THIRD AMENDMENT AND CONSENT TO LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT AND CONSENT TO LOAN AND SECURITY AGREEMENT (this “ Agreement ”) is dated as of August 23, 2013, by and among IMMUNE PHARMACEUTICALS INC. (f/k/a EpiCept Corporation), a Delaware corporation (“ EpiCept ”), MAXIM PHARMACEUTICALS INC. , a Delaware corporation (“ Maxim ”), CYTOVIA, INC. , a Delaware corporation (“ Cytovia ”, and collectively with EpiCept and Maxim, the “ Borrowers ”), MIDCAP FUNDING III, LLC , a Delaware limited liability company in its capacity as agent (“ Agent ”) for the lenders under the Loan Agreement (as defined below) (“ Lenders ”), and the Lenders.

W I T N E S S E T H:

WHEREAS , Borrowers, Lenders and Agent are parties to that certain Loan and Security Agreement, dated as of May 27, 2011, as amended by that certain First Amendment to Loan and Security Agreement, dated as of August 27, 2012 (the “ First Amendment ”) and that certain Second Amendment and Waiver to Loan and Security Agreement, dated as of July 31, 2013 (the “ Second Amendment ”, and as such Loan and Security Agreement may be further amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”; capitalized terms used herein have the meanings given to them in the Loan Agreement except as otherwise expressly defined herein), pursuant to which Lenders have agreed to provide to Borrowers certain loans and other extensions of credit in accordance with the terms and conditions thereof;

WHEREAS , pursuant to Section 6.10 of the Loan Agreement, Borrowers have requested that Agent and Lenders consent to EpiCept’s formation of a fully-owned subsidiary, EpiCept Israel Ltd., an Israeli company in incorporation (“ EpiCept Israel ”), and Agent and Lenders are willing to grant such consent subject to, and in accordance with, the terms and conditions set forth herein;

WHEREAS , pursuant to Section 7.2 of the Loan Agreement, Borrowers have requested that Agent and Lenders consent to the change of EpiCept’s legal name to Immune Pharmaceuticals Inc. (the “ Name Change ”), and Agent and Lenders are willing to grant such consent subject to, and in accordance with, the terms and conditions set forth herein;

WHEREAS , pursuant to Section 7.3 of the Loan Agreement, Borrowers have requested that Agent and Lenders consent to (a) the merger of EpiCept Israel with and into Immune Pharmaceuticals Ltd., an Israeli company (“ Immune Israel ”) with the surviving corporation (the “ Immune Surviving Corporation ”) becoming a wholly-owned Subsidiary of EpiCept, all pursuant to and in accordance with the terms of that certain Merger Agreement and Plan of Reorganization, dated as of November 7, 2012, by and among EpiCept, EpiCept Israel and Immune Israel and attached hereto as Exhibit A-1 , as amended by that certain Amendment to Merger Agreement and Plan of Reorganization, dated as of November 27, 2012 and attached hereto as Exhibit A-2 , that certain Amendment No. 2 to Merger Agreement and Plan of Reorganization, dated as of February 11, 2013 and attached hereto as Exhibit A-3 , that certain Amendment No. 3 to Merger Agreement and Plan of Reorganization, dated as of March 14, 2013 and attached hereto as Exhibit A-4 , and that certain Amendment No. 4 to Merger Agreement and Plan of Reorganization, dated as of June 17, 2013 and attached hereto as Exhibit A-5 (collectively with all amendments, supplements or other modifications thereto, but subject to the restriction on further amendments, supplements or other modifications (other than those attached hereto as Exhibits A-1 through A-5 ) set forth in this Agreement and the other Loan Documents, the “ Merger Agreement ” and such transactions described therein, the “ Immune Merger ”) and (b) the Change in Control that shall occur in connection with the consummation of the Immune Merger, and Agent and Lenders are willing to grant such consent subject to, and in accordance with, the terms and conditions set forth herein;

WHEREAS , pursuant to Section 6.1(a) of the Loan Agreement, Borrowers have requested that Agent and Lenders consent to the dissolution of EpiCept’s fully-owned subsidiary, EpiCept GmbH, a German company (such dissolution, the “ GmbH Dissolution ”), and Agent and Lenders are willing to grant such consent subject to, and in accordance with, the terms and conditions set forth herein;

WHEREAS , pursuant to Section 4 of that certain Deposit Account Control Agreement, dated as of June 28, 2011, by and among Maxim, as ‘Customer’, Agent, as ‘Creditor’, and Silicon Valley Bank, as ‘Bank’ (the “ Maxim DACA ”), Borrowers have requested that Agent and Lenders consent to the closure of the Collateral Accounts numbered 3300246997 and 3300037643, which accounts are subject to the Maxim DACA (such closure, the “ Maxim Account Closure ”), and Agent and Lenders are willing to grant such consent subject to, and in accordance with, the terms and conditions set forth herein; and

WHEREAS , the Borrowers have also requested that the Agent and Lenders amend the Loan Agreement in certain respects and the undersigned Lenders and the Agent are willing to make such amendments, all in accordance with, and subject to, the terms and conditions set forth in, this Agreement.

NOW, THEREFORE, in consideration of the premises, the covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrowers, Lenders and Agent hereby agree as follows:

1.  Acknowledgment of Obligations . Each Borrower acknowledges and agrees that as of the Third Amendment Effective Date, but without giving effect to this Agreement, the aggregate principal balance of the Term Loan is at least $4,070,968.00. The foregoing amount does not include interest, fees, expense and other amounts that are chargeable or otherwise reimbursable under the Loan Agreement and the other Loan Documents. Borrowers hereby acknowledge, confirm and agree that all Term Loans made prior to the date hereof, together with interest accrued and accruing thereon, and fees, costs, expenses and other charges owing by Borrowers to Agent and Lenders under the Loan Agreement and the other Loan Documents, are unconditionally owing by Borrowers to Agent and Lenders, without offset, defense or counterclaim of any kind, nature or description whatsoever except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditor’s rights generally.

2.  Consent . Notwithstanding anything to the contrary in the Loan Agreement and/or any of the other Financing Documents and subject to the terms and conditions of this Agreement, including, without limitation, Section 9 of this Agreement, Agent and Lenders hereby consent to (a) EpiCept’s formation of EpiCept Israel; (b) the Name Change; (c) the Immune Merger, (d) the Change in Control that shall occur in connection with the consummation of the Immune Merger, (e) the GmbH Dissolution and (f) the Maxim Account Closure, so long as no Default or Event of Default has occurred and is continuing or, after giving effect to this Agreement, would result and provided that Borrowers shall not be permitted to amend the Merger Agreement or enter into any other agreements that have the effect of modifying the terms of the Merger Agreement without the prior written consent of Agent and Lenders.

