Exhibit 10.1

 

Pareteum Corporation

 

Senior Secured Convertible Note due 2025

 

THE ISSUANCE AND SALE OF NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS-DELIVERY
REQUIREMENTS OF THE SECURITIES ACT.

 

 

 

 

Pareteum Corporation

 

Senior Secured Convertible Note due 2025

 

Certificate No. A-1

 

Pareteum Corporation, a Delaware corporation, for value received, promises to
pay to HT Investments SA LLC (the “Initial Holder”), or its registered assigns,
the principal sum of seventeen million five hundred thousand dollars
($17,500,000) (such principal sum, the “Principal Amount”) on April 1, 2025, and
to pay interest thereon, as provided in this Note, in each case as provided in
and subject to the other provisions of this Note, including the earlier
redemption, repurchase or conversion of this Note.

 

Additional provisions of this Note are set forth on the other side of this Note.

 

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, Pareteum Corporation has caused this instrument to be duly
executed as of the date set forth below.

 

 

  Pareteum Corporation Date:     June 8, 2020     By: /s/ Alexander Korff      
  Name: Alexander Korff         Title:   Secretary

 

[Signature Page to Senior Secured Convertible Note due 2025, Certificate No.
A-1]

 

 

 

 

Pareteum Corporation

Senior Secured Convertible Note due 2025

 

This Note (this “Note” and, collectively with any Note issued in exchange
therefor or in substitution thereof, the “Notes”) is issued by Pareteum
Corporation, a Delaware corporation (the “Company”), and designated as its
“Senior Secured Convertible Notes due 2025.”

 

Section 1.               Definitions.

 

“Additional Financing Date” means the date the Company has received aggregated
net cash proceeds of not less than four million dollars ($4,000,000) from Hoving
& Partners SA or its Affiliates, or another Person or Persons acceptable to the
Holder in its sole discretion, pursuant to one or more issuances of Capital
Stock or incurrences of Permitted Indebtedness.

 

“Additional Financing Date Conversion Rate” means a number of shares of Common
Stock per $1,000 Principal Amount of Notes equal to a fraction (rounded to the
nearest fourth decimal place) (A) whose numerator is $1,000 and (B) whose
denominator is 105% of the Last Reported Sale Price on the Trading Day prior to
the Additional Financing Date.“Adjustment Period” has the meaning set forth in
Section 8(F)(ii)(1)(d).

 

“Adjustment Right” means any right granted with respect to any securities issued
in connection with, or with respect to, any issuance or sale (or deemed issuance
or sale in accordance with Section 8(F)(ii)) of shares of Common Stock that
could result in a decrease in the net consideration received by the Company in
connection with, or with respect to, such securities (including, without
limitation, any cash settlement rights, cash adjustment or other similar
rights).

 

“Affiliate” has the meaning set forth in Rule 144.

 

“Anti-Dilution Date” has the meaning set forth in Section 8(F)(ii)(1).

 

“Applicable Price” has the meaning set forth in Section 8(F)(ii)(1).

 

“Approved Stock Plan” means any employee benefit plan which has been approved by
the Board of Directors of the Company prior to or subsequent to the date hereof
pursuant to which shares of Common Stock and standard options to purchase Common
Stock may be issued to any employee, officer, director or consultant for
services provided to the Company in their capacity as such.

 

“Attribution Parties” means, collectively, the following Persons and entities:
(i) any investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Issue Date, directly or
indirectly managed or advised by the Holder's investment manager or any of its
Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be
acting as a “group” (within the meaning of Section 13(d)(3) of the Exchange Act)
together with the Holder or any of the foregoing and (iv) any other Persons
whose beneficial ownership of the Common Stock would or could be aggregated with
the Holder’s and the other Attribution Parties for purposes of Section 13(d) of
the Exchange Act. For clarity, the purpose of the foregoing is to subject
collectively the Holder and all other Attribution Parties to the Maximum
Percentage.

 

- 1 -

 

 

“Authorized Denomination” means, with respect to the Notes, a Principal Amount
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof.

 

“Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal
or state or non-U.S. law for the relief of debtors.

 

“Board of Directors” means the board of directors of the Company or a committee
of such board duly authorized to act on behalf of such board.

 

“Business Combination Event” has the meaning set forth in Section 10.

 

“Business Day” means any day other than a Saturday, a Sunday or any day on which
commercial banks in The City of New York are authorized or required by law or
executive order to close or be closed; provided, however, for clarification,
commercial banks in The City of New York shall not be deemed to be authorized or
required by law or executive order to close or be closed due to “stay at home”,
“shelter-in-place”, “non-essential employee” or any other similar orders or
restrictions or the closure of any physical branch locations at the direction of
any governmental authority so long as the electronic funds transfer systems
(including for wire transfers) of commercial banks in The City of New York are
open for use by customers on such day.

 

“Capital Lease” means, with respect to any Person, any leasing or similar
arrangement conveying the right to use any property, whether real or personal
property, or a combination thereof, by that Person as lessee that, in conformity
with GAAP, is required to be accounted for as a capital lease on the balance
sheet of such Person.

 

“Capital Lease Obligation” means, at the time any determination is to be made,
the amount of the liability in respect of a Capital Lease that would at that
time be required to be capitalized on a balance sheet prepared in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be prepaid by the lessee without payment of a penalty.

 

“Capital Stock” of any Person means any and all shares of, interests in, rights
to purchase, warrants or options for, participations in, or other equivalents
of, in each case however designated, the equity of such Person, but excluding
any debt securities convertible into such equity.

 

“Cash” means all cash and liquid funds.

 

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“Cash Equivalents” means, as of any date of determination, any of the following:
(A) marketable securities (i) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government, or (ii) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one (1) year
after such date; (B) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one (1) year after
such date and having, at the time of the acquisition thereof, a rating of at
least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s
Investors Service; (C) commercial paper maturing no more than one (1) year from
the date of creation thereof and having, at the time of the acquisition thereof,
a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from
Moody’s Investors Service; (D) certificates of deposit or bankers’ acceptances
maturing within one (1) year after such date and issued or accepted by any
commercial bank organized under the laws of the United States of America or any
State thereof or the District of Columbia that (i) is at least “adequately
capitalized” (as defined in the regulations of its primary federal banking
regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (E) shares of any money market mutual fund that (i)
has substantially all of its assets invested continuously in the types of
investments referred to in clauses (A) and (B) above, (ii) has net assets of not
less than $500,000,000, and (iii) has the highest rating obtainable from either
Standard & Poor’s Corporation or Moody’s Investors Service.

 

“Close of Business” means 5:00 p.m., New York City time.

 

“Collateral” has the meaning set forth in the Security Agreement

 

“Collateral Agent” means HT Investments SA LLC, in its capacity as collateral
agent for the Holder and each Other Holder, together with any successor thereto
in such capacity.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Common Stock” means the common stock, $0.001 par value per share, of the
Company, subject to Section 8(I).

 

“Common Stock Change Event” has the meaning set forth in Section 8(I).

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (A) any
Indebtedness or other obligations of another Person, including any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (B) any obligations with respect to
undrawn letters of credit, corporate credit cards or merchant services issued
for the account of that Person; and (C) all obligations arising under any
interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement

 

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“Conversion Consideration” has the meaning set forth in Section 8(D)(i).

 

“Conversion Date” means, with respect to a Note, the first Business Day on which
the requirements set forth in Section 8(C)(i) to convert such Note are
satisfied.

 

“Conversion Price” means, as of any time, an amount equal to (A) one thousand
dollars ($1,000) divided by (B) the Conversion Rate in effect at such time.

 

“Conversion Rate” initially means 1666.6667 shares of Common Stock per $1,000
Principal Amount of Notes; provided, that on the Additional Financing Date, if
the Additional Financing Date Conversion Rate is lower than the then current
Conversion Rate, the Conversion Rate shall be reduced to equal the Additional
Financing Date Conversion Rate; and, provided, further, that on the Specified
Conditions Date, if the Specified Conditions Conversion Rate is lower than the
then current Conversion Rate, the Conversion Rate shall be reduced to equal the
Specified Conditions Conversion Rate. Notwithstanding anything to the contrary
herein, the Conversion Rate is subject to adjustment pursuant to Section 8 at
all times, and whenever this Note refers to the Conversion Rate as of a
particular date without setting forth a particular time on such date, such
reference will be deemed to be to the Conversion Rate immediately after the
Close of Business on such date.

 

“Convertible Securities” means any stock or other security (other than Options)
that is at any time and under any circumstances, directly or indirectly,
convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common Stock.

 

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.

 

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof, or of any other
country.

 

“Covering Price” has the meaning set forth in Section 8(D)(v)(1).

 

“Daily VWAP” means, for any VWAP Trading Day, the per share volume-weighted
average price of the Common Stock as displayed under the heading “Bloomberg
VWAP” on Bloomberg page “TEUM <EQUITY> VAP” (or, if such page is not available,
its equivalent successor page) in respect of the period from the scheduled open
of trading until the scheduled close of trading of the primary trading session
on such VWAP Trading Day (or, if such volume-weighted average price is
unavailable, the market value of one share of Common Stock on such VWAP Trading
Day, determined, using a volume-weighted average price method, by a nationally
recognized independent investment banking firm selected by the Company). The
Daily VWAP will be determined without regard to after-hours trading or any other
trading outside of the regular trading session.

 

- 4 -

 

 

“Default” means any event that is (or, after notice, passage of time or both,
would be) an Event of Default.

 

“Default Interest” has the meaning set forth in Section 4(B).

 

“Defaulted Amount” has the meaning set forth in Section 4(B).

 

“Defaulted Shares” has the meaning set forth in Section 8(D)(v).

 

“Dilutive Issuance” has the meaning set forth in Section 8(F)(ii)(1).

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock that
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder) or upon the happening
of any event:

 

(A) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise;

 

(B) is convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock convertible or exchangeable solely at the option of the
issuer or a Subsidiary; provided that any such conversion or exchange will be
deemed an incurrence of Indebtedness or Disqualified Stock, as applicable); or

 

(C) is redeemable at the option of the holder thereof, in whole or in part,

 

in the case of each of clauses (A), (B) and (C), at any point prior to the one
hundred eighty-first (181st) day after the Maturity Date.

 

“DTC” means The Depository Trust Company.

 

“Eligible Exchange” means any of The New York Stock Exchange, The NYSE American,
The Nasdaq Capital Market, The Nasdaq Global Market or The Nasdaq Global Select
Market (or any of their respective successors).

 

“Equipment” means all “equipment” as defined in the UCC with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

 

“Equity Conditions” will be deemed to be satisfied as of any date if all of the
following conditions are satisfied as of such date and on each of the twenty
(20) previous Trading Days: (A) the shares issuable upon conversion of this Note
are Freely Tradable; (B) the Holder is not in possession of any material
non-public information provided by or on behalf of the Company; (C) the issuance
of such shares will not be limited by Section 8(J); (D) the Company is in
compliance with Section 8(E)(i) and such shares will satisfy Section 8(E)(i);
(E) no public announcement of a pending, proposed or intended Fundamental Change
has occurred that has not been abandoned, terminated or consummated; (F) the
Daily VWAP per share of Common Stock is not less than $0.50 (subject to
proportionate adjustments for events of the type set forth in Section
8(F)(i)(1)); (G) the daily dollar trading volume (as reported on Bloomberg) of
the Common Stock on the applicable Eligible Exchange on such date and for at
least 17 of the prior 20 Trading Days is not less than seven hundred fifty
thousand dollars ($750,000); and (H) no Default or Event of Default will have
occurred or be continuing.

 

- 5 -

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

 

“Event of Default” has the meaning set forth in Section 11(A).

