Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of November 17, 2016, between Immune Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, including its
successors and assigns, the “Purchasers” and each a “Purchaser”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(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 the Purchasers,
and the Purchasers desires to purchase from the Company, $1,000,000 of 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 the Purchaser agree as follows:

 

ARTICLE I.

DEFINITIONS

 

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 Saturday, 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 authorized or required by law or other governmental action to close.

 

“Closing
Statement” means the Closing Statement in the form Annex A attached hereto.

 

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

 

“Common
Stock” means the common stock of the Company, par value $.0001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed into.

 

     

     

    

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive Common Stock.

 

“Company”
means Immune Pharmaceuticals Inc.

 

“Company
Counsel” means Sheppard Mullin Richter & Hampton, LLP.

 

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

 

“Notes”
means the Convertible Notes due, subject to the terms therein, twelve months from their respective dates of issuance, issued by
the Company to the Purchaser hereunder, in the form of Exhibit A attached hereto.

 

“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.

 

“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) shares of Common Stock or options to employees, officers, directors or consultants
of the Company pursuant to any stock or option plan or agreement duly adopted for such purpose by the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose up to the amounts on the terms set forth on
Schedule 3.1(g) consistent with past practices, (b) securities upon the exercise, exchange or conversion of any Notes issued
hereunder and/or other securities, options, warrants, convertible securities or other rights to acquire, exercisable or exchangeable
for or convertible into, shares of Common Stock, in each case that are issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities and which securities and the principal terms thereof are set forth
on Schedule 3.1(g) or described in the SEC Reports, (c) securities issued pursuant to acquisitions of companies, assets
or intellectual property (or licensing of assets or intellectual property) or strategic transactions approved by a majority of
the disinterested directors of the Company, if any, provided that any such issuance shall only be to a Person which is, itself
or through its subsidiaries, an operating company, a university or other non-financial institution and in which the Company receives
benefits in addition to the investment of funds but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) securities
issued or issuable in exchange for consideration other than cash in connection with any other transaction that is not for the primary
purpose of financing the Company’s business, but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (e) securities
issued or issuable upon an at-the-market agreement or similar arrangement pursuant to the Company’s S-3 Registration Statement
filed with the SEC on October 28, 2014 (SEC File No.333-198647), or (f) securities issued or issuable to the Purchasers or their
assigns pursuant to this Agreement, the Notes or other Transaction Documents, including without limited to Section 4.18 and Section
4.20 herein, or upon conversion or exchange of any such securities.

 

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“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.

 

“Hercules”
means Hercules Capital, Inc.

 

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

 

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

 

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

 

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

 

“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.

 

“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.

 

“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.

 

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

 

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

 

“Registration
Rights Agreement” means the registration rights agreement, substantially in the form attached in Exhibit B.

 

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“Required
Minimum” means, as of any date, 200% of the maximum aggregate number of Underlying Shares issuable upon conversion in
full of the Notes (including Underlying Shares issuable as payment of interest on the Notes), ignoring any conversion or exercise
limits set forth therein, provided however, that if an Institutional Raise, as such term is defined in the Note, does not occur
within 180 days of the Closing Date, the Required Minimum shall be adjusted every 30 days based on the VWAP at the end of each
applicable 30 day period.

 

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

 

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

 

“Securities”
means the Notes and the Underlying Shares.

 

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

 

“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 

“SM”
means Sheppard Mullin Richter & Hampton LLP, 30 Rockefeller Plaza, New York, New York 10112.

 

“Subordination
Agreement” means the means the subordination agreement between the Purchaser and Hercules, substantially in the form
attached in Exhibit C.

 

“Subscription
Amount” means the aggregate amount to be paid for the Notes purchased hereunder as specified below the 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.

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.

 

“Trading
Day” means a day on which the principal Trading Market is open for trading.

 

“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE MKT, LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange, the OTC Bulletin Board or the OTC QB maintained by the OTC Markets Group, Inc.

 

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“Transaction
Documents” means this Agreement, the Notes, the Registration Rights Agreement, Subordination Agreement, 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, the current transfer agent of the Company with a mailing address of 18 Lafayette Place,
Woodmere, NY 11598 and a telephone number of (212) 828-8436 and any successor transfer agent of the Company.

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Notes and issued and
issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is 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 the Common Stock is not then listed or quoted for
trading on a Trading Market and if prices for the Common Stock are then reported on the OTC Pink (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or
(c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.

 

ARTICLE II

 

PURCHASE AND SALE

 

2.1           Closing.
The purchase and sale of the Notes by the Company to the Purchaser shall occur at one closing of the Offering (a “Closing”
and the date of such Closing, the “Closing Date”) to occur on November 17, 2016. Purchasers signing a counterpart
signature page to this Agreement as of a Closing Date shall become parties to this Agreement only as of such Closing Date. On each
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 Purchaser agrees to purchase, a principal amount of
the Notes equal to its Subscription Amount plus an original issue discount of 5%. The Purchaser shall deliver to the Company, via
wire transfer within three (3) business days of the Closing Date, immediately available funds equal to its Subscription Amount
together with the surrender of a promissory note in the principal amount of $306,000 which shall represent a portion of the aggregate
Subscription Amount of $1,000,000, and the Company shall deliver to the Purchaser its Notes, as determined pursuant to Section
2.2(a), and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the conditions set forth in Sections 2.2 and 2.3, the initial Closing shall occur at the offices of SM or such
other location as the parties shall mutually agree.

 

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2.2          Deliveries.

 

(a)          On
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)         the
Registration Rights Agreement, duly executed by the Company;

 

(iii)        
the Subordination Agreement duly executed by each Purchaser, the Company and Hercules;

 

(iv)        a
Note with a principal amount of $1,050,000, registered in the name of the Purchaser; And

 

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

 

(i)          a
counterpart of this Agreement duly executed by the Purchaser;

 

(ii)         the
Registration Rights Agreement duly executed by the Purchaser;

 

(iii)        such
Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company (see Annex A); and

 

(iv)        the
Subordination Agreement duly executed by the Purchaser, the Company and Hercules.

 

2.3          Closing
Conditions.

 

(a)          The
obligations of the Company hereunder in connection with each Closing 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 such Closing Date of the representations and warranties of the Purchaser contained herein;

 

(ii)         all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to such 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
obligations of the Purchaser hereunder in connection with each Closing are subject to the following conditions being met, unless
waived in the sole and absolute discretion of the Purchaser:

 

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		(i)	the accuracy in all respects (determined without regard
to any materiality, Material Adverse Effect or other similar qualifiers therein) when made and on such Closing Date of the representations
and warranties of the Company contained herein;

 

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

 

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

 

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

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or otherwise 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 as of each Closing, except where otherwise indicated:

 

(a)          Subsidiaries.
The Company has three Subsidiaries: Cytovia, Inc., Maxim Pharmaceuticals Inc. and Immune Pharmaceuticals USA Corp.. The Company
owns, directly or indirectly, the capital stock or other equity interests of each Subsidiary, in the amounts set forth on Schedule
3.1(a), 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. If
the Company shall at any time in which the Notes remain outstanding have no subsidiaries, all other references to the Subsidiaries
or any of them in the Transaction Documents shall be disregarded.

 

(b)          Organization
and Qualification. The Company and each of the Subsidiaries 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 certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries 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, could not have or 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, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any 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.

 

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(c)          Authorization;
Enforcement. Subject to the Stockholder Approval, the Company has the requisite corporate power and authority to enter into
and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the 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 therewith
other than in connection with the Required Approvals. Each 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.

 

(d)          No
Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by it of
the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s 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 or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary 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) subject to the Required
Approvals, 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 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 clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

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(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 federal, state, local 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, (ii) such consents, waivers, or authorizations as have been obtained before the initial
Closing, (iii) if required, the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the
Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, (iv) obtaining
Shareholder Approval (as defined in Section 4.16 herein) and (v) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)          Issuance
of the Securities. The issuance of the Notes has been duly authorized by all applicable corporate power and authority, 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 any and all Liens imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be validly
issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Company has reserved the Required Minimum from its duly authorized capital stock a number
of shares of Common Stock for issuance of the Underlying Shares.

 

(g)          Capitalization.
The capitalization of the Company immediately prior to the Closing is, in all material respects, as set forth in the SEC Reports.
Except as provided on Schedule 3.1(g), or the SEC Reports, no Person has (i) 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
for such, if any, as will have been validly waived before each Closing and (ii) except pursuant to the operation of agreements
filed as exhibits to the SEC Reports before the date of this Agreement and as set forth on Schedule 3.1(j), the issuance
and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other
than the Purchaser) 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 validly issued,
fully paid and nonassessable, have been issued in compliance with all applicable laws (including, without limitation, applicable
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 for obtaining Shareholder Approval, no further approval or authorization
of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. Except as filed as
exhibits to the SEC Reports, 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.

