Document:

Exhibit 10.1 

 

SECOND AMENDMENT TO THE
LOAN AND SECURITY AGREEMENT

 

THIS
SECOND AMENDMENT to the Loan and Security Agreement (this “Amendment”) is made effective as of June 21, 2021 (the
“Amendment Date”) and made by and among WESTERN ALLIANCE BANK, an Arizona corporation (“Bank”)
and FENNEC PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”).

 

WHEREAS,
Bank and Borrower have entered into that certain Loan and Security Agreement, dated as of February 1, 2019 (as amended, supplemented,
restated or otherwise modified from time to time, the “ Loan Agreement”) pursuant to which Bank has provided to Borrower
certain loans in accordance with the terms and conditions thereof; and

 

WHEREAS,
Bank and Borrower desire to amend certain provisions of the Loan Agreement as provided herein and subject to the terms and conditions
set forth herein.

 

NOW,
THEREFORE, in consideration of the promises, covenants and agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

 

1.      
Capitalized terms used herein but not otherwise defined shall have the respective meanings given to them in the Loan Agreement. 

 

2.      
Section 1.1 of the Loan Agreement is hereby amended by deleting therefrom the definitions of “Draw Period” and “Equity
Event” and adding the following definitions therein in alphabetical order: 

 

“Second Amendment
Warrant” is that certain Warrant to purchase Parent’s capital stock from and after the Amendment Date until expiry thereof,
to be issued by Borrower (subject to the conditions hereof) in favor of the Bank on the Amendment Date.

 

“Second Amendment
Fee In Lieu Of Additional Warrant” is an amount of Forty Two Thousand Six Hundred Dollars ($42,600.00).

 

“Second Amendment Date”
is June 21, 2021.

 

“Submission
Event” is the resubmission by Borrower for final NDA approval from the U.S. Food and Drug Administration for Borrower’s drug
candidate currently named PEDMARK on or before June 15, 2021.

 

“Third Draw Period”
is the period commencing of the date of the occurrence of the Revenue Event and ending on the earlier of (i) December 31, 2022 and (ii)
the occurrence of an Event of Default; provided, however, that the Third Draw Period shall not commence if on the date of the occurrence
of the Revenue Event an Event of Default has occurred and is continuing.

 

“Term C Loan” is
defined in Section 2.2(a)(iii).

 

3.       Section
1.1 of the Loan Agreement is hereby amended by amending and restating the following definitions therein as follows:

 

“Approval Event”
is the receipt of the final NDA approval by Borrower from the U.S. Food and Drug Administration for Borrower’s drug candidate currently
named PEDMARK on or before January 31, 2022.

 

“First Draw Period”
is the period commencing of the date of the occurrence of the Submission Event and ending on the earlier of (i) June 30, 2021 and (ii)
the occurrence of an Event of Default; provided, however, that the First Draw Period shall not commence if on the date of the occurrence
of the Submission Event an Event of Default has occurred and is continuing.

 

     

     

    

 

“Revenue Event”
is the achievement by Borrower after the Second Amendment Date of consolidated trailing six- month revenues of at least Eleven Million
Dollars ($11,000,000) on or before December 31, 2022, at the end of any fiscal month of Borrower, as reasonably determined by the Bank
based on evidence reasonably acceptable to the Bank.

 

“Second Draw Period”
is the period commencing of the date of the occurrence of the Approval Event and ending on the earlier of (i) January 31, 2022 and (ii)
the occurrence of an Event of Default; provided, however, that the Second Draw Period shall not commence if on the date of the occurrence
of the Approval Event an Event of Default has occurred and is continuing.

 

“Term Loan” is
defined in Section 2.2(a)(iii).

 

4.       Section
2.2 of the Loan Agreement is hereby amended and restated as follows:

 

 2.2    Term Loans. 

 

 (a)    Availability.

 

(i)                 
Subject to the terms and conditions of this Agreement, during the First Draw Period, Bank shall make a term loan to Borrower in the amount
of Five Million Dollars ($5,000,000) (such term loan is hereinafter referred to as “Term A Loan”). After repayment, the Term
A Loan may not be re-borrowed. 

