmental action to close.

 

“Buy-In”
shall have the meaning set forth in Section 4(c)(iv)

 

“Change
of Control Transaction” means, other than by means of conversion or exercise of the Notes and the Securities issued
together with the Notes, the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of Borrower, by contract or otherwise) of in excess of 50% of
the voting securities of Borrower, (b) Borrower merges into or consolidates with any other Person, or any Person merges into or
consolidates with Borrower and, after giving effect to such transaction, the stockholders of Borrower immediately prior to such
transaction own less than 50% of the aggregate voting power of Borrower or the successor entity of such transaction, (c) Borrower
sells or transfers all or substantially all of its assets to another Person and the stockholders of Borrower immediately prior
to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction,
(d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors
was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution
by Borrower of an agreement to which Borrower is a party or by which it is bound, providing for any of the events set forth in
clauses (a) through (d) above. The proposed transaction with Digiflex as described in the SEC Reports as updated by the Disclosure
Schedules to the Agreement is not a Change of Control Transaction.

 

“Conversion”
shall have the meaning ascribed to such term in Section 4.

 

“Conversion
Date” shall have the meaning set forth in Section 4(a).

 

“Conversion
Price” shall have the meaning set forth in Section 4(b).

 

“Conversion
Shares” means, collectively, the Ordinary Shares issuable upon conversion of this Note in accordance with the terms
hereof.

 

    2

     

    

 

“Dilutive
Issuance” shall have the meaning set forth in Section 5(e).

 

“Equity
Conditions” means, during the period in question, (a) Borrower shall have duly honored all conversions scheduled to
occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested
or required, if any, (b) Borrower shall have paid all liquidated damages and other amounts owing to the applicable Holder in respect
of this Note and the other Transaction Documents, (c) the conditions for an Effective Date are in effect, (d) the Ordinary Shares
are listed or traded on a Trading Market, (e) there is a sufficient number of authorized, but unissued and otherwise unreserved,
Ordinary Shares for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) an Event of Default
has not occurred, whether or not such Event of Default has been cured, (g) there is no existing event which, with the passage
of time or the giving of notice, would constitute an Event of Default, (h) the issuance of the shares in question to the applicable
Holder would not exceed the Beneficial Ownership Limitation, (i) there has been no public announcement of a pending or proposed
Fundamental Transaction or Change of Control Transaction that has not been consummated, and (j) the applicable Holder is not in
possession of any information provided by Borrower that constitutes, or may constitute, material non-public information.

 

“Event
of Default” shall have the meaning set forth in Section 7(a).

 

“Fundamental
Transaction” shall have the meaning set forth in Section 5(d).

 

“Interest
Payment Date” shall have the meaning set forth in Section 2(a).

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Note divided by the
Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an
Event of Default), (B) otherwise due, or (C) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the
date the Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full, whichever is highest, or (ii) 115% of
the outstanding principal amount of this Note plus (b) all other amounts, costs, expenses and liquidated damages due in respect
of this Note.

 

“New
York Courts” shall have the meaning set forth in Section 8(d).

 

“Note
Register” shall have the meaning set forth in Section 3(c).

 

“Notice
of Conversion” shall have the meaning set forth in Section 4(a).

 

“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.

 

“Other
Holder” means a holder of one or more Other Notes (collectively, “Other Holders”).

 

“Other
Notes” means Notes nearly identical to this Note issued to other Holders pursuant to the Purchase Agreement.

 

“Permitted
Indebtedness” means (a) any liabilities or indebtedness existing as of the date hereof, (b) any liabilities for borrowed
money or amounts owed not in excess of $150,000 in the aggregate (other than trade accounts payable and insurance premium financing
incurred in the ordinary course of business which shall be deemed Permitted Indebtedness) incurred after the date hereof, (c)
all guaranties, endorsements and other contingent obligations in respect of indebtedness of others described on Schedule 1.1 to
the Purchase Agreement incurred after the date hereof, whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto) not affecting more than $150,000 in the aggregate, except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (d) the present
value of any lease payments not in excess of $150,000 due under leases required to be capitalized in accordance with GAAP and
incurred after the date hereof; and (e) any liabilities for borrowed money that are junior to this Note pursuant to an intercreditor
agreement acceptable to Holder and the holders of which are not granted any security interest.

 

    3

     

    

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of Borrower) have
been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of Borrower’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of Borrower’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of Borrower and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
and (c) Liens in connection with Permitted Indebtedness under clauses (a) and (b) thereunder, and Liens incurred in connection
with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of Borrower or its
Subsidiaries other than the assets so acquired or leased.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of August 16, 2017 among Borrower and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Share
Delivery Date” shall have the meaning set forth in Section Section 4(c)(ii).

 

“Successor
Entity” shall have the meaning set forth in Section 5(d).

 

“Trading
Day” means a day on which the principal Trading Market is open for trading, and if the Borrower has no Trading Market,
shall mean a Business Day.