 

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(h)          SEC
Reports; Financial Statements. Except as set forth on Schedule 3.1(h) hereto, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under Section 15(d) of the Exchange Act 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, including the exhibits thereto and documents incorporated by reference therein, 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, except as set forth on Schedule 3.1(h). 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 generally accepted accounting principles
(“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.

 

(i)          Material
Changes. Except as provided in Schedule 3.1(i) hereto, since the date of the latest financial statements included in
the SEC Reports: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result
in a Material Adverse Effect, (ii) the Company has not incurred any 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, nor has the Board of Directors of
the Company authorized, 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
or common stock equivalents to any officer, director or Affiliate, except pursuant to existing Company equity incentive plans.
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 as may otherwise be disclosed herein or in any Schedule hereto, no event,
liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties,
operations 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 one Trading Day prior to the date
that this representation is made.

 

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(j)          Litigation.
Except as disclosed in the SEC Reports and as may otherwise be disclosed herein or in any Schedule hereto, 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 assets or 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 the availability of the Company to perform its obligations under the Transaction Documents or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director, officer or affiliate thereof, is or has been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of 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 material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company which could 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, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer, to the knowledge of the Company, 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. To the Company’s knowledge, 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 could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

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(l)          Compliance.
To the Company’s knowledge, neither the Company nor any Subsidiary: (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 material 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) and such default or violation
has not been cured, (ii) is in violation of any judgment, order of any court, arbitrator or governmental body or (iii) is or has
been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal,
state and local laws applicable to its business and all such laws that affect the environment, except in each of the foregoing
cases as may otherwise be disclosed herein or in any Schedule hereto or as could not have or reasonably be expected to result in
a Material Adverse Effect.

 

(m)          Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess
such permits could 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. The Company and the Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title in all personal property owned by it that, in each case, is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for 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 the Subsidiaries and Liens for the payment
of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties in any material respect.
Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(o)          Patents
and Trademarks. To the Company’s knowledge (without having conducted any independent investigation): (i) the Company
and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as
described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure
to so have could reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”);
(ii) neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property
Rights violates or infringes upon the rights of any Person; (iii) all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual Property Rights, except where the failure to be so enforceable
or for such infringements as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
and (iv) the Company and its Subsidiaries have taken all commercially appropriate security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

    	 	12	 

     

    

 

(p)          Transactions
with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and,
to the knowledge of the Company, none of the employees of the Company 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, 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 or partner, in each case in excess
of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the
Company

 

(q)          Environmental
Laws. The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval.

 

(r)          Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in the SEC Reports, the Company is in material compliance with all provisions
of the Sarbanes-Oxley Act of 2002 which are applicable to it as of each Closing Date. The Company and the Subsidiaries 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 has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company 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 Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s 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 Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.

 

    	 	13	 

     

    

 

(s)          Certain
Fees. Except as disclosed on Schedule 3.1(t), no brokerage, due diligence, finder’s fees or commissions are or
will be payable by the Company 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 Purchaser shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

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

 

(u)          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 subject to the Investment Company Act of
1940, as amended.

 

(v)         Registration
Rights. Except as disclosed in the SEC Reports and on Schedule 3.1(v) hereto, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the Company.

 

(w)          Listing
and Maintenance Requirements. Except as set forth on Schedule 3.1(w) hereto, (i) the Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration, (ii) the Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which the Common Stock is 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 and (iii) the Company
is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements.

 

    	 	14	 

     

    

 

(x)          Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser 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 Purchaser’s ownership of the Securities.

 

(y)          Disclosure.
Except with respect to (i) the material terms and conditions of the transactions contemplated by the Transaction Documents and
(ii) information given to the Investor, if any, which the Company hereby confirms does not constitute material non-public information,
the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or their agents or counsel
with any information that it believes constitutes or might constitute material, nonpublic information. The Company understands
and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company.
All disclosure furnished in writing by or on behalf of the Company to the Purchaser regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this Agreement, 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 do not 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 the Purchaser has not made any
representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section
3.2 hereof.

 

(z)          No
Integrated Offering. Assuming the accuracy of the Purchaser’s 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 this offering
of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act which would require the
registration of any such securities under the Securities Act. 

 

(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 each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary. There are no audits pending by any tax or other governmental
authority relating to the payment of taxes by the Company or any subsidiary other than the tax notices received from the Israeli
Tax Authority relating to the 2010 to 2014 tax years which have been disclosed in the Company’s SEC Reports.

 

    	 	15	 

     

    

 

(bb)         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 Purchaser
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(cc)         Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of
the Company, 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 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 the Foreign Corrupt Practices Act of 1977, as amended.

 

(dd)         No
Disagreements with Accountants and Lawyers; Outstanding SEC Comments. There are no disagreements of any kind presently existing,
or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is or immediately after each Closing Date will be current with respect to any fees owed to its accountants
which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. There
are no unresolved comments or inquiries received by the Company or its Affiliates from the Commission which remain unresolved as
of the date hereof.

 

(ee)         Acknowledgment
Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser 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 the 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 Purchaser’s purchase of the Securities. The Company further represents to
the 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.

 

(ff)         Disqualification.
No executive officer, member of the Board of Directors of the Company or shareholder of the Company beneficially owning more than
10% of the Company’s securities is currently subject to a Disqualifying Event. For purposes of this Agreement, “Disqualifying
Event” means any conviction, order, judgment, decree, suspension, expulsion, event or other matter set out in Rule 506(d)(1)(i)
through (viii) of Regulation D that is currently in effect or which occurred within the periods set out in Rule 506(d)(1)(i) through
(viii).

 

    	 	16	 

     

    

 

(gg)         Solvency.
Based on the consolidated financial condition of the Company and Subsidiaries as of each 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. The SEC Reports discloses, 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 $100,000 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 $100,000 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.

 

(hh)         Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere
herein to the contrary notwithstanding, 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 Common Stock 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.

 

    	 	17	 

     

    

 

(ii)          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.

 

(jj)          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.

 

(kk)        Stock
Option Plans. Each stock option and similar security granted by the Company was granted (i) in accordance with the terms of
such any applicable stock option plans and (ii) with an exercise price at least equal to the fair market value of the Common Stock
on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under any 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.

 

(ll)          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”).

 

(mm)      Indebtedness
and Seniority. As of the date hereof, all Indebtedness and Liens of the Company and the principal terms thereof are set forth
in the SEC Reports. Except as set forth on Schedule 3.1(mm), as of the Closing Date, no Indebtedness or other equity of
the Company is or will be pari passu or 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).

 

    	 	18	 

     

    

 

(nn)         FDA.
The Company has no applications pending before the jurisdiction of the U.S. Food and Drug Administration (“FDA”).

 

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

 

3.2          Representations
and Warranties of the Purchaser. Each Purchaser, as to itself only, hereby represents and warrants as of the date hereof and
as of each Closing Date to the Company as follows:

 

(a)          Organization;
Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with full right, corporate or partnership 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 the Purchaser of the transactions contemplated by the Transaction Documents
have been duly authorized by all necessary corporate or similar action on the part of the Purchaser. Each Transaction Document
to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the 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)          Own
Account. The 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 present 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 (this representation and warranty not limiting the Purchaser’s
right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state securities law. The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

(c)          Purchaser
Status. At the time the Purchaser was offered the Notes, it was, and as of the date hereof it is, and on each date on which
it 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. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

    	 	19	 

     

    

 

(d)          Experience
of the Purchaser. The 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. The 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.

 

(e)          General
Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.

 

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 in connection with a pledge as contemplated
in Section 4.1(b) or a transfer to an Affiliate of the Purchaser, 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 the Registration Rights Agreement, including the representations
and warranties made by the Purchaser herein, and shall have the rights of a Purchaser under this Agreement.

 

(b)          The
Purchaser agrees to the imprinting by the Company, 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 [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 [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.

 

    	 	20	 

     

    

 

The Company
acknowledges and agrees that the Purchaser may from time to time 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 in writing with the Company to be bound by the provisions of this Agreement and, if required under the terms of such arrangement
and subject to compliance with applicable federal and state securities laws, the Purchaser may transfer secured Securities to the
secured parties. Absent special circumstances, such a transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the secured party shall be required in connection therewith. At the Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a secured party of Securities may reasonably request in connection with
a pledge or transfer of the Securities.