 

(ii)               
Subject to the terms and conditions of this Agreement, during the Second Draw Period, Bank shall, at the request of the Borrower, make
a term loan to Borrower in an aggregate original principal amount equal to up to Seven Million Five Hundred Thousand Dollars ($7,500,000)
(such term loan is hereinafter referred to as “Term B Loan”). After repayment, the Term B Loan may not be re-borrowed. 

 

(iii)             
Subject to the terms and conditions of this Agreement, during the Third Draw Period, Bank shall, at the request of the Borrower, make
a term loan to Borrower in an aggregate original principal amount equal to up to Seven Million Five Hundred Thousand Dollars ($7,500,000)
(such term loan is hereinafter referred to as “Term C Loan”; each Term A Loan, Term B Loan or Term C Loan is hereinafter
referred to singly as a “Term Loan” and the Term A Loan, the Term B Loan and the Term C Loan are hereinafter referred to
collectively as the “Term Loans”). After repayment, the Term C Loan may not be re-borrowed. 

 

(b)  
Repayment. Borrower shall make monthly payments of interest only commencing on the first (1st) Payment Date following the Funding
Date of each Term Loan, and continuing on the Payment Date of each successive month thereafter through and including the Payment Date
immediately preceding the Amortization Date. Borrower agrees to pay, on the Funding Date of each Term Loan, any initial partial monthly
interest payment otherwise due for the period between the Funding Date of such Term Loan and the first Payment Date thereof. Commencing
on the Amortization Date, and continuing on the Payment Date of each month thereafter, Borrower shall make equal monthly payments of
principal, together with applicable interest, in arrears, as calculated by Bank (which calculations shall be deemed correct absent manifest
error) based upon: (1) the amount of the Term Loans, (2) the effective rate of interest, as determined in Section 2.4(a), and (3) a repayment
schedule as determined by the Bank based on the Maturity Date and the Amortization Date (which determination shall be deemed correct
absent manifest error). All unpaid principal and accrued and unpaid interest is due and payable in full on the Maturity Date with respect
to the Term Loans. The Term Loans may only be prepaid in accordance with Sections 2.2(c) and 2.2(d). 

 

(c)    Mandatory
Prepayments. If any Term Loan is accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to
Bank, an amount equal to the sum of: (i) all outstanding principal of all of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (ii) the Final Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations that are due and
payable, including Bank’s Expenses and interest at the Default Rate with respect to any past due amounts. Notwithstanding (but
without duplication with) the foregoing, on the Maturity Date, if the Final Payment had not previously been paid in full in
connection with the prepayment of the Term Loans in full, Borrower shall pay Bank the Final Payment in respect of the Term
Loans.

 

    2 

     

    

 

(d)  
Permitted Prepayment of Term Loans. Borrower shall have the option to prepay all, but not less than all, of the Term Loans advanced
by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Term Loans at least
thirty (30) days prior to such prepayment, and (ii) pays to the Bank on the date of such prepayment an amount equal to the sum of (A)
all outstanding principal of the Term Loans plus accrued and unpaid interest thereon through the prepayment date, (B) the Final Payment,
(C) the Prepayment Fee, plus (D) all other Obligations that are due and payable, including Bank’s Expenses and interest at the
Default Rate with respect to any past due amounts. 

 

5.      
Section 2.5 of the Loan Agreement is hereby amended by removing “and” at the end of Section 2.5(d), replacing “.”
at the end of Section 2.5(e) with “; and” and adding the following Section 2.5(f) thereto: 

 

 (f) second amendment fee in the amount of $8,400 due on the funding date of the Term A Loan. 