3.  Third Amendment Effective Date Amendments to the Loan Agreement . Subject to the terms and conditions of this Agreement, including without limitation fulfillment of the conditions to effectiveness specified in Section 9 below, on the Third Amendment Effective Date (as defined below) the Loan Agreement is hereby amended as follows:

(a) Section 5.1 of the Loan Agreement shall be amended by deleting clause (a) of such section in its entirety and substituting in lieu thereof the following new clause (a) to read in its entirety as follows:

“(a) Borrower and each of its Subsidiaries (if any) are duly existing and in good standing, as Registered Organizations in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their business or their ownership of property requires that they be qualified except where the failure to do so could not reasonably be expected to have a Material Adverse Change. Borrower represents and warrants that (i) Borrower’s and each Loan Party’s exact legal name is that indicated on Schedule 5.1 and on the signature pages to the Third Amendment; (ii) Borrower and each Loan Party is an organization of the type and is organized in the jurisdiction set forth on Schedule 5.1 ; (iii) Schedule 5.1 accurately sets forth Borrower’s and each Loan Party’s organizational identification number or accurately states that Borrower or such Loan Party has none; (iv) Schedule 5.1 accurately sets forth Borrower’s and each Loan Party’s place of business, or, if more than one, its chief executive office as well as Borrower’s and each Loan Party’s mailing address (if different than its chief executive office); and (v) Borrower and each Loan Party (and each of their respective predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction. Further, (y) in connection with this Agreement, Borrower has delivered to Agent a completed Perfection Certificate signed by Borrower (the “ Closing Date Perfection Certificate ”) and (z) in connection with the Third Amendment, Borrower has completed an updated Perfection Certificate signed by Borrower (the “ Third Amendment Perfection Certificate ”; and together with the Closing Date Perfection Certificate, collectively the “ Perfection Certificate ”). All other information set forth on the Perfection Certificate pertaining to Borrower, each other Loan Party and each of their respective Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Closing Date, to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Agent of such occurrence and provide Agent with Borrower’s organizational identification number.”

(b) The Loan Agreement shall be amended by inserting the following new Section 6.13 to read in its entirety as follows:

“6.13 Cash Covenant . Together with the other Loan Parties, maintain all cash and Cash Equivalents in a Collateral Account owned by EpiCept that is located the United States and subject to a Control Agreement other than cash or Cash Equivalents equal to (a) the lesser of (i) $500,000 (or an amount equivalent thereto in Shekels) and (ii) an amount equal to the Three Month Immune Budget (as defined below) plus ten percent (10%) of such amount, in each case, to be used for the out-of-pocket costs and expenses of Immune Surviving Corporation in the Ordinary Course of Business, (b) $60,000 (or an amount equivalent thereto in Shekels), which shall be permitted to be held in a deposit account owned by Immune Surviving Corporation for purposes of securing the Lien in favor of Bank of Hapoalim referenced as fixed charge over a money deposit, transaction number 880001 (which, for the avoidance of doubt, constitutes the Lien with respect to Immune Surviving Corporation’s guarantee of credit card activity) on Exhibit C to the Charge, (c) $150,000 (or an amount equivalent thereto in Shekels) which shall be permitted to be held in a deposit account owned by Immune Surviving Corporation for purposes of securing the Liens in favor of Bank of Hapoalim referenced as fixed charges over Shekel deposit with a credit balance of NIS 79,500 and 115,000, respectively (which, for the avoidance of doubt, constitute the Liens with respect to Immune Surviving Corporation’s leasing facilities) on Exhibit C of the Charge, or any replacement Liens that are solely to secure amounts that are being held as security deposits for operating leases entered into in the ordinary course of business subject to the overall cap of $150,000 (or an amount equivalent thereto in shekels) set forth above and (d) amounts held in a Deposit Account subject to a floating charge in favor of Agent used to pay costs and expenses required to be paid pursuant to the terms of the Merger Agreement to the extent such amounts are required to be paid in Shekels.

For purposes hereof, “Three Month Immune Budget” shall mean a budget in form and substance satisfactory to Agent, reflecting the Loan Parties’ good faith projection of all Ordinary Course of Business costs and expenses of Immune, on a monthly basis, for the next three months. The Loan Parties agree to deliver an updated Three Month Immune Budget to Agent each month by not later than 10 days prior to the beginning of the first month projected in that Three Month Immune Budget.”

(c) Section 7 of the Loan Agreement shall be amended by deleting the first sentence of such section in its entirety and substituting in lieu thereof the following new sentence to read in its entirety as follows:

“Borrower shall not do, or permit any of its Subsidiaries or any other Loan Party to do, any of the following without the prior written consent of Agent and Required Lenders:”

(d) Section 7.2 of the Loan Agreement shall be amended by deleting such section in its entirety and substituting in lieu thereof the following new section to read in its entirety as follows:

“7.2 Change in Business, Management, Ownership or Business Locations . (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; (c) enter into any transaction or series of related transactions which would result in a Change in Control unless the documentation for such transaction requires, as a condition precedent to such transaction, the consent of Agent and Lenders or the payment in full of the Obligations; (d) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Twenty Five Thousand Dollars ($25,000) in Borrower’s assets or property and so long as such new offices or business locations do not contain any Borrower’s Books); (e) change its jurisdiction of organization; (f) change its organizational structure or type; (g) change its legal name; or (h) change any organizational number (if any) assigned by its jurisdiction of organization.”.

(e) Section 7.3 of the Loan Agreement shall be amended by deleting such section in its entirety and substituting in lieu thereof the following new section to read in its entirety as follows:

“7.3 Mergers or Acquisitions . Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person; provided, however , that a Subsidiary of Borrower may merge or consolidate into Borrower, so long as (i) Borrower has provided Agent with prior written notice of such transaction, (ii) Borrower shall be the surviving legal entity, (iii) Borrower’s tangible net worth is not thereby reduced, and (iv) as long as no Event of Default is occurring prior thereto or arises as a result therefrom.”

(f) The Loan Agreement shall be amended by inserting the following new Section 7.12 to read in its entirety as follows:

“7.12 Amendments to Organization Documents and Material Agreements . Amend, modify or waive any provision of (a) any Material Agreement, or (b) any of its organizational documents (other than a change in registered agents or, in the case of Immune Surviving Corporation, an amendment to its Articles of Association to reflect the Immune Merger and the fact that EpiCept will become the sole shareholder of Immune Surviving Corporation after the Immune Merger), in each case, without the prior written consent of Agent. Borrower shall provide to Agent copies of all such amendments, waivers and modifications.”

(g) The Loan Agreement shall be amended by inserting the following new Section 7.13 to read in its entirety as follows:

“7.13 Immune Pharmaceuticals USA Corporation . Permit its fully-owned, indirect subsidiary, Immune Pharmaceuticals USA Corporation, a Delaware corporation to (a) engage in any business or (b) own any assets.”