 

“Trading
Market” means any of the following markets or exchanges on which the Ordinary Shares are listed or quoted for trading
on the date in question: the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the
New York Stock Exchange, the OTC Bulletin Board, the OTCQB, or the OTCQX (or any successors to any of the foregoing).

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary Shares are then
listed or quoted on a Trading Market, the daily volume weighted average price of the Ordinary Shares for such date (or the nearest
preceding date) on the Trading Market on which the Ordinary Shares are then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if any of the NASDAQ markets or exchanges
is not a Trading Market, the volume weighted average price of the Ordinary Shares for such date (or the nearest preceding date)
on the OTC Bulletin Board, (c) if the Ordinary Shares are not then listed or quoted for trading on the OTC Bulletin Board and
if prices for the Ordinary Shares are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets
Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average
price of the Ordinary Shares on the first such facility (or a similar organization or agency succeeding to its functions of reporting
prices), or (d) in all other cases, the fair market value of an Ordinary Share as determined by an independent appraiser selected
in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to Borrower,
the fees and expenses of which shall be paid by Borrower.

 

    4

     

    

 

Section
2.      Interest.

 

(a)       Interest
in Cash or in Kind. Holders shall be entitled to receive, and Borrower shall pay, interest on the outstanding principal amount
of this Note compounded annually at the annual rate of six percent (6%) (as subject to increase as set forth in this Note) from
the Original Issue Date through the Maturity Date. Interest shall be payable on the six month anniversary of the Original Issue
Date, each three month anniversary thereafter and on the Maturity Date, when all amounts outstanding in connection with this Note
shall be due and payable (each an “Interest Payment Date”) (if any Interest Payment Date is not a Trading Day,
the applicable payment shall be due on the next succeeding Trading Day) in cash or at the election of the Borrower, such interest
may be paid in duly authorized, validly issued, fully paid and non-assessable Ordinary Shares, or a combination thereof (the amount
to be paid in Ordinary Shares, the “Interest Share Amount”). The Interest Share Amount will be determined by
dividing the amount of interest on the subject Interest Payment Date by the then applicable Conversion Price. The Holders shall
have the same rights and remedies with respect to the delivery of any such shares as if such shares were being issued pursuant
to Section 4. Borrower may not pay interest by delivery of an Interest Share Amount without the consent of the Holder in the event
that the Equity Conditions are not in effect on each day from thirty (30) Trading Days prior to the relevant Interest Payment
Date through the date the Interest Share Amount is delivered to the Holder.

 

(b)       Payment
Grace Period. Except as set forth herein, the Borrower shall not have any grace period to pay any monetary amounts due under
this Note.

 

(c)       Conversion
Privileges. The Conversion Rights set forth in Section 4 shall remain in full force and effect immediately from the date hereof
and until the Note is paid in full regardless of the occurrence of an Event of Default. This Note shall be payable in full on
the Maturity Date, unless previously converted into Ordinary Shares in accordance with Section 4 hereof.

 

(d)       Application
of Payments. Interest on this Note shall be calculated on the basis of a 360-day year and the actual number of days elapsed.
Payments made in connection with this Note shall be applied first to amounts due hereunder other than principal and interest,
thereafter to interest and finally to principal.

 

(e)       Pari
Passu. Except as otherwise set forth herein, all payments made on this Note and the Other Notes and all actions taken by the
Borrower with respect to this Note and the Other Notes, including but not limited to Optional Redemption, shall be made and taken
pari passu with respect to this Note and the Other Notes. Notwithstanding anything to the contrary contained herein or in the
Transaction Documents, it shall not be considered non-pari passu for a Holder or Other Holder to elect to receive interest paid
in Ordinary Shares or for the Borrower to actually pay interest in Ordinary Shares to such electing Holder or Other Holder.

 

    5

     

    

 

(f)       Manner
and Place of Payment. Principal and interest on this Note and other payments in connection with this Note shall be payable
at the Holder’s offices as designated above in lawful money of the United States of America in immediately available funds
without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make
its payment pursuant to the assignee’s instructions upon receipt of written notice thereof. Except as set forth herein,
this Note may not be prepaid or mandatorily converted without the consent of the Holder.

 

Section
3.      Registration of Transfers and Exchanges.

 

(a)       Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

 

(b)       Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth
in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.

 

(c)       Reliance
on Note Register. Prior to due presentment for transfer to Borrower of this Note, Borrower and any agent of Borrower may treat
the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Note is overdue, and neither Borrower nor any such agent shall
be affected by notice to the contrary.

 

Section
4.      Conversion.

 

(a)       Voluntary
Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible,
in whole or in part, into Ordinary Shares at the option of the Holder, at any time and from time to time (subject to the conversion
limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to Borrower a Notice of Conversion,
the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal
amount of this Note to be converted at the election of the Holder and the date on which such conversion shall be effected (such
date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion
Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder
shall not be required to physically surrender this Note to Borrower unless the entire principal amount of this Note has been so
converted and all other amount payable in connection with this Note have been made. Conversions of principal hereunder shall have
the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder
and Borrower shall maintain records showing the principal amount(s) converted and the date of such conversion(s). Borrower may
deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the
event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest
error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less
than the amount stated on the face hereof.