 

 6.     Section 3.2 of the Loan Agreement is hereby amended and restated as follows: 

 

3.2       Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is further subject to the representations and warranties contained in Section 5 shall be true and correct in all material
respects on and as of the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default
shall have occurred and be continuing, or would exist after giving effect to such Credit Extension. The making of each Credit Extension
shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts
referred to in this Section 3.2. Furthermore, the making of each Credit Extension shall be subject to the delivery by Borrower to the
Bank, to the extent not delivered at the Closing, of duly executed original Secured Promissory Notes and Warrants, in number, form and
content acceptable to the Bank, with respect to such Credit Extension made by the Bank after the Closing Date. Furthermore, if the Credit
Extension is for Term B Loan or Term C Loan, in addition to all other applicable provisions of this Agreement, Borrower must also have
on the Funding Date of the Term B Loan or Term C Loan, as applicable, in accounts maintained with the Bank, unrestricted cash and cash
equivalents in an aggregate amount equal to at least nine times the Monthly Cash Burn as calculated on the last date of the immediately
preceding month. 

 

 7.     Section 6.12 of the Loan Agreement is hereby amended and restated as follows: 

 

 6.12     Financial Covenants. 

 

(a)
     Commencing on the Closing Date, Borrower shall at all times maintain in accounts held at the Bank, unrestricted cash and cash equivalents
in an aggregate amount equal to at least three times the Monthly Cash Burn as calculated on the last date of the immediately preceding
month.

 

(b)      At
all times on and after the Funding Date Term C Loan, Parent must satisfy the Seventy Five Percent Test each month, as determined by the
Bank on the date of the receipt of the monthly financial statements by the Bank in accordance with Section 6.3 hereof.

 

 8.     The following Section 6.16 is hereby added to the Loan Agreement: 

 

6.16
    Approval Event. The Approval Event must occur on or before January 31, 2022.

 

 9.     Exhibit C to the Loan Agreement is hereby amended and restated as set forth on Exhibit A hereto.

 

 10.   Exhibit D to the Loan Agreement is hereby amended and restated as set forth on Exhibit B hereto.

 

    3 

     

    

 

 11.     Limitation of Amendment. 

 

a.                
The amendments set forth above are effective for the purposes set forth herein and shall be limited precisely as written and shall not
be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise
prejudice any right, remedy or obligation which the Bank or Borrower may now have or may have in the future under or in connection with
any Loan Document, as amended hereby. 

 

b.               
This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain
in full force and effect. 

 

12.  
To induce the Bank to enter into this Amendment, Borrower hereby represents and warrants to the Bank as follows:

 

a.                
Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate
and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier
date, in which case they are true and correct in all material respects as of such date), and (b) no Event of Default has occurred and
is continuing; 

 

b.               
Borrower has the power and due authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement,
as amended by this Amendment; 

 

c.                
The organizational documents of Borrower delivered to the Bank on the Effective Date, and updated pursuant to subsequent deliveries by
the Borrower to the Bank, if any, remain true, accurate and complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect; 

 

d.               
The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement,
as amended by this Amendment, will not constitute an event of default under any material agreement with a Person binding on Borrower,
or a breach of any provision contained in the Articles of Incorporation or Bylaws of Borrower; and 

 

e.               
This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium
or other similar laws of general application and by general equitable principles. 

 

13.   
Borrower hereby remises, releases, acquits, satisfies and forever discharges the Bank, its agents, employees, officers, directors, predecessors,
attorneys and all others acting or purporting to act on behalf of or at the direction of the Bank (“Releasees”), of
and from any and all manner of actions, causes of action, suit, debts, accounts, covenants, contracts, controversies, agreements, variances,
damages, judgments, claims and demands whatsoever, in law or in equity, which any of such parties ever had, now has or, to the extent
arising from or in connection with any act, omission or state of facts taken or existing on or prior to the date hereof, may have after
the date hereof against the Releasees, for, upon or by reason of any matter, cause or thing whatsoever relating to or arising out of
the Loan Agreement or the other Loan Documents on or prior to the date hereof and through the date hereof. Without limiting the generality
of the foregoing, the Borrower waives and affirmatively agrees not to allege or otherwise pursue any defenses, affirmative defenses,
counterclaims, claims, causes of action, setoffs or other rights they do, shall or may have as of the date hereof, including the rights
to contest: (a) the right of Bank to exercise its rights and remedies described in the Loan Documents; (b) any provision of this Amendment
or the Loan Documents; or (c) any conduct of the Bank or other Releasees relating to or arising out of the Loan Agreement or the other
Loan Documents on or prior to the date hereof. 