 

“Event of Default Acceleration Amount” means, with respect to the delivery of a
notice pursuant to Section 11(B)(ii) declaring this Note to be due and payable
immediately on account of an Event of Default, a cash amount equal to the
greater of (A) one hundred twenty percent (120%) of the then outstanding
Principal Amount of this Note plus accrued and unpaid interest on this Note; and
(B) one hundred twenty percent (120%) of the product of (i) the Conversion Rate
in effect as of the Trading Day immediately preceding the date such notice is so
delivered; (ii) the total then outstanding principal portion of the Principal
Amount (expressed in thousands) of this Note plus accrued and unpaid interest on
this Note; and (iii) the greater of (x) the highest Daily VWAP per share of
Common Stock occurring during the thirty (30) consecutive VWAP Trading Days
ending on, and including, the VWAP Trading Day immediately before the date such
notice is so delivered and (y) the highest Daily VWAP per share of Common Stock
occurring during the thirty (30) consecutive VWAP Trading Days ending on, and
including, the VWAP Trading Day immediately before the date the applicable Event
of Default occurred.

 

“Event of Default Additional Shares” means, with respect to the conversion of
this Note (or any portion of this Note), an amount equal to the excess, if any,
of (A) the Event of Default Conversion Rate applicable to such conversion over
(B) the Conversion Rate that would otherwise apply to such conversion without
giving effect to Section 8(H). For the avoidance of doubt, the Event of Default
Additional Shares cannot be a negative number.

 

“Event of Default Conversion Period” means, with respect to an Event of Default,
the period beginning on, and including, the date such Event of Default occurs
and ending on later of (A) the twentieth (20th) Trading Day after the Holder’s
receipt of an Event of Default Notice and (B) five (5) Trading Days after the
date the Holder receives notice from the Company that such Event of Default has
been cured.

 

“Event of Default Conversion Price” means, with respect to the conversion of
this Note (or any portion of this Note), the greater of (i) the Floor Price and
(ii) the lesser of (A) the Conversion Price that would be in effect immediately
after the Close of Business on the Conversion Date for such conversion, without
giving effect to Section 8(H); and (B) seventy five percent (75%) of the lowest
Daily VWAP per share of Common Stock during the ten (10) consecutive VWAP
Trading Days ending on, and including, such Conversion Date (or, if such
Conversion Date is not a VWAP Trading Day, the immediately preceding VWAP
Trading Day).

 

“Event of Default Conversion Rate” means, with respect to the conversion of this
Note (or any portion of this Note), an amount (rounded to the nearest 1/10,000th
of a share of Common Stock (with 5/100,000ths rounded upward)) equal to (A) one
thousand dollars ($1,000) divided by (B) the Event of Default Conversion Price
applicable to such conversion.

 

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“Event of Default Notice” has the meaning set forth in Section 11(C).

 

“Ex-Dividend Date” means, with respect to an issuance, dividend or distribution
on the Common Stock, the first date on which shares of Common Stock trade on the
applicable exchange or in the applicable market, regular way, without the right
to receive such issuance, dividend or distribution (including pursuant to due
bills or similar arrangements required by the relevant stock exchange). For the
avoidance of doubt, any alternative trading convention on the applicable
exchange or market in respect of the Common Stock under a separate ticker symbol
or CUSIP number will not be considered “regular way” for this purpose.

 

“Excess Shares” has the meaning set forth in Section 8(J)(i).

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“Excluded Securities” means (i) shares of Common Stock or standard options to
purchase Common Stock issued to directors, officers, employees or consultants of
the Company for services rendered to the Company in their capacity as such
pursuant to an Approved Stock Plan, provided that (A) all such issuances (taking
into account the shares of Common Stock issuable upon exercise of such options)
after the Issue Date pursuant to this clause (i) do not, in the aggregate,
exceed more than 10% of the Common Stock issued and outstanding immediately
prior to the Issue Date and (B) the exercise price of any such options is not
lowered, none of such options are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such options are
otherwise materially changed in any manner that adversely affects the Holder;
(ii) shares of Common Stock issued upon the conversion or exercise of
Convertible Securities (other than standard options to purchase Common Stock
issued pursuant to an Approved Stock Plan that are covered by clause (i) above)
issued prior to the Issue Date, provided that the conversion price of any such
Convertible Securities (other than standard options to purchase Common Stock
issued pursuant to an Approved Stock Plan that are covered by clause (i) above)
is not lowered, none of such Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects the Holder; (iii) the
shares of Common Stock issuable upon conversion of the Notes or otherwise
pursuant to the terms of the Notes; provided, that the terms of the Notes are
not amended, modified or changed on or after the Issue Date (other than
antidilution adjustments pursuant to the terms thereof in effect as of the Issue
Date) (iv) the shares of Common Stock issuable upon exercise of the Warrants (as
defined in the Securities Purchase Agreement).

 

“Expiration Date” has the meaning set forth in Section 8(F)(i)(5).

 

“Expiration Time” has the meaning set forth in Section 8(F)(i)(5).

 

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“Floor Price” means ten cents ($0.10).

 

“Freely Tradable” means, with respect to any shares of Common Stock issued or
issuable upon conversion of this Note, that (A) such shares would be eligible to
be offered, sold or otherwise transferred by the Holder pursuant to Rule 144,
without any requirements as to volume, manner of sale, availability of current
public information (whether or not then satisfied) or notice under the
Securities Act and without any requirement for registration under any state
securities or “blue sky” laws; or (B) such shares are (or, when issued, will be)
listed and admitted for trading, without suspension or material limitation on
trading, on an Eligible Exchange; and (C) no delisting or suspension by such
Eligible Exchange has been threatened (with a reasonable prospect of delisting
occurring after giving effect to all applicable notice, appeal, compliance and
hearing periods) or reasonably likely to occur or pending as evidenced by (x) a
writing by such Eligible Exchange or (y) the Company falling below the minimum
listing maintenance requirements of such Eligible Exchange.

 

“Fundamental Change” means any of the following events:

 

(A)       a “person” or “group” (within the meaning of Section 13(d)(3) of the
Exchange Act), other than the Company or its Wholly Owned Subsidiaries, or the
employee benefit plans of the Company or its Wholly Owned Subsidiaries, files
any report with the Commission indicating that such person or group has become
the direct or indirect “beneficial owner” (as defined below) of shares of the
Company’s common equity representing more than fifty percent (50%) of the voting
power of all of the Company’s then-outstanding common equity;

 

(B)       the consummation of (i) any sale, lease or other transfer, in one
transaction or a series of transactions, of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, to any Person
(other than solely to one or more of the Company’s Wholly Owned Subsidiaries);
or (ii) any transaction or series of related transactions in connection with
which (whether by means of merger, consolidation, share exchange, combination,
reclassification, recapitalization, acquisition, liquidation or otherwise) all
of the Common Stock is exchanged for, converted into, acquired for, or
constitutes solely the right to receive, other securities, cash or other
property (other than a subdivision or combination, or solely a change in par
value, of the Common Stock); provided, however, that any merger, consolidation,
share exchange or combination of the Company pursuant to which the Persons that
directly or indirectly “beneficially owned” (as defined below) all classes of
the Company’s common equity immediately before such transaction directly or
indirectly “beneficially own,” immediately after such transaction, more than
fifty percent (50%) of all classes of common equity of the surviving, continuing
or acquiring company or other transferee, as applicable, or the parent thereof,
in substantially the same proportions vis-à-vis each other as immediately before
such transaction will be deemed not to be a Fundamental Change pursuant to this
clause (B);

 

(C)       the Company’s stockholders approve any plan or proposal for the
liquidation or dissolution of the Company; or.

 

(D)       the Common Stock ceases to be listed on any Eligible Exchange.

 

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For the purposes of this definition, (x) any transaction or event described in
both clause (A) and in clause (B)(i) or (ii) above (without regard to the
proviso in clause (B)) will be deemed to occur solely pursuant to clause (B)
above (subject to such proviso); and (y) whether a Person is a “beneficial
owner” and whether shares are “beneficially owned” will be determined in
accordance with Rule 13d-3 under the Exchange Act.

 

“Fundamental Change Base Repurchase Price” means, with respect to this Note (or
any portion of this Note to be repurchased) upon a Repurchase Upon Fundamental
Change, a cash amount equal to of the greater of (i) one hundred twenty percent
(120%) of the then outstanding Principal Amount of this Note (or portion
thereof) and (ii) one hundred twenty percent (120%) of the product of (A) the
Conversion Rate in effect as of the Trading Day immediately preceding the
effective date of such Fundamental Change; (B) the Principal Amount of this Note
to be repurchased upon a Repurchase Upon Fundamental Change divided by $1,000;
and (C) the Fundamental Change Stock Price for such Fundamental Change.

 

“Fundamental Change Notice” has the meaning set forth in Section 6(C).

 

“Fundamental Change Repurchase Date” means the date as of which this Note must
be repurchased for cash in connection with a Fundamental Change, as provided in
Section 6(B).

 

“Fundamental Change Repurchase Price” means the cash price payable by the
Company to repurchase this Note (or any portion of this Note) upon its
Repurchase Upon Fundamental Change, calculated pursuant to Section 6(D).

 

“Fundamental Change Stock Price” means, with respect to any Fundamental Change,
the highest Daily VWAP per share of Common Stock occurring during the thirty
(30) consecutive VWAP Trading Days ending on, and including, the VWAP Trading
Day immediately before the effective date of such Fundamental Change.

 

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time; provided the definitions set forth in
this Note and any financial calculations required by thereby shall be computed
to exclude any change to lease accounting rules from those in effect pursuant to
Financial Accounting Standards Board Accounting Standards Codification 840
(Leases) and other related lease accounting guidance as in effect on the date
hereof.

 

“Holder” means the person in whose name this Note is registered on the books of
the Company, which initially is the Initial Holder.

 

The term “including” means “including without limitation,” unless the context
provides otherwise.

 

“Indebtedness” means, indebtedness of any kind, including, without duplication
(A) all indebtedness for borrowed money or the deferred purchase price of
property or services, including reimbursement and other obligations with respect
to surety bonds and letters of credit, (B) all obligations evidenced by notes,
bonds, debentures or similar instruments, (C) all Capital Lease Obligations, (D)
all Contingent Obligations, and (E) Disqualified Stock.

 

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“Initial Holder” has the meaning set forth in the cover page of this Note.

 

“Interest Cash Payment Notice” has the meaning set forth in Section 5(B).

 

“Interest Payment Date” means, with respect to a Note, (A) the first calendar
day of each month beginning on August 1, 2020; and (B) if not otherwise included
in clause (A), the Maturity Date.

 

“Interest Stock Payment Date” has the meaning set forth in Section 5(B).

 

“Interest Stock Payment Period” has the meaning set forth in Section 5(B).

 

“Intellectual Property” means all of the Company’s Copyrights; Trademarks;
Patents; Licenses; trade secrets and inventions; mask works; the Company’s
applications therefor and reissues, extensions, or renewals thereof; and the
Company’s goodwill associated with any of the foregoing, together with the
Company’s rights to sue for past, present and future infringement of
Intellectual Property and the goodwill associated therewith.

 

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or
substantially all, of the assets of another Person or the purchase of any assets
of another Person for greater than the fair market value of such assets to
solely the extent of the amount in excess of the fair market value.

 

“Issue Date” means June 8, 2020.

 

“Last Reported Sale Price” of the Common Stock for any Trading Day means the
closing sale price per share (or, if no closing sale price is reported, the
average of the last bid price and the last ask price per share or, if more than
one in either case, the average of the average last bid prices and the average
last ask prices per share) of Common Stock on such Trading Day as reported in
composite transactions for the principal U.S. national or regional securities
exchange on which the Common Stock is then listed. If the Common Stock is not
listed on a U.S. national or regional securities exchange on such Trading Day,
then the Last Reported Sale Price will be the last quoted bid price per share of
Common Stock on such Trading Day in the over-the-counter market as reported by
OTC Markets Group Inc. or a similar organization. If the Common Stock is not so
quoted on such Trading Day, then the Last Reported Sale Price will be the
average of the mid-point of the last bid price and the last ask price per share
of Common Stock on such Trading Day from a nationally recognized independent
investment banking firm selected by the Company.