 

(b)       Conversion
Price. The conversion price for the principal and subject to the terms hereof, interest in connection with voluntary conversions
by the Holder and permissible payments of such interest, shall be One Dollar (US$1.00), subject to adjustment as described herein
(“Conversion Price”).

 

    6

     

    

 

(c)       Mechanics
of Conversion.

 

(i)       Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by
(y) the Conversion Price.

 

(ii)       Delivery
of Certificate Upon Conversion. Not later than five (5) Trading Days after each Conversion Date (the “Share Delivery
Date”), Borrower shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the
Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective
Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase
Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. On or after the earlier
of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, Borrower shall use its commercially reasonable
efforts to deliver any certificate or certificates required to be delivered by Borrower under this Section 4(c) electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.

 

(iii)       Failure
to Deliver Certificates.. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered
to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice
to Borrower at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event
Borrower shall promptly return to the Holder any original Note delivered to Borrower and the Holder shall promptly return to Borrower
the Ordinary Shares certificates issued to such Holder pursuant to the rescinded Conversion Notice.

 

(iv)       Obligation
Absolute. Borrower’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance
with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same,
any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or
any other Person of any obligation to Borrower or any violation or alleged violation of law by the Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such obligation of Borrower to the Holder in connection
with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by Borrower of
any such action Borrower may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of
the outstanding principal amount hereof, Borrower may not refuse conversion based on any claim that the Holder or anyone associated
or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction
from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought
and obtained, and Borrower posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal
amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation
of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence
of such injunction, Borrower shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If Borrower
fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery
Date, Borrower shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount
being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated
damages being to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds
such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant
to Section 7 hereof for Borrower’s failure to deliver Conversion Shares within the period specified herein and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.

 

    7

     

    

 

(v)       Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if Borrower fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder or Holder’s brokerage firm otherwise purchases, Ordinary Shares to deliver
in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then Borrower shall (A) pay in cash to the Holder (in addition
to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Ordinary Shares so purchased exceeds (y) the product of (1) the aggregate
number of Ordinary Shares that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B)
at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of
the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of Ordinary
Shares that would have been issued if Borrower had timely complied with its delivery requirements under Section 4(c)(ii). For
example, if the Holder purchases Ordinary Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence,
Borrower shall be required to pay the Holder $1,000. The Holder shall provide Borrower written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of Borrower, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver certificates
representing Ordinary Shares upon conversion of this Note as required pursuant to the terms hereof.

 

(vi)       Reservation
of Shares Issuable Upon Conversion. Borrower covenants that it will at all times reserve and keep available out of its authorized
and unissued Ordinary Shares for the sole purpose of issuance upon conversion of this Note as herein provided, free from preemptive
rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not
less than such aggregate number of shares of the Ordinary Shares as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the
then outstanding principal amount of this Note and interest which has accrued and would accrue on such principal amount, assuming
such principal amount was not converted through three years after the Original Issue Date. Borrower covenants that all Ordinary
Shares that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

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(vii)       Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As
to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, Borrower shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.

 

(viii)       Transfer
Taxes and Expenses. The issuance of certificates for shares of the Ordinary Shares on conversion of this Note shall be made
without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or
delivery of such certificates, provided that, Borrower shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder
of this Note so converted and Borrower shall not be required to issue or deliver such certificates unless or until the Person
or Persons requesting the issuance thereof shall have paid to Borrower the amount of such tax or shall have established to the
satisfaction of Borrower that such tax has been paid. Borrower shall pay all Transfer Agent fees required for same-day processing
of any Notice of Conversion.

 

(d)       Holder’s
Conversion Limitations. Borrower shall not affect any conversion of this Note, and a Holder shall not have the right to convert
any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of
the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of Ordinary Shares beneficially owned by the Holder and its Affiliates shall include
the number of Ordinary Shares issuable upon conversion of this Note with respect to which such determination is being made, but
shall exclude the number of Ordinary Shares which are issuable upon (i) conversion of the remaining, unconverted principal amount
of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of Borrower subject to a limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the
limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other
securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be
in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination
of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which
principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance
with this restriction, the Holder will be deemed to represent to Borrower each time it delivers a Notice of Conversion that such
Notice of Conversion has not violated the restrictions set forth in this paragraph and Borrower shall have no obligation to verify
or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 4(d), in determining the number of outstanding Ordinary Shares, the Holder may rely on the number of outstanding
Ordinary Shares as stated in the most recent of the following: (i) Borrower’s most recent periodic or annual report filed
with the Commission, as the case may be, (ii) a more recent public announcement by Borrower, or (iii) a more recent written notice
by Borrower or Borrower’s transfer agent setting forth the number of Ordinary Shares outstanding. Upon the written or oral
request of a Holder, Borrower shall within two Trading Days confirm orally and in writing to the Holder the number of Ordinary
Shares then outstanding. In any case, the number of outstanding Ordinary Shares shall be determined after giving effect to the
conversion or exercise of securities of Borrower, including this Note, by the Holder or its Affiliates since the date as of which
such number of outstanding Ordinary Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99%
of the number of shares of the Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares
issuable upon conversion of this Note held by the Holder. The Holder may decrease the Beneficial Ownership Limitation at any time
and the Holder, upon not less than 61 days’ prior notice to Borrower, may increase the Beneficial Ownership Limitation provisions
of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the
Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares upon conversion of this Note held
by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any such increase
will not be effective until the 61st day after such notice is delivered to Borrower. The Beneficial Ownership Limitation provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section
4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this Note.