 

    4 

     

    

 

14.   
Except as expressly set forth herein, the Loan Agreement shall continue in full force and effect without alteration or amendment. This
Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.

 

15.   
This Amendment shall be deemed effective as of the Amendment Date upon (i) the due execution and delivery to the Bank of this Amendment
by each party hereto and (ii) either (A) Borrower’s delivery to Bank a duly executed, issued and authorized Second Amendment Warrant
to purchase stock of Parent in such form and substance as is agreed to by the parties, dated as of the Second Amendment Date or (B) Borrower
payment to the Bank, on the Second Amendment Date, Second Amendment Fee In Lieu Of Additional Warrant. 

 

16.   
This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together,
shall constitute one and the same instrument. 

 

17.   
This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of
the State of California. 

 

[Balance of Page Intentionally
Left Blank]

 

    5 

     

    

  

IN
WITNESS WHEREOF, the parties hereto have caused this Second Amendment to the Loan and Security Agreement to be executed as of the
date first set forth above.

 

 

	 	Fennec
  pharmaceuticals, inc., A delaware corporation
	 	 

	 	By:	/s/
  Robert Andrade
	 	 	 
	 	Name:	Robert
  Andrade
	 	 	 
	 	Title:	CFO

 

	 	Western
  alliance bank, an arizona corporation

 

	 	By:	/s/
  Alex Augustyn
	 	 	 
	 	Name:	Alex
  Augustyn
	 	 	 
	 	Title:	VP,
  Life Sciences

 

     

     

    

 

Exhibit A

 

EXHIBIT C

 

 

COMPLIANCE CERTIFICATE

 

	TO:	WESTERN ALLIANCE BANK, an Arizona corporation

 

	FROM:	 	 

 

The undersigned
authorized officer of FENNEC PHARMACEUTICALS, INC. hereby certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the
Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification.
The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently
applied from one period to the next except as explained in an accompanying letter or footnotes.

 

Please indicate compliance
status by circling Yes/No under “Complies” column.

 	Reporting Covenant	 	Required	Complies	 
	 	 	 	 	 
	Annual financial statements (CPA Audited)	 	FYE within 90 days	Yes	No	 
	 	 	 	 	 	 
	Monthly  financial  statements  and  Compliance Certificate	 	Prior  to  each  Credit  Extension,  and monthly within 30 days	Yes	No	 
	 	 	 	 	 	 
	10K and 10Q	 	Within 5 days of filing	Yes	No	 
	 	 	 	 	 	 
	Annual operating budget, sales projections and operating plans approved by board of directors	 	Annually no later than 30 days prior to the beginning of each fiscal year	Yes	No	 
	 	 	 	 	 	 
	Monthly  Cash  Burn  (after  Closing  Date)1:	 	 	 	 	 
	___________	 	 	 	 	 
	 	 	 	 	 	 
	Unrestricted deposits with Bank $____________	 	 	 	 	 
	 	 	 	 	 	 
	Covenant	 	 	Yes	No	 
	 	 	 	 	 	 
	Approval Event must occur by January 31, 2022	 	 	
    

     

	 	 	 	 	 	 
	 At all times after the Closing Date unrestricted cash and cash equivalents held at accounts at the Bank must be greater than or equal to three time the Monthly Cash Burn	
     

     
	
      
	
    Yes
	
    No
	
     

	 	 	 	 	 
	At all times on and after the Funding Date of Term C Loan, Parent must achieve 75% of the trailing 6-month consolidated revenue	
     

     
	
     

     
	
    Yes 
	
    No 
	
     

	 	 	 	 	 	 
	Deposit balances with Bank	 	$ ___________________	 	 	 

 

 

1 Please attach separate sheet
showing the calculation

 

     

     

    

 

	Deposit balance outside Bank	$
    ___________________	 
	Comments Regarding
    Exceptions: See Attached.	 	 	 	 
	 	BANK USE ONLY
	 	 	Received by:	 	 
	Sincerely,	 	 	AUTHORIZED
    SIGNER
	 	 	 	 