 

(c)          The
Company agrees that certificates evidencing the Underlying Shares (or, if Underlying Shares are issued in uncertificated form,
comparable share notices) shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration
statement covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying
Shares pursuant to Rule 144, or (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 otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff of the Commission), as reasonably determined by
the Company. Upon the Purchaser’s request in connection with a proposed sale of Underlying Shares pursuant to Rule 144 and
if the Company reasonably determines it is so required, upon receipt of customary documentation from Purchaser’s broker (if
the Underlying Shares are sold in brokers transactions), the Company shall, at its own cost and effort, retain legal counsel to
provide an opinion letter to the Company’s transfer agent opining that the Underlying Shares may be resold without registration
under the Securities Act, pursuant to Rule 144, promulgated thereunder, so long as the requirements of Rule 144 are met for any
Underlying Shares to be resold thereunder. The Company shall arrange for any such opinion letter to be provided not later than
two (2) business days after the date of delivery to and receipt by the Company of a written request by the Purchaser together with
(if required in order to render the opinion) any broker’s representation letter of other customary documentation reasonably
requested by the Company evidencing compliance with Rule 144 (the “Legend Removal Date”).

 

    	 	21	 

     

    

 

(d)          The
Purchaser agrees that the Purchaser will sell any Securities only pursuant to either an exemption from registration or a registration
statement under the Securities Act, including any applicable prospectus delivery requirements, 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.

 

(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(c) 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 Common Stock 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 after the Legend Removal Date (increasing to $20 per Trading Day after the third 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
Common Stock 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 Common Stock
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.

 

    	 	22	 

     

    

 

(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) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock 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 shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock 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 shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of Underlying 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 shares
of Common Stock, 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 the 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.

 

(a)          Until
the earlier to occur of the time that (i) the Purchaser owns no Securities, or (ii) 24 months from the date hereof, the Company
covenants that it will maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to use
all commercially reasonable efforts 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. As long as the Purchaser
owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell
the Securities under Rule 144. The Company further covenants that it will use all commercially reasonable efforts to take such
further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person
to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule
144.

 

    	 	23	 

     

    

 

(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”) 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 impairment of its ability to sell
the Securities, an amount in cash equal to 2.0% of the aggregate principal amount of Notes and accrued interest thereon, 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.

 

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

 

    	 	24	 

     

    

 

4.6           Securities
Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately following the
date hereof, issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and including
the Transaction Documents as exhibits thereto. The Company and the Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any
such press release nor otherwise make any such public statement (other than in the Company’s SEC Reports after the initial
Closing Date or exhibits filed therewith) without the prior consent of the Company, with respect to any press release of the Purchaser,
or without the prior consent of the 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, other than in connection
with the Company’s SEC Reports or disclosures to any regulatory agency or Trading Market that the Company determines are
necessary or appropriate, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser,
in any press release or similar public statement, without the prior written consent of the Purchaser.

 

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 the
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 that the Purchaser could
be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents
or any other agreement between the Company and the Purchaser.

 

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 after each Closing Date neither it, nor any other Person acting on its behalf, will provide
the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company. Purchaser acknowledges that it is aware that the United States
securities laws prohibit any person who has material non-public information about a company from purchasing or selling securities
of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities, and Purchaser agrees not to engage in any unlawful trading in securities
of the Company or unlawful misuse or misappropriation of any such information. Purchaser agrees to maintain the confidentiality
of and not disclose or use (except for purposes relating to the transactions contemplated by this Agreement) any confidential,
proprietary or non-public information disclosed by the Company to Purchaser, unless such information becomes publicly known through
no breach of this Agreement by Purchaser.

 

    	 	25	 

     

    

 

4.9           Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes.
The net proceeds shall not be used for: (a) the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior practices) or (b) the settlement of any outstanding
litigation.

 

4.10         Indemnification
of Purchaser. Subject to the provisions of this Section 4.10, the Company will indemnify and hold the 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 the 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 person and their respective heirs, personal representatives,
successors and assigns (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
any action, suit, claim or proceeding brought by a third party against such Purchaser Party arising out 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 a Purchaser in any capacity, or any of them or their respective Affiliates,
by any stockholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or
covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder
or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud,
gross negligence, willful misconduct or malfeasance, as determined by a final judgment of a court of competent jurisdiction from
which no appeal may be taken). If any action shall be brought against the 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 such separate 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. 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 any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents, as determined by
a final judgment of a court of competent jurisdiction from which no appeal may be taken.

 

    	 	26	 

     

    

 

4.11        Reservation
and Listing of Securities.

 

(a)          The
Company shall maintain a reserve from its duly authorized shares of Common Stock 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.

 

(b)          If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate
or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required
Minimum at such time, as soon as possible and in any event not later than the 75th calendar day after such date.

 

(c)          The
Company shall, 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 shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing
on such Trading Market as soon as possible thereafter, (iii) provide to the Purchaser evidence of such listing and (iv) maintain
the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another
Trading Market.

 

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 the 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 Purchaser
at each 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 the Purchaser.

 

4.13        Corporate
Existence. So long as any of the Notes remain outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, consolidation, sale of all or substantially all of the Company’s assets or any similar transaction
or related transactions (each such transaction, an “Organizational Change”) unless, prior to the consummation
an Organizational Change, the Company obtains the written consent of the Purchaser, which consent shall not be unreasonably withheld.
In any such case, the Company will make appropriate provision with respect to such holders’ rights and interests to insure
that the provisions of this Section 4.13 will thereafter be applicable to the Notes.

 

4.14        Transfer
Agent. The Company covenants and agrees that it will at all times while the Notes remains outstanding maintain a duly qualified
independent transfer agent.

 

    	 	27	 

     

    

 

4.15         No
Short Selling. The Purchaser has and shall not, directly or indirectly, his, her or itself, through related parties, affiliates
or otherwise, (i) sell “short” or “short against the box” (as those terms are generally understood) any
equity security of the Company or (ii) otherwise engage in any transaction that involves hedging of the Purchaser’s position
in any equity security of the Company, until the later of (i) the date the Notes owned by the Purchaser is no longer owned by the
Purchaser, or (ii) the Maturity Date (as such term is defined in the Notes) and the Conversion Date.

 

4.16         Shareholder
Approval. If it is required in order to permit the conversion of the Notes (or any other securities that may be issued under
or in connection with this Agreement or the transactions contemplated hereby) issued pursuant to this Agreement into shares of
Common Stock in accordance with applicable listing rules of The Nasdaq Capital Market or any shareholder approval requirement of
Nasdaq (the “Shareholder Approval”), the Company shall (i) hold a special meeting of shareholders (which may
also be at the annual meeting of shareholders) as soon as reasonably practicable for the purpose of obtaining Shareholder Approval,
with the recommendation of the Company’s Board of Directors that such proposal be approved, and the Company shall solicit
proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement
and all management-appointed proxyholders shall vote their proxies in favor of such proposal and (ii) file a definitive proxy statement
(the “Proxy Statement”) in connection with the foregoing as soon as reasonably practicable; provided however,
that the obligations of the Company under clauses (i) and (ii) are subject to the Commission’s review of the Proxy Statement
and the Company shall not be deemed to be in violation of this Section 4.16 if it responds to the Commission’s comments on
the Proxy Statement, if any, in a timely manner. If the Company does not obtain Shareholder Approval at the first special meeting,
the Company shall call a meeting every three months thereafter to seek Shareholder Approval until the earlier of the date Shareholder
Approval is obtained or the Notes are no longer outstanding.

 

4.17         Registration
Rights. The Company shall file a “resale” registration statement with the Commission covering the Underlying Shares,
so that such shares of Common Stock will be registered under the Securities Act. The Company will maintain the effectiveness of
the “resale” registration statement from the effective date of the registration statement until all Registrable Securities
(as defined in the Registration Rights Agreement) covered by such registration statement have been sold, or may be sold without
the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144.  The
Company will use its best efforts to have such “resale” registration statement filed by the Filing Date (as defined
in the Registration Rights Agreement) and declared effective by the SEC as soon as possible and, in any event, by the Effectiveness
Date (as defined in the Registration Rights Agreement).

 

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

 

4.19         Indebtedness.
For so long the Notes are outstanding, the Company will not incur any Indebtedness other than Permitted Indebtedness, without the
consent of the Purchaser.

 

    	 	28	 

     

    

 

4.20         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 Common Stock or common stock equivalents, 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 investors than are the terms
and conditions granted to the Purchasers hereunder, upon notice to the Company by such Purchaser within five (5) Trading Days after
disclosure of such issuance or sale, 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. This Section 4.20 shall not apply with respect to an Exempt
Issuance. The Company shall provide each Purchaser with notice of any such issuance or sale not later than ten (10) Trading Days
before such issuance or sale.

