NOTE 16. RELATED-PARTY TRANSACTIONS

(a) Dr. Daniel G. Teper

In September 2011, Immune Ltd. entered into an employment agreement with Dr. Teper under which he continued as Immune Ltd.’s Chief Executive Officer. Immune Ltd. agreed to compensate Dr. Teper with a monthly salary of approximately $10,000 plus benefits and reimbursement of certain expenses. Dr. Teper was eligible for an annual bonus of up to 50% of his annual salary, based 50% upon successful achievement of personal objectives and the overall performance of his duties and obligations, and 50% on general corporate performance. The agreement was cancelable by Dr. Teper with six months’ prior notice and by Immune Ltd. with twelve months’ prior notice. On June 1, 2014, Immune Ltd., and Dr. Teper entered into an amendment to an employment agreement, according to which, Dr. Teper’s compensation is to be adjusted to reflect an annual compensation of $0.1 million per annum. Effective January 1, 2015, Dr. Teper’s employment agreement with Immune Ltd. was terminated.

On June 1, 2014, Dr. Teper entered into an additional employment agreement with Immune Inc. According to the agreement between Immune Inc. and Dr. Teper, an annual total compensation of $0.3 million is to be paid to Dr. Teper by the Company. In addition, the Company agreed to pay Dr. Teper a sign-on bonus for the services provided prior to the date of this agreement. Moreover, Dr. Teper is entitled for an annual incentive award, in cash or in equity, based on mutually agreed goals. Effective January 1, 2015, concurrent with his terminated agreement Dr. Teper’s employment agreement with the Immune Inc. was amended to increase total compensation to $0.4 million.

In June 2011, Immune Pharmaceuticals Corporation, Inc., a wholly owned subsidiary of Immune Ltd., entered into a services agreement with 21 West Partners LLC (“21 West”), a company owned and controlled by Dr. Teper, a founder and CEO of Immune Ltd, under which, the Company agreed to pay $0.2 million annually for services rendered plus reimbursement for certain expenses. The agreement with 21 West was terminated by the parties in December 2013. In addition, Dr. Teper offset $60,000 of the amounts due to him under the service agreement with 21 West for participation in the March 2014 Financing. Total expenses recorded for 21 West Partners LLC and Dr. Teper in the aggregate amounted to $0, and $0.2 million in each of the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014 no amounts were due to Dr. Teper.

In February 2014, the Company granted Dr. Teper 750,000 options to the Company’s shares of common stock, at an exercise price of $2.38. These options will vest quarterly over a three-year period. Total fair value at grant date was approximately $1.5 million.

(b)

Dr. Jean Kadouche, Ph.D.

In July 2010, Immune Ltd. issued Dr. Kadouche shares of its ordinary stock, so that at the time of the transaction, Dr. Kadouche became a 50% owner of Immune Ltd. Immune Ltd. assigned no value to the shares issued in this transaction.

In August 2013, Immune Ltd. and Dr. Kadouche entered into a consulting agreement, pursuant to which, Dr. Kadouche agreed to serve as Immune Ltd.’s Vice President Biologics Research and Development and as a member of the Scientific Advisory Board. In consideration for his services, Immune Ltd. agreed to pay a consulting fee of up to $10,000 per any calendar month plus reimbursement of expenses if and when services are provided. Dr. Kadouche is also eligible to receive bonus compensation in any calendar year at the discretion of the Company’s Board of Directors. In 2013, Immune Ltd. issued 22,917 of its ordinary shares to Dr. Kadouche as compensation for any past services rendered for which payment had not already been made. The shares were valued at $55,000.

Total expenses recorded for Dr. Kadouche in the aggregate amounted to $0.1 million and $15,000 for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, no amounts were due to Dr. Kadouche.

(c)

Isaac Kobrin

In October 2013, in connection with his board service, the Company awarded Dr. Kobrin ten-year options to purchase 100,000 ordinary shares at an exercise price of $2.50 per share. Half of the options were immediately vested and half of the options vest within a three year period. The fair value of the options, based on the Black-Scholes option-pricing model, was approximately $0.2 million. In addition, in October 2013, the Company agreed to pay Dr. Isaac Kobrin $60,000 per year for his board services.

In July 2014, Dr. Kobrin resigned from the Company’s Board of Directors and signed a consulting agreement, under which he will be paid monthly fees of $5,000 for his services to the Company. In addition, his options continue to vest under their original terms. The related modification charge was insignificant.

