NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
|Principal Amount: $525,000.00
||Issue Date: April 10, 2017|
6% CONVERTIBLE NOTE
FOR VALUE RECEIVED, IMMUNE
PHARMACEUTICALS, INC., a Delaware corporation (“Borrower” or “Company”), hereby promises
to pay to the order of EMA FINANCIAL, LLC, a Delaware limited liability company, or its registered assigns (the “Holder”),
on April 10, 2018, (subject to extension as set forth below, the “Maturity Date”), the sum of $525,000.00, together
with interest on the unpaid principal balance hereof at the rate of six (6%) per annum (the “Interest Rate”) from the
date of issuance hereof until this Note (including any and all additional amounts payable hereunder) are paid in full, and any
additional amounts set forth herein, including without limitation any Additional Principal (as defined herein). Interest shall
be computed on the basis of a 365-day year and the actual number of days elapsed and interest shall be due on the Maturity Date.
Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty-four (24%)
per annum from the due date thereof until the same is paid (“Default Interest”). All payments due hereunder shall be
made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter
give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be
due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full,
the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on
such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day
on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.
Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities
Purchase Agreement entered into by and between the Company and Holder dated on or about the date hereof, pursuant to which this
Note was originally issued (the “Purchase Agreement”). The Holder may, by written notice to the Borrower at least five
(5) days before the Maturity Date (as may have been previously extended), extend the Maturity Date to up to one (1) year following
the date of the then scheduled Maturity Date hereunder.
This Note is free from
all taxes, liens, claims and encumbrances with respect to the issue hereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Borrower and will not impose personal liability upon the holder hereof.
The following terms
shall apply to this Note:
I. CONVERSION RIGHTS
Right. The Holder shall have the right, in its sole and absolute discretion, at any time from time to time after the date which
is the earlier of (i) the effectiveness of the registration statement covering the Conversion Shares or (ii) six (6) months following
the Closing Date, to convert all or any part of the outstanding amount due under this Note into fully paid and non-assessable shares
of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower
into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”)
determined as provided herein (a “Conversion”); provided, however, that in no event shall the
Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted
portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which
the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more
than 4.9% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and Regulation 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however,
that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’
prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such
later date, as determined by the Holder, as may be specified in such notice of waiver). Notwithstanding anything to the contrary
contained herein, prior to Stockholder Approval, the Company shall not effect the conversion of any portion of this Note, and the
Holder shall not have the right to convert any portion of this Note pursuant to the terms and conditions of this Note and any such
conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the
number of shares of Common Stock issued pursuant to the Note sold in the Purchase Agreement collectively would exceed 19.99% of
the shares of Common Stock outstanding immediately prior to the Issuance Date (“Maximum Share Issuance”). The number
of shares of Common Stock to be issued upon each Conversion of this Note (“Conversion Shares”) shall be determined
by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in
the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower
by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail
(or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 11:59 p.m., New York, New
York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect
to any Conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such Conversion, plus (2)
accrued and unpaid interest, if any, on such principal amount being converted at the interest rates provided in this Note to the
Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the
immediately preceding clauses (1) and/or (2), plus (4) any Additional Principal
for such Conversion, plus (5) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.2(c)
and 1.4(g) hereof.