 

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.

 

- 10 -

 

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest; provided, that for the
avoidance of doubt, licenses, strain escrows and similar provisions in
collaboration agreements, research and development agreements that do not create
or purport to create a security interest, encumbrance, levy, lien or charge of
any kind shall not be deemed to be Liens for purposes of this Note.

 

“Market Disruption Event” means, with respect to any date, the occurrence or
existence, during the one-half hour period ending at the scheduled close of
trading on such date on the principal U.S. national or regional securities
exchange or other market on which the Common Stock is listed for trading or
trades, of any material suspension or limitation imposed on trading (by reason
of movements in price exceeding limits permitted by the relevant exchange or
otherwise) in the Common Stock or in any options contracts or futures contracts
relating to the Common Stock.

 

“Market Stock Payment Price” means, with respect to any Interest Payment Date or
Optional Redemption Stock Payment Date, an amount equal to the greater of (A)
the Floor Price and (B) eighty-five percent (85%) of the lowest Daily VWAP
during the ten (10) VWAP Trading Day period ending on the VWAP Trading Day
immediately prior to such Interest Payment Date or Optional Redemption Stock
Payment Date, as applicable.

 

“Maturity Date” means April 1, 2025.

 

“Maximum Percentage” has the meaning set forth in Section 8(J)(i).

 

“New Issuance Price” has the meaning set forth in Section 8(F)(ii)(1).

 

“Open of Business” means 9:00 a.m., New York City time.

 

“Optional Redemption Cash Payment Notice” has the meaning set forth in Section
5(C).

 

“Optional Redemption Date” means, with respect to a Note, (A) the earlier of (i)
October 1, 2020 and (ii) the first Trading Day that the Common Stock is Freely
Tradable; (B) the first calendar day of each month following the applicable date
set forth in clause (A); and (C) if not otherwise included in clause (B), the
Maturity Date.

 

“Optional Redemption Payment” means, (A) with respect to each Optional
Redemption Date, up to three million five hundred thousand dollars ($3,500,000),
as determined by the Holder in its sole discretion; provided, that, the Holder
and the Company may agree to increase the size of any Optional Redemption
Payment by mutual written consent; and provided, further, that in no event shall
the amount of any Optional Redemption Payment exceed the then outstanding
Principal Amount of this Note.

 

“Optional Redemption Stock Payment Date” has the meaning set forth in Section
5(C).

 

“Optional Redemption Stock Payment Period” has the meaning set forth in Section
5(C).

 

- 11 -

 

 

The term “or” is not exclusive, unless the context expressly provides otherwise.

 

“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.

 

“Other Holder” means any person in whose name any Other Note is registered on
the books of the Company.

 

“Other Notes” means any Notes that are of the same class of this Note and that
are represented by one or more certificates other than the certificate
representing this Note.

 

“Pareteum Europe” means Pareteum Europe B.V., a private company with limited
liability (besloten vennootschap met beperkte aansprakelijkheid), having its
corporate seat at Amsterdam.

 

“Pareteum Europe Pledge Agreement” means that certain Deed of Pledge over
Registered Shares, dated on or about the date hereof, among the Company, the
Collateral Agent and Pareteum Europe.

 

“Pareteum Europe Security Agreement ” means a security agreement under the laws
of the Netherlands acceptable to the Holder in its sole discretion, pursuant to
which Pareteum Europe will grant a security interest in favor of the Collateral
Agent in substantially all of its assets (other than leased real property and
rights as to which the grant of a security interest would violate or invalidate
any such contract or other document or give any other party to such contract,
instrument, license or other document the right to terminate its obligations
thereunder).

 

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States or in any other country, all registrations and recordings thereof,
and all applications for letters patent of, or rights corresponding thereto, in
the United States or any other country.

 

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement the Company now holds or hereafter acquires any
interest.

 

- 12 -

 

 

“Permitted Indebtedness” means (A) Indebtedness evidenced by this Note; (B)
Indebtedness deemed to be disclosed pursuant to the Securities Purchase
Agreement, as in effect as of the Issue Date, including the existing
Disqualified Stock disclosed therein; (C) Indebtedness to trade creditors,
purchase money Indebtedness and Capital Leases incurred in the ordinary course
of business, including Indebtedness incurred in the ordinary course of business
with corporate credit cards; (D) Indebtedness that also constitutes a Permitted
Investment; (E) Subordinated Indebtedness of the Company; (F) reimbursement
obligations in connection with letters of credit or similar instruments that are
secured by Cash or Cash Equivalents and issued on behalf of the Company or a
Subsidiary thereof in an aggregate amount not to exceed five hundred thousand
dollars ($500,000) at any time outstanding; (G) Indebtedness in respect of (1)
advances of payroll amounts in an aggregate principal amount not to exceed at
any time $1,000,000 and (2) an aggregate principal amount of $2,500,000 in
indebtedness resulting from certain unsecured loans made or to be made to the
Company under the Paycheck Protection Program established by the Coronavirus
Aid, Relief, and Economic Security Act; (H) refinancings of items of Permitted
Indebtedness so long as such refinanced Permitted Indebtedness (i) does not have
a final maturity date, amortization payment, sinking fund, mandatory redemption
or other repurchase obligation for cash or put right for cash at the option of
the lender or holder of such Indebtedness prior to the earlier of (1) the final
maturity date of the Permitted Indebtedness being refinanced and (2) one hundred
eighty-one (181) days following the Maturity Date, (ii) does not impose
materially more burdensome terms upon the Company or its Subsidiaries, (iii)
does not increase the amount thereof other than in respect of amounts accrued
thereon to the date of such refinancing and (iv) is not otherwise materially
adverse to the Holder; and (I) Contingent Obligations that are guarantees of
Indebtedness described in clauses (A) through (E) and (H).

 

“Permitted Intellectual Property Licenses” means Intellectual Property (A)
licenses in existence at the Issue Date and (B) non-perpetual licenses granted
in the ordinary course of business on arm’s length terms consisting of the
licensing of technology, the development of technology or the providing of
technical support which may include licenses with unlimited renewal options
solely to the extent such options require mutual consent for renewal or are
subject to financial or other conditions as to the ability of licensee to
perform under the license; provided such license was not entered into during
continuance of a Default or an Event of Default.

 

“Permitted Investment” means: (A) Investments deemed to be disclosed pursuant to
the Securities Purchase Agreement, as in effect as of the Issue Date; (B) (i)
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency or any State thereof maturing within one year
from the date of acquisition thereof, (ii) commercial paper maturing no more
than one year from the date of creation thereof and currently having a rating of
at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) certificates of deposit issued by any bank
headquartered in the United States with assets of at least five billion dollars
$5,000,000,000 maturing no more than one year from the date of investment
therein, and (iv) money market accounts; (C) Investments accepted in connection
with Permitted Transfers; (D) Investments (including debt obligations) received
in connection with the bankruptcy or reorganization of customers or suppliers
and in settlement of delinquent obligations of, and other disputes with,
customers or suppliers arising in the ordinary course of the Company’s business;
(E) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers in the ordinary course of
business and consistent with past practice, provided that this clause (E) shall
not apply to Investments of the Company in any Subsidiary; (F) Investments
consisting of loans not involving the net transfer on a substantially
contemporaneous basis of cash proceeds to employees, officers or directors
relating to the purchase of capital stock of the Company pursuant to an Approved
Stock Plan; (G) Investments consisting of travel advances in the ordinary course
of business; (H) Investments in the Subsidiary Grantors and, from and after the
execution of the Pareteum Europe Security Agreement, Pareteum Europe; (I)
Permitted Intellectual Property Licenses; and (J) additional Investments that do
not exceed twenty-five thousand dollars ($25,000) in the aggregate in any twelve
(12) month period.

 

- 13 -

 

 

“Permitted Liens” means any and all of the following: (A) Liens in favor of
Holder or the Collateral Agent; (B) Liens deemed to be disclosed pursuant to the
Securities Purchase Exchange Agreement, as in effect as of the Issue Date; (C)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; provided, that the Company maintains adequate reserves therefor in
accordance with GAAP; (D) Liens securing claims or demands of materialmen,
artisans, mechanics, carriers, warehousemen, landlords and other like Persons
arising in the ordinary course of business; provided, that the payment thereof
is not yet required; (E) Liens arising from judgments, decrees or attachments in
circumstances which do not constitute a Default or an Event of Default
hereunder; (F) the following deposits, to the extent made in the ordinary course
of business: deposits under workers’ compensation, unemployment insurance,
social security and other similar laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) or
to secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (G) Liens on Equipment or software or other
intellectual property constituting purchase money Liens and Liens in connection
with Capital Leases securing Indebtedness permitted in clause (C) of “Permitted
Indebtedness”; (H) leasehold interests in leases or subleases and licenses
granted in the ordinary course of the Company’s business and not interfering in
any material respect with the business of the licensor; (I) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
custom duties that are promptly paid on or before the date they become due; (J)
Liens on insurance proceeds securing the payment of financed insurance premiums
that are promptly paid on or before the date they become due (provided that such
Liens extend only to such insurance proceeds and not to any other property or
assets); (K) statutory and common law rights of set-off and other similar rights
as to deposits of cash and securities in favor of banks, other depository
institutions and brokerage firms; (L) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business so long as they do not materially
impair the value or marketability of the related property; and (M) Liens on Cash
or Cash Equivalents securing obligations permitted under clause (D) and (G) of
the definition of Permitted Indebtedness.

 

“Permitted Transfers” means (A) dispositions of inventory sold, and Permitted
Intellectual Property Licenses entered into, in each case, in the ordinary
course of business, (B) dispositions of worn-out, obsolete or surplus property
at fair market value in the ordinary course of business; (C) dispositions of
accounts or payment intangibles (each as defined in the UCC) resulting from the
compromise or settlement thereof in the ordinary course of business for less
than the full amount thereof; (D) transfers consisting of Permitted Investments
under clause (H) of Permitted Investments; (E) other transfers of assets to any
Person other than to a joint venture and which have a fair market value of not
more than twenty-five thousand dollars ($25,000) in the aggregate in any twelve
(12) month period and (F) a restructuring, recapitalization, sale or other
transfer of all or substantially all of the equity securities or assets of iPass
India Private Limited, including following commencement of any proceedings under
Bankruptcy Law or otherwise with respect to any such Subsidiary.

 

“Person” or “person” means any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

 

- 14 -

 

 

“Primary Security” has the meaning set forth in Section 8(F)(ii)(1)(d).

 

“Principal Amount” has the meaning set forth in the cover page of this Note;
provided, however, that the Principal Amount of this Note will be subject to
reduction (A) pursuant to Section 6, Section 7, and Section 8 and (B) by an
amount equal to (i) the sum of all Optional Redemption Payments made prior to
date of determination of the Principal Amount of the Note then outstanding.

 

“Reference Property” has the meaning set forth in Section 8(I)(i).

 

“Reference Property Unit” has the meaning set forth in Section 8(I)(i).

 

“Related Party” has the meaning set forth in Section 22(B).

 

“Reported Outstanding Share Number” has the meaning set forth in Section
8(J)(i).

 

“Repurchase Upon Fundamental Change” means the repurchase of any Note by the
Company pursuant to Section 6.