	 	 	Date:	 	 
	 	 	Verified:	 	 
	SIGNATURE	 	 	AUTHORIZED SIGNER
	 	 	Date:	 	 
	TITLE	 	Compliance
    Status	Yes	No
	 	 	 
	 	 	 	 	 
	DATE	 	 	 	 

 

     

     

    

 

Exhibit B

 

EXHIBIT D

 

SECURED PROMISSORY NOTE

(Term [A][B][C] Loan)

 

	             $[_____]	Dated: [_____]

 

FOR VALUE
RECEIVED, the undersigned, FENNEC PHARMACEUTICALS, INC., a Delaware corporation with offices located at 68 TW Alexander Drive, Research
Triangle Park, NC 27709 (“Borrower”) HEREBY PROMISES TO PAY to the order of WESTERN ALLIANCE BANK (“Bank”)
the principal amount of [___] DOLLARS ($ [____]) or such lesser amount as shall equal the outstanding principal balance of the Term [A][B][C]
Loan made to Borrower by the Bank, plus interest on the aggregate unpaid principal amount of such Term [A][B][C] Loan, at the rates and
in accordance with the terms of the Loan and Security Agreement dated February 1, 2019 by and between Borrower and the Bank (as amended,
restated, supplemented or otherwise modified from time to time, the “Loan Agreement”). If not sooner paid, the entire
principal amount and all accrued and unpaid interest hereunder shall be due and payable on the Maturity Date as set forth in the Loan
Agreement. Any capitalized term not otherwise defined herein shall have the meaning attributed to such term in the Loan Agreement.

 

Principal,
interest and all other amounts due with respect to the Term [A][B][C] Loan, are payable in lawful money of the United States of America
to the Bank as set forth in the Loan Agreement and this Secured Promissory Note (this “Note”). The principal amount
of this Note and the interest rate applicable thereto, and all payments made with respect thereto, shall be recorded by the Bank and,
prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note.

 

The
Loan Agreement, among other things, (a) provides for the making of a secured Term [A][B][C] Loan by the Bank to Borrower, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain stated events.

 

This
Note may not be prepaid except as set forth in Section 2.2 (c) and Section 2.2(d) of the Loan Agreement.

 

This
Note and the obligation of Borrower to repay the unpaid principal amount of the Term [A][B][C] Loan, interest on the Term [A][B][C] Loan
and all other amounts due to the Bank under the Loan Agreement is secured under the Loan Agreement.

 

Presentment
for payment, demand, notice of protest and all other demands and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.

 

Borrower
shall pay all reasonable fees and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred by the
Bank in the enforcement or attempt to enforce any of Borrower’s obligations hereunder not performed when due.

 

This
Note shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California.

 

The ownership
of an interest in this Note shall be registered on a record of ownership maintained by the Bank or its agent. Notwithstanding anything
else in this Note to the contrary, the right to the principal of, and stated interest on, this Note may be transferred only if the transfer
is registered on such record of ownership and the transferee is identified as the owner of an interest in the obligation. Borrower shall
be entitled to treat the registered holder of this Note (as recorded on such record of ownership) as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or interest in this Note on the part of any other person
or entity.

 

     

     

    

 

[Balance of
Page Intentionally Left Blank]

 

     

     

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of its officers thereunto duly authorized on the date hereof.

 

	 	BORROWER:

 

	 	FENNEC PHARMACEUTICALS, INC.

 

	 	By	/s/ Robert
Andrade

 

	 	Name:	Robert
Andrade
	 	 	 
	 	Title:	CFO

 

Term [A][B][C]
Loan Note

 

     

     

    

 

	 	 	LOAN INTEREST
    RATE AND PAYMENTS OF PRINCIPAL	 	 
	 	 	 	 	 
	Date	 	Principal	 	 	 	Scheduled	 	 
	 	Amount	 	Interest
    Rate	 	Payment
    Amount	 	Notation
    ByExhibit 10.1

 

INMUNE BIO, INC.