(h) Section 8.2 of the Loan Agreement shall be amended by deleting such section in its entirety and substituting in lieu thereof the following new section to read in its entirety as follows:

“8.2 Covenant Default .

(a) Any Loan Party fails or neglects to perform any obligation in Sections 6.1(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.10, 6.11, 6.12 or 6.13 or violates any covenant in Section 7; or

(b) Any Loan Party or any of its Subsidiaries fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however , that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by the Loan Parties be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then the Loan Parties shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Grace periods provided under this Section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above; or

(c) Without limiting clauses (a) and (b) of this Section 8.2, Immune Surviving Corporation breaches any term of or defaults under the Unconditional Guaranty, the Charge or any other agreement, instrument or document executed in connection therewith or otherwise executed by Immune Surviving Corporation in connection with this Agreement or any other Loan Document.”

(i) Each reference to “Borrower” or “Borrower’s” in each of Sections 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11 and 8.13 shall be changed to “any Loan Party” or “any Loan Party’s”, respectively.

(j) The Loan Agreement shall be amended by inserting the following new Section 8.14 to read in its entirety as follows:

“8.14 Change in Control . (i) A Change in Control occurs or (ii) any Loan Party or direct or indirect equity owner in a Loan Party shall enter into an agreement which provides for a Change in Control unless, with respect to clause (ii), such agreement requires as a condition precedent to the effectiveness of any such transaction either the consent of Agent and Lenders or the payment in full of the Obligations.”

(k) Section 10 of the Loan Agreement shall be amended by replacing the notice information for “Agent or Lenders” with the following new notice information:

“MidCap Funding III, LLC
7255 Woodmont Avenue, Suite 200
Bethesda, Maryland 20814
Attention: Portfolio Management- Life Sciences
Fax: (301) 941-1450
E-Mail: lviera@midcapfinancial.com

with a copy to:

MC Serviceco, LLC
7255 Woodmont Avenue, Suite 200
Bethesda, Maryland 20814
Attention: General Counsel
Fax: (301) 941-1450
E-Mail: legalnotices@midcapfinancial.com”

(l) Section 14 of the Loan Agreement shall be amended by deleting the definitions of “ Change in Control ”, “ Indebtedness ”, “ Material Adverse Change ”, “ Permitted Investments ”, and “ Warrants ”, in each case in its entirety, and substituting in lieu thereof the following new definitions to read in their entirety as follows:

“‘ Change in Control ’ means, at any time after the Third Amendment Effective Date and the consummation of the Immune Merger (as defined in the Third Amendment), any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of EpiCept, representing twenty-five percent (25%) or more of the combined voting power of Borrower’s then outstanding securities; (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the board of directors or managers of Borrower (together with any new directors or managers whose election by the board of directors or managers of Borrower was approved by a vote of not less than two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office; (c) EpiCept ceases to own and control, directly or indirectly, all of the economic and voting rights associated with the outstanding securities of each of its Subsidiaries; (d) the occurrence of any “change in control” or any term of similar effect under any Subordinated Debt Document; (e) Borrower or any Subsidiary of Borrower ceases to own and control, directly or indirectly, all of the economic and voting rights associated with the outstanding voting capital stock (or other voting equity interest) of each of its Subsidiaries; or (f) either Robert W. Cook or Daniel Teper shall cease to be involved as Chief Financial Officer and Chief Executive Officer, respectively, in the day to day operations (including research development) or management of the business of EpiCept.”

“‘ Indebtedness ’ means (a) indebtedness for borrowed money (including the Obligations) or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, (d) non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, (e) equity securities of such Person subject to repurchase or redemption other than at the sole option of such Person, (f) obligations secured by a Lien on any asset of such Person, whether or not such obligation is otherwise an obligation of such Person, (g) “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature of such Person arising out of purchase and sale contracts, (h) all Indebtedness of others guaranteed by such Person, (i) off-balance sheet liabilities and/or pension plan or multiemployer plan liabilities of such Person, (j) obligations arising under non-compete agreements, (k) obligations arising under bonus, deferred compensation, incentive compensation or similar arrangements, other than those arising in the Ordinary Course of Business, (l) Contingent Obligations and (m) any grant or similar extension of cash or credit by the Israel Office of Chief Scientist to any Loan Party.”

“‘ Material Adverse Change ’ means (a) a material impairment in the perfection or priority of the Agent’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) or prospects of any Loan Party that in Agent’s credit judgment may impair the ability of any Loan Party to repay any of the Obligations; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.”

“‘ Permitted Investments ’ means:

(a) Investments existing on the Closing Date and described on Schedule 7.7 ; and

(b) Investments consisting of Cash Equivalents.”

“‘ Warrants ’ means, collectively, (i) the Closing Date Warrant and (ii) the Third Amendment Warrant.”

(m) Section 14 of the Loan Agreement shall be further amended by adding thereto in appropriate alphabetical order the following definitions:

“‘ Charge ’ means that certain Debenture of Floating Charge and Fixed Charge, dated as of August 23, 2013, by and among Immune Surviving Corporation, Agent and Lenders.”

“‘ Closing Date Warrant ’ means that certain Common Stock Purchase Warrant, dated as of the Closing Date and executed by Borrower in favor of each Lender or such Lender’s Affiliates.”

“‘ Immune Surviving Corporation ’ means Immune Pharmaceuticals Ltd., a company incorporated in Israel which is the surviving corporation of the merger of EpiCept Israel (as defined in the Third Amendment) with and into Immune Pharmaceuticals Ltd. pursuant to the terms of the Immune Merger.”

“‘ Material Agreement ’ means (i) the agreements listed on Schedule 14 (including, without limitation, the Merger Agreement (as defined in the Third Amendment)), (ii) each agreement or contract to which a Credit Party is a party involving the receipt or payment of amounts in the aggregate exceeding One Hundred Thousand Dollars ($100,000) per year (excluding (a) any agreement or contract that involves payment by the Borrower to another party for materials or supplies (but, for the avoidance of doubt, not equipment) and services in the ordinary course of business, but specifically including all such agreements relating to licensure of Intellectual Property and (b) employment offers or employment agreements), (iii) all lease or other occupancy agreements for the principal office or any other business location of Borrower or its Subsidiaries, and (iv) any agreement or contract to which such Credit Party or its Subsidiaries is a party the termination of which could reasonably be expected to result in a Material Adverse Change.”

“‘ Third Amendment ’ means that certain Third Amendment and Consent to Loan and Security Agreement, dated as of August 23, 2013, by and among Borrower, Lenders and Agent.”

“‘ Third Amendment Effective Date ’ means August 23, 2013.”

“‘ Third Amendment Warrant ’ means that certain Common Stock Purchase Warrant, required to be delivered in connection with the Third Amendment and executed by Borrower in favor of each Lender or such Lender’s Affiliates.”