a) Calculation of
Conversion Price. The conversion price hereunder (the “Conversion Price”) shall equal the lower of: (i)
the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date,
and (ii) 75% of either the lowest sale price for the Common Stock on the Principal Market during the fifteen (15) consecutive
Trading Days immediately preceding the Conversion Date or the closing bid price, provided, however, that the Conversion
Price shall be subject to adjustment as set forth herein. If such Common Stock is not traded on the NASDAQ, OTCQX or NYSE, then
such sale price shall be the sale price of such security on the principal securities exchange or trading market where such security
is listed or traded or, if no sale price of such security is available in any of the foregoing manners, the average of the closing
bid prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau,
Inc. If such sale price cannot be calculated for such security on such date in the manner provided above, such price shall be
the fair market value as mutually determined by the Borrower and the Holder. If the Borrower’s Common stock is chilled for
deposit at DTC, becomes chilled at any point while this Note remains outstanding or deposit or other additional fees are payable
due to a Yield Sign, Stop Sign or other trading restrictions, or if the closing sale price at any time falls below $0.05 (as appropriately
and equitably adjusted for stock splits, stock dividends, stock combinations and similar events), then such 75% figure specified
in clause 1.2(a)(ii) above shall be reduced to 60%. If within 45 days following the issuance hereof the Borrower fails to increase
its number of authorized but unissued shares of Common Stock (which may be pursuant to an authorized share increase and/or a stock
combination) to an amount greater than ten times the number of shares of Common stock issuable upon conversion hereunder, then
such 75% figure specified in clause 1.2(a)(ii) above shall be reduced to 50%. In the event that the shares of the Borrower’s
Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional 5% discount will be
attributed to the Conversion Price. Additionally, the Borrower acknowledges that it will take all reasonable steps necessary or
appropriate, including providing a board of directors resolution authorizing the issuance of common stock to Holder. If a registration
statement is not effective covering the shares of Common Stock issuable upon conversion hereof and sales thereof may be made pursuant
to Rule 144 promulgated by the SEC (“Rule 144”), the Company agrees to accept an opinion of counsel to the Holder
confirming the rights of the Holder to sell such shares pursuant to Rule 144, as such Rule 144 may be in effect from time to time,
which opinion will be issued at the Company’s expense and the conversion dollar amount will be reduced by $750.00 to cover
the cost of such legal opinion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period
on Nasdaq, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Additionally, if the Company ceases to be a reporting company pursuant to the 1934 Act or if the Note cannot be converted into
free trading shares after 181 days from the issuance date, an additional 15% discount will be attributed to the Conversion Price
for any and all Conversions submitted thereafter. Notwithstanding anything in this Section 1.2(a) to the foregoing, in no event
shall the Conversion Price be lower than $0.05 (as appropriately and equitably adjusted for any stock dividends, stock splits
and stock combinations, provided that following any stock combination such figure shall not exceed $1.00).
b) If at any time
the Conversion Price as determined hereunder for any Conversion would be less than the par value of the Common Stock, then the
Conversion Price hereunder shall equal such par value for such Conversion and the Conversion Amount for such Conversion shall be
increased to include Additional Principal, where “Additional Principal” means such additional amount to be added to
the Conversion Amount to the extent necessary to cause the number of Conversion Shares issuable upon such Conversion to equal the
same number of Conversion Shares as would have been issued had the Conversion Price not been subject to the minimum price set forth
in this Section 1.2(b).
c) Without in any
way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (as defined below)
the Borrower shall pay to the Holder $1,000.00 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver
such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the Holder, shall be added to the principal amount of this Note, in which event interest shall accrue thereon
in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance
with the terms of this Note. The Borrower agrees that the right to convert this Note is a valuable right to the Holder. The damages
resulting from a failure, attempt to frustrate, or interference with such conversion right are difficult if not impossible to quantify.
Accordingly the parties acknowledge that the liquidated damages provision contained in this Section are justified.
Shares. The Borrower covenants that the Borrower will at all times while this Note is outstanding reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion or adjustment of this Note. The Borrower is required at all times to have authorized and reserved five
(5) times the number of shares that is actually issuable upon full conversion or adjustment of this Note (based on the Conversion
Price of the Notes in effect from time to time)(the “Reserved Amount”). Initially, the Company will instruct the Transfer
Agent to reserve twenty two million eight hundred seventy six thousand (22,876,000) shares of common stock in the name of the Holder
for issuance upon conversion hereof. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully
paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which
would change the number of shares of Common Stock into which this Note shall be convertible at the then current Conversion Price,
the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved, free from preemptive rights, for conversion of this Note in full. The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this
Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance
with the terms and conditions of this Note.
If, at any time the
Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time and from time
to time after the Issue Date, by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means
of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New York time).
b) Book Entry upon
Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the
terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal
amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted
and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as
not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records
of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error.
Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless
the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon
the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer
taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee,
by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of
a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the
amount stated on the face hereof.
c) Payment of
Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of
the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such
tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
d) Delivery of
Common Stock upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for
the Common Stock issuable upon such conversion within three (3) business days after such receipt or such an event (the “Deadline”)
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a duly and properly executed Notice of Conversion, the
Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal
amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion or adjustment, and,
unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being
so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets,
as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s
obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence
of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation
of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit
such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of
Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 11:59 p.m., New
York, New York time, on such date.