 

2021 STOCK INCENTIVE PLAN

 

Nonqualified Stock Option Agreement

 

This NONQUALIFIED STOCK
OPTION AGREEMENT (this “Agreement”), made and entered into on the ___ day of 2021, by and between (the “Participant”)
and INmune Bio, Inc., a Nevada corporation (the “Company”), sets forth the terms and conditions of stock options issued
to the Participant by the Compensation Committee of the Board of Directors of the Company on June , 2021 (the “Grant Date”)
pursuant to the Company’s 2021 Stock Incentive Plan (the “Plan”) and this Agreement, which options have been
approved by the Company’s Board of Directors. Any capitalized terms used but not defined herein shall have the meaning prescribed
in Annex A or in the Plan.

 

1. Grant
of Stock Option. Subject to the provisions of this Agreement and the Plan, the Company hereby grants to the Participant a nonqualified
stock option (the “Option”) to purchase up to shares of the Company’s common stock, $0.001 par value per share
(the “Common Stock”). The Option are granted as of the Grant Date pursuant to, and subject to the terms and conditions
of, the Plan.

 

2.Exercise Price.The
exercise price per share of Common Stock subject to the Options is $_____ (the “Exercise Price”).

 

3.Vesting.Subject
to Section 4 hereof, the Options shall vest on a pro rata quarterly basis over__________________ such that all options to purchase the
shares granted pursuant to the Option will have vested the anniversary of the Date of Grant, so long as (and provided that) the Participant
continuously remains an employee, officer, director, or consultant of the Company from the Grant Date through such date(s). The Options
shall be exercisable on any date to the extent vested and outstanding on such date. For purposes of this Agreement, employment or service
relationship with the Company shall include employment with or provision of services to the Company’s affiliates (including Subsidiaries)
and/or its successors. As set forth in Section 12 herein, nothing in this Agreement or the Plan shall confer upon the Participant any
right to continue in the employ or service of the Company or any of its affiliates (including Subsidiaries) or interfere in any way with
the right of the Company or any such affiliates (including Subsidiaries) to terminate the Participant’s employment or service relationship
at any time. In the event of any “Change of Control”, all of the options granted hereunder shall automatically and immediately
vest. For purposes of this Option, the term Change of Control shall mean: the sale of all or substantially all of the assets of the Company;
any merger, consolidation or acquisition of the Company with, by or into another corporation, entity or person which results in another
party acquiring more than 50% of the entity. To avoid ambiguity, the Participant acknowledges that a reverse merger of the Company into
a public entity wherein the pre-merger shareholders of the Company still own more than 50.1% of the combined company shall not constitute
a Change of Control.

 

    1

     

    

 

4. Termination
of Employment or Service.

 

(a) In
the event of the Participant’s termination of employment or service relationship, whether as an employee, officer, director or consultant,
by either the Company or its affiliates (including Subsidiaries) without Cause, or by the Participant, any portion of the Options that
has not vested as of the date of such termination of employment or service relationship shall immediately expire, and the vested Options
shall expire within 90 days after such termination of employment or service relationship. In the event of the Participant’s termination
of employment or service relationship by reason of the Participant’s death or Disability, the vested Options shall expire within
180 days after such termination of employment or service relationship.

 

(b) In
the event of the Participant’s termination of employment or service relationship, whether as an employee, officer, director or consultant,
by the Company or its affiliates (including Subsidiaries) for Cause, any portion of the Options that are outstanding as of the date of
such termination of employment or service relationship shall immediately be forfeited.

 

5. Term of
Options. All unexercised Options shall expire as to all shares of Common Stock underlying the Options on _________, 20__ (the
“Expiration Date”), unless sooner terminated as provided in Section 4 hereof.

 

6. Method
of Stock Option Exercise.

 

(a) The
Options may be exercised during their term, in whole or in part, to the extent they have become vested and exercisable pursuant to Sections
3 and/or 4 and have not yet been forfeited or expired, by the Participant providing notice in writing to the Chief Executive Officer of
the Company (the “CEO”), signifying the Participant’s election to exercise the Options (the “Notice
of Exercise”). The Notice of Exercise shall be in such manner and on such form as designated by the CEO and pursuant to procedures
established by the CEO and/or the Company. The Company may in the future change the person designated to receive such Notice(s) of Exercise,
to any other agent or employee of the Company. In the event of any such change, the Company shall provide notice to the Participant.

