Document:

Exhibit 10.1

 

Execution Version

 

Conversion Agreement

 

This agreement (the “Agreement”)
is made and entered into as of 27 December 2018 (the “Effective Date”) by and among Alexander Aurovsky (“Mr.
Aurovsky”), Anatoly Hurgin (“Mr. Hurgin”), Ability Inc., company number 303448, a Cayman Islands company
(the “Company”) and Ability Computer & Software Industries Ltd., company number 511911182, a company incorporated
in the State of Israel (the “Subsidiary”).

 

Whereas,
Mr. Hurgin and Mr. Aurovsky (collectively the “Lenders”) made available to the Company and the Subsidiary a
line of credit in the aggregate amount of NIS 11.0 million (approximately $3.1 million) (the “LOC”), through
the First International Bank of Israel (the “Bank”), by way of an Irrevocable Undertaking to the Company dated
21 February 2018 (the “Undertaking”);

 

Whereas,
as of the date hereof, the Company has utilized NIS 5.5 million (approximately $1.5 million) of the LOC (the “Outstanding
Debt”);

 

Whereas,
the LOC is secured by the Lenders;

 

Whereas,
the Lenders, the Company and the Subsidiary (each a “Party” and collectively the “Parties”)
wish to terminate the LOC and the Undertaking, all subject to the terms and conditions herein;

 

Whereas,
the Lenders desire to transfer to the Company an amount in cash equal to the amount outstanding under the LOC (the “Founders’
Proceeds”), and the Company desires to use the Founders’ Proceeds to repay the Outstanding Debt to the Bank,
and terminate the LOC;

 

Whereas,
in return for the transfer to the Company of the Founders’ Proceeds, the Company wishes to issue Units (as defined herein) to the Lenders; and

 

Whereas,
the Lenders, the Company and the Subsidiary (each a “Party” and collectively the
“Parties”) are executing and delivering this Agreement in accordance with and in reliance upon the
exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”) and/or Regulation S (“Regulation S”) as promulgated under the Securities Act.

 

NOW THEREFORE, the Parties agree
as follows:

 

		1.	Preamble
                                         Interpretation

 

		1.1.	The preamble and the schedules to
                                         this Agreement constitute an integral part hereof.

 

		1.2.	Section headings are for convenience
                                         purposes only and are to be disregarded in construing this Agreement.

 

		2.	Conversion
                                         and Termination of the Undertaking

 

		2.1.	At the Closing, the Founders’ Proceeds shall convert into such number of Units equal to the
                                                                                                                                      Founders’ Proceeds divided by the Price Per Unit as calculated according to the USD/NIS exchange rate published by the
                                                                                                                                      Bank of
                                                                                                                                      Israel on November 23, 2018 (the “Conversion” and the “Conversion Units”).

 

     

     

    

 

For the purpose herein:

 

“Business Day”
means any day except Friday, Saturday, Sunday or any other day on which commercial banks located in Israel or the United States
are authorized or required by law to be closed for business.

 

“Price Per
Unit” means – $3.25 per unit.

 

“Unit” shall
consist of, and shall mean (i) one ordinary share of the Company, and (ii) one warrant to purchase one ordinary share of the Company,
substantially in the form attached as Exhibit A hereto (the “Warrants”). The Warrants shall have an exercise
price of $3.25 per full ordinary share, be exercisable immediately upon the date of issuance and will expire five years from the
date of issuance.

  

	 	2.2.	The securities constituting the Conversion Units shall be issued and allocated to the Lenders in equal portions (50:50).

 

	 	2.3.	Upon repayment of the Outstanding Debt with the Founders’ Proceeds, the Lenders irrevocably and absolutely waive their rights to repayment of the LOC, the Founders’ Proceeds and/or payment of any additional payment or interest in connection therewith, and hereby absolve the Company and the Subsidiary of remitting payment thereof. The Conversion shall constitute the full and final settlement, payment and discharge of all of the Company’s and the Subsidiary’s obligations and liabilities in connection with the LOC.

 

	 	2.4.	Simultaneously with the Conversion, the Undertaking shall automatically terminate.

 

	 	2.5.	The Company shall sign any documentation reasonably requested by the Lenders in order to secure the transfer of the Founders’ Proceeds and the termination of the LOC from the Bank. The Lenders shall sign any documentation reasonably requested by the Company in order to evidence the foregoing to the Bank.