 

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(e)       Redemption
Restrictions. Borrower shall have no right to require the Holder to surrender the Note for redemption without the consent
of the Holder except as described in this Note.

 

(f)       Mandatory
Conversion. Subject to the limitation set forth in Section 4(d), if (i) all of the Equity Conditions are in effect, each day
during the Threshold Period, and (ii) the VWAP of the Ordinary Shares for any 10 consecutive Trading Days, which 10 consecutive
Trading Day period shall commence six months after the Original Issue Date (“Threshold Period”), equals or
exceeds 250% of the then in effect Conversion Price (subject to adjustment for reverse and forward stock splits and the like),
the Company may deliver a written notice to all Holders and Subsequent Purchasers (as defined in the Purchase Agreement) (a “Mandatory
Conversion Notice” and the date such notice is delivered to all Holders and Subsequent Purchasers, the “Mandatory
Conversion Notice Date”) to cause such Holders and Other Holders to convert (a “Mandatory Conversion”)
up to all or part of such Notes and debt instruments held by Subsequent Purchasers (as specified in such Mandatory Conversion
Notice). It is agreed that the “Conversion Date” for purposes of Section 4 in connection with a Mandatory Conversion
Notice shall be deemed to occur on the third (3rd) Trading Day following the Mandatory Conversion Notice Date (such
third Trading Day, the “Mandatory Conversion Date”). Borrower may not deliver a Mandatory Conversion Notice,
and any Mandatory Conversion Notice delivered by Borrower shall not be effective, unless all of the Equity Conditions have been
met on each Trading Day during the applicable Threshold Period and through and including the date that the Conversion Shares issuable
pursuant to such Mandatory Conversion Notice are actually delivered to the Holder pursuant to the Mandatory Conversion Notice.
Any Mandatory Conversion Notice shall be applied ratably to the Holder, all Other Holders and Subsequent Purchasers based on each
such Holder’s and Other Holders and Subsequent Purchasers initial Note and debt principal, provided that any voluntary conversions
by a Holder or other Holder during the Threshold Period through the Mandatory Conversion Date shall be applied against such Holder’s
pro rata allocation, thereby decreasing the aggregate amount mandatorily convertible hereunder. For purposes of clarification,
a Mandatory Conversion shall be subject to all of the provisions of Section 4, including, without limitation, the provisions requiring
payment of liquidated damages and limitations on conversions. The maximum amount of all Conversion Shares issuable in connection
with a Mandatory Conversion Notice for all Mandatory Conversion Notices deliverable to Holders, Other Holders and Subsequent Purchasers
may not exceed twenty five percent (25%) of the trading volume component of the VWAP for the applicable Threshold Period. A Mandatory
Conversion Notice may not be given sooner than ten (10) Trading Days after the preceding Mandatory Conversion Date. A Mandatory
Conversion will not be effective in excess of the Beneficial Ownership Limitation under Section 4(d).

 

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Section
5.      Certain Adjustments.

 

(a)       Stock
Dividends and Stock Splits. If Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in Ordinary Shares on Ordinary Shares or any Ordinary Shares Equivalents (which,
for avoidance of doubt, shall not include any Ordinary Shares issued by Borrower upon conversion of the Notes), (ii) subdivides
outstanding Ordinary Shares into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding
Ordinary Shares into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Ordinary Shares,
any shares of capital stock of Borrower, then the Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of Ordinary Shares (excluding any treasury shares of Borrower) outstanding immediately before such event, and of
which the denominator shall be the number of Ordinary Shares outstanding immediately after such event. Any adjustment made pursuant
to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination
or re-classification.

 

(b)       Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time Borrower grants, issues or
sells any Ordinary Shares Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Ordinary Shares (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of Ordinary Shares acquirable upon complete conversion of this Note (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record
holders of Ordinary Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial
ownership of such Ordinary Shares as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).

 

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(c)       
Pro Rata Distributions. During such time as this Note is outstanding, if Borrower shall declare or make any dividend whether
or not permitted, or makes any other distribution of its assets (or rights to acquire its assets) to holders of Ordinary Shares,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case,
the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein
if the Holder had held the number of Ordinary Shares acquirable upon complete exercise of this Note (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a
record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Ordinary Shares
are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s
right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the
Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any Ordinary
Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation.