 

(b) The
payment of the Exercise Price shall be subject to the following:

 

(i) Payment
of Exercise Price. The Exercise Price shall be payable in cash or by wire transfer to the Company’s bank account, for the full
purchase price of the shares being purchased, plus such amount, if any, as is required for withholding taxes and for fees related to any
agent(s), if applicable.

 

    2

     

    

 

(ii) If
requested by the Company, a written acknowledgement by the Participant, in the form contained in the Notice of Exercise that an investment
in the Common Stock of the Company involves a high degree of risk, that the Participant has received a copy of the Company’s financial
statements for the most recently ended fiscal year for which such statement is available, and that the Participant has had the opportunity
to ask questions of management concerning the Company prior to the exercise of the Options (the Company to provide such information as
the Participant may reasonably request in writing, provided that such information has been disclosed to the public).

 

(iii) The
Exercise Price per share of Common Stock purchased upon the exercise of the Options shall be paid at the time of such exercise.

 

(c) The
Company may cause each certificate evidencing the purchased Common Stock to be endorsed with one or more legends setting forth the restrictions
on transfer or otherwise of such Common Stock.

 

(d) Certificates
for shares of the Common Stock so purchased will be issued as soon as practicable. The Company, however, shall not be required to issue
or deliver a certificate for any shares until it has complied with all requirements of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any stock exchange on which the Company’s Common Stock may then be listed and all applicable state
laws in connection with the issuance or sale of such shares or the listing of such shares on said exchange. Until the issuance of the
certificate for such shares, the Participant, or such other person as may be entitled to exercise these Options, shall have none of the
rights of a stockholder with respect to shares subject to the Options.

 

7. Taxes.
Participant understands that, upon the exercise of the Option, Participant may recognize income, for federal and state income tax purposes.
The acceptance of the shares underlying the Option by the Participant shall constitute an agreement by the Participant to report such
income in accordance with then applicable law and to cooperate with the Company in establishing the amount of such income and corresponding
deduction to the Company for its income tax purposes. Withholding for federal or state income and employment tax purposes will be made,
if and as required by law, from Participant’s then current compensation, or, if such current compensation is insufficient to satisfy
withholding tax liability, the Company may require the Participant to make a cash payment to cover such liability as a condition of the
exercise of the Option.

 

8. Non-transferability.
The Options shall not be transferable by the Participant (as defined below) other than pursuant to the terms of the Plan or by will or
by the laws of descent and distribution. The Options shall be exercisable, subject to the terms of the Plan and this Agreement, only by
the Participant, the Participant’s estate or beneficiary, the guardian or legal representative of the Participant, or any person
to whom such Options are transferred pursuant to this Section 8. For purposes of this Section 8, the term “Participant” includes
such guardian, legal representative and other permitted transferee.

 

    3

     

    

 

9. Successors,
Assigns and Transferees. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and each of their respective
successors, assigns and permitted transferees (including, upon the death of the Participant, the Participant’s estate).

 

10. Administration.
The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee
shall have all powers with respect to this Agreement as it has with respect to the Plan. In the event of any question or controversy relating
to the terms of the Plan and this Agreement, the decision of the Committee shall be conclusive.

 

11. Incorporation
of Plan. Subject to the limitations contained in Section 10 of this Agreement, all terms and conditions of the Plan are incorporated
herein and made part hereof as if stated herein. The Participant may obtain a copy of the Plan by contacting the Company’s Chief
Executive Officer.

 

12. Not
an Employment or Service Contract. Neither this Agreement nor any Options, or the Plan, shall confer on the Participant any right
with respect to continuance of employment or other service with the Company or any of its affiliates (including Subsidiaries), nor shall
they interfere in any way with any right(s) that the Company or any such affiliates (including Subsidiaries) would otherwise have to terminate
or modify the terms of the Participant’s employment or other service, at any time.

 

13. Insider
Trading Policy. The Participant hereby certifies as to his agreement to comply with any policies, instructions, guidelines or procedures
covering trading in the Company’s securities that the Company adopts from time to time, as may relate to the Options and underlying
shares issued hereunder.