 

4.21         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 Purchaser, enter into any Equity Line of Credit or similar agreement, issue or agree to issue floating or Variable Priced
Equity Linked Instruments nor 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 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 shares of Common Stock or common stock 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 Common Stock 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 Common Stock since
date of initial issuance, or upon the issuance of any debt, equity or common stock 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 shares of Common Stock which are valued
at a price that is based upon and/or varies with the trading prices of or quotations for Common Stock 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 Purchaser,
issue any Common Stock or common stock equivalents to officers, directors, and employees of the Company unless such issuance is
an Exempt Issuance pursuant to items (a) or (d) of the definition of Exempt Issuance or in the amounts and on the terms set forth
on Schedule 4.21. For so long as the Notes are outstanding, the Company will not amend the terms of any securities or common
stock 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 nor amend the terms of the Form S-3 registration statement, as amended, included in the SEC Reports, nor issue
any Common Stock or common stock equivalents, without the consent of Purchaser, if such issuance or the result of such amendment
would be at an effective price per share of Common Stock less than Conversion Price.

 

    	 	29	 

     

    

 

ARTICLE V.

MISCELLANEOUS

 

5.1           Termination.
This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the Purchaser, by written notice to the Company, if the Initial Closing has
not been consummated on or before November __, 2016; provided, however, that such termination will not affect the
right of any party to sue for any breach by the other party (or parties).

 

5.2           Fees
and Expenses. Except as set forth on Schedule 3.1(t) or except as expressly set forth in the Transaction Documents to
the contrary, 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 to Purchaser’s counsel a legal fee of $35,000. The Company shall pay all transfer agent fees, stamp
taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.

 

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 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: Immune Pharmaceuticals, Inc, 430 East 29th Street, Suite 940,
New York, NY 10016, Attn: Daniel Teper, CEO, fax: 917-398-1922, and (ii) if to the Purchaser, to: the address and fax number indicated
on the signature page 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.

 

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5.5           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement 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. At the request of the Purchaser after the Closing, if the Other Notes have terms
that are more favorable to the Purchaser of those Notes than these Notes, subject to applicable securities laws, the Company will
amend this Note if requested by the Purchaser.

 

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
the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom
the Purchaser assigns or transfers any Securities, provided that such transfer complies with all applicable federal and state securities
laws and that such transferee agrees in writing with the Company to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the Purchaser.

 

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.

 

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.

 

    	 	31	 

     

    

 

5.10         Survival.
The representations and warranties shall survive each Closing and the delivery of the Notes until, with respect to the Purchaser,
the Notes held by the Purchaser has been paid in full or converted into Underlying Shares, at which time they shall expire such
respect to Purchaser and shall no longer be of any force or effect.

 

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 the other party, it being
understood that both 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 the 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 the Purchaser
may 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 Notes, the Purchaser shall be required to return any shares of Common Stock subject to
any such rescinded conversion or exercise notice.

 

    	 	32	 

     

    

 

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 Purchaser 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 agrees 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 the Purchaser pursuant to any Transaction Document
or the 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 the 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 effective date 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 the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall
be applied by the 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 the Purchaser’s election.

 

    	 	33	 

     

    

 

5.18         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.

 

5.19         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.

 

5.20         Construction.
The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

 

5.21         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. 

 

(Signature Pages Follow)

 

    	 	34	 

     

    

 

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.

 

	IMMUNE PHARMACEUTICALS INC. 	 	
        Address for Notice:

        430 East 29th Street, Suite 940

        New York, NY 10016

		 	 
	By:	/s/ Daniel G. Teper	 	Fax:
	 	Name: Daniel G. Teper	 	 
	 	Title: CEO	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	 	35	 

     

    

 

[PURCHASER
SIGNATURE PAGES TO IMMUNE PHARMACEUTICALS, INC. 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: ________________________________________________________

 

Signature of Authorized Signatory of
Purchaser: __________________________________

 

Name of Authorized Signatory: ____________________________________________________

 

Title of Authorized Signatory: _____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory: __________________________________________

 

Address for Notice of Purchaser: 

 

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

 

Subscription Amount: _____________

 

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

    	 	36	 

     

    

 

	IMMUNE PHARMACEUTICALS INC.	 
	 	 	 
	By:	/s/ Daniel G. Teper	 
	 	Name: Daniel G. Teper	 
	 	Title: CEO	 
	 	 	 
	By:	 	 
	 	Name:     	 
	 	Title:	 

 

[Closing Statement Signature Page]

 

    	 	37	 

     

    

 

SCHEDULE 3.1(a)

 

List of Subsidiaries

 

	Name of Entity	 	Jurisdiction of Incorporation	 	Ownership
	Immune Pharmaceuticals Ltd.	 	Israel	 	100%
	Cytovia Inc.	 	Delaware	 	100%
	Maxim Pharmaceuticals, Inc.	 	Delaware	 	100%
	Immune Pharmaceuticals Corp	 	Delaware	 	100%

 

    	 	38	 

     

    

 

SCHEDULE 3.1(g)

Capitalization

 

None 

 

2015 Equity Inventive Plan -5,000,000
Shares

 

    	 	39	 

     

    

 

SCHEDULE 3.1(h)

SEC Reports 

 

None.

 

10-Q due on or before November 14, 2016.

 

    	 	40	 

     

    

 

SCHEDULE 3.1(i)

Material Changes

 

None

 

    	 	41	 

     

    

 

SCHEDULE 3.1(t)

Certain Fees

 

Due Diligence Fee and other expenses of $40,000

 

    	 	42	 

     

    

 

SCHEDULE 3.1(v)

Registration Rights

 

The Company currently intends to prepare and file a Form S-3
Registration Statement covering the shares underlying its pre-merger warrants, which warrants are priced at $0.50 or higher and
which expire on December 31, 2106.

 

    	 	43	 

     

    

 

SCHEDULE 3.1(w)

Listing and Maintenance Requirements

 

The Company has received notification from NASDAQ that they
are reviewing the financings completed with Regatta Select Healthcare LLC in April and June 2016 and certain other financings completed
in June 2016 to determine whether or not to aggregate the securities sold in such placements for purposes of NASDAQ Marketplace
Rule 4350(i)(i)(D). The Company has made a submission to NASDAQ as to why it believes that such issuances should not be aggregated.
NASDAQ has preliminarily responded that it believes that the financings should be integrated, and the Company has proposed to make
certain revisions to other financings completed in the June 2016, which would address NASDAQ’s concerns, which NASDAQ is
currently considering. The Company further believes, and intends to submit to NASDAQ, its further position that the other financings
completed in the June 2016 should not be counted against the same share cap tas that which was applied to the Regatta financings.
No final determination has been made with respect to this issue.

 

    	 	44Exhibit 10.2

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF.

 

Immune
Pharmaceuticals Inc.

 

CONVERTIBLE
NOTE

 

	Issuance Date:  November 17, 2016	Principal Amount: U.S.  $1,050,000

 

FOR VALUE RECEIVED,
Immune Pharmaceuticals Inc., a Delaware corporation (the "Company"), hereby promises to pay to HLHW IV, LLC or
registered assigns (the "Holder") in cash and/or in shares of Common Stock (as defined in Section 27), to the
extent provided for herein, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant
to redemption, conversion or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined
below), acceleration, mandatory conversion, redemption or otherwise (in each case in accordance with the terms hereof) and to pay
interest ("Interest") on any outstanding Principal at the applicable Interest Rate from the date set out above
as the Issuance Date (the "Issuance Date") until the same becomes due and payable, whether upon the Maturity Date,
acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms
used herein are defined in Section 27. This Note is one of a series of Notes, having the same terms and provisions, issued pursuant
to that certain Securities Purchase Agreement dated November 17, 2016, by and among the Company, the Holder and the other parties
thereto (the "Purchase Agreement"), and capitalized terms not defined herein will have the meanings set forth
in the Purchase Agreement.

 

      

     

    

  

(1)          PAYMENTS
OF PRINCIPAL; PREPAYMENT. On the Maturity Date, the Company shall pay to the Holder an amount in cash
and/or shares of Common Stock as set forth herein representing all outstanding Principal, accrued and unpaid Interest) on
such Principal and Interest ; provided, however, that in all cases involving payments of Principal, Interest, fees or Redemption
Prices or redemptions in cash, the Company may only use the proceeds from the sale of common stock pursuant to the At the Market
Equity Facility to make cash payments or redeem the Notes while the Company continues to have outstanding senior debt with Hercules
Capital, Inc. (f/k/a Hercules Technology Growth Capital, Inc., “Hercules”). The "Maturity Date"
shall be November 17, 2017.