 

“Requisite Stockholder Approval” means the stockholder approval contemplated by
Nasdaq Listing Standard Rule 5635(d) with respect to the issuance of shares of
Common Stock upon conversion of this Note and the Warrant (as defined in the
Securities Purchase Agreement) in excess of the limitations imposed by such
rule; provided, however, that clause (B) of the Requisite Stockholder Approval
will be deemed to be obtained if, due to any amendment or binding change in the
interpretation of the applicable listing standards of The Nasdaq Capital Market,
such stockholder approval is no longer required for the Company to settle all
conversions of this Note by delivering shares of Common Stock without limitation
pursuant to Section 8(J)(ii).

 

“Rule 144” means Rule 144 under the Securities Act.

 

“Scheduled Trading Day” means any day that is scheduled to be a Trading Day on
the principal U.S. national or regional securities exchange on which the Common
Stock is then listed or, if the Common Stock is not then listed on a U.S.
national or regional securities exchange, on the principal other market on which
the Common Stock is then traded. If the Common Stock is not so listed or traded,
then “Scheduled Trading day” means a Business Day.

 

“Secondary Security” has the meaning set forth in Section 8(F)(ii)(1)(d).

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Securities Purchase Agreement” means that certain Securities Purchase
Agreement, dated as of June 8, 2020, between the Company and HT Investments SA
LLC providing for the issuance of this Note.

 

“Security Agreement” means that certain Security Agreement, dated as of June 8,
2020, among the Company, certain of its Subsidiaries and the Collateral Agent.

 

- 15 -

 

 

“Security Document” has the meaning set forth in the Security Agreement.

 

“Series C Preferred Stock” means an aggregate of 148 shares of the Company’s 8%
Series C Redeemable Preferred Stock, with the rights, powers and preferences
described in the Certificate of Designation, Preferences, and Rights of such
Series C Preferred Stock filed by the Company on December 10, 2019, as in effect
on the date hereof.

 

“Significant Subsidiary” means, with respect to any Person, any Subsidiary of
such Person that constitutes a “significant subsidiary” (as defined in Rule
1-02(w) of Regulation S-X under the Exchange Act) of such Person.

 

“Specified Conditions” will be deemed to be satisfied as of any date if all of
the following conditions are satisfied (or, if not satisfied, any such condition
is waived by the Holder in its sole discretion) as of such date: (A) all Equity
Conditions are met (including, for the avoidance of doubt, the Company
satisfying the requirements of Rule 144(c)(1) under the Securities Act); (B) the
Company has obtained the Requisite Stockholder Approval; (C) the Daily VWAP per
share of Common Stock is not less than $0.85 (subject to proportionate
adjustments for events of the type set forth in Section 8(F)(i)(1)); (D) the
Additional Financing Date shall have occurred; and (E) no Default or Event of
Default shall have occurred hereunder.

 

“Specified Conditions Conversion Rate” means a number of shares of Common Stock
per $1,000 Principal Amount of Notes equal to a fraction (rounded to the nearest
fourth decimal place) (A) whose numerator is $1,000; and (2) whose denominator
is 105% of the Last Reported Sale Price on the VWAP Trading Day immediately
before the Specified Conditions Date.

 

“Specified Conditions Date” means the first date on which all Specified
Conditions have been satisfied by the Company (or, if not satisfied, any such
condition is waived by the Holder in its sole discretion).

 

“Spin-Off” has the meaning set forth in Section 8(F)(i)(3)(b).

 

“Spin-Off Valuation Period” has the meaning set forth in Section 8(F)(i)(3)(b).

 

“Stated Interest Rate” means, as of any date, a rate per annum equal to 8.00%.

 

“Subordinated Indebtedness” means Indebtedness subordinated to the Notes in
amounts and on terms and conditions satisfactory to the Holder in its sole
discretion.

 

- 16 -

 

 

“Subsidiary” means, with respect to any Person, (A) any corporation, association
or other business entity (other than a partnership or limited liability company)
of which more than fifty percent (50%) of the total voting power of the Capital
Stock entitled (without regard to the occurrence of any contingency, but after
giving effect to any voting agreement or stockholders’ agreement that
effectively transfers voting power) to vote in the election of directors,
managers or trustees, as applicable, of such corporation, association or other
business entity is owned or controlled, directly or indirectly, by such Person
or one or more of the other Subsidiaries of such Person; and (B) any partnership
or limited liability company where (i) more than fifty percent (50%) of the
capital accounts, distribution rights, equity and voting interests, or of the
general and limited partnership interests, as applicable, of such partnership or
limited liability company are owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person, whether in
the form of membership, general, special or limited partnership or limited
liability company interests or otherwise; and (ii) such Person or any one or
more of the other Subsidiaries of such Person is a controlling general partner
of, or otherwise controls, such partnership or limited liability company.

 

“Subsidiary Grantor” means a Grantor (as defined in the Security Agreement) that
is a Wholly Owned Subsidiary of the Company and Pareteum Europe.

 

“Successor Corporation” has the meaning set forth in Section 10(A).

 

“Successor Person” has the meaning set forth in Section 8(I)(i).

 

“Tender/Exchange Offer Valuation Period” has the meaning set forth in Section
8(F)(i)(5).

 

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.

 

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or
any political subdivision thereof.

 

“Trading Day” means any day on which (A) trading in the Common Stock generally
occurs on the principal U.S. national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, on the principal other market on
which the Common Stock is then traded; and (B) there is no Market Disruption
Event. If the Common Stock is not so listed or traded, then “Trading Day” means
a Business Day.

 

“Transaction Documents” has the meaning set forth in the Securities Purchase
Agreement.

 

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of New York.

 

“Unit” has the meaning set forth in Section 8(F)(ii)(1)(d).

 

“Valuation Event” has the meaning set forth in Section 8(F)(ii)(1)(d).

 

“Variable Price Securities” has the meaning set forth in Section 8(F)(ii)(2).

 

- 17 -

 

 

“Variable Price” has the meaning set forth in Section 8(F)(ii)(2).

 

“VWAP Market Disruption Event” means, with respect to any date, (A) the failure
by the principal U.S. national or regional securities exchange on which the
Common Stock is then listed, or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, the principal other market on
which the Common Stock is then traded, to open for trading during its regular
trading session on such date; or (B) the occurrence or existence, for more than
one half hour period in the aggregate, of any suspension or limitation imposed
on trading (by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in the Common Stock or in any options contracts
or futures contracts relating to the Common Stock, and such suspension or
limitation occurs or exists at any time before 1:00 p.m., New York City time, on
such date.

 

“VWAP Trading Day” means a day on which (A) there is no VWAP Market Disruption
Event; provided that the Holder, by notice to the Company, may waive any such
VWAP Market Disruption Event; and (B) trading in the Common Stock generally
occurs on the principal U.S. national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, on the principal other market on
which the Common Stock is then traded. If the Common Stock is not so listed or
traded, then “VWAP Trading Day” means a Business Day.

 

“Wholly Owned Subsidiary” of a Person means any Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which (other than
directors’ qualifying shares) are owned by such Person or one or more Wholly
Owned Subsidiaries of such Person.

 

“Withheld Shares” has the meaning set forth in Section 8(J).

 

 

 

Section 2.               Persons Deemed Owners.

 

The Holder of this Note will be treated as the owner of this Note for all
purposes.

 

Section 3.               Registered Form.

 

This Note, and any Note issued in exchange therefor or in substitution thereof,
will be in registered form, without coupons.

 

Section 4.               Accrual of Interest; Defaulted Amounts.

 

(A)             Accrual of Stated Interest. This Note will accrue interest (the
“Stated Interest”) at a rate per annum equal to the Stated Interest Rate. Stated
Interest on this Note will (i) accrue on the Principal Amount of this Note; (ii)
accrue from, and including, the most recent date to which Stated Interest has
been paid or duly provided for (or, if no Stated Interest has theretofore been
paid or duly provided for, the Issue Date) to, but excluding, the date of
payment of such Stated Interest; (iii) be payable in arrears on each Interest
Payment Date, each Optional Redemption Date and each Optional Redemption Stock
Payment Date, as applicable; and (iv) be computed on the basis of a 360-day year
comprised of twelve 30-day months.

 

- 18 -

 

 

(B)           Defaulted Amounts. If (i) the Company fails to pay any amount
payable on this Note on or before the due date therefor as provided in this
Note, then, regardless of whether such failure constitutes an Event of Default,
or (ii) a Default or Event of Default occurs (such amount payable or the
Principal Amount outstanding as of such failure to pay or Default or Event of
Default, (as applicable, a “Defaulted Amount”)), then in each case, to the
extent lawful, interest (“Default Interest”) will accrue on such Defaulted
Amount at a rate per annum equal to eighteen percent (18.0%), from, and
including, such due date or the date of such Default or Event of Default, as
applicable, to, but excluding, the date such failure to pay or Default or Event
of Default is cured and all outstanding Default Interest under this Note has
been paid, as applicable.

 

Section 5.Method of Payment; When Payment Date is Not a Business Day.

 

(A)          Method of Payment. Except as set forth in Section 5(B) or Section
5(C), the Company will pay all cash amounts due under this Note by wire transfer
of immediately available funds to the account or accounts specified by the
Holder by written notice in advance of the date such amount is due, by wire
transfer of immediately available funds to such account or address set forth in
such written notice, as applicable.

 

(B)           Company’s Election to Pay Stated Interest in Cash or Common Stock.
At least ten (10) Trading Days (but no more than twenty (20) Trading Days) prior
to an Interest Payment Date, the Company, if it desires to elect to make a
payment of Stated Interest with respect to such Interest Payment Date, entirely
or partially, in cash, shall deliver to the Holder a written notice of such
election stating which portion thereof the Company has elected to pay in cash (a
“Interest Cash Payment Notice”), and such amount shall be paid on the applicable
Interest Payment Date in cash pursuant to Section 5(A) (and such election shall
be irrevocable as to such payment of Stated Interest (or portion thereof)).
Failure to timely deliver such written notice to the Holder shall be deemed an
election by the Company to pay the Stated Interest (or applicable portion
thereof) with respect to such Interest Payment Date in shares of Common Stock,
subject to the terms hereof. With respect to any Interest Payment Date for which
the Company has made a deemed election to pay Stated Interest (or any applicable
portion thereof) in shares of Common Stock in accordance with this Section 5(B),
(i) the Holder shall have the right to allocate all or any portion of the
applicable payment of Stated Interest (or applicable portion thereof) to one or
more Scheduled Trading Days (any such date, an “Interest Stock Payment Date”)
during the period beginning on, and including, the applicable Interest Payment
Date and ending on, and including, the Scheduled Trading Day immediately before
the subsequent Interest Payment Date (the “Interest Stock Payment Period”) or
defer such payment of Stated Interest (or applicable portion thereof) to any
future Interest Payment Date selected by the Holder; and (ii) the Company shall
issue to the Holder a number of validly issued, fully paid and Freely Tradable
shares of Common Stock equal to the quotient (rounded up to the closest whole
number) obtained by dividing such payment of Stated Interest (or any applicable
portion thereof) by the Market Stock Payment Price as of such Interest Stock
Payment Date. The Holder must provide notice to the Company of its election of
any Interest Stock Payment Date and the applicable portion of Stated Interest it
is electing to receive on each such Interest Stock Payment Date no later than
4:30 p.m. New York Time on such Interest Stock Payment Date. In the event that
the number of shares of Common Stock issued to the Holder on any Interest Stock
Payment Date is reduced as a result of the Floor Price, the Company shall
concurrently with the issuance of such shares also pay to the Holder an amount,
in cash, equal to the product of (i) the number of shares by which the
applicable amount of Stated Interest (or portion thereof) was reduced as a
result of the Floor Price, multiplied by the Market Stock Payment Price.
Notwithstanding anything herein to the contrary, the Company will not have the
right to, and will not, make any payment of Stated Interest (or any applicable
portion thereof) in shares of Common Stock if the Equity Conditions are not
satisfied for each VWAP Trading Day occurring between the date that is five (5)
Trading Days prior to the applicable Interest Payment Date and the applicable
Interest Stock Payment Date, and such payment of Stated Interest (or any
applicable portion thereof) shall instead be paid in cash in accordance with
Section 5(A), unless such failure of the Equity Conditions to be so satisfied is
waived in writing by the Holder, which waiver may be granted or withheld by the
Holder in its sole discretion. The Company shall not pay any portion of a
payment of Stated Interest in shares of Common Stock unless the Holder has
designated an Interest Stock Payment Date for such portion. Any portion of a
payment of Stated Interest not paid in shares of Common Stock because the Holder
did not allocate such payment of Stated Interest (or applicable portion thereof)
to a Scheduled Trading Day during the applicable Interest Stock Payment Period
or because the Holder elected to defer the receipt of such payment of Stated
Interest (or portion thereof) during the applicable Interest Stock Payment
Period will be automatically deferred to the next Interest Payment Date or such
future Interest Payment Date as was elected by the Holder, as applicable. Any
such shares of Common Stock will be delivered by the Company to the Holder on or
before the second (2nd) Business Day following the applicable Interest Stock
Payment Date.