 

(d)       Fundamental
Transaction. If, at any time while this Note is outstanding, (i) Borrower, directly or indirectly, in one or more related
transactions effects any merger or consolidation of Borrower with or into another Person, (ii) Borrower, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by Borrower or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Ordinary
Shares, (iv) Borrower, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares are effectively
converted into or exchanged for other securities, cash or property, (v) Borrower, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding Ordinary Shares (not including any Ordinary Shares held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination)
(each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have
the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence
of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note), the number
of Ordinary Shares of the successor or acquiring corporation or of Borrower, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder
of the number of Ordinary Shares for which this Note is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 4(d) on the conversion of this Note). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one (1) Ordinary Share in such Fundamental Transaction, and Borrower shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Ordinary Shares are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives
upon any conversion of this Note following such Fundamental Transaction. Borrower shall cause any successor entity in a Fundamental
Transaction in which Borrower is not the survivor (the “Successor Entity”) to assume in writing all of the
obligations of Borrower under this Note and the other Transaction Documents (as defined in the Purchase Agreement) in accordance
with the provisions of this Section 5(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, if the Successor Entity
is a public company or if the shareholders of the Borrower have the option to or will become equity holders of the Successor Entity,
at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number
of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Ordinary Shares acquirable and receivable
upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction,
and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account
the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock,
such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this
Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right
and power of Borrower and shall assume all of the obligations of Borrower under this Note and the other Transaction Documents
with the same effect as if such Successor Entity had been named as Borrower herein. The proposed transaction with Digiflex as
described in the SEC Reports as updated by the Disclosure Schedules to the Agreement is not a Fundamental Transaction.

 

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(e)       Adjustment
Upon Issuance of Ordinary Shares. If and whenever on or after the date hereof, the Company (whether or not it is permitted
to do so) issues or sells, or in accordance with this Section 5 is deemed to have issued or sold, any Ordinary Shares (including
the issuance or sale of Ordinary Shares owned or held by or for the account of the Company, but excluding any Exempt Issuance
issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”)
less than a price equal to the Conversion Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Conversion Price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to the
New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Price
and consideration per share under this Section 5(e)), the following shall be applicable:

 

(i)       Issuance
of Options. If the Company in any manner grants or sells any options (other than options that qualify as Exempt Issuances)
and the lowest price per share for which one Ordinary Share is issuable upon the exercise of any such option or upon conversion,
exercise or exchange of any Ordinary Shares Equivalents issuable upon exercise of any such option is less than the Applicable
Price, then such Ordinary Shares shall be deemed to be outstanding and to have been issued and sold by the Company at the time
of the granting or sale of such option for such price per share. For purposes of this Section 5(e)(i), the “lowest price
per share for which one Ordinary Share is issuable upon the exercise of any such options or upon conversion, exercise or exchange
of any Ordinary Shares Equivalents issuable upon exercise of any such option” shall be equal to (1) the lower of (x) the
sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Ordinary Share
upon the granting or sale of such option, upon exercise of such option and upon conversion, exercise or exchange of any Ordinary
Shares Equivalent issuable upon exercise of such option and (y) the lowest exercise price set forth in such option for which one
Ordinary Share is issuable upon the exercise of any such options or upon conversion, exercise or exchange of any Ordinary Shares
Equivalents issuable upon exercise of any such option minus (2) the sum of all amounts paid or payable to the holder of such option
(or any other Person) upon the granting or sale of such option, upon exercise of such option and upon conversion, exercise or
exchange of any Ordinary Shares Equivalent issuable upon exercise of such option plus the value of any other consideration received
or receivable by, or benefit conferred on, the holder of such option (or any other Person). Except as contemplated below, no further
adjustment of the Conversion Price shall be made upon the actual issuance of such Ordinary Shares or of such Ordinary Shares Equivalents
upon the exercise of such options or upon the actual issuance of such Ordinary Shares upon conversion, exercise or exchange of
such Ordinary Shares Equivalents.

 

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(ii)       Issuance
of Ordinary Shares Equivalents. If the Company in any manner issues or sells any Ordinary Shares Equivalents (other than Ordinary
Shares Equivalents that qualify as Exempt Issuances) and the lowest price per share for which one Ordinary Share is issuable upon
the conversion, exercise or exchange thereof is less than the Applicable Price, then such Ordinary Shares shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Ordinary Shares Equivalents
for such price per share. For the purposes of this Section 5(e)(ii), the “lowest price per share for which one Ordinary
Share is issuable upon the conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the
lowest amounts of consideration (if any) received or receivable by the Company with respect to one Ordinary Share upon the issuance
or sale of the Ordinary Shares Equivalent and upon conversion, exercise or exchange of such Ordinary Shares Equivalent and (y)
the lowest conversion price set forth in such Ordinary Shares Equivalent for which one Ordinary Share is issuable upon conversion,
exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Ordinary Shares Equivalent
(or any other Person) upon the issuance or sale of such Ordinary Shares Equivalent plus the value of any other consideration received
or receivable by, or benefit conferred on, the holder of such Ordinary Shares Equivalent (or any other Person). Except as contemplated
below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such Ordinary Shares upon conversion,
exercise or exchange of such Ordinary Shares Equivalents, and if any such issue or sale of such Ordinary Shares Equivalents is
made upon exercise of any Options for which adjustment of this Note has been or is to be made pursuant to other provisions of
this Section 5(e), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such
issue or sale.