“‘ Unconditional Guaranty ’ means that certain Unconditional Guaranty, dated as of August 23, 2013, by and between Immune Surviving Corporation and Agent.”

(n) Section 14 of the Loan Agreement shall be further amended by (i) deleting the word “and” appearing at the end of clause (e) of the definition of “Permitted Indebtedness”; (ii) replacing the period at the end of clause (f) of the definition of “Permitted Indebtedness” with the language “; and”; and (iii) inserting the following new clause (g) at the end of the definition of “Permitted Indebtedness” to read in its entirety as follows:

“(g) amounts owing to the Israel Office of Chief Scientist by Immune Surviving Corporation (i) in an amount not to exceed $500,000 in Dollars on the Third Amendment Effective Date and (ii) in such additional amounts as may be approved from time to time by Agent in writing (which writing may be given by e-mail).”

(o) Section 14 of the Loan Agreement shall be further amended by (i) deleting the word “and” appearing at the end of clause (k) of the definition of “Permitted Liens”; (ii) replacing the period at the end of clause (l) of the definition of “Permitted Liens” with a semicolon; and (iii) inserting the following new clauses (m) and (n) at the end of the definition of “Permitted Liens” to read in its entirety as follows:

“(m) Liens listed on Exhibit C of the Charge; and

(n) Liens in favor of the Israel Office of the Chief Scientist with respect to Indebtedness permitted pursuant to clause (g) of the definition of Permitted Indebtedness.”

(p)  Schedule 5.1 is hereby deleted in its entirety and replaced with the new Schedule 1 attached hereto as Exhibit B-2 (which schedule has been prepared for the Loan Parties, after giving effect to the Immune Merger).

(q)  Schedule 5.2 is hereby deleted in its entirety and replaced with the new Schedule 1 attached hereto as Exhibit B-3 (which schedule has been prepared for the Loan Parties, after giving effect to the Immune Merger).

(r)  Schedule 5.3 is hereby deleted in its entirety and replaced with the new Schedule 1 attached hereto as Exhibit B-4 (which schedule has been prepared for the Loan Parties, after giving effect to the Immune Merger).

(s)  Schedule 5.11 is hereby deleted in its entirety and replaced with the new Schedule 1 attached hereto as Exhibit B-5 (which schedule has been prepared for the Loan Parties, after giving effect to the Immune Merger).

(t) A new Schedule 14 shall be incorporated into the Loan Agreement in form and substance as attached hereto as Exhibit C (which schedule has been prepared for the Loan Parties, after giving effect to the Immune Merger).

4.  Post-Closing Effective Amendments to the Loan Agreement . Subject to the terms and conditions of this Agreement, including without limitation fulfillment of the conditions to effectiveness specified in Section 9 below, upon Agent’s confirmation in writing that the post-closing obligations set forth in Section 10(a) – (g) of this Agreement have been satisfied within the time periods permitted to so satisfy, but only so long as no Default or Event of Default has occurred and is continuing as of such date, and all representations and warranties of the Loan Parties under the Loan Documents are true and correct in all material respects as of such date (the certification of which may be evidenced by an officer’s certificate executed by a Responsible Officer of the Loan Parties, in Agent’s sole discretion)(the date the foregoing conditions are satisfied, the “ Additional Third Amendment Effective Date ”), the Loan Agreement shall be amended as follows:

(a) Section 2.2(a) of the Loan Agreement shall be deleted in its entirety and the following revised Section 2.2(a) shall be substituted in lieu thereof:

“(a) Availability . Subject to the terms and conditions of this Agreement, during the Draw Period, the Lenders agree, severally and not jointly, to make one or more term loans to Borrower in an aggregate amount up to FIVE MILLION, SEVENTY THOUSAND, NINE HUNDRED SIXTY-EIGHT AND NO/100 Dollars ($5,070,968.00) according to each Lender’s Term Loan Commitment as set forth on Schedule 1 hereto (such term loans are hereinafter referred to individually as a “ Term Loan ”, and collectively as the “ Term Loans ”). After repayment, no Term Loan may be reborrowed. The Term Loans shall be available in two tranches. The first tranche (“ Tranche One ”) shall be in an amount equal to FOUR MILLION, FOUR HUNDRED FORTY-ONE THOUSAND, NINE HUNDRED SIXTY-EIGHT AND NO/100 Dollars ($4,441,968.00), of which (i) FOUR MILLION, SEVENTY THOUSAND, NINE HUNDRED SIXTY-EIGHT AND NO/100 Dollars ($4,070,968.00) was advanced on the Closing Date and (ii) THREE HUNDRED SEVENTY-ONE THOUSAND AND NO/100 Dollars ($371,000.00) (which represents the Capitalized Final Payment (as defined in the Third Amendment)) shall be deemed advanced as of the Additional Third Amendment Effective Date; provided that notwithstanding the foregoing, each Lender’s Term Loan Commitment with respect to Tranche One and the Tranche One Term Loan amount as of the Additional Third Amendment Effective Date shall be reduced by any principal payments with respect to the Term Loan made after the Third Amendment Effective Date and prior to the Additional Third Amendment Effective Date (any such reduction, the “ Tranche One Reduction ”). For the avoidance of doubt, as of the Additional Third Amendment Effective Date, after giving effect to the Third Amendment, the Tranche One Term Loan has been advanced and the principal balance of the Tranche One Term Loan is FOUR MILLION, FOUR HUNDRED FORTY-ONE THOUSAND, NINE HUNDRED SIXTY-EIGHT AND NO/100 Dollars ($4,441,968.00) less any Tranche One Reduction. The second tranche (“ Tranche Two ”) shall be in an amount equal to but not less than ONE MILLION AND NO/100 Dollars ($1,000,000.00) and shall be available to be advanced in a single advance during the Draw Period, but only after the Tranche Two Eligibility Date.”

(b) Section 2.2(b) of the Loan Agreement shall be deleted in its entirety and the following revised Section 2.2(b) shall be substituted in lieu thereof:

“(b) Interest Payments and Repayment . Commencing on the first (1 ^st ) Payment Date following the Additional Third Amendment Effective Date, and continuing on the Payment Date of each successive month thereafter through and including the Maturity Date, Borrower shall make monthly payments of interest to each Lender in accordance with its respective Pro Rata Share, in arrears, and calculated as set forth in Section 2.3. In addition to the interest payments in accordance with the immediately preceding sentence, commencing on the Amortization Date, and continuing on the Payment Date of each successive month thereafter through and including the Maturity Date, Borrower shall make consecutive monthly payments of principal to each Lender in accordance with its respective Pro Rata Share, as calculated by Agent based upon: (i) the amount of such Lender’s Term Loans, (ii) the effective rate of interest, as determined in Section 2.3, and (iii) a straight-line amortization schedule ending on the Maturity Date. All unpaid principal and accrued interest with respect to the Term Loans is due and payable in full on the Maturity Date. The Term Loans may be prepaid only in accordance with Sections 2.2(c) and 2.2(d).”