 

	 	3.	Closing 

 

	3.1.	The closing of the Conversion (the “Closing”) shall take place remotely via the exchange of documents and signatures within 4 Business Days of the Effective Date.
	 	 
	3.2.	Prior to the Closing, and no later than December 31, 2018, the Lenders shall transfer to the Company the Founders’ Proceeds, and the Company shall use the Founders’ Proceeds to repay the Outstanding Debt to the Bank.

 

		3.3.	At the Closing, the following transactions
                                         shall occur and the following documents shall be delivered, which transactions shall
                                         be deemed to take place and documents shall be deemed to have been executed simultaneously
                                         and no transaction shall be deemed to have been completed or any document delivered until
                                         all such transactions have been completed and all required documents delivered:

 

The Company shall:

 

		(i)	Deliver to the Lenders a copy of
                                         a duly executed resolution of the Board of Directors of the Company by which, the execution
                                         and performance by the Company of this Agreement and the Conversion shall have been approved;

 

	 	(ii)	Issue and allot 50% of the securities constituting the Conversion Units to Mr. Aurovsky;

 

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	 	(iii)	Issue and allot 50% of the securities constituting the Conversion Units to Mr. Hurgin;

 

	 	(iv)	Send an instruction letter to the Company’s transfer agent pertaining to the issuance of the ordinary shares constituting the Conversion Units to the Lenders; and
	 	 	 
	 	(v)	Obtain evidence from the Bank confirming that the LOC has been fully discharged and repaid.

 

		4.	Representations
                                         and Warranties of the Lenders

 

		4.1.	The Lenders hereby represent and warrant
                                         as of the date hereof and as of the Closing Date to the Company as follows (unless as
                                         of a specific date therein, in which case they shall be accurate as of such date):

 

		4.1.1.	Investment Purpose.
                                         The Lenders understand and acknowledge that the issuance of the securities constituting
                                         the Units has not been registered under the Securities Act in reliance upon an exemption
                                         from registration that depends upon, among other things, the Lenders’ investment
                                         purpose and status. In this connection, the Lenders hereby represent that the Lenders
                                         are purchasing the securities constituting the Units for the their own account for investment
                                         and not with a view toward the resale or distribution to other; provided, however, that
                                         by making the representations herein, the Lenders do not agree to hold any of the securities
                                         constituting the Units for any minimum or other specific term and reserves the right
                                         to dispose of the securities constituting the Units at any time in accordance with or
                                         pursuant to a registration statement or an exemption under the Securities Act.

 

	 	4.1.2.	Lenders Status. The Lenders are “accredited investors” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”). The Lenders are not required to be registered as a broker-dealer under Section 15 of the Exchange Act and the Lenders are not a broker-dealer, nor an affiliate of a broker-dealer. The Lenders (i) acknowledge that the certificate(s) representing or evidencing the securities constituting the Units contains a customary restrictive legend restricting the offer, sale or transfer of any of the securities constituting the Units except in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration, (ii) agree that all offers and sales by the Lenders of the securities constituting the Units shall be made pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from, or a transaction not subject to the registration requirements of, the Securities Act, (iii) represent that the offer to purchase the securities constituting the Units was made to the Lenders outside of the United States, and the Lenders were, at the time of the offer and will be, at the time of the sale and is now, outside the United States, (iv) have not engaged in or directed any unsolicited offers to purchase the securities constituting the Units in the United States, (v) are neither a U.S. Person nor a Distributor (as such terms are defined in Rule 902(k) and 902(d), respectively, of Regulation S), (vi) have purchased the securities constituting the Units for their own account and not for the account or benefit of any U.S. Person, (vii) are the sole beneficial owner of the securities constituting the Units specified on signature pages hereto opposite their name and have not pre-arranged any sale in the United States, and (ix) are familiar with and understand the terms and conditions and requirements contained in Regulation S, specifically, without limitation, the Lenders understand that the statutory basis for the exemption claimed for the sale of the securities constituting the Units would not be present if the sale, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the Securities Act.

 

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		4.1.3.	Reliance on Exemptions.
                                         The Lenders understand that the securities constituting the Units are being offered and
                                         sold to it in reliance upon specific exemptions from the registration requirements of
                                         United States federal and state securities laws and that the Company is relying upon
                                         the truth and accuracy of, and the Lenders’ compliance with, the representations, warranties,
                                         agreements, acknowledgments and understandings of the Lenders set forth herein in order
                                         to determine the availability of such exemptions and the eligibility of the Lenders to
                                         acquire the securities constituting the Units.