 

(iii)       Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Ordinary Shares Equivalents, or the rate at which any
Ordinary Shares Equivalents are convertible into or exercisable or exchangeable for Ordinary Shares increases or decreases at
any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which
would have been in effect at such time had such options or Ordinary Shares Equivalents provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially
granted, issued or sold. For purposes of this Section 5(e)(iii), if the terms of any option or Ordinary Shares Equivalent that
was outstanding as of the date of issuance of this Note are increased or decreased in the manner described in the immediately
preceding sentence, then such option or Ordinary Shares Equivalent and the Ordinary Shares deemed issuable upon exercise, conversion
or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to
this Section 5(e) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

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(iv)       Calculation
of Consideration Received. If any option and/or Ordinary Shares Equivalent and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the
“Primary Security”, and such option and/or Ordinary Shares Equivalent and/or Adjustment Right, the “Secondary
Securities”), together comprising one integrated transaction, the consideration per Ordinary Shares with respect to
such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one Ordinary Share
was issued in such integrated transaction (or was deemed to be issued pursuant to Section 5(e)(i) or Section 5(e)(ii) above, as
applicable) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I)
the Black Scholes Consideration Value of each such option, if any, (II) the fair market value (as determined by the Holder) or
the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined
by the Holder) of such Ordinary Shares Equivalent, if any, in each case, as determined on a per share basis in accordance with
this Section 5(e)(iv). If any Ordinary Shares, options or Ordinary Shares Equivalents are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Ordinary
Shares, option or Ordinary Shares Equivalent, but not for the purpose of the calculation of the Black Scholes Consideration Value)
will be deemed to be the net amount of consideration received by the Company therefor. If any Ordinary Shares, options or Ordinary
Shares Equivalents are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid
for such Ordinary Shares, option or Ordinary Shares Equivalent, but not for the purpose of the calculation of the Black Scholes
Consideration Value), the amount of such consideration received by the Company will be the fair value of such consideration, except
where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately
preceding the date of receipt. If any Ordinary Shares, Options or Ordinary Shares Equivalents are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the surviving entity (for the purpose of determining
the consideration paid for such Ordinary Shares, option or Ordinary Shares Equivalent, but not for the purpose of the calculation
of the Black Scholes Consideration Value), the amount of consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such Ordinary Shares, options or Ordinary Shares
Equivalents, as the case may be. The fair value of any consideration other than cash or publicly traded securities (for the purpose
of determining the consideration paid for such Ordinary Shares, option or Ordinary Shares Equivalent, but not for the purpose
of the calculation of the Black Scholes Consideration Value) will be determined jointly by the Company and the Holder. If such
parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th)
day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The
determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of
such appraiser shall be borne by the Company.

 

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(f)       Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of Ordinary Shares deemed to be issued and outstanding as of a given date shall be
the sum of the number of Ordinary Shares (excluding any treasury shares of Borrower) issued and outstanding.

 

(g)       Notice
to the Holder.

 

(i)       Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, Borrower shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.

 

(ii)       Notice
to Allow Conversion by Holder. If (A) Borrower shall declare a dividend (or any other distribution in whatever form) on the
Ordinary Shares, (B) Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Ordinary Shares, (C)
Borrower shall authorize the granting to all holders of the Ordinary Shares of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of Borrower shall be required
in connection with any reclassification of the Ordinary Shares, any consolidation or merger to which Borrower is a party, any
sale or transfer of all or substantially all of the assets of Borrower, or any compulsory share exchange whereby the Ordinary
Shares are converted into other securities, cash or property or (E) Borrower shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of Borrower, then, in each case, Borrower shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it
shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Ordinary Shares of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it
is expected that holders of the Ordinary Shares of record shall be entitled to exchange their shares of the Ordinary Shares for
securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity
of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes,
or contains, material, non-public information regarding Borrower or any of the Subsidiaries, Borrower shall simultaneously file
such notice with the Commission pursuant to a Current Report on Form 6-K. The Holder shall remain entitled to convert this Note
during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.