(c) The Loan Agreement shall be amended by inserting the following new Section 3.5 to read in its entirety as follows:

“3.5 Condition Precedent to Making of the Tranche Two Term Loan . Each Lender’s obligation to make the Tranche Two Term Loan is subject to the condition precedent that Agent shall have received Borrower’s duly executed signature pages to the Tranche Two Warrant. ”

(d) Section 14 of the Loan Agreement shall be amended by deleting the definitions of “ Amortization Date ”, “ Draw Period ”, “ Draw Period Termination Date ”, “ Final Payment ”, “ Maturity Date ”, “ Prepayment Fee ” and “ Tranche Two Eligibility Date ”, in each case in its entirety, and substituting in lieu thereof the following new definitions to read in their entirety as follows:

“‘ Amortization Date ’ means (a) December 1, 2013, or (b) if, on or before November 15 ¸ 2013, EpiCept shall have received into a Collateral Account located in the United States, owned by EpiCept and subject to a Control Agreement net cash proceeds in an amount not less than five million and no/100 dollars ($5,000,000.00) pursuant to one or more Qualifying Transactions, June 1, 2014, which proceeds shall be maintained in such Collateral Account and used solely for working capital purposes in accordance with this Agreement.”

“‘ Draw Period ’ means the period of time commencing upon the Additional Third Amendment Effective Date and continuing through the earliest to occur of (a) the Draw Period Termination Date, (b) an Event of Default, and (c) the existence of any Default.”

“‘ Draw Period Termination Date ’ means August 1, 2014.”

“‘ Final Payment ’ means a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) due on the earlier to occur of (a) the Maturity Date, (b) the acceleration of any Term Loan, and (c) the prepayment of a Term Loan pursuant to Section 2.2(c) or (d), equal to (i) if Tranche Two has been advanced, one hundred seventy-seven thousand, five hundred and no/100 dollars ($177,500) or (ii) if Tranche Two has not been advanced, one hundred forty-two, four hundred ninety-seven and no/100 dollars ($142,497).”

“‘ Maturity Date ’ means August 1, 2016 for each Term Loan.”

“‘ Prepayment Fee ’ means with respect to any Term Loan subject to prepayment prior to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration or otherwise, an additional fee payable to the Lenders in an amount equal to:

(a) for a prepayment made on or after the Additional Third Amendment Effective Date through and including the date which is twelve (12) months after the Additional Third Amendment Effective Date, five percent (5.0%) multiplied by the original Term Loan Commitments;

(b) for a prepayment made after the date which is twelve (12) months after the Additional Third Amendment Effective Date through and including the date which is twenty-four (24) months after the Additional Third Amendment Effective Date, three percent (3.0%) multiplied by the original Term Loan Commitments; and

(c) for a prepayment made after the date which is twenty-four (24) months after the Additional Third Amendment Effective Date and prior to the Maturity Date, one percent (1.0%) multiplied by the original Term Loan Commitments.”

“‘ Tranche Two Eligibility Date ’ means the date (if such date occurs prior to the Draw Period Termination Date) on which Agent determines, pursuant to such documentation and other evidence satisfactory to Agent in its sole discretion, that EpiCept has received into a Collateral Account located in the United States, owned by EpiCept and subject to a Control Agreement net cash proceeds of at least seventeen million, five hundred thousand and no/100 dollars ($17,500,000.00) pursuant to one or more Qualifying Transactions, which proceeds shall be maintained in such Collateral Account and used solely for working capital purposes in accordance with this Agreement.”

“‘ Warrants ’ means, collectively, (i) the Closing Date Warrant, (ii) the Third Amendment Warrant and (iii) the Tranche Two Warrant.”

(e) Section 14 of the Loan Agreement shall be further amended by deleting the definition of “ Final Payment Percentage ” in its entirety.

(f) Section 14 of the Loan Agreement shall be further amended by adding thereto in appropriate alphabetical order the following definitions:

“‘ Additional Third Amendment Effective Date ’ has the meaning given to such term in the Third Amendment.”

“‘ Qualifying Transaction ’ means (i) an equity contribution arising from the issuance of new             shares of EpiCept’s common stock or (ii) such other equity contribution in form and substance and pursuant to documentation acceptable to Agent and Lenders in their sole and absolute discretion.”

“‘ Tranche Two Warrant ’ means that certain Common Stock Purchase Warrant in substantially the same form as the Third Amendment Warrant for a number of shares to be determined based on eighty thousand (80,000) divided by the exercise price (which shall be the same exercise price as specified in the Third Amendment Warrant), executed by Borrower in favor of each Lender or such Lender’s Affiliates.”

(g)  Schedule 1 is hereby deleted in its entirety and replaced with the new Schedule 1 attached hereto as Exhibit B-1 .

5.  Additional Agreements .

(a) Agent agrees that the requirement set forth in Section 6.2(a)(i) of the Loan Agreement that Borrower deliver to Agent a company prepared consolidated balance sheet, income statement and cash flow statement covering Borrower’s consolidated operations within forty (40) days of the last day of each month is hereby waived for each of the months ending August 31, 2013, September 30, 2013, October 31, 2013, November 30, 2013 and December 31, 2013.

(b) Beginning with the month ending August 31, 2013, as soon as available, but no later than ten (10) days after the last day of such month and each month ending thereafter, Borrower covenants and agrees to deliver to Agent copies of all of Borrower’s bank statements and reports, each of which shall be in a form satisfactory to Agent in its sole discretion.

6.  Final Payment Fee . Borrowers acknowledge and agree that, (a) as of the Additional Third Amendment Effective Date, the Final Payment fee of $371,000.00 due under the Loan Agreement prior to giving effect to this Agreement (the “ Capitalized Final Payment ”) is hereby deemed due and payable and shall be capitalized and become a part of the principal balance of the Tranche One Term Loan and (b) such Capitalized Final Payment is separate and apart from the Final Payment set forth in the Loan Agreement after giving effect to this Agreement, which notwithstanding any of the amendments or other modifications set forth herein or in any other documentation or correspondence related to the Loan Agreement or Loan Documents, or any other action taken by Borrower, Agent or any Lender, remains due and payable, in full and without counterclaim or offset of any kind, on the Maturity Date.