 

14. Exercise
on certain Record Dates. Notwithstanding anything to the contrary contained in this Agreement or the Plan, in the event the Company
sets a record date (“Record Date”) in connection with a distribution of bonus shares or dividends, rights offering,
stock split, reverse stock split or capital reduction (each an “Event”), the Participant shall not be eligible to exercise
the Options on the Record Date.

 

15. Integration.
This Agreement and the other documents referred to herein, including without limitation the Plan, or delivered pursuant hereto, which
form a part hereof contain the entire understanding of the parties with respect to their subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly
set forth herein. This Agreement, including without limitation the Plan, supersedes all prior agreements and understandings between the
parties with respect to its subject matter.

 

16. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together constitute one
and the same instrument. Notwithstanding the foregoing, any duly authorized officer of the Company may execute this Agreement by providing
an appropriate facsimile signature and any counterpart or amendment hereto containing such facsimile signature shall for all purposes
be deemed an original instrument duly executed by the Company.

 

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17. Modification;
Waiver. No provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing
and signed by the Participant and by a duly authorized officer of the Company, and such waiver is set forth in writing and signed by the
party to be charged. No waiver by either party hereto at any time of any breach by the other party hereto of any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time.

 

THIS AGREEMENT SHALL BE NULL AND VOID AB
INITIO, AND THE GRANT OF OPTIONS REFLECTED HEREIN, SHALL BE DEEMED FORFEITED, UNLESS THE COMPANY RECEIVES, WITHIN TWO WEEKS OF ITS
TENDER OF THIS AGREEMENT TO THE PARTICIPANT, ONE COPY HEREOF BEARING THE PARTICIPANT’S ORIGINAL COUNTERSIGNATURE BELOW.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Participant
has executed this Agreement on the Participant’s own behalf, thereby representing that the Participant has carefully read and understands
this Agreement and the Plan as of the day and year first written above, and the Company has caused this Agreement to be executed in its
name and on its behalf, all as of the date first written above.

 

	 	INMUNE BIO, INC.
	 	 	 
	 	By:	 
	 	 	Name: Raymond J. Tesi 
	 	 	Title: President & CEO 

 

	Agreed to and Accepted	 
	this ___ day of     , 2021	 
	 	 
	 	 

 

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Annex A

 

Certain Definitions

 

A.
“Cause” shall only mean

 

		(i)	the willful and continued failure of the Participant to perform substantially the Participant’s
duties (other than any such failure resulting from bodily injury or disease or any other incapacity due to mental or physical illness)
after a written demand for substantial performance is delivered to the Participant by the Company, which specifically identifies the manner
in which the Company believes the Participant has not substantially performed the Participant’s duties; or

 

		(ii)	the willful engaging by the Participant in illegal conduct or gross misconduct that is materially and
demonstrably detrimental to the Company and/or its affiliates (including Subsidiaries), monetarily or otherwise.

 

For purposes of this
provision, no act, or failure to act, on the part of the Participant shall be considered “willful” unless done, or omitted
to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best
interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, upon
the instructions of the Chairman or another Board Member of the Company, upon the instructions of the Company’s Chief Executive
Officer or Chief Financial Officer, or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Participant in good faith and in the best interests of the Company and its affiliates (including Subsidiaries).

 

		(iii)	the Participant’s conviction of, or plea of nolo contendere to, any felony of theft, fraud, embezzlement
or violent crime.

 

B. “Disability”
shall mean the absence of the Participant from the Participant’s duties under his employment or service relationship on a full-time
basis for an aggregate of 180 days within any given period of 270 consecutive days (in addition to any statutorily required leave
of absence and any leave of absence approved by the Company) as a result of incapacity of the Participant, despite any reasonable accommodation
required by law, due to bodily injury or disease or any other mental or physical illness, which will, in the opinion of a physician selected
by the Company or its insurers and acceptable to the Participant or the Participant’s legal representative, be permanent and continuous
during the remainder of the Participant’s life.

 

 

 

7

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