 

    16

     

    

 

Section 6.     Negative
Covenants. As long as at least twenty percent (20%) of the principal amount of this Note remains outstanding, unless the holders
of a Majority in Interest shall have otherwise given prior written consent, Borrower shall not, and shall not permit any of the
Subsidiaries to, directly or indirectly:

 

(a)       other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom;

 

(b)       other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

(c)       amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;

 

(d)       repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Ordinary Shares or
Ordinary Shares Equivalents other than as to the Conversion Shares or Warrant Shares as permitted or required under the Transaction
Documents;

 

(e)       redeem,
defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness
(other than the Notes if on a pro-rata basis), except for Indebtedness identified on Schedule 3.1(z) to the Purchase Agreement
as permitted to be paid but not before the maturity date (without acceleration thereof) nor latest permissible payment date thereof,
whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness, the foregoing restriction
shall also apply to Permitted Indebtedness from and after the occurrence of an Event of Default;

 

(f)       declare
or make any dividend or other distribution of its assets or rights to acquire its assets to holders of Ordinary Shares, preferred
stock, or any other equity security by way of return of capital or otherwise including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction;

 

(g)       enter
into any transaction with any Affiliate of Borrower which would be required to be disclosed in any public filing with the Commission,
buy a company subject to the reporting obligations of Section 13 or 15(d) of the Exchange Act, unless such transaction is made
on an arm’s-length basis and expressly approved by a majority of the disinterested directors of Borrower (even if less than
a quorum otherwise required for board approval); or

 

(h)       enter
into any agreement with respect to any of the foregoing.

 

    17

     

    

 

Section
7.      Events of Default.

 

(a)       “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body):

 

(i)       any
default in the payment of (A) the principal or interest amount of this Note or (B) liquidated damages and other amounts owing
to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date
or by acceleration or otherwise) which default, solely in the case of a default under clause (B) above, is not cured within 10
Trading Days after Borrower has become or should have become aware of such default;

 

(ii)      Borrower
shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by Borrower of its
obligations to deliver Ordinary Shares to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure
is not cured, if possible to cure, within the earlier to occur of (A) 10 Trading Days after written notice of such failure sent
by the Holder or by any Other Holder to Borrower and (B) twenty (20) Trading Days after Borrower has become or should have become
aware of such failure;

 

(iii)     a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents, including but not limited to failure to strictly comply with the provisions
of the Transaction Documents, or (B) any other material agreement, lease, document or instrument to which Borrower or any Subsidiary
is obligated (and not covered by clause (vi) below), which, in the case of subsection (B), would reasonably be expected to have
a Material Adverse Effect;

 

(iv)     any
representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder or any Other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;

 

(v)     Borrower
or any Subsidiary shall be subject to a Bankruptcy Event;

 

(vi)     Borrower
or any Subsidiary shall materially default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

(vii)    Borrower
shall be a party to any Change of Control Transaction or Fundamental Transaction;

 

(viii)   Borrower
does not meet the current public information requirements under Rule 144 for ten (10) or more consecutive Trading Days or twenty
(20) Trading days in the aggregate ;

 

    18

     

    

 

(ix)     Borrower
shall fail for any reason to deliver certificates to a Holder prior to the fifth (5th) Trading Day after a Share Delivery Date
pursuant to Section 4(c) or Borrower shall provide at any time notice to the Holder, including by way of public announcement,
of Borrower’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;

 

(x)      any monetary judgment, writ or similar final process shall be entered or filed against Borrower, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 90 calendar days;

 

(xi)     any
dissolution, liquidation or winding up by Borrower or a material Subsidiary of a substantial portion of their business;

 

(xii)    cessation
of operations by Borrower or a material Subsidiary;

 

(xiii)   an
event resulting in the Ordinary Shares no longer being listed or quoted on a Trading Market, or notification from a Trading Market
that the Borrower is not in compliance with the conditions for such continued quotation and such non-compliance continues for
twenty (20) days following such notification;

 

(xiv)   a
Commission or judicial stop trade order or suspension from the Borrower’s Principal Trading Market;

 

(xv)    the
Borrower effectuates a reverse split of its Ordinary Shares without ten (10) days prior written notice to the Holder;

 

(xvi)   a
failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms
of this Note or any other Transaction Document;

 

(xvii)   a default by the Borrower of a material term, covenant, warranty or undertaking of any other agreement to which the Borrower and
Holder are parties, or the occurrence of an event of default under any such other agreement to which Borrower and Holder are parties
which is not cured after any required notice and/or cure period or waived;

 

(xviii)  the
occurrence of an Event of Default under any Other Note or under debt instruments issued to Subsequent Purchasers;

 

(xix)    any material provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms
thereof) cease to be valid and binding on or enforceable against the Borrower, or the validity or enforceability thereof shall
be contested by Borrower, or a proceeding shall be commenced by Borrower or any governmental authority having jurisdiction over
Borrower or Holder, seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny in writing that it
has any liability or obligation purported to be created under any Transaction Document;

 

(xx)     the
failure by Borrower or any material Subsidiary to maintain any material intellectual property rights, personal, real property,
equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and such breach is
not cured with twenty (20) days after the first day of such occurrence; or

 

    19

     

    

 

(xxi)    the
restatement after the date hereof of any financial statements filed by the Borrower with the Commission for any date or period
from and after the Original Issue Date and until this Note is no longer outstanding, if the result of such restatement would,
by comparison to the unrestated financial statements, have constituted a Material Adverse Effect. For the avoidance of doubt,
any restatement related to new accounting pronouncements shall not constitute a default under this Section.