 

		4.1.4.	Experience of the Lenders. The
                                         Lenders have 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 constituting the Units, and has so evaluated the merits and risks of
                                         such investment. The Lenders are able to bear the economic risk of an investment in the
                                         securities constituting the Units and, at the present time, are able to afford a complete
                                         loss of such investment.

 

		4.1.5.	General Solicitation.  The
                                         Lenders are not purchasing the securities constituting the Units as a result of
                                         any advertisement, article, notice or other communication regarding the securities
                                         constituting the Units published in any newspaper, magazine or similar media or broadcast
                                         over television or radio or presented at any seminar or any other general advertisement.

 

	 	4.1.6.	Access to Information. The Lenders acknowledge that they have had the opportunity to review the Company’s filings with the Securities Exchange Commission and have been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the securities constituting the Units and the merits and risks of investing in the Lenders; (ii) as the Company’s officers and directors have access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 

 

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	 	4.1.7.	Transfer or Re-sale. The Lenders understand that (i) the sale or re-sale of the securities constituting the securities constituting the Units has not been and is not being registered under the Securities Act or any applicable state securities laws, and the securities constituting the Units may not be transferred unless (a) the securities constituting the Units are sold pursuant to an effective registration statement under the Securities Act, (b) the Lenders shall have delivered to the Company, at the cost of the Lenders, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the securities constituting the Units to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion may be accepted by the Company in its reasonable discretion,  or (c) the securities constituting the Units are sold pursuant to Rule 144 or Regulation S, and the Lenders shall have delivered to the Company, at the cost of the Lenders, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion may be accepted by the Company in its reasonable discretion; (ii) any sale of such securities constituting the Units made in reliance on Rule 144 may be made only in accordance with the terms of said Rule 144 and further, if said Rule 144 is not applicable, any re-sale of such securities constituting the Units under circumstances in which the selling Lender (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such securities constituting the Units under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case).

 

		4.1.8.	Legends. The Lenders
                                         consent to the placement of a legend on any certificate or other document evidencing
                                         the securities constituting the Units that such securities have not been registered under
                                         the Securities Act or any state securities or “blue sky” laws and setting
                                         forth or referring to the restrictions on transferability and sale thereof contained
                                         in this Agreement. The Lenders are aware that the Company will make a notation in its
                                         appropriate records with respect to the restrictions on the transferability of such securities
                                         constituting the Units. The legend to be placed on each certificate shall be in form
                                         substantially similar to the following:

 

THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES 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. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

 

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		4.1.9.	Independent Investment
                                         Decision.  The Lenders has independently evaluated the merits of its decision
                                         to purchase the securities constituting the Units pursuant to this Agreement.  The
                                         Lenders understand that nothing in this Agreement or any other materials presented by
                                         or on behalf of the Company to the Lenders in connection with the purchase of the securities
                                         constituting the Units constitutes legal, tax or investment advice.  The Lenders
                                         has consulted such legal, tax and investment advisors as it, in its sole discretion,
                                         has deemed necessary or appropriate in connection with its purchase of the securities
                                         constituting the Units.

 

		4.1.10.	Group. Each Lender
                                         represents that it is not a “group” within the meaning of Section 13d-5 under
                                         the Exchange Act with any holder or beneficial owner of the Company’s securities
                                         and in calculating and reporting such Lender’s beneficial ownership, such Lender
                                         is not required under the rules and regulations promulgated under the Exchange Act to
                                         include the beneficial ownership of the securities of the Company held by another holder
                                         or beneficial owner of the Company’s securities.

 

		5.	Miscellaneous

 

		5.1.	Any provision of this Agreement may
                                         be amended, waived or modified only upon the written consent of all the Parties.

 

		5.2.	Notice as required herein shall be
                                         delivered by hand, by fax, by e-mail, by courier service or by registered or certified
                                         mail, return receipt requested, postage prepaid. A notice shall be effective 1 day after being delivered by hand,
                                         courier service, fax or e-mail, and 5 days after being sent by mail.

 

		5.3.	Unless otherwise specified in this
                                         Agreement, none of the rights contained herein may be assigned, by operation of law or
                                         otherwise, without the prior written consent of the Company.