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1
and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal Agent Commission (“DWAC”) system.
g) Failure to Deliver
Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including
actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion or adjustment
of this Note is not delivered by the Deadline, the Borrower shall pay to the Holder $1,000.00 per day in cash, for each day beyond
the Deadline that the Borrower fails to deliver such Common Stock to the Holder. Such cash amount shall be paid to Holder by the
fifth day of the month following the month in which it has accrued or, at the option of the Holder, shall be added to the principal
amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional
principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the
right to convert and/or receive shares in the event of an adjustment is a valuable right to the Holder. The damages resulting
from a failure, attempt to frustrate, or interference with such conversion or adjustment right are difficult if not impossible
to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.
h) The Borrower
acknowledges that it will take all reasonable steps necessary or appropriate, including accepting an opinion of counsel to Holder
confirming the rights of Holder to sell shares of Common Stock issued to Holder on conversion or adjustment of the Note pursuant
to Rule 144 as promulgated by the SEC (“Rule 144"), as such Rule may be in effect from time to time. So long as the
requested sale may be made pursuant to Rule 144 the Borrower agrees to accept an opinion of counsel to the Holder which opinion
will be issued at the Borrower’s expense.
and Expenses. Issuance of Common Stock to Holder, or any of its assignees, upon the conversion of this Note shall be made without
charge to the Holder for any issuance fee, transfer tax, legal opinion and related charges, postage/mailing charge or any other
expense with respect to the issuance of such Common Stock. Company shall pay all Transfer Agent fees incurred from the issuance
of the Common Stock to Holder, as well as any and all other fees and charges required by the Transfer Agent as a condition to effectuate
such issuance. Any such fees or charges as noted in this Section that are paid by the Holder (whether from the Company’s
delays, outright refusal to pay, or otherwise), will be automatically added to the Principal Amount of the Note and tack back to
the Issue Date herein for purposes of Rule 144.
Securities. The shares of Common Stock issuable upon conversion or adjustment of this Note may not be sold or transferred unless
(i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent
shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions
of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor
rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the
Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited
Investor (as defined in the Purchase Agreement). Any legend set forth on any stock certificate evidencing any Conversion Shares
shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the
Borrower or its transfer agent shall have received an opinion of counsel form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale or transfer of
such Common Stock may be made without registration under the Act, which opinion shall be reasonably acceptable to the Company,
or (ii) in the case of the Common Stock issued or issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately sold.
of Certain Events.
a) Effect of Merger,
Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets
of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of
the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with
or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be
an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the
consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii)
be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization.
b) Adjustment Due
to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of
the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event,
as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of
another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all
or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon
the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted
in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such
case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities
or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section
1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least
fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no
such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time, for clarification, the Holder shall be entitled to convert this Note) and
(b) the resulting successor or acquiring entity assumes by written instrument the obligations of this Section 1.6(b). The above
provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
c) Adjustment Due
to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution
to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after
the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would
have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been
the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
Such assets shall be held in escrow by the Company pending any such conversion.
d) Purchase Rights.
If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase
stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class
of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) 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 Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
e) Stock Dividends
and Stock Splits. If the Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes
a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any securities convertible into
or exercisable for Common Stock; (B) subdivides outstanding shares of Common Stock into a larger number of shares; (C) combines
(including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (D) issues,
in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion
Price (and each sale or bid price used in determining the Conversion Price) shall be multiplied by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish
to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number
of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion
of the Note.
If any Conversion Shares are not received by the Deadline, the Holder may revoke the applicable Conversion pursuant to which such
Conversion Shares were issuable. This Note shall remain convertible after the Maturity Date hereof until this Note is repaid or
converted in full.