 

- 19 -

 

 

(C)          Company’s Election to Pay Optional Redemption Payments in Cash or
Common Stock. At least ten (10) Trading Days (but no more than twenty (20)
Trading Days) prior to an Optional Redemption Date, the Company, if it desires
to elect to make an Optional Redemption Payment with respect to such Optional
Redemption Date, entirely or partially, in cash, shall deliver to the Holder a
written notice of such election stating which portion thereof the Company has
elected to pay in cash (an “Optional Redemption Cash Payment Notice”) (and such
election shall be irrevocable as to such Optional Redemption Date). Failure to
timely deliver such written notice to the Holder shall be deemed an election by
the Company to pay the Optional Redemption Payment (or applicable portion
thereof) with respect to such Optional Redemption Date in shares of Common
Stock, subject to the terms hereof. With respect to any Optional Redemption Date
for which the Company has made a deemed election to make an Optional Redemption
Payment (or any applicable portion thereof) in shares of Common Stock in
accordance with this Section 5(C), (i) the Holder shall have the right to
allocate all or any portion of the applicable Optional Redemption Payment (or
applicable portion thereof) to one or more Scheduled Trading Days (any such
date, an “Optional Redemption Stock Payment Date”) during the period beginning
on, and including, the applicable Optional Redemption Date and ending on, and
including, the Scheduled Trading Day immediately before the subsequent Optional
Redemption Date (the “Optional Redemption Stock Payment Period”) or defer such
Optional Redemption Payment (or applicable portion thereof) to any future
Optional Redemption Date selected by the Holder; and (ii) the Company shall
issue to the Holder, a number of validly issued, fully paid and Freely Tradable
shares of Common Stock equal to the quotient (rounded up to the closest whole
number) obtained by dividing such Optional Redemption Payment (or any applicable
portion thereof) by the Market Stock Payment Price as of such Optional
Redemption Stock Payment Date. The Holder must provide notice to the Company of
its election of any Optional Redemption Stock Payment Date and the applicable
portion of the Optional Redemption Payment it is electing to receive on each
such Optional Redemption Stock Payment Date no later than 4:30 p.m. New York
Time on such Optional Redemption Stock Payment Date. In the event that the
number of shares of Common Stock issued to the Holder on any Optional Redemption
Stock Payment Date is reduced as a result of the Floor Price, the Company shall
concurrently with the issuance of such shares also pay to the Holder an amount,
in cash, equal to the product of (i) the number of shares by which the
applicable Optional Redemption Payment (or portion thereof) was reduced as a
result of the Floor Price, multiplied by the Market Stock Payment Price.
Notwithstanding anything herein to the contrary, the Company will not have the
right to, and will not, make any Optional Redemption Payment (or any applicable
portion thereof) in shares of Common Stock if the Equity Conditions are not
satisfied for each VWAP Trading Day occurring between the date that is five (5)
Trading Days prior to the applicable Optional Redemption Date and the applicable
Optional Redemption Stock Payment Date, and such Optional Redemption Payment (or
any applicable portion thereof) shall instead be paid in cash in accordance with
Section 5(A), unless such failure of the Equity Conditions to be so satisfied is
waived in writing by the Holder, which waiver may be granted or withheld by the
Holder in its sole discretion. The Company shall not pay any portion of the
Optional Redemption Payment in shares of Common Stock unless the Holder has
designated an Optional Redemption Stock Payment Date for such portion. Any
portion of the Optional Redemption Payment not paid in shares of Common Stock
because the Holder did not allocate such Optional Redemption Payment (or
applicable portion thereof) to a Scheduled Trading Day during the applicable
Optional Redemption Stock Payment Period or because the Holder elected to defer
the receipt of such Optional Redemption Payment (or portion thereof) during the
applicable Optional Redemption Stock Payment Period will be automatically
deferred to the next Optional Redemption Date or such future Optional Redemption
Date as was elected by the Holder, as applicable. Any such shares of Common
Stock will be delivered by the Company to the Holder on or before the second
(2nd) Business Day following the applicable Optional Redemption Stock Payment
Date.

 

- 20 -

 

 

(D)          Delay of Payment when Payment Date is Not a Business Day. If the
due date for a payment on this Note as provided in this Note is not a Business
Day, then, notwithstanding anything to the contrary in this Note, such payment
may be made on the immediately following Business Day and no interest will
accrue on such payment as a result of the related delay.

 

Section 6.Repurchase of Note upon a Fundamental Change.

 

(A)          Repurchase Upon Fundamental Change. Subject to the other terms of
this Section 6, if a Fundamental Change occurs, then (i) the Holder will have
the right to require the Company to repurchase this Note (or any portion of this
Note in an Authorized Denomination) and (ii) the Company will have the right to
repurchase this Note, in each case on the Fundamental Change Repurchase Date for
such Fundamental Change for a cash purchase price equal to the Fundamental
Change Repurchase Price.

 

(B)           Fundamental Change Repurchase Date. The Fundamental Change
Repurchase Date for any Fundamental Change will be a Business Day of the
Holder’s choosing that is no more than twenty (20) Business Days after the later
of (x) the date the Company delivers to the Holder the related Fundamental
Change Notice pursuant to Section 6(C); and (y) the effective date of such
Fundamental Change.

 

- 21 -

 

 

(C)          Fundamental Change Notice. No later than the fifth (5th) Business
Day before the occurrence of any Fundamental Change, the Company will send to
the Holder a written notice (the “Fundamental Change Notice”) thereof, stating
the expected date such Fundamental Change will occur and, if applicable, the
Company’s election to repurchase this Note pursuant to Section 6(A).

 

(D)          Fundamental Change Repurchase Price. The Fundamental Change
Repurchase Price for this Note (or any portion of this Note to be repurchased)
upon a Repurchase Upon Fundamental Change following a Fundamental Change is an
amount in cash equal to the Fundamental Change Base Repurchase Price for such
Fundamental Change plus accrued and unpaid interest on this Note (or such
portion of this Note) to, but excluding, the Fundamental Change Repurchase Date
for such Fundamental Change. For the avoidance of doubt, if such Fundamental
Change Repurchase Date is on an Interest Payment Date, then the interest
otherwise payable on this Note (or such portion of this Note) on such Interest
Payment Date will be paid as part of the Fundamental Change Repurchase Price, in
satisfaction of the Company’s obligation to pay such interest on such Interest
Payment Date.

 

(E)           Effect of Repurchase. If this Note (or any portion of this Note)
is to be repurchased upon a Repurchase Upon Fundamental Change, then, from and
after the date the related Fundamental Change Repurchase Price is paid in full,
this Note (or such portion) will cease to be outstanding and interest will cease
to accrue on this Note (or such portion).

 

Section 7.Optional Redemption Payments; Holder Optional Redemption.

 

(A)          Optional Redemption Payments. At the Holder’s election, in its sole
discretion, the Company shall be required to redeem a portion of this Note equal
to the applicable Optional Redemption Payment on each Optional Redemption Date;
provided, however, that the Holder may, in its sole discretion, defer any
Optional Redemption Payment (or any portion thereof) to any subsequent Optional
Redemption Date. The Holder shall deliver to the Company a written notice of any
such election under this Section 7(A) at least fifteen (15) Trading Days prior
to the applicable Optional Redemption Date in order to make an effective
election; provided, however, that the Holder may, in its sole discretion, defer
any Optional Redemption Payment (or any portion thereof) to any subsequent
Optional Redemption Date in accordance with the immediately preceding sentence
at any time prior to the applicable Optional Redemption Date.

 

(B)          Effect of Optional Redemption Payment. If this Note (or any portion
of this Note) is redeemed pursuant to Section 7(A), then, from and after the
date the related Optional Redemption Payment is paid in full, this Note (or such
portion) will cease to be outstanding and interest will cease to accrue on this
Note (or such portion).

 

Section 8. Conversion.

 

(A)          Right to Convert.

 

(i)                Generally. Subject to the provisions of this Section 8, the
Holder may, at its option, convert this Note, including any portion constituting
an Optional Redemption Payment, as applicable, or any deferred Optional
Redemption Payment, into Conversion Consideration.

 

- 22 -

 

 

(ii)                Conversions in Part. Subject to the terms of this Section 8,
this Note may be converted in part, but only in an Authorized Denomination.
Provisions of this Section 8 applying to the conversion of this Note in whole
will equally apply to conversions of any permitted portion of this Note.

 

(B)          When this Note May Be Converted.

 

(i)                Generally. The Holder may convert this Note at any time until
the Close of Business on the second (2nd) Scheduled Trading Day immediately
before the Maturity Date; provided that, with respect to the conversion of any
Optional Redemption Payment, the Holder must provide notice of such conversion
no later than the Close of Business on the second (2nd) Scheduled Trading Day
immediately preceding the date such Optional Redemption Payment is due in
accordance with the terms of this Note, and any such conversion will not reduce
the amount of future Optional Redemption Payments. For the avoidance of doubt,
the Holder’s right to convert this Note shall not be impacted by a prior notice
or election to defer any Optional Redemption Payment pursuant to Section 7(A)
hereof.

 

(ii)               Limitations and Closed Periods. Notwithstanding anything to
the contrary in this Section 8, if this Note (or any portion of this Note) is to
be repurchased upon a Repurchase Upon Fundamental Change pursuant to Section 6,
then this Note (or such portion) may not be converted after the Close of
Business on the Scheduled Trading Day immediately before the related Fundamental
Change Repurchase Date; provided, that this Section 8(B) shall no longer apply
to this Note (or such applicable portion) if the applicable Fundamental Change
Repurchase Price is not delivered on the Fundamental Change Repurchase Date in
accordance with Section 6.

 

(C)          Conversion Procedures.

 

(i)                Generally. To convert this Note, the Holder must (1)
complete, manually sign and deliver to the Company the conversion notice
attached to this Note or a facsimile or portable document format (.pdf) version
of such conversion notice (at which time such conversion will become
irrevocable); and (2) pay any amounts due pursuant to Section 8(C)(iii). For the
avoidance of doubt, the conversion notice may be delivered by e-mail in
accordance with Section 14. If the Company fails to deliver, by the related
Conversion Settlement Date, any shares of Common Stock forming part of the
Conversion Consideration of the conversion of this Note, the Holder, by notice
to the Company, may rescind all or any portion of the corresponding conversion
notice at any time until such Defaulted Shares are delivered.

 

(ii)               Holder of Record of Conversion Shares. The person in whose
name any shares of Common Stock is issuable upon conversion of this Note will be
deemed to become the holder of record of such shares as of the Close of Business
on the Conversion Date for such conversion, conferring, as of such time, upon
such person, without limitation, all voting and other rights appurtenant to such
shares.