 

		5.4.	This Agreement is governed by the
                                         laws of Israel and the competent courts of Tel Aviv, Israel shall have sole and exclusive
                                         jurisdiction to resolve any disputes arising herefrom or in connection herewith.

 

[Signature Page  to Follow]

 

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IN WITNESS WHEREOF, the Parties hereto have executed
this Agreement on the date first above written.

 

	
        ALEXANDER AUROVSKY 

         

        /s/ Alexander Aurovsky
	 	
        ANATOLY HURGIN 

         

        /s/ Anatoly Hurgin

	 	 	 
	ABILITY INC.	 	ABILITY COMPUTER & SOFTWARE INDUSTRIES LTD.
	 	 	 
	By:	Avi Levin 	 	By:	Avi Levin 
	Title:	Chief Financial Officer	 	Title:	Chief Financial Officer

  

	/s/
    Avi Levin	 	 	/s/
    Avi Levin

 

[Signature Page to Conversion Agreement]

 

     

     

    

 

Exhibit
A

 

Form
of Warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

ORDINARY SHARE
PURCHASE WARRANT

 

ABILITY
INC.

 

	Warrant
    Shares: [___]	Initial Exercise Date: [___]
	 	Issue Date: [___]

 

THIS ORDINARY SHARE PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, [___], or its assigns (the “Holder”) is entitled, upon the terms and subject
to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial
Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on [___] (the “Termination Date”),
but not thereafter, to subscribe for and purchase from Ability Inc., a Cayman Islands exempted company (the “Company”),
up to [___] Ordinary Shares, $0.001 par value (the “Ordinary Share(s)”) (as subject to adjustment hereunder,
the “Warrant Shares”). The purchase price of one Ordinary Share under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b). This Warrant is issued pursuant to the Registration Statement which Registration Statement
also registers the Warrant Shares issuable upon exercise of this Warrant.

 

Section 1.Definitions.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

 

“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.

 

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

 

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

 

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

 

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

 

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

 

“Registration Statement”
means the Company’s registration statement on Form F-1 (File No. 333-226993).

 

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

 

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

 

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

 

“Transfer Agent”
means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 1 State
Street, 30th Floor, New York, New York 10004, and any successor transfer agent of the Company.

 

Section 2.Exercise.

 

a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or
times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly
executed facsimile copy (or .pdf copy via e-mail attachment) of the Notice of Exercise in the form attached as Exhibit
A hereto (the “Notice of Exercise”). Within two (2) Trading Days following the date of exercise as
aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of
Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be
required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within two (2)
Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased
and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day
of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof.

 

Without limiting the rights of
a Holder to receive Warrant Shares on a “cashless exercise” and without limiting the liquidated damages provision
in Section 2(d)(i) and the buy-in provision in Section 2(d)(iv), in no event will the Company be required to net cash settle a
Warrant exercise.

 

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b) Exercise
Price. The exercise price per Ordinary Share under this Warrant shall be $3.25, subject to adjustment hereunder (the
“Exercise Price”).

 

c) Cashless
Exercise. If at any time after the Initial Exercise Date, there is no effective registration statement registering, or no
current prospectus is available for, the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised,
in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive
a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

		(A) =	as applicable: (i) the VWAP on
                                         the Trading Day immediately preceding the date of the applicable Notice of Exercise if
                                         such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof
                                         on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section
                                         2(a) hereof on a Trading Day prior to the opening of “regular trading hours”
                                         (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities
                                         laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the
                                         Trading Day immediately preceding the date of the applicable Notice of Exercise or (z)
                                         the Bid Price of the Ordinary Share on the principal Trading Market as reported by Bloomberg
                                         L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise
                                         if such Notice of Exercise is executed during “regular trading hours” on
                                         a Trading Day and is delivered within two (2) hours thereafter (including until two (2)
                                         hours after the close of “regular trading hours” on a Trading Day) pursuant
                                         to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise
                                         if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is
                                         both executed and delivered pursuant to Section 2(a) hereof after the close of “regular
                                         trading hours” on such Trading Day;

 

		(B) =	the Exercise Price of this Warrant, as adjusted hereunder;
and

 

		(X) =	the number of Warrant Shares that would be issuable upon
exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather
than a cashless exercise.

 

If Warrant
Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised.  The
Company agrees not to take any position contrary to this Section 2(c).