 

(2)          INTEREST.
Interest on this Note shall commence accruing on the Issuance Date at the Interest Rate and shall be computed on the basis of a
360-day year and twelve 30-day months and shall be payable in arrears on the Maturity Date. Interest shall be payable on the Maturity
Date or, if such date falls on a Holiday, the next day that is not a Holiday, to the record holder of this Note on the Maturity
Date in cash by wire transfer of immediately available funds pursuant to wire instructions provided by the Holder in writing to
the Company, shares of Common Stock or a combination thereof at the Company’s discretion, unless there is an Event of Default,
in which case, the option of having this Note repaid in cash, shares of Common Stock or a combination thereof shall be with the
Holder. Prior to the payment of Interest on the Maturity Date, Interest on this Note shall accrue at the Interest Rate and be payable
by way of inclusion of the Interest in the Conversion Amount (as defined in Section 3(b)(i)) on each (i) Conversion Date (as defined
in Section 3(c)(ii)) in accordance with Section 3(c)(i) and/or (ii) Redemption Date.

 

(3)          CONVERSION
OF NOTES. Following the Issuance Date, this Note shall be convertible into shares of Common Stock on the terms and conditions
set forth in this Section 3.

 

(a)    Optional
Conversion Right. Subject to the provisions of Section 3(d)(i) and Section 3(d)(ii), at any time or times on or after the Issuance
Date of this Note, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully
paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company
shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery
of Common Stock upon conversion of any Conversion Amount.

 

(b)    Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall
be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate").

 

(i)          "Conversion
Amount" means the sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to which
this determination is being made and (B) accrued and unpaid Interest with respect to such Principal.

 

    - 2 -  

     

    

 

(ii)         "Conversion
Price" means eighty percent (80%) of the lowest intraday bid price on the date of conversion (“Conversion Date”);
provided the lowest intraday bid price on such Conversion Date is above the Market Price. In the event on the Conversion Date,
the lowest intraday bid price is less than the Market Price, then in that instance, the Conversion Price on that Conversion Date
will be equal to the lowest intraday bid price.

 

		(c)	Mechanics of Optional Conversion and Adjustment:

 

(i)          Registration;
Book-Entry. The Company shall maintain a register (the "Register") for the recordation of the names and addresses
of the holders of each Note and the Principal amount of the Notes (and stated interest thereon) held by such holders (the "Registered
Notes"). The entries in the Register, made in good faith, shall be conclusive and binding for all purposes absent manifest
error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of
a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest, if any, hereunder,
notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or in part only by registration of such
assignment or sale on the Register. Upon its receipt of a request to assign or sell all or part of any Registered Note by the Holder,
the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same
aggregate Principal amount as the Principal amount of the surrendered Registered Note to the designated assignee or transferee
pursuant to Section 14. Notwithstanding anything to the contrary in this Section 3(c)(iii), the Holder may assign any Note or any
portion thereof to an Affiliate of such Holder or a Related Fund of such Holder without delivering a request to assign or sell
such Note to the Company and the recordation of such assignment or sale in the Register (a "Related Party Assignment");
provided, that (x) the Company may continue to deal solely with such assigning or selling Holder unless and until such Holder
has delivered a request to assign or sell such Note or portion thereof to the Company for recordation in the Register; (y) the
failure of such assigning or selling Holder to deliver a request to assign or sell such Note or portion thereof to the Company
shall not affect the legality, validity, or binding effect of such assignment or sale and (z) such assigning or selling Holder
shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register (the "Related Party
Register") comparable to the Register on behalf of the Company, and any such assignment or sale shall be effective upon
recordation of such assignment or sale in the Related Party Register. Notwithstanding anything to the contrary set forth herein,
upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically
surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the
Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance
of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and
Interest, converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and
the Company, so as not to require physical surrender of this Note upon conversion.

 

    - 3 -  

     

    

  

(ii)         Registration
Rights. Within 10 days from the date of this Note, the Company shall file an S-3 Registration Statement with the Securities
and Exchange Commission registering for resale the shares of Common Stock underlying the Note.

 

(iii)        Optional
Repayment (“Redemption”). If at any time the lowest intraday bid price drops below $0.25, the Holder may elect
to redeem $350,000 of the outstanding principal, interest and any amounts due under the Note. This redemption process may be repeated
once every five (5) business days, at the election of Holder, until the Note is fully satisfied. The foregoing notwithstanding,
Holder may convert any or all of this Note into shares of Common Stock at any time. As per the Subordination Agreement, the above
amounts may be paid only from the proceeds from the sale of Common Stock pursuant of the At The Market Equity Facility.

 

		(d)	Limitations on Conversions.

 

(i)     Beneficial
Ownership. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible by the Holder
hereof, and the Company shall not effect any conversion of this Note or otherwise issue any shares of Common Stock pursuant hereto,
to the extent (but only to the extent) that after giving effect to such conversion or other share issuance hereunder the Holder
(together with its affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock.
To the extent the above limitation applies, the determination of whether this Note shall be convertible (vis-à-vis other
convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) shall, subject to such Maximum
Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as
the case may be). No prior inability to convert this Note, or to issue shares of Common Stock, pursuant to this paragraph shall
have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility.
For purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with
respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the 1934 Act (as defined
in the Securities Purchase Agreement) and the rules and regulations promulgated thereunder. The provisions of this paragraph shall
be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation.
The limitations contained in this paragraph shall apply to a successor Holder of this Note. The holders of Common Stock shall be
third party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of holders of a majority
of its Common Stock. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1)
Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue
of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation,
pursuant to this Note or securities issued pursuant to the Securities Purchase Agreement.

 

    - 4 -  

     

    

  

(ii)    Principal
Market Regulation. Unless permitted by the applicable rules and regulations of the Principal Market, the Company shall not
issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock would exceed the aggregate
number of shares of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the Notes without
breaching the Company’s obligations under the rules or regulations of the Principal Market (the number of shares which may
be issued without violating such rules and regulations, the “Exchange Cap”). Notwithstanding the foregoing,
such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable
rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion
from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder.
In the event that any Holder shall sell or otherwise transfer any of such Holder’s Notes, the Exchange Cap restrictions set
forth herein shall continue to apply to the Note and such transferee.

 

(e)   Disputes.
In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of
this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in
accordance with Section 22.

 

		(4)	The Company hereby covenants and agrees as follows:

 

(a)   Sale of Assets.
During the thirty (30) days from the date of this Note, with the exception of moving certain of its assets to any of its subsidiaries,
the Company shall not sell any material assets.

 

(b)  Additional Debt.
While this Note is outstanding, the Company shall not incur any additional indebtedness for borrowed money, other than an indebtedness
that is Permitted Indebtedness.

 

(c)   Issuances of
Common Stock. Until the effectiveness of the registration statement by the Company pursuant to the Registration Rights Agreement
dated the date of this Note between the Company and the initial Holder of this Note, the Company will not issue any shares of Common
Stock that do not constitute “restricted securities” (as that term is known under Rule 144 of the Securities and Exchange
Act), other than pursuant to convertible securities, option and warrants that are outstanding as of the date of this Note.

 

    - 5 -  

     

    

 

		(5)	RIGHTS UPON EVENT OF DEFAULT.

 

(a)   Event
of Default. Each of the following events shall constitute an "Event of Default”; provided, however,
that, except in the case of the Events of Default listed in Sections 5(a)1, or 5(a)9 below, the Company shall have five (5) business
days to cure such Event of Default unless a lesser number of days is required pursuant to the provisions of this Section 5.

 

(i)          Failure
to Pay Principal or Interest. The Company fails to pay the Principal Amount hereof, interest, liquidated damages and other
amounts thereon when due on the Note whether at maturity, upon acceleration or otherwise.

 

(ii)         Conversion
and the Shares. The Company (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing that it
will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the
terms of the Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form)
any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to the Note as and when
required by the Note, or (iii) the Company directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing) (electronically or in certificated form) any certificate for the Conversion Shares issuable
to the Holder upon conversion of or otherwise pursuant to the Note as and when required by the Note, or fails to remove (or directs
its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or
to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Holder
upon conversion of or otherwise pursuant to the Note as and when required by the Note (or makes any written announcement, statement
or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured
(or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for five (5)
business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Company to remain current
in its obligations to its transfer agent. It shall be an Event of Default of the Note, if a conversion of the Note is delayed,
hindered or frustrated due to a balance owed by the Company to its transfer agent. If at the option of the Holder, the Holder advances
any funds to the Company’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Company
to the Holder within forty eight (48) hours of a demand from the Holder. If Borrower is unable to do so, they shall have an opportunity
to cure within five (5) business days.