 

- 23 -

 

 

(iii)              Taxes and Duties. If the Holder converts a Note, the Company
will pay any documentary, stamp or similar issue or transfer tax or duty due on
the issue of any shares of Common Stock upon such conversion; provided, however,
that if any tax or duty is due because such Holder requested such shares to be
issued in a name other than that of such Holder, then such Holder will pay such
tax or duty and, until having received a sum sufficient to pay such tax or duty,
the Company may refuse to deliver any such shares to be issued in a name other
than that of such Holder.

 

(D)          Settlement upon Conversion.

 

(i)                Generally. The consideration (the “Conversion Consideration”)
due in respect of each $1,000 Principal Amount of this Note, including any
portion constituting an Optional Redemption Payment or any deferred Optional
Redemption Payment, to be converted will consist of the following:

 

(1)            subject to Section 8(D)(ii), a number of shares of Common Stock
equal to the Conversion Rate in effect on the Conversion Date for such
conversion; and

 

(2)            cash in an amount equal to the aggregate accrued and unpaid
interest on this Note to, but excluding, the Conversion Settlement Date for such
conversion.

 

(ii)                Fractional Shares. The total number of shares of Common
Stock due in respect of any conversion of this Note, including any portion
constituting an Optional Redemption Payment or any deferred Optional Redemption
Payment, will be determined on the basis of the total Principal Amount of this
Note to be converted with the same Conversion Date; provided, however, that if
such number of shares of Common Stock is not a whole number, then such number
will be rounded up to the nearest whole number.

 

(iii)               Delivery of the Conversion Consideration. The Company will
pay or deliver, as applicable, the Conversion Consideration due upon the
conversion of this Note, including any portion constituting an Optional
Redemption Payment required to be paid by the Company on the next Optional
Redemption Date or Optional Redemption Stock Payment Date, as applicable, or any
outstanding deferred Optional Redemption Payment, to the Holder on or before the
second (2nd) Business Day (or, if earlier, the standard settlement period for
the primary Eligible Exchange on which the Common Stock is traded) immediately
after the Conversion Date for such conversion (the “Conversion Settlement
Date”).

 

(iv)              Effect of Conversion. If this Note is converted, then, from
and after the date the Conversion Consideration therefor is issued or delivered
in settlement of such conversion, this Note will cease to be outstanding and
interest will cease to accrue on this Note.

 

(v)               Conversion Settlement Defaults. If (x) the Company fails to
deliver, by the related Conversion Settlement Date, any shares of Common Stock
(the “Defaulted Shares”) forming part of the Conversion Consideration of the
conversion of this Note, including any portion constituting an Optional
Redemption Payment or any deferred Optional Redemption Payment; and (y) the
Holder (whether directly or indirectly, including by any broker acting on the
Holder’s behalf or acting with respect to such Defaulted Shares) purchases any
shares of Common Stock (whether in the open market or otherwise) to cover any
such Defaulted Shares (whether to satisfy any settlement obligations with
respect thereto of the Holder or otherwise), then, without limiting the Holder’s
right to pursue any other remedy available to it (whether hereunder, under
applicable law or otherwise), the Holder will have the right, exercisable by
notice to the Company, to cause the Company to either:

 

- 24 -

 

 

(1)            pay, on or before the second (2nd) Business Day after the date
such notice is delivered, cash to the Holder in an amount equal to the aggregate
purchase price (including any brokerage commissions and other out-of-pocket
costs) incurred to purchase such shares (such aggregate purchase price, the
“Covering Price”); or

 

(2)            promptly deliver, to the Holder, such Defaulted Shares in
accordance with this Note, together with cash in an amount equal to the excess,
if any, of the Covering Price over the product of (x) the number of such
Defaulted Shares; and (y) the Daily VWAP per share of Common Stock on the
Conversion Date relating to such conversion.

 

To exercise such right, the Holder must deliver notice of such exercise to the
Company, specifying whether the Holder has elected clause (1) or (2) above to
apply. If the Holder has elected clause (1) to apply, then the Company’s
obligation to deliver the Defaulted Shares in accordance with this Note will be
deemed to have been satisfied and discharged to the extent the Company has paid
the Covering Price in accordance with clause (1).

 

(E)           Reserve and Status of Common Stock Issued upon Conversion.

 

(i)                Stock Reserve. At all times when this Note is outstanding,
the Company will reserve, out of its authorized but unissued and unreserved
shares of Common Stock, a number of shares of Common Stock equal to (1) the
then-outstanding Principal Amount of this Note plus accrued and unpaid interest
on this Note; divided by (2) the Floor Price.

 

(ii)               Status of Conversion Shares; Listing. Each share of Common
Stock delivered upon conversion of this Note will be a newly issued or treasury
share and will be duly and validly issued, fully paid, non-assessable, free from
preemptive rights and free of any lien or adverse claim (except to the extent of
any lien or adverse claim created by the action or inaction of the Holder or the
Person to whom such share will be delivered). If the Common Stock is then listed
on any securities exchange, or quoted on any inter-dealer quotation system, then
the Company will cause each share of Common Stock issued upon conversion of this
Note, when delivered upon such conversion, to be admitted for listing on such
exchange or quotation on such system.

 

(iii)              Book-Entry Shares. Any shares of Common Stock issued upon
conversion of this Note will be issued in the form of book-entries at the
facilities of DTC, with or without restrictive legends, as appropriate.

 

- 25 -

 

 

(F)           Adjustments to the Conversion Rate for Certain Events.

 

(i)                Events Requiring an Adjustment to the Conversion Rate. The
Conversion Rate will be adjusted from time to time as follows:

 

(1)            Stock Dividends, Splits and Combinations. If the Company issues
solely shares of Common Stock as a dividend or distribution on all or
substantially all shares of the Common Stock, or if the Company effects a stock
split or a stock combination of the Common Stock (in each case excluding an
issuance solely pursuant to a Common Stock Change Event, as to which Section
8(I) will apply), then the Conversion Rate will be adjusted based on the
following formula:

 

 [tm2022008d1_ex10-1img01.jpg]

where:

 

CR0 =

the Conversion Rate in effect immediately before the Open of Business on the
Ex-Dividend Date for such dividend or distribution, or immediately before the
Open of Business on the effective date of such stock split or stock combination,
as applicable;

      CR1 =

the Conversion Rate in effect immediately after the Open of Business on such
Ex-Dividend Date or the Open of Business on such effective date, as applicable;

      OS0 =

the number of shares of Common Stock outstanding immediately before the Open of
Business on such Ex-Dividend Date or effective date, as applicable, without
giving effect to such dividend, distribution, stock split or stock combination;
and

      OS1 = the number of shares of Common Stock outstanding immediately after
giving effect to such dividend, distribution, stock split or stock combination.
     

If any dividend, distribution, stock split or stock combination of the type
described in this Section 8(F)(i)(1) is declared or announced, but not so paid
or made, then the Conversion Rate will be readjusted, effective as of the date
the Board of Directors determines not to pay such dividend or distribution or to
effect such stock split or stock combination, to the Conversion Rate that would
then be in effect had such dividend, distribution, stock split or stock
combination not been declared or announced.

 

- 26 -

 

 

(2)            Rights, Options and Warrants. If the Company distributes, to all
or substantially all holders of Common Stock, rights, Options or warrants (other
than rights issued or otherwise distributed pursuant to a stockholder rights
plan, as to which the provisions set forth in Sections 8(F)(i)(3)(a) and
8(F)(vii) will apply) entitling such holders, for a period of not more than
sixty (60) calendar days after the record date of such distribution, to
subscribe for or purchase shares of Common Stock at a price per share that is
less than the average of the Last Reported Sale Prices per share of Common Stock
for the ten (10) consecutive Trading Days ending on, and including, the Trading
Day immediately before the date such distribution is announced, then the
Conversion Rate will be increased based on the following formula:

 

[tm2022008d1_ex10-1img02.jpg] 

where:

 

CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such distribution;       CR1 = the Conversion Rate in
effect immediately after the Open of Business on such Ex-Dividend Date;       OS
= the number of shares of Common Stock outstanding immediately before the Open
of Business on such Ex-Dividend Date;       X = the total number of shares of
Common Stock issuable pursuant to such rights, Options or warrants; and       Y
= a number of shares of Common Stock obtained by dividing (x) the aggregate
price payable to exercise such rights, Options or warrants by (y) the average of
the Last Reported Sale Prices per share of Common Stock for the ten (10)
consecutive Trading Days ending on, and including, the Trading Day immediately
before the date such distribution is announced.

 

To the extent that shares of Common Stock are not delivered after the expiration
of such rights, Options or warrants (including as a result of such rights,
Options or warrants not being exercised), the Conversion Rate will be readjusted
to the Conversion Rate that would then be in effect had the increase to the
Conversion Rate for such distribution been made on the basis of delivery of only
the number of shares of Common Stock actually delivered upon exercise of such
rights, Option or warrants. To the extent such rights, Options or warrants are
not so distributed, the Conversion Rate will be readjusted to the Conversion
Rate that would then be in effect had the Ex-Dividend Date for the distribution
of such rights, Options or warrants not occurred.

 

For purposes of this Section 8(F)(i)(2), in determining whether any rights,
Options or warrants entitle holders of Common Stock to subscribe for or purchase
shares of Common Stock at a price per share that is less than the average of the
Last Reported Sale Prices per share of Common Stock for the ten (10) consecutive
Trading Days ending on, and including, the Trading Day immediately before the
date the distribution of such rights, Options or warrants is announced, and in
determining the aggregate price payable to exercise such rights, Options or
warrants, there will be taken into account any consideration the Company
receives for such rights, Options or warrants and any amount payable on exercise
thereof, with the value of such consideration, if not cash, to be determined by
the Board of Directors in good faith.

 

- 27 -

 

 

(3)            Spin-Offs and Other Distributed Property.

 

(a)            Distributions Other than Spin-Offs. If the Company distributes
shares of its Capital Stock, evidences of its indebtedness or other assets or
property of the Company, or rights, Options or warrants to acquire Capital Stock
of the Company or other securities, to all or substantially all holders of the
Common Stock, excluding:

 

(v)        dividends, distributions, rights, Options or warrants for which an
adjustment to the Conversion Rate is required pursuant to Section 8(F)(i)(1) or
Section 8(F)(i)(2);

 

(w)       dividends or distributions paid exclusively in cash for which an
adjustment to the Conversion Rate is required pursuant to Section 8(F)(i)(4);

 

(x)         rights issued or otherwise distributed pursuant to a stockholder
rights plan, except to the extent provided in Section 8(F)(vii);

 

(y)       Spin-Offs for which an adjustment to the Conversion Rate is required
pursuant to Section 8(F)(i)(3)(b); and

 

(z)        a distribution solely pursuant to a Common Stock Change Event, as to
which Section 8(I) will apply,

 

then the Conversion Rate will be increased based on the following formula:

 

 [tm2022008d1_ex10-1img03.jpg]

where:

 

CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such distribution;       CR1 = the Conversion Rate in
effect immediately after the Open of Business on such Ex-Dividend Date;       SP
= the average of the Last Reported Sale Prices per share of Common Stock for the
ten (10) consecutive Trading Days ending on, and including, the Trading Day
immediately before such Ex-Dividend Date; and

 

- 28 -

 

 

FMV = the fair market value (as determined by the Board of Directors in good
faith), as of such Ex-Dividend Date, of the shares of Capital Stock, evidences
of indebtedness, assets, property, rights, Options or warrants distributed per
share of Common Stock pursuant to such distribution;

 

provided, however, that if FMV is equal to or greater than SP, then, in lieu of
the foregoing adjustment to the Conversion Rate, the Holder will receive, for
each $1,000 Principal Amount of this Note held by this Holder on the record date
for such distribution, at the same time and on the same terms as holders of
Common Stock, the amount and kind of shares of Capital Stock, evidences of
indebtedness, assets, property, rights, Options or warrants that such Holder
would have received if such Holder had owned, on such record date, a number of
shares of Common Stock equal to the Conversion Rate in effect on such record
date.