Notwithstanding anything to the contrary contained in this Note, subject to the terms of this Section, at any time during the period
beginning on the Issue Date and ending on the date which is six (6) months following the Issue Date (“Prepayment Termination
Date”), Borrower shall have the right, exercisable on not less than five (5) Trading Days prior written notice to the Holder
of this Note, to prepay the outstanding balance on this Note (principal and accrued interest), in full, in accordance with this
Section. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the
date of prepayment which shall be not more than ten (10) Trading Days from the date of the Optional Prepayment Notice. On the date
fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount
(as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business
day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make
payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to the Prepayment Factor (as defined
below), multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest,
if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to
Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment
Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay the Note pursuant to this Section. After the Prepayment Termination Date, the Borrower shall have no
right to prepay this Note. For purposes hereof, the “Prepayment Factor” shall equal one hundred thirty-five percent
(135%), provided that such Prepayment Factor shall equal one hundred twenty-five percent (125%) if the Optional Prepayment Date
occurs on or before the date which is ninety (90) days following the Issue Date hereof.
II. CERTAIN COVENANTS
on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s
written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or
other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares
of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its
capital stock except for distributions pursuant to any shareholders’ rights plan (other than a Distribution) which is approved
by a majority of the Borrower’s disinterested directors. To the extent that the Company desires to effect a Distribution,
such Holder’s consent shall not be unreasonably withheld provided that the Company and the entities which are the subject
of the Distribution enter into such documentation reasonably acceptable to the Holder to provide for the Holder to receive substantially
the same economic benefit as contemplated hereunder.
on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities
or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants,
rights or options to purchase or acquire any such shares.
Liens. Notwithstanding section 4(m) of the Purchase Agreement, so long as the Borrower shall have any obligation under
this Note, the Borrower shall not (i) create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable
instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence
or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof (including those
set forth in the SEC Documents), or (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course
of business, or (ii) enter into, create or incur any liens, claims or encumbrances of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom, securing any indebtedness
occurring after the date hereof.
of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business.
Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances in existence
or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof.
So long as the Borrower shall have any obligations under this Note, the Borrower shall not amend its charter documents, including
without limitation its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights
of the Holder.
Agent. The Borrower shall not change its transfer agent without the prior written consent of the Holder. Any resignation by
the transfer agent without a replacement transfer agent consented to by the Holder prior to such replacement taking effect shall
constitute an Event of Default hereunder.
Financing. From the date hereof until the date which is three months following the effectiveness date of a registration statement
covering the Conversion Shares, the Company shall not enter into any financing transaction involving convertible securities without
the prior written consent of the Holder.
Shares. Within 45 days following the issuance hereof the Borrower shall increase its number of its authorized but unissued
shares of Common Stock (which may be pursuant to an authorized share increase and/or a stock combination) to an amount greater
than ten times the number of shares of Common stock issuable upon conversion hereunder.
III. EVENTS OF DEFAULT
Any one or more of
the following events which shall occur and/or be continuing shall constitute an event of default (each, an “Event of Default”):
to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note,
whether at maturity, upon acceleration or otherwise.
and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so at any time following the execution hereof or) upon exercise by the Holder of the
conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to
transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this Note, directs its transfer agent not to transfer
or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any
certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and
when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders
its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on
any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and
when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations
described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not
to honor its obligations shall not be rescinded in writing) for five (5) business days after the Holder shall have delivered a
Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall
be an event of default of this Note if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the
Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer
agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48)
hours of a demand from the Holder.
of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note, the Purchase
Agreement, the Warrant, the Registration Rights Agreement, or any other document entered into in connection with the Purchase Agreement,
and such breach continues for a period of seven (7) days after written notice thereof to the Borrower from the Holder.
of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement),
shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have)
a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply
for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such
a receiver or trustee shall otherwise be appointed.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or
any of its property or other assets for more than $100,000.00, and shall remain unvacated, unbonded or unstayed for a period of
twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the
of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least NASDAQ, OTCQX, NYSE or AMEX
or an equivalent replacement exchange.
to Comply with the Exchange Act. The Borrower shall fail to comply in any material respect with the reporting requirements
of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
3.10. Liquidation. Any
dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay
its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
of Assets. The failure by Borrower, during the term of this Note, to maintain any material intellectual property
rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date
or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase Agreement.
Splits. The Borrower effectuates a reverse split of its Common Stock without ten (10) days prior written notice to the Holder,
other than the contemplated reverse split that was approved at the annual meeting of shareholders held in January 2017 that is
being undertaken to comply with NASDAQ continued listing requirements.