 

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“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary
Share is then listed or quoted on a Trading Market, the bid price of the Ordinary Share for the time in question (or the nearest
preceding date) on the Trading Market on which the Ordinary Share 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 OTCQB or OTCQX is not a
Trading Market, the volume weighted average price of the Ordinary Share for such date (or the nearest preceding date) on OTCQB
or OTCQX as applicable, (c) if the Ordinary Share is not then listed or quoted for trading on OTCQB or OTCQX and if prices for
the Ordinary Shares are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per the Ordinary Share so reported, or (d) in
all other cases, the fair market value of an Ordinary Share as determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

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

 

d) Mechanics
of Exercise.

 

i. Delivery
of Warrant Shares Upon Exercise. Within two (2) Trading Days of the date that a Notice of Exercise is delivered to the Company,
the Company shall deposit the Warrant Shares to the account of the Holder’s prime broker with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement registering for resale of the Warrant Shares by the Holder or
(B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations and current information
requirements are met at such time pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder
in the Notice of Exercise (such date, the “Warrant Share Delivery Date”). If the Warrant Share can be delivered
via DWAC, then in addition to the delivery of the Warrant Shares to the Transfer Agent, within two (2) Trading Days of the applicable
exercise, the Transfer Agent shall have received from the Company any legal opinions or other documentation required by the Transfer
Agent to deliver such Shares without legend and, if applicable and requested by the Company prior to the Warrant Share Delivery
Date, the Transfer Agent shall have received from the Holder a confirmation of sale of the Warrant Shares.

 

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ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that
the Holder shall be required to return any Warrant Shares or Ordinary Shares subject to such rescinded exercise notice concurrently
with the return to Holder of an aggregate Exercise Price paid to the Company for such Warrant Shares and the restoration of Holder’s
right to acquire such Warrant Shares pursuant to this Warrant (including issuance of a replacement warrant certificate evidencing
such restored right).

 

iv. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

 

    13

     

    

 

v. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid
by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached as Exhibit
B hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vi. Closing
of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of
this Warrant, pursuant to the terms hereof.

 

Section 3.Certain
Adjustments.

 

a) Share
Capitalizations and Splits. If the Company, at any time while this Warrant is outstanding: (i) effects a share capitalization
or pays a dividend or otherwise makes a distribution or distributions on its Ordinary Shares or any other equity or equity equivalent
securities payable in Ordinary Shares (which, for avoidance of doubt, shall not include any Ordinary Shares issued by the Company
upon exercise of this Warrant), (ii) subdivides issued and outstanding Ordinary Shares into a larger number of shares, (iii) combines
(including by way of a share consolidation) issued and outstanding Ordinary Shares into a smaller number of shares, or (iv) issues
by reclassification of the Ordinary Shares any capital share of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of Ordinary Shares (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number of Ordinary Shares outstanding immediately after such event,
and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise
Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Reserved.

 

c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Ordinary Share Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record
holders of any class of Ordinary Shares (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of Ordinary Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record
holders of Ordinary Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that
to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such Ordinary Shares as a result of such Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

 

    14

     

    

 

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

 

e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the issued and outstanding
Ordinary Shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares are effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more
related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the issued and outstanding Ordinary Shares (not including any Ordinary Shares held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such share purchase
agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise
of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation
in Section 2(e) on the exercise of this Warrant), the number of Ordinary Shares of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of Ordinary Shares for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Ordinary Share
in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Ordinary Shares
are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall
be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor
Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for
a corresponding number of capital shares of such Successor Entity (or its parent entity) equivalent to the Ordinary Shares acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such capital shares (but taking
into account the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and the value of such capital
shares, such capital shares and such exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with
the same effect as if such Successor Entity had been named as the Company herein.

 

    15

     

    

 

f) Calculations.
All calculations under this Section 3 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 3, the number of Ordinary Shares deemed to be issued and outstanding as of a given date shall be
the sum of the number of Ordinary Shares (excluding treasury shares, if any) issued and outstanding.

 

g) Notice
to Holder.

 

i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall
promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

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

 

    16

     

    

 

Section 4.Transfer
of Warrant.

 

a) Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company
or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed
by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly
be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning
this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued.

 

b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue
Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.