 

To the extent such distribution is not so paid or made, the Conversion Rate will
be readjusted to the Conversion Rate that would then be in effect had the
adjustment been made on the basis of only the distribution, if any, actually
made or paid.

 

(b)           Spin-Offs. If the Company distributes or dividends shares of
Capital Stock of any class or series, or similar equity interest, of or relating
to an Affiliate, a Subsidiary or other business unit of the Company to all or
substantially all holders of the Common Stock (other than solely pursuant to a
Common Stock Change Event, as to which Section 8(I) will apply), and such
Capital Stock or equity interest is listed or quoted (or will be listed or
quoted upon the consummation of the transaction) on a U.S. national securities
exchange (a “Spin-Off”), then the Conversion Rate will be increased based on the
following formula:

 

 [tm2022008d1_ex10-1img04.jpg]

where:

 

CR0=the Conversion Rate in effect immediately before the Open of Business on the
Ex-Dividend Date for such Spin-Off;

 

CR1=the Conversion Rate in effect immediately after the Open of Business on such
Ex-Dividend Date;

 

- 29 -

 

 

FMV=the product of (x) the average of the Last Reported Sale Prices per share or
unit of the Capital Stock or equity interests distributed in such Spin-Off over
the ten (10) consecutive Trading Day period (the “Spin-Off Valuation Period”)
beginning on, and including, such Ex-Dividend Date (such average to be
determined as if references to Common Stock in the definitions of Last Reported
Sale Price, Trading Day and Market Disruption Event were instead references to
such Capital Stock or equity interests); and (y) the number of shares or units
of such Capital Stock or equity interests distributed per share of Common Stock
in such Spin-Off; and    

 

SP=the average of the Last Reported Sale Prices per share of Common Stock for
each Trading Day in the Spin-Off Valuation Period.    

 

The adjustment to the Conversion Rate pursuant to this Section 8(F)(i)(3)(b)
will be calculated as of the Close of Business on the last Trading Day of the
Spin-Off Valuation Period but will be given effect immediately after the Open of
Business on the Ex-Dividend Date for the Spin-Off, with retroactive effect. If a
Note is converted and the Conversion Date occurs during the Spin-Off Valuation
Period, then, notwithstanding anything to the contrary in this Note, the Company
will, if necessary, delay the settlement of such conversion until the second
(2nd) Business Day after the last day of the Spin-Off Valuation Period.

 

To the extent any dividend or distribution of the type set forth in this Section
8(F)(i)(3)(b) is declared but not made or paid, the Conversion Rate will be
readjusted to the Conversion Rate that would then be in effect had the
adjustment been made on the basis of only the dividend or distribution, if any,
actually made or paid.

 

(4)            Cash Dividends or Distributions. If any cash dividend or
distribution is made to all or substantially all holders of Common Stock, then
the Conversion Rate will be increased based on the following formula:

 

 [tm2022008d1_ex10-1img05.jpg]

where:

 

CR0=the Conversion Rate in effect immediately before the Open of Business on the
Ex-Dividend Date for such dividend or distribution;

 

CR1=the Conversion Rate in effect immediately after the Open of Business on such
Ex-Dividend Date;

 

- 30 -

 

 

SP=the Last Reported Sale Price per share of Common Stock on the Trading Day
immediately before such Ex-Dividend Date; and

 

D=the cash amount distributed per share of Common Stock in such dividend or
distribution;

 

provided, however, that if D is equal to or greater than SP, then, in lieu of
the foregoing adjustment to the Conversion Rate, the Holder will receive, for
each $1,000 Principal Amount of this Note held by the Holder on the record date
for such dividend or distribution, at the same time and on the same terms as
holders of Common Stock, the amount of cash that such Holder would have received
if such Holder had owned, on such record date, a number of shares of Common
Stock equal to the Conversion Rate in effect on such record date.

 

To the extent such dividend or distribution is declared but not made or paid,
the Conversion Rate will be readjusted to the Conversion Rate that would then be
in effect had the adjustment been made on the basis of only the dividend or
distribution, if any, actually made or paid.

 

(5)            Tender Offers or Exchange Offers. If the Company or any of its
Subsidiaries makes a payment in respect of a tender offer or exchange offer for
shares of Common Stock (other than solely pursuant to an odd-lot tender offer
pursuant to Rule 13e-4(h)(5) under the Exchange Act), and the value (determined
as of the Expiration Time by the Board of Directors in good faith) of the cash
and other consideration paid per share of Common Stock in such tender or
exchange offer exceeds the Last Reported Sale Price per share of Common Stock on
the Trading Day immediately after the last date (the “Expiration Date”) on which
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it may be amended), then the Conversion Rate will be increased based on the
following formula:

 

[tm2022008d1_ex10-1img06.jpg] 

where:

 

CR0=the Conversion Rate in effect immediately before the time (the “Expiration
Time”) such tender or exchange offer expires;

 

CR1=the Conversion Rate in effect immediately after the Expiration Time;

 

- 31 -

 

 

AC=the aggregate value (determined as of the Expiration Time by the Board of
Directors in good faith) of all cash and other consideration paid for shares of
Common Stock purchased or exchanged in such tender or exchange offer;

 

OS0=the number of shares of Common Stock outstanding immediately before the
Expiration Time (including all shares of Common Stock accepted for purchase or
exchange in such tender or exchange offer);

 

OS1=the number of shares of Common Stock outstanding immediately after the
Expiration Time (excluding all shares of Common Stock accepted for purchase or
exchange in such tender or exchange offer); and

 

SP=the average of the Last Reported Sale Prices per share of Common Stock over
the ten (10) consecutive Trading Day period (the “Tender/Exchange Offer
Valuation Period”) beginning on, and including, the Trading Day immediately
after the Expiration Date;

 

provided, however, that the Conversion Rate will in no event be adjusted down
pursuant to this Section 8(F)(i)(5), except to the extent provided in the
immediately following paragraph. The adjustment to the Conversion Rate pursuant
to this Section 8(F)(i)(5) will be calculated as of the Close of Business on the
last Trading Day of the Tender/Exchange Offer Valuation Period but will be given
effect immediately after the Expiration Time, with retroactive effect. If a Note
is converted and the Conversion Date occurs on the Expiration Date or during the
Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the
contrary in this Note, the Company will, if necessary, delay the settlement of
such conversion until the second (2nd) Business Day after the last day of the
Tender/Exchange Offer Valuation Period.

 

To the extent such tender or exchange offer is announced but not consummated
(including as a result of the Company being precluded from consummating such
tender or exchange offer under applicable law), or any purchases or exchanges of
shares of Common Stock in such tender or exchange offer are rescinded, the
Conversion Rate will be readjusted to the Conversion Rate that would then be in
effect had the adjustment been made on the basis of only the purchases or
exchanges of shares of Common Stock, if any, actually made, and not rescinded,
in such tender or exchange offer.

 

(ii)              Adjustments to the Conversion Rate in Connection with Certain
Equity Issuances.

 

(1)            Adjustment Upon Issuance of Shares of Common Stock. If at any
time on or prior to the date that is one year following the Specified Conditions
Date (the “Anti-Dilution Date”), the Company grants issues or sells (or enters
into any agreement to grant, issue or sell), or in accordance with this Section
8(F)(ii) is deemed to have granted, issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding any Excluded Securities granted
issued or sold or deemed to have been granted issued or sold) for a
consideration per share (the “New Issuance Price”) less than a price equal to
the Conversion Price in effect immediately prior to such granting, issuance or
sale or deemed granting issuance or sale (such Conversion Price then in effect
is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Conversion Rate
will be increased to an amount equal to (x) $1,000 divided by (y) such New
Issuance Price. For all purposes of the foregoing (including, without
limitation, determining the adjusted Conversion Rate and the New Issuance Price
under this Section 8(F)(ii)), the following shall be applicable:

 

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(a)               Issuance of Options. If the Company in any manner grants,
issues or sells (or enters into any agreement to grant, issue or sell) any
Options and the lowest price per share for which one share of Common Stock is at
any time issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any
such Option or otherwise pursuant to the terms thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 8(F)(ii)(1)(a), the “lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise of any such Options or
upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option or otherwise pursuant to the terms thereof”
shall be equal to (1) the lower of (x) the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting, issuance or sale of such Option,
upon exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof and (y) the lowest exercise price set forth in such Option
for which one share of Common Stock is issuable (or may become issuable assuming
all possible market conditions) upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof minus (2)
the sum of all amounts paid or payable to the holder of such Option (or any
other Person) upon the granting, issuance or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option or otherwise pursuant to the
terms thereof plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person).
Except as contemplated below, no further adjustment of the Conversion Rate shall
be made upon the actual issuance of such shares of Common Stock or of such
Convertible Securities upon the exercise of such Options or otherwise pursuant
to the terms of or upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities.

 

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(b)               Issuance of Convertible Securities. If the Company in any
manner issues or sells (or enters into any agreement to issue or sell) any
Convertible Securities and the lowest price per share for which one share of
Common Stock is at any time issuable upon the conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale (or
the time of execution of such agreement to issue or sell, as applicable) of such
Convertible Securities for such price per share. For the purposes of this
Section 8(F)(ii)(1)(b), the “lowest price per share for which one share of
Common Stock is at any time issuable upon the conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the
lower of (x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock upon the
issuance or sale (or pursuant to the agreement to issue or sell, as applicable)
of the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security or otherwise pursuant to the terms thereof and (y) the
lowest conversion price set forth in such Convertible Security for which one
share of Common Stock is issuable (or may become issuable assuming all possible
market conditions) upon conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof minus (2) the sum of all amounts paid or payable
to the holder of such Convertible Security (or any other Person) upon the
issuance or sale (or the agreement to issue or sell, as applicable) of such
Convertible Security plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such Convertible Security
(or any other Person). Except as contemplated below, no further adjustment of
the Conversion Rate shall be made upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such Convertible
Securities or otherwise pursuant to the terms thereof, and if any such issuance
or sale of such Convertible Securities is made upon exercise of any Options for
which an adjustment of the Conversion Rate has been or is to be made pursuant to
other provisions of this Section 8(F)(ii), except as contemplated below, no
further adjustment of the Conversion Price shall be made by reason of such
issuance or sale.

 

(c)               Change in Option Price or Rate of Conversion. If the purchase
or exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time (other than proportional changes in conversion or exercise prices,
as applicable, in connection with an event referred to in Section
8(F)(ii)(1)(a)), the Conversion Price in effect at the time of such increase or
decrease shall be adjusted to the Conversion Price which would have been in
effect at such time had such Options or Convertible Securities provided for such
increased or decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 8(F)(ii)(1)(c), if the terms of any
Option or Convertible Security that was outstanding as of the Issue Date are
increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 8(F)(ii)(1)(c) shall be made if such
adjustment would result in an increase of the Conversion Price then in effect.