Total expenses recorded for Dr. Kobrin in the aggregate amounted to $0 and $30,000 in each of the years ended December 31, 2015 and 2014, respectively. In addition, Dr. Kobrin participated in the March 2014 financing by converting $60,000 owed to him by the Company. As of December 31, 2015 and 2014, $0 and $30,000 was due to Dr. Kobrin, respectively.

(d)

Mark E. Rothenberg, M.D., Ph.D.

Mark E. Rothenberg, M.D., Ph.D. was the co-chairman of Immune Ltd.’s Scientific Advisory Board. In March 2011, Immune Ltd. agreed to compensate Dr. Rothenberg $5,000 per month for consulting services if and when services are provided plus 400,000 ordinary shares. The share grant was valued at $0.3 million based on the fair value of the share as of the date of grant.

In December 2013, in connection with his board service, Immune Ltd. awarded Dr. Rothenberg options to purchase 50,000 ordinary shares at an exercise price of $2.35 per share. The options were immediately vested. The fair value of the options, based on the Black-Scholes option pricing formula, was approximately $0.1 million.

Total expenses recorded for Dr. Rothenberg in the aggregate amounted to $0 and $20,000 for the years ended December 31, 2015 and 2014, respectively. In addition, Dr. Rothenberg participated in the March 2014 Financing by converting $39,000 into shares of the Company’s Series C Preferred Stock for consulting fees due to him. As of December 31, 2015 and 2014, there were no amounts due to Dr. Rothenberg.

(e)

Daniel Kazado and Melini Capital Corp (“Melini”).

Mr. Kazado originally served on the Board of Directors of Immune Ltd. and is now Chairman of Immune’s Board of Directors. In January 2014, the Company entered into a consulting agreement with Melini, to which Mr. Kazado is related. In accordance with the agreement, Melini received a grant of 600,000 restricted shares of common stock of the Company, to vest monthly over three years. The vesting of these restricted shares was accelerated in connection with the November 2014 Note (see Note 15). In connection with this grant, and acceleration, the Company recorded an expense of approximately $1.6 million for the year ended December 31, 2014.

In 2012, Melini had previously received options to purchase an aggregate of 750,000 shares of the Company’s common stock. As of December 31, 2015, those options were fully vested. The options had a grant date fair value aggregating approximately $1.2 million based on the Black-Scholes option-pricing model.

In April 2014, the Company entered into a three-year, $5.0 million revolving line of credit with Melini, an existing stockholder, who is related to the Chairman of the Board of Directors. Borrowings under this revolving line of credit incur interest at a rate of 12% per year, payable quarterly. Drawdowns are available to the Company within four weeks of an official request. The revolving line of credit is unsecured and subordinated to the Loan Agreement. Either party to the revolving line of credit has the right to terminate this credit facility upon completion of a capital raise in excess of $5.0 million. On April 14, 2015, the revolving line of credit was amended to remove Melini’s right to terminate the line of credit and extended to provide Melini the right to terminate the line of credit on the earlier of (i) one year from the amendment date, or (ii) the completion of a capital raise in excess of $5.0 million. The revolving line of credit was further amended upon the completion of the July 29, 2015 financings in which the Company completed a capital raise greater than $5.0 million. On August 7, 2015, Melini agreed to extend the revolving line of credit until September 30, 2015 and on October 14, 2015, Melini agreed to extend the line of credit until November 30, 2016. In October 2015, the Company paid Melini $0.3 million as reimbursement for direct financial and administrative expenses accrued for the maintenance of the revolving line of credit from April 2014 to March 2016. To date, no amounts have been drawn under the revolving line of credit. Any amounts borrowed by the Company under the revolving line of credit become due upon the maturity date of November 30, 2016.

Mr. Kazado offset $20,000 of existing debt by the Company for participation in the March 2014 Financing. As of December 31, 2015 and 2014, $30,000 and $0 were due to Mr. Kazado for his board services.

(f)

Soho Mavericks LLC

In September 2014, the Company entered into a consulting agreement with Soho Mavericks LLC, which was founded, and is being managed by Mr. Benjamin Teper, the son of the Company’s CEO, Dr. Daniel Teper. According to the agreement, the Company is to pay a $5,000 monthly retainer for services received. In December 2014, the Company terminated the agreement with Soho Mavericks LLC. No expense was incurred under this agreement during the year ended December 31, 2015. During the year ended December 31, 2014, total payment under the consulting agreement of $20,000 was recorded. The Company paid $7,500 to Soho Mavericks LLC for media services performed during the year ended December 31, 2015 unrelated to the 2014 consulting agreement.