 

    17

     

    

 

d) Transfer
Restrictions. In connection with any transfer of this Warrant or Warrant Shares, the Company may require the transferor thereof
to provide to the Company and the Transfer Agent an opinion of counsel selected by the transferor and reasonably acceptable to
the Company and the Transfer Agent, the form and substance of which opinion shall be reasonably satisfactory to the Company and
the Transfer Agent, to the effect that such transfer does not require registration of such transferred Warrants or Warrant Shares
under the Securities Act.

 

Section 5.Miscellaneous.

 

a) No
Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in
Section 3.

 

b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate (if any) relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which,
in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or
share certificate (if any), if mutilated, the Company will make and deliver a new Warrant or share certificate (if any) of like
tenor and dated as of such cancellation, in lieu of such Warrant or share certificate (if any).

 

c) 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.

 

d) Authorized
Shares.

 

The Company covenants that, during the period the Warrant
is outstanding, it will reserve from its authorized and unissued Ordinary Shares a sufficient number of shares to provide for
the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Trading Market upon which the Ordinary Shares may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

    18

     

    

 

Except and to the extent as waived
or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of association
or through any reorganization, transfer of assets, consolidation, merger, 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 Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction
thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which
would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their 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, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant 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,
suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be
reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

    19

     

    

 

f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder
does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. If the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such
amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

 

h) Notices.
Any notices, consents, waivers or other document or communications required or permitted to be given or delivered under the terms
of this Warrant must be in writing and will be deemed to have been delivered: (i) upon receipt, if delivered personally; (ii)
when sent, if sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party); (iii) when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically
or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s
e-mail server that such e-mail could not be delivered to such recipient) and (iv) if sent by overnight courier service, one (1)
Trading Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed
to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:

 

If to the Company:

 

Ability Inc.

Yad Harutzim 14

Tel Aviv, Israel, 6770007

Facsimile: +972 3 5376483

E-mail: avi@ability.co.il

Attention: Avi Levin, CFO

 

    20

     

    

 

With a copy (for informational purposes only) to:

 

McDermott Will & Emery LLP

340 Madison Ave

New York, NY 10173

Facsimile: 212 547 5444

E-mail: gemmanuel@mwe.com

Attention: Gary Emmanuel

 

i) If to
a Holder, to its address, facsimile number or e-mail address set forth herein or on the books and records of the Company.

 

j) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Ordinary Share or as a shareholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

k) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.

 

l) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.

 

m) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

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

 

o) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.

 

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

 

(Signature Page Follows)

 

    21

     

    

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	 	ABILITY INC.
	 	 	 
	 	By:	                        
	 	 	Name:
	 	 	Title:

 

    22

     

    

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

		To:	ABILITY
                                         INC.

 

The undersigned hereby
elects to purchase Warrant Shares of Ability Inc. (the “Company”), pursuant to the terms of the attached warrant (the
“Warrant”). The undersigned tenders herewith payment of the exercise price pursuant to the terms of the Warrant.

 

The undersigned hereby
represents and warrants to, and agrees with, the Company as follows:

 

1. Holder is acquiring
the Warrant Shares for its own account, for investment purposes only.

 

2. Holder understands
that an investment in the Warrant Shares involves a high degree of risk, and Holder has the financial ability to bear the economic
risk of this investment in the Warrant Shares, including a complete loss of such investment. Holder has adequate means for providing
for its current financial needs and has no need for liquidity with respect to this investment.

 

3. Holder has
such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment
in the Warrant Shares and in protecting its own interest in connection with this transaction.

 

4. Holder understands
that the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act“)
or under any state securities laws. Holder is familiar with the provisions of the Securities Act and Rule 144 thereunder and understands
that the restrictions on transfer on the Warrant Shares may result in Holder being required to hold the Warrant Shares for an indefinite
period of time.

 

5. Holder (i) represents that the issuance of the Warrant Shares is being made outside of the United
States, and the Holder is outside the United States, (ii) has not engaged in or directed any unsolicited offers to purchase the
Warrant Shares, (iii) is neither a U.S. Person nor a Distributor (as such terms are defined in Rule 902(k) and 902(d), respectively,
of Regulation S), (iv) is purchasing the Warrant Shares for his own account and not for the account or benefit of any U.S. Person,
(v) will be the sole beneficial owner of the Warrant Shares and has not pre-arranged any sale in the United States, and (v) is
familiar with and understands the terms and conditions and requirements contained in Regulation S, specifically, without limitation,
the Holder understands that the statutory basis for the exemption claimed for the sale of the Warrant Shares would not be present
if the sale, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions
of the Securities Act.