7.  No Other Amendments or Consents, Waivers, Etc.; Reservation of Rights . Except for the amendments and other modifications set forth and referred to in Sections 2 thru 5 above, the Loan Agreement and the other Loan Documents shall remain unchanged and in full force and effect. Nothing in this Agreement is intended, or shall be construed, to constitute a novation or an accord and satisfaction of any of Borrowers’ Obligations or to modify, affect or impair the perfection or continuity of Agent’s security interests in, security titles to or other liens, for the benefit of itself and the Lenders, on any Collateral for the Obligations. Without limiting the foregoing, except as expressly set forth herein, the execution, delivery and effectiveness of this Agreement shall not directly or indirectly (i) create any obligation to make any further loans, advances or other financial accommodations or to continue to defer any enforcement action after the occurrence of any Default or Event of Default, whether such Default or Event of Default has occurred or occurs in the future, (ii) constitute a consent or waiver of any past, present or future violations of any provisions of the Loan Agreement or any other Loan Documents nor constitute a novation of any of the Obligations under the Loan Agreement or other Loan Documents, (iii) amend, modify or operate as a waiver of any provision of the Loan Agreement or any other Loan Documents or any right, power or remedy of any Lender, (iv) constitute a consent to any merger or other transaction or to any sale, restructuring or refinancing transaction or (v) constitute a course of dealing or other basis for altering any Obligations or any other contract or instrument. Except as expressly set forth herein, each Lender reserves all of its rights, powers, and remedies under the Loan Agreement, the other Loan Documents and applicable law. All of the provisions of the Loan Agreement and the other Loan Documents, including, without limitation, the time of the essence provisions, are hereby reiterated, and if ever waived, are hereby reinstated.

8.  Representations and Warranties . To induce Agent and Lenders to enter into this Agreement, each Borrower does hereby warrant, represent and covenant to Agent and Lenders that (i) each representation or warranty of Borrowers set forth in the Loan Agreement is hereby restated and reaffirmed as true and correct in all material respects on and as of the date hereof as if such representation or warranty were made on and as of the date hereof (except to the extent that any such representation or warranty expressly relates to a prior specific date or period) and (ii) each Borrower has the power and is duly authorized to enter into, deliver and perform this Agreement and this Agreement is the legal, valid and binding obligation of each Borrower enforceable against such Borrower in accordance with its terms.

9.  Condition Precedent to Effectiveness of this Agreement . This Agreement shall become effective as of August 23, 2013 (the “ Third Amendment Effective Date ”) upon which Agent shall have received the following, each in form and, in form and substance satisfactory to Agent and Lenders:

(a) one or more counterparts of this Agreement duly executed and delivered by Borrowers, Agent and Lenders;

(b) evidence that, on or prior to the Third Amendment Effective Date, Borrowers have received at least $1,000,000 in unrestricted net cash proceeds in connection with the Immune Merger;

(c) current UCC lien, judgment and tax lien search results demonstrating that there are no other security interests on the Collateral, other than Permitted Liens;

(d) a fully executed Unconditional Guaranty (as defined in the Loan Agreement, as amended by this Agreement), executed by Immune Surviving Corporation;

(e) a fully executed Charge (as defined in the Loan Agreement, as amended by this Agreement), executed by Immune Surviving Corporation, Agent and Lenders;

(f) a fully executed Third Amendment Perfection Certificate (as defined in the Loan Agreement, as amended by this Agreement);

(g) a fully-executed secretary’s certificate for each Borrower, together with the following attachments: (a) the Operating Documents of such Borrower certified by the Secretary of State of the State of organization of Borrower as of a date no earlier than thirty (30) days prior to the Third Amendment Effective Date, (b) completed Borrowing Resolutions for such Borrower and (c) good standing certificates dated as of a date no earlier than thirty (30) days prior to the Third Amendment Effective Date to the effect that such Borrower is qualified to transact business in all states in which the nature of Borrower’s business so requires;

(h) a fully-executed “Pledge Amendment” supplement to the Pledge Agreement, together with all original certificates or other documentation representing the pledge of one hundred percent (100%) of the outstanding shares of Immune Surviving Corporation;

(i) a fully-executed secretary’s certificate for Immune Surviving Corporation, together with appropriate corporate documentation, good standing certificates and incumbency certificates, each in accordance with Israeli law; and

(j) such other documents, instruments, agreements and opinions as the Agent shall request.

10.  Post-Closing Obligations . The Loan Parties shall satisfy and complete each of the following obligations, or provide Agent each of the items listed below, as applicable, on or before the date indicated below, all to the satisfaction of Agent in its sole and absolute discretion (the date upon which Agent determines, in its sole and absolute discretion:

(a) By not later than August 29, 2013, deliver to Agent evidence in form and substance satisfactory to Agent that the board of directors of Immune Surviving Corporation have ratified and approved the execution by Immune Surviving Corporation of the Unconditional Guaranty (as defined in the Loan Agreement, as amended by this Agreement) and the Charge (as defined in the Loan Agreement, as amended by this Agreement);

(b) By not later than August 30, 2013, deliver to Agent an updated Schedule 5.2(d) to the Loan Agreement, which schedule shall list the Loan Parties’ Intellectual Property after giving effect to the Immune Merger;

(c) By not later than August 30, 2013, deliver to Agent a fully-executed secretary’s certificate for Immune Surviving Corporation, together with appropriate corporate documentation, resolutions and good standing certificates, each in accordance with Israeli law;

(d) By not later than August 23, 2013, deliver to Agent Borrowers’ duly executed original signature page to the Third Amendment Warrant;

(e) By not later than twenty (20) days after the effective date of the Unconditional Guaranty and Charge, Borrowers and each Loan Party shall take such steps as are required to perfect Agent’s Liens in connection with such Unconditional Guaranty and Charge and any other Guarantor Documents (as defined in the Unconditional Guaranty (as defined in the Loan Agreement, as amended by this Agreement));

(f) By not later than thirty (30) days after the Third Amendment Effective Date, Borrowers and each Loan Party shall deliver to Agent evidence in form and substance satisfactory to Agent that the Indebtedness of Immune Surviving Corporation in favor of Bank Hapoalim has been satisfied in full and any Liens in favor of Bank Hapoalim have been discharged;

(g) By not later than twenty (20) days after the Third Amendment Effective Date, execute any further instruments and take further actions as Agent reasonably requests to perfect or continue Agent’s Lien in the Collateral or to effect the purposes of the Loan Agreement and this Agreement;

(h) As soon as any remaining legal requirements with respect thereto have been satisfied, Borrowers shall take such steps as are required to dissolve Immune Surviving Corporation’s fully-owned subsidiary, Immune Pharmaceuticals USA Corporation, a Delaware corporation.

The Loan Parties’ failure to complete and satisfy any of the above obligations on or before the date indicated above, or the Loan Parties’ failure to deliver any of the above listed items on or before the date indicated above, shall constitute an immediate and automatic Event of Default.

11.  Release .

(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender and their respective successors and assigns, and their respective present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, Lenders and all such other persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Borrower or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the Third Amendment Effective Date, including, without limitation, for or on account of, or in relation to, or in any way in connection with the Loan Agreement or any of the other Loan Documents or transactions thereunder or related thereto.