 

(iii)        Breach
of Agreements and Covenants. The Company breaches any material agreement, covenant or other material term or condition contained
in the Purchase Agreement, the Note, the subordination agreement to be entered into with Hercules with respect to this Note and
transaction or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith,
and such breach results in a material adverse effect on the business or assets of the Company. 

 

(iv)        Breach
of Representations and Warranties. Any representation or warranty of the Company made in the Purchase Agreement or the Note,
or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith shall be
false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a Material
Adverse Effect on the rights of the Holder with respect to the Note or the Purchase Agreement.  In the event of such a breach,
the Company shall have an opportunity to cure within two (2) business days.

 

    - 6 -  

     

    

 

(v)         Receiver
or Trustee. The Company or any subsidiary of the Company shall make an assignment for the benefit of creditors, or apply for
or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a
receiver or trustee shall otherwise be appointed. Under such circumstances, the Company shall have an opportunity to cure within
sixty (60) days.

 

(vi)        Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Company or any subsidiary of the Company or any
of its property or other assets for more than $200,000, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

(vii)       Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company or any subsidiary of the
Company. Under such circumstances, the Company shall have an opportunity to cure within sixty (60) days.

 

(viii)      Delisting
of Common Stock. The Company shall fail to maintain the listing of the Common Stock minimally on the OTCQB. 

 

(ix)         Failure
to Comply with the 1934 Act. The Company shall fail to comply with the reporting requirements of the 1934 Act and/or the Company
shall cease to be subject to the reporting requirements of the 1934 Act.

 

(x)          Liquidation.
Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business or assets.

 

(xi)         Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Company’s ability to continue as a “going concern”
shall not be an admission that the Company cannot pay its debts as they become due.

 

(xii)        Reverse
Splits. The Company effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder,
except if the Reverse Split is being effectuated to comply with NASDAQ continued listing requirements.

 

(xiii)       DTC
“Chill”. The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC’s services,
such as limiting a DTC participant’s ability to make a deposit or withdrawal of the security at DTC) on any of the Company’s
securities. In the event of such a breach, the Company shall have an opportunity to cure within twenty (20) business days.

 

    - 7 -  

     

    

 

(xiv)      Other
Obligations. The occurrence of any default under any agreement or obligation of Company that is not cured within 10 days that
could reasonably be expected to have a Material Adverse Effect.

 

(xv)       Default
under Transaction Documents or Other Material Agreement. 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) this Note or any of the other agreements entered
into by the parties related to the purchase of this Note (collectively, the “Transaction Documents”), or (B)
any other material agreement, lease, document or instrument to which Company 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.

 

(xvi)      Default
under Mortgage or Other Agreement of Indebtedness. Company or any Subsidiary shall 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 $50,000, 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.

 

(xvii)     The
Occurrence of a Change in Control Transaction. Company shall be a party to any change of control transaction or Fundamental
Transaction or shall agree to sell or dispose of all or in excess of 30% of its assets in one transaction or a series of related
transactions (whether or not such sale would constitute a Change of Control Transaction).

 

(xviii)    Failure
to Meet the Requirements under Rule 144. Company does not meet the current public information requirements under Rule 144.

 

(xix)       Failure
to Maintain Intellectual Property. The failure by Company 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 written notice to the Company from the Holder.

 

(xx)        Trading
Suspension. A Commission or judicial stop trade order or suspension from the Company’s Principal Market.

 

(xxi)       Restatement
of Financial Statements. The restatement after the date hereof of any financial statements filed by the Company with the Commission
for any date or period from two years prior to the Issuance 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.

 

    - 8 -  

     

    

  

(xxii)      Failure
to Provide Required Notification of a Material Event. A failure by Company to notify Holder of any material event of which
Company is obligated to notify Holder pursuant to the terms of this Note or any other Transaction Document.

 

(xxiii)     Invalidity
or Unenforceability of Transaction Documents. 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 Company,
or the validity or enforceability thereof shall be contested by Company, or a proceeding shall be commenced by Company or any governmental
authority having jurisdiction over Company or Holder, seeking to establish the invalidity or unenforceability thereof, or Company
shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document.

 

(xxiv)    Registration
Statement. Failure to file the Registration Statement within 10 days as noted in Section 3(c)(ii) and/or to have the Registration
Statement declared effective effective by the SEC.

 

(xxv)     At
the Market Equity Facility. Failure of the Company to execute and/or comply with its obligations pursuant to the terms of the
At the Market Equity Facility on or before November 23, 2016.

 

(b)   Redemption
Right. At any time after the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (an
"Event of Default Redemption") all or any portion of this Note by delivering written notice thereof (the "Event
of Default Redemption Notice") to the Company, which Event of Default Redemption Notice shall indicate the portion of
this Note the Holder is electing to require the Company to redeem. Each portion of this Note subject to redemption by the Company
pursuant to this Section 5(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds at a price
equal to the greater of 18% per annum or the maximum rate permitted under applicable law of the Conversion Amount being redeemed
(the "Event of Default Redemption Price") together with liquidated damages of $250,000. Redemptions required
by this Section 5(b) shall be made in accordance with the provisions of Section 12. To the extent redemptions required by this
Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions
shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section
3(b)(ii) and 3(d), until the Event of Default Redemption Price (together with any interest thereon) is paid in full, the Conversion
Amount submitted for redemption under this Section 5(b) (together with any interest thereon) may be converted, in whole or in part,
by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the event of the Company's redemption of
any portion of the Note under this Section 5(b), the Holder's damages would be uncertain and difficult to estimate because of the
parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment
opportunity for the Holder. Accordingly, any Event of Default redemption premium due under this Section 5(b) is intended by the
parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as
a penalty.

 

    - 9 -  

     

    

 

		(6)	INTENTIONALLY OMITTED.

 

		(7)	RIGHTS UPON FUNDAMENTAL TRANSACTION.

 

(a)   If, at any time while this Note is outstanding, (i) the Company effects 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, the same kind and amount of securities, cash
or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of 1 share of Common Stock (the “Alternate Consideration”).
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 1 share of Common Stock in such Fundamental
Transaction, and the Company 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 Common Stock 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 Debenture following such Fundamental Transaction. To
the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and evidencing the Holder’s
right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction
is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section
7(a) and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.

 

(8)         DISTRIBUTION
OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

 

(a)   Distribution
of Assets. If the Company shall declare or make any dividend or other distributions of its assets (or rights to acquire its
assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation,
any distribution of cash, stock or other securities, property, options, evidence of Indebtedness or any other assets by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the "Distributions"),
then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this
Note) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as
of which the record holders of Common Stock are to be determined for such Distributions and the portion of such Distribution shall
be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such rights (and any rights under
this Section 8(a) on such initial rights or on any subsequent such rights to be held similarly in abeyance) to the same extent
as if there had been no such limitation).

 

    - 10 -  

     

    

 

(b)   Purchase
Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"),
then the Holder will be entitled to acquire or receive, as applicable, 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 shares of Common Stock acquirable upon
complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note)
immediately prior to 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 shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, that to the extent that the Holder's right to participate in any
such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of
such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right
(and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly
in abeyance) to the same extent as if there had been no such limitation).

 

(c)   Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the occurrence or consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities, cash, assets
or other property with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company
shall make appropriate provision to ensure that, and any applicable Successor Entity or Successor Entities shall ensure that, and
it shall be a required condition to the occurrence or consummation of such Corporate Event that, the Holder will thereafter have
the right to receive upon conversion of this Note at any time after the occurrence or consummation of the Corporate Event, shares
of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares of Common Stock (or other securities,
cash, assets or other property) purchasable upon the conversion of this Note prior to such Corporate Event (but not in lieu of
such items still issuable under Sections 6(a) and 6(b), which shall continue to be receivable on the Common Stock or on such shares
of stock, securities, cash, assets or any other property otherwise receivable with respect to or in exchange for shares of Common
Stock), such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or
subscription rights and any shares of Common Stock) which the Holder would have been entitled to receive upon the occurrence or
consummation of such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate
Event, had this Note been converted immediately prior to such Corporate Event or the record, eligibility or other determination
date for the event resulting in such Corporate Event (without regard to any limitations on conversion of this Note). Provision
made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this Section
8 shall apply similarly and equally to successive Corporate Events.