 

Number of Warrant Shares Exercised: ______________

Name of Holder: ________________________________________________________________________

Signature of Authorized Signatory of Holder: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

    23

     

    

 

EXHIBIT B

 

ASSIGNMENT
FORM

 

(To assign the
foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED,
the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	Name:	 	 
	 	 	(Please Print)
	 	 	 
	Address:	 	 
	 	 	(Please Print)
	 	 	 
	Phone Number:	 	 
	 	 	 
	Email Address: 	 	 
	 	 	 
	Dated: _______________ __, ______	 	 
	 	 	 
	Holder’s Signature: __________	 	 
	 	 	 
	Holder’s Address:__________	 	 

 

    24Exhibit
10.2

 

 

Ability’s Line of Credit to be Repaid and Converted into Equity 

 

TEL AVIV, ISRAEL, December 28, 2018
/ (GLOBENEWSWIRE) / Ability Inc. (NASDAQ: ABIL) (the “Company”), a provider of innovative tactical communications
intelligence solutions, today announced that Anatoly Hurgin and Alexander Aurovsky, founders and officers and directors of the
Company, have entered into an agreement with the Company pursuant to which the amount outstanding under the Company’s line
of credit (NIS 5.5 million, or approximately $1.5 million), which is secured with funds of Messrs. Hurgin and Aurovsky, will be
repaid and converted into equity.

 

Under the terms of the agreement, the Company’s
outstanding line of credit with an Israeli commercial bank (NIS 5.5 million, or approximately $1.5 million) will be repaid using
funds to be transferred to the Company by Messrs. Hurgin and Aurovsky. In return, the Company will issue, in a private placement,
to each of Messrs. Hurgin and Aurovsky 226,426 ordinary shares (452,852 ordinary shares in the aggregate) and warrants to purchase
226,426 ordinary shares (452,852 ordinary shares in the aggregate) at a conversion price of $3.25, the same price per unit of the
Company’s recently closed public offering. The warrants will be immediately exercisable at a price of $3.25 per ordinary
share, subject to adjustment in certain circumstances, expire five years from the date of issuance and contain substantially similar
terms to the warrants issued in the recently closed public offering. Closing is expected to take place on or around January 3,
2019.

 

The securities to be issued in the private
placement described above will be offered in a private placement pursuant to an exemption from the registration requirements under
Regulation S and/or Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), Rule 506 of Regulation
D promulgated thereunder. The offer and sale of the securities will be made without any form of general solicitation or advertising.
The securities have not been registered under the Act or applicable state securities laws. Accordingly, the securities, and may
not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption
the such registration requirements of the Act and such applicable state securities laws.

 

This
press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein.
There shall not be any offer, solicitation of an offer to buy, or sale of securities in any state or jurisdiction in which such
an offering, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such
state or jurisdiction.

 

About
Ability Inc.

 

Ability
Inc. is the sole owner of Ability Computer & Software Industries Ltd. (“ACSI”) and Ability Security Systems Ltd.
Headquartered in Tel Aviv, Israel, ACSI was founded in 1994. ACSI provides advanced interception, geolocation and cyber intelligence
tools used by security and intelligence agencies, military forces, law enforcement and homeland security agencies worldwide. ACSI
has sold to governments and government agencies in over 50 countries. ACSI offers a broad range of lawful interception, decryption,
cyber and geolocation solutions for cellular and satellite communication, including ULIN, or Ultimate Interceptor, which to our
knowledge, is the first-to-market SaaS strategic interception system with voice and geolocation capabilities without geographic
limitation. State-of-the-art technology underpins ACSI’s scalable offerings, which can be tactical-and-portable, or strategic-and-fixed,
depending on its customers’ needs. Additional information regarding ACSI may be found at http://www.interceptors.com.

 

Caution
Regarding Forward-Looking Statements

 

Any
statements contained in this press release that do not describe historical facts may constitute forward-looking statements as
that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other
thing, statements regarding the acquisition. Forward-looking statements should not be read as a guarantee of future performance
or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements
are based on information that the Company has when those statements are made or management’s good faith belief as of that
time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results
to differ materially from those expressed in or suggested by the forward-looking statements. The Company assumes no obligation
to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

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