(b) Each Borrower understands, acknowledges and agrees that its release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

(c) Each Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.

12.  Covenant Not To Sue . Each Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by Borrowers pursuant to Section 11 above. If any Borrower or any of its successors, assigns or other legal representatives violates the foregoing covenant, Borrowers, for themselves and their successors, assigns and legal representatives, agree to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by any Releasee as a result of such violation.

13.  Indemnification . Each Borrower hereby agrees to indemnify, defend and hold harmless Agent and each Lender in accordance with Section 12.2 of the Loan Agreement, the terms of which are incorporated herein by reference.

14.  Advice of Counsel . Each of the parties represents to each other party hereto that it has discussed this Agreement with its counsel.

15.  Severability of Provisions . In case any provision of or obligation under this Agreement shall be invalid, illegal or unenforceable in any applicable jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

16.  Counterparts . This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument.

17.  GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MARYLAND APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.

18.  Entire Agreement . The Loan Agreement and the other Loan Documents as and when modified through this Agreement embody the entire agreement between the parties hereto relating to the subject matter thereof and supersede all prior agreements, representations and understandings, if any, relating to the subject matter thereof.

19.  No Strict Construction, Etc. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. Time is of the essence for this Agreement.

20.  Loan Document . For the avoidance of doubt, this Agreement constitutes a Loan Document.

21.  Costs and Expenses . Each Borrower absolutely and unconditionally agrees to pay or reimburse upon demand for all reasonable fees, costs and expenses incurred by Agent and the Lenders that are Lenders on the Closing Date in connection with the preparation, negotiation, execution and delivery of this Agreement and any other Loan Documents or other agreements prepared, negotiated, executed or delivered in connection with this Agreement or transactions contemplated hereby.

[ Remainder of page intentionally blank; signature pages follow. ]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year specified at the beginning hereof.

BORROWERS :

IMMUNE PHARMACEUTICALS INC. (f/k/a EpiCept Corporation)

By:        (SEAL)
Name:       
Title:       


MAXIM PHARMACEUTICALS INC.

By:        (SEAL)
Name:       
Title:       


CYTOVIA, INC .

By:        (SEAL)
Name:       
Title:       




AGENT AND LENDER :

MIDCAP FUNDING III, LLC

By:        (SEAL)
Name:       
Title: Authorized Signatory

ACKNOWLEDGEMENT, CONSENT AND AGREEMENT BY GUARANTOR

The undersigned hereby acknowledges and consents to the entering into of this Third Amendment and Consent to Loan and Security Agreement (this “ Agreement ”) by the Borrowers and agrees and acknowledges its rights and obligations under the Loan Agreement (as amended by this Agreement) and the other Loan Documents, as applicable, remain in full force and effect notwithstanding the execution of this Agreement and further agrees to be bound by and comply with the terms of this Agreement.

IMMUNE PHARMACEUTICALS LTD.

By:        (SEAL)
Name:       
Title:       

EXECUTION VERSION

THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ ACT ”) NOR QUALIFIED UNDER SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE LAW, OR SUCH SALE IS PERMITTED UNDER RULE 144 OF THE ACT OR OTHERWISE EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE LAW. THIS COMMON STOCK PURCHASE WARRANT HAS BEEN ACQUIRED, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF WILL BE ACQUIRED, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF.

COMMON STOCK PURCHASE WARRANT

IMMUNE PHARMACEUTICALS INC.

Warrant Shares: 101,531 Issue Date: August 23, 2013

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, MidCap Financial, LLC, a Delaware limited liability company, or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date and on or prior to the close of business on August 23, 2018 (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from Immune Pharmaceuticals Inc., a Delaware corporation (the “ Company ”), up to 101,531 shares (as subject to adjustment hereunder, the “ Warrant Shares ”) of Common Stock, par value $0.0001 per share, of the Company (the “ Common Stock ”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Loan and Security Agreement (the “ Loan Agreement ”), dated May 27, 2011, among the Company, MidCap Funding III, LLC, a Delaware limited liability company, as the Agent thereunder, the Lenders and other parties thereto.

Section 2 . Exercise .

a) Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Issue Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile or electronic (pdf) copy of the Notice of Exercise Form annexed hereto (or by delivery of an original or copy of such Notice of Exercise Form by any other method permitted for providing notices under the Loan Agreement). Within three (3) Trading Days (as used herein, “ Trading Day ” means a day on which the principal Trading Market is open for trading, and “ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQX or the OTC Bulletin Board (or any successors to any of the foregoing)) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the             shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of reducing the outstanding number of Warrant Shares purchasable hereunder by an amount equal to the applicable number of Warrant Shares purchased. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $3.50, subject to adjustment hereunder (the “ Exercise Price ”).

c) Cashless Exercise . At the option of the Holder, this Warrant may be exercised, in whole or in part, at any time that this Warrant shall be exercisable and the VWAP shall exceed the Exercise Price, by means of a “cashless exercise” in which the Holder shall be entitled, without any obligation to pay the Exercise Price in cash, to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A)

= the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

(B)

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

(X)

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

“ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the National Association of Securities Dealers, Inc. OTC Bulletin Board (the “ OTC Bulletin Board ”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall, to the extent not previously exercised, be automatically exercised via cashless exercise pursuant to this Section 2(c).

d) Mechanics of Exercise .

i. Delivery of Certificates Upon Exercise . Certificates for             shares purchased hereunder shall, subject to Section 4(d) below, be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“ DWAC ”), if the Company is then a participant in such system, and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to and resale of the Warrant Shares by Holder (or the Warrant Shares may be resold pursuant to SEC Rule 144) or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) payment of the aggregate Exercise Price as set forth above (including by cashless exercise) (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. If the Company fails for any reason to deliver to the Holder certificates evidencing the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $2 per Trading Day (increasing to $4 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such certificates are delivered or Holder rescinds such exercise.

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

iii. Rescission Rights . If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise; Remedies Cumulative . In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount payable by the Company to the Holder hereunder. No provision of this Warrant, including without limitation any right of the Holder to any payment or liquidated damages, rescission or any other remedy provided for in this Warrant, shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing             shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

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

vi. Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

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

Section 3 . Certain Adjustments .

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

b) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant 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 shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

c) Pro Rata Distributions . If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security, then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d) Fundamental Transaction . If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Shares (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder (assuming such holder sold, exchanged or otherwise transferred such shares in connection with such Fundamental Transaction) of the number of             shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the Exercise Price shall be appropriately apportioned to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, including, but not limited to, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “ Black Scholes Value ” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“ Bloomberg ”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor or acquirer (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(c) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

e) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury             shares, if any) issued and outstanding.

f) Notice to Holder .

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

ii. Notice to Allow Exercise by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their             shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice, except as may otherwise be expressly set forth herein.