 

    - 11 -  

     

    

 

		(9)	RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

(A)        Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Issuance Date
subdivides (by any stock split, stock dividend, recapitalization or otherwise) other than for a reverse split effectuated to comply
with Nasdaq listing standards, one or more classes of its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time on
or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately
increased.

 

		(B)	Certain Adjustments.

 

(a)          Adjustment
Upon Issuance of Shares of Common Stock. If and whenever on or after the date hereof, the Company issues or sells, or in accordance
with this Section 9(B) is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of
Common Stock 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 9(B)), 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 share of Common Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price,
then such share of Common Stock 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 9(B)(a)(i), the “lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities 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 share of
Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of
any Convertible Security issuable upon exercise of such Option and (y) the lowest exercise price set forth in such Option for which
one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible
Securities 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 Convertible Security 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 shares of Common Stock or of such Convertible Securities
upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities.

 

    - 12 -  

     

    

 

(ii)         Issuance
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities (other than Convertible
Securities that qualify as Exempt Issuances) and the lowest price per share for which one share of Common Stock is issuable upon
the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock 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 Convertible Securities
for such price per share. For the purposes of this Section 9(B)(a)(ii), the “lowest price per share for which one share
of Common Stock 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 share of Common
Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security
and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security
(or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received
or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated
below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities
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 9(B)(a), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of
such issue or sale.

 

    - 13 -  

     

    

 

(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 Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock 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 Convertible Securities 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 9(B)(a)(iii), if the terms of any Option or Convertible Security 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 Convertible Security and the shares of Common Stock 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
9(B) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

(iv)        Calculation
of Consideration Received. If any Option and/or Convertible Security 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 Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction, the consideration per share of Common Stock 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 share of Common Stock was issued
in such integrated transaction (or was deemed to be issued pursuant to Section 9(B)(a)(i) or 9(B)(a)(ii) above, as applicable)
solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the fair market value of such
Secondary Securities as agreed to by the Company and Holder and absent such agreement 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.

 

(C)         Calculations.
All calculations under this Section 9(b) 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 9(b) the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury shares of Company) issued and outstanding.

 

		(D)	Notice to the Holder.

 

(i)   Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 9(D), Company 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.

 

    - 14 -  

     

    

  

ii.    Notice
to Allow Conversion by Holder. If (A) Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) Company
shall authorize the granting to all holders of the Common Stock 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 Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which Company is a party, any sale or transfer of all
or substantially all of the assets of Company, or any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property or (E) Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of Borrower, then, in each case, Company 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 Common Stock 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 Common Stock of record shall be entitled to exchange their shares of the Common Stock 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 Company or any of the Subsidiaries, Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-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.

 

(E)         Voluntary
Adjustment by Company. The Company may at any time during the term of this Note, with the prior written consent of the Holder,
reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

 

(10)        NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will
at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights
of the Holder of this Note.

 

    - 15 -  

     

    

 

		(11)	OPTIONAL REDEMPTION RIGHTS

 

(a)   On
the Maturity Date, the Company shall pay the amount being redeemed, including accrued interest and any other amounts due under
the Note, in cash, Common Stock or any combination thereof, at the Company’s sole discretion.

 

		(b)	Reserved.

 

(c)   Optional
Repayment(“Redemption”). If at any time the lowest intraday bid price drops below $0.25, the Holder may elect to
redeem $350,000 of the outstanding principal, interest and any amounts due under the Note. This redemption process may be repeated
once every five (5) business days, at the election of Holder, until the Note is fully satisfied. The foregoing notwithstanding,
Holder may convert any or all of this Note into shares of Common Stock at any time. As per the Subordination Agreement, the above
amounts may be paid only from the proceeds from the sale of Common Stock pursuant of the At The Market Equity Facility.

 

		(12)	REDEMPTIONS.

 

(a)    Mechanics.
The Company shall deliver the applicable Optional Redemption Price to the Holder within three (3) Business Days after the Company's
receipt of such notice otherwise (such date, the "Optional Redemption Date"). The Company shall pay the applicable
Redemption Price to the Holder in cash by wire transfer of immediately available funds pursuant to wire instructions provided by
the holder in writing to the Company on the applicable due date. In the event of a redemption of less than all of the Conversion
Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section
17(d)) representing the outstanding Principal which has not been redeemed and any accrued Interest on such Principal which shall
be calculated as if no Redemption Notice has been delivered. In the event that the Company does not pay the applicable Redemption
Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price
in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or
any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption
Price has not been paid. Upon the Company's receipt of such notice, (x) the applicable Redemption Notice shall be null and void
with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance
with Section 17(d)) to the Holder representing such Conversion Amount to be redeemed and (z) the Conversion Price of this Note
or such new Notes shall be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable
Redemption Notice is voided and (B) the lowest Closing Bid Price of the Common Stock during the period beginning on and including
the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the
applicable Redemption Notice is voided; provided, however, that in no event shall the Conversion Price be a price less than the
Market Price.

 

    - 16 -  

     

    

  

(13)        VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided
in this Note.

 

		(14)	COVENANTS.

 

(a)    Incurrence
of Indebtedness. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness.

 

(b)   Existence
of Liens. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, allow or suffer to exist any Liens other than Permitted Liens.

 

(c)   Change
in Nature of Business. The Company shall not make, or permit any of its Subsidiaries to make, any change in the nature of its
business as described in the Company's most recent Annual Report filed on Form 10-K with the SEC. The Company shall not modify
its corporate structure or purpose.

 

(d)   Intellectual
Property. The Company shall not, and the Company shall not permit any of its Subsidiaries, directly or indirectly, to encumber
or allow any Liens on, any of its own or its licensed copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications
and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part
of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered
or not, and the goodwill of the business of the Company and its Subsidiaries connected with and symbolized thereby, know-how, operating
manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing, other than Permitted Liens.

 

(e)    Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.

 

(f)    Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases
to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

 

    - 17 -  

     

    

 

(g)   Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance), and having a Best’s Rating of no less than _____,with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority
having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in
similar businesses similarly situated.

 

(h)   Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of
business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its
business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arm's length transaction with a Person that is not an Affiliate thereof.

 

(i)    Corporate
Changes. The Company shall not change its corporate name, legal form or jurisdiction of formation without twenty (20) days’
prior written notice to Holder. Company shall not enter into or be party to a Fundamental Transaction unless the in violation of
Section 7 hereof. Company shall not relocate its chief executive office or its principal place of business unless it has provided
prior written notice to Holder.

 

(j)     Issue
any Common Stock or common stock equivalents except as permitted pursuant to the Purchase Agreement.

 

(k)   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.

 

(l)     Repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock or common stock equivalents other than as to the Conversion Shares as permitted or required under the Transaction Documents.

 

(m)  
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), 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.

 

(n)   Declare
or make any dividend or other distribution of its assets or rights to acquire its assets to holders of shares of Common Stock,
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.

 

		(o)	Enter into any agreement with respect to any of the foregoing.

 

    - 18 -  

     

    

 

		(15)	Intentionally Omitted.

  

(16)        TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company.

 

		(17)	REISSUANCE OF THIS NOTE.

 

(a)    Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 17(d) and subject to Section 3(c)(iii)), registered
as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire
outstanding Principal is being transferred, a new Note (in accordance with Section 17(d)) to the Holder representing the outstanding
Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason
of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal
represented by this Note may be less than the Principal stated on the face of this Note.

 

(b)    Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company
shall execute and deliver to the Holder a new Note (in accordance with Section 17(d)) representing the then outstanding Principal
amount of the Note.

 

(c)   Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 17(d) representing in the aggregate the outstanding
Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the
Holder at the time of such surrender.

 

(d)   Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions
as this Note, and (v) shall represent accrued and unpaid Interest. on the Principal and Interest of this Note, from the Issuance
Date.

 

    - 19 -  

     

    

 

(18)          REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents, at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder's right
to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth
or provided for herein with respect to payments, conversion, redemption and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security
being required.

 

(19)         PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors' rights and involving a claim under this Note, then the Company shall pay the
costs and expenses incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees and disbursements.

 

(20)         CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note.

 

(21)         FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.