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default
by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable
notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements,
in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the
terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements”
means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the
Holder and any affiliate of the Holder, including, without limitation, promissory notes. Each of the loan transactions will be
cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.
Price. If (a) at any time prior to the date which is the earlier of (i) the effectiveness of the registration statement
covering the Conversion Shares or (ii) six (6) months following the Closing Date, the volume-weighted average sale price of a share
of Common Stock on the Principal Market for any Trading Day is less than $0.0667 (as appropriately and equitably adjusted for any
stock dividends, stock splits and stock combinations, provided that following any stock combination such price shall not exceed
$1.00) for ten (10) consecutive trading days, or (b) at any time after the date which is the earlier of (i) the effectiveness of
the registration statement covering the Conversion Shares or (ii) six (6) months following the Closing Date, the volume-weighted
average sale price of a share of Common Stock on the Principal Market for any Trading Day is less than $0.05 (as appropriately
and equitably adjusted for any stock dividends, stock splits and stock combinations, provided that following any stock combination
such price shall not exceed $1.00).
Upon the occurrence and during the continuation
of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in
full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2 or 3.17, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE
AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT
SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified
in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading
Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, 3.17, 3.18
and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”),
and upon the occurrence of an Event of Default specified in the remaining sections of Articles III (other than failure to pay the
principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due
and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the
greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x)
accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment
Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z)
any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to
the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the
“Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a)
the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance
with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date”
for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in
respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b)
the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default
and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder
shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived,
together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled
to exercise all other rights and remedies available at law or in equity.
If the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right
at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares),
to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect. The Holder may still convert
any amounts due hereunder, including without limitation the Default Sum, until such time as this Note has been repaid in full.
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, email or facsimile, addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile or email, with accurate confirmation generated by the transmitting
facsimile machine or computer, at the address, email or number designated in the Purchase Agreement (if delivered on a business
day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term
“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes
issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.
of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.
Law. This Note shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts of laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement must be brought only in the civil or state courts of New York or in the federal courts located in the State and
county of New York. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit
to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable
attorney’s fees and costs. In the event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or unenforceability of any other provision of this Note. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction
to collect on the Borrower’s obligations to Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other decision in favor of the Holder. This Note shall be deemed an unconditional obligation
of Borrower for the payment of money and, without limitation to any other remedies of Holder, may be enforced against Borrower
by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar rule or statute in the jurisdiction
where enforcement is sought. For purposes of such rule or statute, any other document or agreement to which Holder and
Borrower are parties or which Borrower delivered to Holder, which may be convenient or necessary to determine Holder’s rights
hereunder or Borrower’s obligations to Holder are deemed a part of this Note, whether or not such other document or agreement
was delivered together herewith or was executed apart from this Note.
Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount
(or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower
and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall within one (1) Trading Day after any such receipt or delivery, publicly disclose
such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate
to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company
or its Subsidiaries.
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Note into Common Stock. In the event of any taking by the Borrower of
a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or
other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification
or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose
of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially
all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail
a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the
consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose
of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event
requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with
the terms of this Section 4.9.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law
or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required.
This Note shall be subject to the anti-usury limitations contained in the Purchase Agreement.
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IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by its duly authorized officer as of the Issue Date first set forth above.
IMMUNE PHARMACEUTICALS, INC.
NOTICE OF CONVERSION
The undersigned hereby elects to convert
principal under the 6% Convertible Note of IMMUNE PHARMACEUTICALS, INC., a Delaware corporation (the Company”), into
shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date
written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested
by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes,
By the delivery of
this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts specified under Section 1.1 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock pursuant to any prospectus.
||Date to Effect Conversion:
||Principal Amount of Note to be Converted:
||Less applicable fees under the Note:
||Amount of Note to be Converted:
||Interest Accrued on Account
||of Conversion at Issue:
||Additional Principal on Account of Conversion|
||Pursuant to Section 1.2(b) of the Note:
||Number of shares of Common Stock to be issued:
||Remaining Balance of Note*:
||Address for Delivery of Common Stock Certificates:
*Sum provided does not include accrued
interest and/or additional fees