Section 4 . Transfer of Warrant .

a) Transferability . This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

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

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

d) Exchange Act Reports; Legend .

(i) With a view to making available to the Holder the benefits of Securities and Exchange Commission (“ SEC ”) Rule 144 and any other rule or regulation of the SEC that may at any time permit the Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall, so long as it is subject to the reporting requirements of the Securities Act of 1933 (as amended, and the rules and regulations promulgated thereunder, the “ Securities Act ”) and the Securities Exchange Act of 1934 (as amended, and the rules and regulations promulgated thereunder, the “ Exchange Act ”), (A) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times, (B) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (C) furnish to the Holder, so long as the Holder owns the Warrant or Warrant Shares, forthwith upon request (1) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, and (2) such other information as may be reasonably requested in availing the Holder of any rule or regulation of the SEC that permits the sale of any securities without registration or pursuant to Form S-3.

(ii) Neither this Warrant nor any certificate or instrument evidencing this Warrant or the Warrant Shares shall bear (and the Company hereby agrees to remove or not to affix, as applicable and provided herein) any restrictive or other legend, notice or provision (including without limitation the legend included on the first page of this Warrant as of the Issue Date or any similar legend) restricting the sale or transfer of this Warrant or the Warrant Shares if (A) a transfer of this Warrant or the Warrant Shares is made or proposed to be made pursuant to SEC Rule 144, (B) a transfer of this Warrant or the Warrant Shares is made or proposed to be made for no consideration to an Affiliate of the Holder or (C) such a legend, notice or provision is not required in order to establish compliance with any provisions of the Securities Act. Within three (3) Trading Days of (X)any written request by the Holder indicating its intention to make a transfer of this Warrant or all or a portion of the Warrant Shares pursuant to SEC Rule 144 or (Y) satisfaction of the registration and prospectus delivery requirements of the Act, the Company shall remove any such legend, notice or provision and issue a new Warrant and/or Warrant Shares without any such legend, notice or provision restricting the sale or transfer of this Warrant or the Warrant Shares, as applicable. Notwithstanding the forgoing or anything to contrary contained in this Warrant, no certificate or certificates for any shares purchased hereunder shall bear any restrictive or other legend, notice or provision restricting the sale or transfer of Warrant Shares if, as of the date of any exercise of this Warrant, the Warrant Shares may be transferred pursuant to SEC Rule 144 and, if such sale or transfer cannot, as of such exercise date, be made, the Company shall cause any such legend, notice or provision to be removed from all or any such certificates within three (3) Trading Days of the first date on which such a transfer pursuant to SEC Rule 144 can be made. For all purposes of Section 2(d), the Company shall not be deemed to have delivered to the Holder Warrant Shares unless and until the Company shall have fully complied with all of the terms and conditions of this Section 4(d).

e) Warrant Put Right .

(i) Put Right . Notwithstanding any other provision of this Warrant, Holder may elect by giving the Company written notice thereof (“ Put Notice ”), from time to time and at any time that is on or before the Expiration Date and that is upon or after the earlier of (a) twenty four (24) months from the Issue Date, (b) the repayment in full of or an event of default under the Loan Agreement or any note, agreement or obligation entered into in connection therewith, and (c) a Fundamental Transaction (any such event, transaction or date, a “ Put Event ”), to require the Company to purchase, and to sell to the Company, this Warrant and/or the Warrant Shares (collectively, the “ Warrant Securities ”) or any portion thereof (“ Put Right ”) at a purchase price equal to the Put Redemption Price, and the Company shall be required to purchase such Warrant Securities or portion thereof in accordance with the terms of this Section 4(e).

(ii) Put Redemption Price . The “ Put Redemption Price ” of the Warrant Securities or any portion thereof to be redeemed and purchased by the Company hereunder shall be calculated as of the date the Put Notice is given by Holder and shall be equal to (a) in the case of this Warrant, the product of (i) the difference of (A) the VWAP minus (B) the Exercise Price then in effect multiplied by (ii) that portion of this Warrant (expressed in Warrant Shares) to be redeemed and (b) in the case of any Warrant Shares, the product of (i) the VWAP multiplied by (ii) the number of Warrant Shares to be redeemed.

(iii) Closing . On a date specified by Holder in the Put Notice which is not less than twenty (20) days after the date the Put Notice is given by Holder, Holder shall surrender the Warrant Securities to be redeemed to the Company at its principal office or such other place as may be set forth in the Put Notice on tender by the Company of the Put Redemption Price in cash or other immediately available funds. If this Warrant is redeemed only in part, the Company shall issue a new Warrant for the portion of this Warrant that has not been redeemed.

(iv) No Restrictions . The Company covenants and agrees that it shall not, without the prior written consent of Holder, enter into or agree to become subject to any term, condition, provision or agreement that would restrict in any way the performance of the Company’s obligations under this Section 4(e). Upon receipt of a Put Notice, if the Company believes that at the time of the closing of the purchase pursuant to the Put Right, it does not have legally available funds sufficient to pay the Put Redemption Price, the Company shall promptly use all reasonable efforts to cause such legally available funds to become available in any manner permitted or contemplated by applicable law. If the Company does not have legally available funds sufficient to pay the Put Redemption Price, Holder may elect pursuant to written notice given by Holder to the Company: (a) that the Put Right pursuant to the Put Notice shall remain exercised and the closing of the purchase pursuant to the Put Right shall be deferred until the Company has legally available funds sufficient to pay the Put Redemption Price or a portion thereof (and provided that, as and to the extent that such funds become available, the Company shall promptly make partial payments of the Put Redemption Price); (b) that the exercise of the Put Right shall be rescinded in whole or in part; or (c) that, to the extent the Company does not have legally available funds sufficient to pay the Put Redemption Price, the Put Redemption Price shall be paid by delivery to Holder of a promissory note of the Company dated as of the closing date, having a term of one (1) year from the date thereof, providing for a single payment of principal and interest at the end of its term, bearing interest rate per annum equal to the maximum rate allowed by the Small Business Administration.

Section 5 . Miscellaneous .

a) No Rights as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), subject to any express provision of this Warrant to the contrary.

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

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

d) Authorized Shares .

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

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

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

e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Loan Agreement.

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

g) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Loan Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Loan Agreement.

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

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

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

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

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

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

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

(Signature Page Follows)

1

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: August   , 2013

NOTICE OF EXERCISE

TO: IMMUNE PHARMACEUTICALS INC.

(1) The undersigned hereby elects to purchase        Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered by physical delivery of a certificate to:

[SIGNATURE OF HOLDER]

Name of Holder:      
Signature of Authorized Signatory of Holder :      
Name of Authorized Signatory:      
Title of Authorized Signatory:      
Date:       

2

ASSIGNMENT FORM

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [        ] all of or [        ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

       whose address is

       .

Dated:        ,       

Signature Guaranteed:       

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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