 

(22)         DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price or the Closing Sale Price or the arithmetic
calculation of the Conversion Rate, the Conversion Price or any Redemption Price, the Company shall submit the disputed determinations
or arithmetic calculations via facsimile or electronic mail within one (1) Business Days of receipt, or deemed receipt, of the
Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be, to the Holder. If the Holder
and the Company are unable to agree upon such determination or calculation within two (2) Business Day of such disputed determination
or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile
or electronic mail (a) the disputed determination of the Closing Bid Price or the Closing Sale Price to an independent, reputable
investment bank selected by the Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned
or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price or any Redemption Price to an independent,
outside accountant, selected by the Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned
or delayed. The Company, at the Company's expense, shall cause the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the results no later than five (5) Business Days from
the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation,
as the case may be, shall be binding upon all parties absent demonstrable error.

 

    - 20 -  

     

    

 

		(23)	NOTICES; PAYMENTS.

 

(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, facsimile, or electronic mail, 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) upon receipt, when sent by electronic mail (provided confirmation
of transmission is electronically generated and keep on file by the sending party), or (c) 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: Immune Pharmaceuticals, Inc,
430 East 29th Street, Suite 940, New York, NY 10016, Attn: Daniel Teper, CEO, fax: 917-398-1922 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, fax: (212) 697-3575. Without
limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) immediately upon any adjustment
of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least
twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information
shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

(b)   Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful
money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to
such Person at such address as previously provided to the Company in writing; provided, that the Holder may elect to receive
a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out
such request and the Holder's wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is
due on any day, which is not a Business Day, the same shall instead be due on the next succeeding day, which is a Business Day.

 

    - 21 -  

     

    

 

(24)         CANCELLATION.
After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full, this Note shall automatically
be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

(25)         WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement of this Note.

 

(26)         GOVERNING
LAW; JURISDICTION; JURY TRIAL. 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 conflicts of law thereof. The Company agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Note (whether brought against the Company, the Holder or their respective
affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts
sitting in the City of New York, County of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. The Company 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 it at the address in effect for notices
to it under the Purchase 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 the Company or a Holder shall commence an action or proceeding to enforce any provisions of the Note, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. IN ANY ACTION, SUIT,
OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE COMPANY KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL
BY JURY.

 

(27)         Severability.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

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(28)        DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company
or its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters
relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.

 

(29)        CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

(a)    "Affiliate"
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that "control" of a Person means the power
directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such
Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

(b)   "Attribution
Parties" means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or
any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of
the foregoing and (iv) any other Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated
with the Holder's and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.

 

(c)   “At
the Market Equity Facility” means the transaction documents representing a sale by the Company to Purchaser of up to
$10,000,000 of its Common Stock.

 

(d)   "Bloomberg"
means Bloomberg Financial Markets.

 

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(e)   "Closing
Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York Time,
as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Bid Price
or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 20. All such determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction during the applicable calculation period.

 

(f)    "Closing
Date" shall means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Holder’s obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Note have been satisfied or waived.

 

(g)   "Common
Stock" means (i) the Company's shares of Common Stock, par value $0.0001 per share, and (ii) any share capital
into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(h)   "Convertible
Securities" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable
or exchangeable for shares of Common Stock.

 

(i)    "Default
Interest Rate" means 18% per annum.

 

(j)    "Equity
Interests" means (a) all shares of capital stock (whether denominated as common capital stock or preferred capital stock),
equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or
profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting
or non-voting and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants, options or other
rights to purchase, subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible, exchangeable
or exercisable.

 

(k)   "Exchange
Act" means the Securities Exchange Act of 1934, as amended.

 

    - 24 -  

     

    

 

(l)    "Fundamental
Transaction" means (A) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise,
in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X) to one
or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or
have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares
of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with
any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares
of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such
purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act)
of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject
Entities whereby such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares
of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by
all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement
or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities
become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding
shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or
indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender
offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of
the stockholders of the Company or (C) directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.

 

    - 25 -  

     

    

 

(m)    "GAAP"
means United States generally accepted accounting principles, consistently applied.

 

(n)   "Group"
means a "group" as that term is used in Section 13(d) of the Exchange Act and as defined in Rule 13d-5 thereunder.

 

(o)   "Holiday"
means a day other than a Business Day or on which trading does not take place on the Principal Market.

 

(p)   "Interest
Rate" means 7.0% per annum, subject to adjustment as set forth in Section 3(b)(ii).

 

(q)   “Market
Price” shall mean, (i) shall mean the lowest Closing Bid Price on the Closing Date.

 

(r)    "Options"
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(s)   "Parent
Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity
whose common capital stock or equivalent equity security is quoted or listed on a Trading Market (or, if so elected by the Holder,
any other market, exchange or quotation system), or, if there is more than one such Person or such entity, the Person or entity
designated by the Holder or in the absence of such designation, such Person or such entity with the largest public market capitalization
as of the date of consummation of the Fundamental Transaction.

 

(t)    "Permitted
Indebtedness" means (i) Indebtedness evidenced by this Note; (ii) Hercules senior debt; (iii) debt incurred to make acquisitions;
(iv) trade payables incurred in the ordinary course of business consistent with past practice, (v) unsecured indebtedness
not in excess of $200,000 in the aggregate, (vi) the Indebtedness set forth on Schedule 27(v) hereto; (vii) Indebtedness
evidenced by debt securities, if any, and (viii) Indebtedness secured by Permitted Liens.

 

(u)   "Permitted
Liens" means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen's liens, mechanics' liens and other similar liens, arising in the ordinary course of business with
respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings,
(iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price
of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B)
existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal or refinancing
of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others in the ordinary
course of the Company's business, not interfering in any material respect with the business of the Company and its Subsidiaries
taken as a whole, (vii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of
custom duties in connection with the importation of goods, (viii) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 4(a)(viii) and (ix) liens listed on Schedule 27(v) hereto.  

 

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(v)    "Principal
Market" means The NASDAQ Capital Market, or, if the Common Stock is not listed for trading on The NASDAQ Capital Market
on the day in question, a Trading Market.

 

(w)  "Redemption
Dates" means, collectively, the Event of Default Redemption Dates, and the Optional Redemption Dates, each of the foregoing,
individually, a Redemption Date.

 

(x)    "Redemption
Notices" means, collectively, the Event of Default Redemption Notices, and the Optional Redemption Notices, each of the
foregoing, individually, a Redemption Notice.

 

(y)   "Redemption
Price" means, 120% of the outstanding principal amount of the Notes together with accrued interest thereon, which after
an Event of Default shall be calculated at the Default Rate.

 

(z)    "Related
Fund" means, with respect to any Person, a fund or account managed by such Person or an Affiliate of such Person.

 

(aa)   "SEC"
means the United States Securities and Exchange Commission.

 

(bb)  "Securities
Act" means the Securities Act of 1933, as amended.

 

(cc)   "Subject
Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.

 

(dd)  "Successor
Entity" means one or more Person or Persons (or, if so elected by the Holder, the Company or Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or, if so elected by the Holder, the
Company or the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(ee)   “Trading
Market” means any of the following markets or exchanges on which the Common Stock is 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, OTCQB or OTCQX (or any successors to any of the foregoing).

 

    - 27 -  

     

    

 

(ff)    “VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is 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 the Common Stock is not then listed or quoted for
trading on a Trading Market and if prices for the Common Stock are then reported on the OTC Pink (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or
(c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.

 

[Signature Page Follows]

 

    - 28 -  

     

    

  

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed as of the Issuance Date set out above.

 

	 	Immune Pharmaceuticals Inc.
	 	 
	 	By:	/s/ Daniel G. Teper
	 	 	Name:  Daniel G. Teper
	 	 	Title: CEO

 

      

     

    

 

EXHIBIT I

Immune pharmaceuticals inc.

CONVERSION NOTICE

 

Reference is made to the Convertible Note
(the "Note") issued to the undersigned by Immune Pharmaceuticals Inc., a Delaware corporation (the "Company").
In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the
Note) of the Note indicated below into shares of Common Stock par value $0.0001 per share (the "Common Stock")
of the Company, as of the date specified below. 

 

	Date of Conversion:	 	 

 

	Aggregate Conversion Amount to be converted:	 

 

Please confirm the following information:

 

	Conversion Price:	 

 

	Number of shares of Common Stock to be issued:	 

 

Please issue the Common Stock into which
the Note is being converted in the following name and to the following address:

 

	Issue to:	 
	 	 
	 	 
	 	 
	 	 

 

	Facsimile Number and Electronic Mail:	 

 

	Authorization:	 

 

	 	By:	 

 

	 	Title:	 

 

	Dated:	 

 

	Account Number:	 
	    (if electronic book entry transfer)

 

	Transaction Code Number:	 
	    (if electronic book entry transfer)

 

      

     

    

 

SCHEDULE 27(V)

 

PERMITTED INDEBTEDNESS AND LIENS

 

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

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