 

In
the event more than one grace, cure or notice period is applicable to an Event of Default, then the shortest grace, cure or notice
period shall be applicable thereto.

 

(b)       Remedies
Upon Event of Default, Fundamental Transaction and Change of Control Transaction. If any Event of Default or a Fundamental
Transaction or a Change of Control Transaction occurs, the outstanding principal amount of this Note, liquidated damages and other
amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due
and payable in cash at the Mandatory Default Amount. Commencing on the Maturity Date and also five (5) days after the occurrence
of any Event of Default interest on this Note shall accrue at an interest rate equal to the lesser of 15% per annum or the maximum
rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender
this Note to or as directed by Borrower. In connection with such acceleration described herein, the Holder need not provide, and
Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the
Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to
this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent
thereon.

 

Section
8.      Miscellaneous.

 

(a)       Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to Borrower, to: P.V. Nano Cell Ltd., Inc., c/o Corporation Service
Company 1180 Avenue of the Americas, Suite 210, New York, NY 10036, with an additional copy by fax only to (which shall not
constitute notice): Greenberg Traurig, P.A., 333 S.E. 2nd Avenue, Miami, FL 33131, Attn: Robert L. Grossman, Esq.,
facsimile: 305-961-5756, and (ii) if to the Holder, to: the address and fax number indicated on the front page of this Note, with
an additional copy by fax only to (which shall not constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley
Stream, New York 11581, facsimile: (212) 697-3575. For so long as any notice may or be required to be given to the Company
pursuant to this Note, Borrower will maintain an address for notice purposes in New York, New York or Miami, Florida.

 

    20

     

    

 

(b)       Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of Borrower.
This Note ranks pari passu with all Other Notes now or hereafter issued under the terms set forth herein.

 

(c)       Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to Borrower.

 

(d)       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this
Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees
and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding. This
Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without limitation to any other remedies
of Holder, may be enforced against Borrower by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213
or any similar rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other
document or agreement to which Holder and Borrower are parties or which Borrower delivered to Holder, which may be convenient
or necessary to determine Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part of this
Note, whether or not such other document or agreement was delivered together herewith or was executed apart from this Note.

 

    21

     

    

 

(e)       Waiver.
Any waiver by Borrower or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of this Note. The failure of Borrower or the Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion.
Any waiver by Borrower or the Holder must be in writing.

 

(f)       Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

 

(g)       Usury.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and
Borrower (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder,
but will suffer and permit the execution of every such as though no such law has been enacted.

 

(h)       Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.

 

(i)       Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit
or affect any of the provisions hereof.

 

(j)       Amendment.
Unless otherwise provided for in the Purchase Agreement or hereunder, this Note may not be modified or amended or the provisions
hereof waived without the written consent of Borrower and the Holder.

 

(k)       Facsimile
Signature. In the event that the Borrower’s signature is delivered by facsimile transmission, PDF, electronic signature
or other similar electronic means, such signature shall create a valid and binding obligation of the Borrower with the same force
and effect as if such signature page were an original thereof.

 

(l)       Currency.
All monetary amounts referred to in this Note are in United States currency.

 

*********************

 

(Signature
Pages Follow)

 

    22

     

    

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by an authorized officer as of the 16th day of August, 2017. 

 

	 	P.V.
    NANO CELL LTD.
	 	 
	 	By:	/s/
    Fernando de la Vega
	 	 	Name:
    	 
	 	 	Title:
    	                           

  

    23

     

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Convertible Note due October 16, 2018 of P.V. Nano Cell Ltd., a company
formed under the laws of the State of Israel (the “Company”), into Ordinary Shares (the “Ordinary
Shares”), of Borrower according to the conditions hereof, as of the date written below. If Ordinary Shares are to be
issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto
and is delivering herewith such certificates and opinions as reasonably requested by Borrower in accordance therewith. No fee
will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By
the delivery of this Notice of Conversion the undersigned represents and warrants to Borrower that its ownership of the Ordinary
Shares does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the
Exchange Act.

 

The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with
any transfer of the aforesaid Ordinary Shares.

 

	Conversion
    calculations:	 
	 	 
	 	Date
    to Effect Conversion: ______________________________________________
	 	 
	 	Principal
Amount of Note to be Converted: __________________________________
	 	 
	 	Interest
to be Converted: _______________________________________________
	 	 
	 	Number
of Ordinary Shares to be issued: ___________________________________
	 	 
	 	Signature: __________________________________________________________
	 	 
	 	Name: _____________________________________________________________
	 	 
	 	Address
                                                         for Delivery of Ordinary Shares Certificates: __________________________

                                                         ___________________________________________________________________

                                                         

                                                         ___________________________________________________________________

	 	 
	 	Or
	 	 
	 	DWAC
Instructions:___________________________________________________
	 	 
	 	Broker
No: __________________________________________________________
	 	Account
No: ________________________________________________________

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