 

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(d)               Calculation of Consideration Received. If any Option and/or
Convertible Security and/or Adjustment Right is issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the
Company (as determined by the Holder, the “Primary Security”, and such Option
and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”
and together with the Primary Security, each a “Unit”), together comprising one
integrated transaction, the aggregate consideration per share of Common Stock
with respect to such Primary Security shall be deemed to be the lower of (x) the
purchase price of such Unit, (y) if such Primary Security is an Option and/or
Convertible Security, the lowest price per share for which one share of Common
Stock is at any time issuable upon the exercise or conversion of the Primary
Security in accordance with Section 8(F)(ii)(1)(A) or Section 8(F)(ii)(1)(B)
above and (z) the lowest Daily VWAP of the shares of Common Stock on any Trading
Day during the four (4) Trading Day period (the “Adjustment Period”) immediately
following the public announcement of such Dilutive Issuance (for the avoidance
of doubt, if such public announcement is released prior to the opening of the
Principal Market on a Trading Day, such Trading Day shall be the first Trading
Day in such four (4) Trading Day period and if this Note is converted, on any
given Conversion Date during any such Adjustment Period, solely with respect to
such portion of this Note converted on such applicable Conversion Date, such
applicable Adjustment Period shall be deemed to have ended on, and included, the
Trading Day immediately prior to such Conversion Date). If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the net amount of consideration received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are issued or sold for
a consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company for such securities will be the
arithmetic average of the Daily VWAPs of such security for each of the five (5)
Trading Days immediately preceding the date of receipt. If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Trading Days after the tenth
(10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. The determination of such
appraiser shall be final and binding upon all parties absent manifest error and
the fees and expenses of such appraiser shall be borne by the Company.

 

(2)            Holder’s Right of Alternative Conversion Price Following Issuance
of Certain Options or Convertible Securities. In addition to and not in
limitation of the other provisions of this Section 8(F)(ii), if the Company in
any manner issues or sells or enters into any agreement to issue or sell, any
Common Stock, Options or Convertible Securities (any such securities, “Variable
Price Securities”) prior to the Anti-Dilution Date that are issuable pursuant to
such agreement or convertible into or exchangeable or exercisable for shares of
Common Stock at a price which varies or may vary with the market price of the
shares of Common Stock, including by way of one or more reset(s) to a fixed
price, but exclusive of such formulations reflecting customary anti-dilution
provisions (such as share splits, share combinations, share dividends and
similar transactions) (each of the formulations for such variable price being
herein referred to as, the “Variable Price”), the Company shall provide written
notice thereof via email and overnight courier to the Holder on the date of such
agreement and the issuance of such Convertible Securities or Options. From and
after the date the Company enters into such agreement or issues any such
Variable Price Securities, the Holder shall have the right, but not the
obligation, in its sole discretion to substitute $1,000 divided by the
applicable Variable Price for the Conversion Rate upon conversion of this Note
by designating in the Conversion Notice delivered upon any conversion of this
Note that solely for purposes of such conversion the Holder is relying on the
Variable Price rather than the Conversion Rate then in effect. The Holder’s
election to rely on a Variable Price for a particular conversion of this Note
shall not obligate the Holder to rely on a Variable Price for any future
conversion of this Note.

 

(3)               Other Events. In the event that the Company (or any
Subsidiary) shall take any action to which the provisions hereof are not
strictly applicable, or, if applicable, would not operate to protect the Holder
from dilution or if any event occurs of the type contemplated by the provisions
of this Section 8(F)(ii) but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company’s
Board of Directors shall in good faith determine and implement an appropriate
adjustment in the Conversion Rate so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 8(F)(ii)(3) will
decrease the Conversion Rate as otherwise determined pursuant to this Note;
provided, further that if the Holder does not accept such adjustments as
appropriately protecting its interests hereunder against such dilution, then the
Company’s Board of Directors and the Holder shall agree, in good faith, upon an
independent investment bank of nationally recognized standing to make such
appropriate adjustments, whose determination shall be final and binding absent
manifest error and whose fees and expenses shall be borne by the Company.

 

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(iii)            Holder’s Right of Alternative Conversion Price Pursuant to
Section 8(F)(i) or 8(F)(ii). In the event of any conflict between the terms of
Section 8(F)(i) and Section 8(F)(ii) with regard to any adjustment to the
Conversion Price hereunder, the Holder may, in its sole discretion, determine
whether Section 8(F)(i) or Section 8(F)(ii) controls.

 

(iv)             No Adjustments in Certain Cases.

 

(1)            Where the Holder Participates in the Transaction or Event Without
Conversion. Notwithstanding anything to the contrary in Section 8(F)(i) or
Section 8(F)(ii), the Company will not be obligated to adjust the Conversion
Rate on account of a transaction or other event otherwise requiring an
adjustment pursuant to Section 8(F)(i) or Section 8(F)(ii) (other than a stock
split or combination of the type set forth in Section 8(F)(i)(1) or a tender or
exchange offer of the type set forth in Section 8(F)(i)(5) or a Dilutive
Issuance) if the Holder participates, at the same time and on the same terms as
holders of Common Stock, and solely by virtue of being the Holder of this Note,
in such transaction or event without having to convert this Note and as if the
Holder held a number of shares of Common Stock equal to the product of (i) the
Conversion Rate in effect on the related record date; and (ii) the aggregate
Principal Amount (expressed in thousands) of this Note held by this Holder on
such date.

 

(2)            Certain Events. The Company will not be required to adjust the
Conversion Rate except as provided in Section 8(F), Section 8(G) or Section
8(H). Without limiting the foregoing, the Company will not be obligated to
adjust the Conversion Rate on account of:

 

(a)               except as otherwise provided in Section 8(F), the sale of
shares of Common Stock for a purchase price that is less than the market price
per share of Common Stock or less than the Conversion Price;

 

(b)               solely a change in the par value of the Common Stock; or

 

(c)               accrued and unpaid interest on this Note.

 

(v)               Adjustments Not Yet Effective. Notwithstanding anything to the
contrary in this Note, if:

 

(1)            this Note is to be converted;

 

(2)            the record date, effective date or Expiration Time for any event
that requires an adjustment to the Conversion Rate pursuant to Section 8(F)(i)
or Section 8(F)(ii) has occurred on or before the Conversion Date for such
conversion, but an adjustment to the Conversion Rate for such event has not yet
become effective as of such Conversion Date;

 

(3)            the Conversion Consideration due upon such conversion includes
any whole shares of Common Stock; and

 

(4)            such shares are not entitled to participate in such event
(because they were not held on the related record date or otherwise),

 

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then, solely for purposes of such conversion, the Company will, without
duplication, give effect to such adjustment on such Conversion Date. In such
case, if the date on which the Company is otherwise required to deliver the
consideration due upon such conversion is before the first date on which the
amount of such adjustment can be determined, then the Company will delay the
settlement of such conversion until the second (2nd) Business Day after such
first date.

 

(vi)             Conversion Rate Adjustments where the Converting Holder
Participates in the Relevant Transaction or Event. Notwithstanding anything to
the contrary in this Note, if:

 

(1)            a Conversion Rate adjustment for any dividend or distribution
becomes effective on any Ex-Dividend Date pursuant to Section 8(F)(i);

 

(2)            a Note is to be converted;

 

(3)            the Conversion Date for such conversion occurs on or after such
Ex-Dividend Date and on or before the related record date;

 

(4)            the Conversion Consideration due upon such conversion includes
any whole shares of Common Stock based on a Conversion Rate that is adjusted for
such dividend or distribution; and

 

(5)            such shares would be entitled to participate in such dividend or
distribution (including pursuant to Section 8(C)(ii)),

 

then (x) such Conversion Rate adjustment will not be given effect for such
conversion; (y) the shares of Common Stock issuable upon such conversion based
on such unadjusted Conversion Rate will not be entitled to participate in such
dividend or distribution; and (z) there will be added, to the Conversion
Consideration otherwise due upon such conversion, the same kind and amount of
consideration that would have been delivered in such dividend or distribution
with respect to such shares of Common Stock had such shares been entitled to
participate in such dividend or distribution.

 

(vii)          Stockholder Rights Plans. If any shares of Common Stock are to be
issued upon conversion of any Note and, at the time of such conversion, the
Company has in effect any stockholder rights plan, then the Holder of such Note
will be entitled to receive, in addition to, and concurrently with the delivery
of, the Conversion Consideration otherwise payable under this Note upon such
conversion, the rights set forth in such stockholder rights plan, unless such
rights have separated from the Common Stock at such time, in which case, and
only in such case, the Conversion Rate will be adjusted pursuant to Section
8(F)(i)(3)(a) on account of such separation as if, at the time of such
separation, the Company had made a distribution of the type referred to in such
Section to all holders of the Common Stock, subject to readjustment in
accordance with such Section if such rights expire, terminate or are redeemed.

 

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(viii)           Limitation on Effecting Transactions Resulting in Certain
Adjustments. The Company will not engage in or be a party to any transaction or
event that would require the Conversion Rate to be adjusted pursuant to Section
8(F)(i), Section 8(F)(ii), Section 8(G) or Section 8(H) to an amount that would
result in the Conversion Price per share of Common Stock being less than the par
value per share of Common Stock.

 

(ix)             Equitable Adjustments to Prices. Whenever any provision of this
Note requires the Company to calculate the average of the Last Reported Sale
Prices, or any function thereof, over a period of multiple days (including to
calculate an adjustment to the Conversion Rate), the Company will make
proportionate adjustments, if any, to such calculations to account for any
adjustment to the Conversion Rate pursuant to Section 8(F)(i) or Section
8(F)(ii) that becomes effective, or any event requiring such an adjustment to
the Conversion Rate where the Ex-Dividend Date or effective date, as applicable,
of such event occurs, at any time during such period.

 

(x)              Calculation of Number of Outstanding Shares of Common Stock.
For purposes of this Section 8(F), the number of shares of Common Stock
outstanding at any time will (i) include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock; and (ii)
exclude shares of Common Stock held in the Company’s treasury (unless the
Company pays any dividend or makes any distribution on shares of Common Stock
held in its treasury).

 

(xi)             Calculations. All calculations with respect to the Conversion
Rate and adjustments thereto will be made to the nearest 1/10,000th of a share
of Common Stock (with 5/100,000ths rounded upward).

 

(xii)            Notice of Conversion Rate Adjustments. Upon the effectiveness
of any adjustment to the Conversion Rate pursuant to Section 8(F)(i) or Section
8(F)(ii), the Company will promptly send notice to the Holder containing (i) a
brief description of the transaction or other event on account of which such
adjustment was made; (ii) the Conversion Rate in effect immediately after such
adjustment; and (iii) the effective time of such adjustment.

 

(G)           Voluntary Adjustments.

 

(i)               Generally. To the extent permitted by law and applicable stock
exchange rules, the Company, from time to time, may (but is not required to)
increase the Conversion Rate by any amount if (i) the Board of Directors
determines in good faith that such increase is either (x) in the best interest
of the Company; or (y) advisable to avoid or diminish any income tax imposed on
holders of Common Stock or rights to purchase Common Stock as a result of any
dividend or distribution of shares (or rights to acquire shares) of Common Stock
or any similar event; and (ii) such increase is irrevocable. The Company and the
Holder agree that any such voluntary adjustment to the Conversion Rate and any
conversion of any portion of the Note based upon any such voluntary adjustment
shall not constitute material non-public information with respect to the
Company.

 

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(ii)              Notice of Voluntary Increases. If the Board of Directors
determines to increase the Conversion Rate pursuant to Section 8(G)(i), then, no
later than the first Business Day following such determination, the Company will
send notice to the Holder of such increase, the amount thereof and the period
during which such increase will be in effect.

 

(H)           Adjustments to the Conversion Rate in Connection with an Event of
Default. If an Event of Default occurs and the Conversion Date for the
conversion of a Note occurs during the related Event of Default Conversion
Period, then, subject to Section 8(J), the Conversion Rate applicable to such
conversion will be increased by a number of shares equal to the Event of Default
Additional Shares. In the event the issuance of any Event of Default Additional
Shares is reduced as a result of the Floor Price, then concurrently with the
issuance of such shares, the Company shall also pay to the Holder an amount, in
cash, equal to the product of (i) the number of shares by which such amount was
reduced as a result of the Floor Price, multiplied by (ii) the Event of Default
Conversion Price.

 

(I)           Effect of Certain Recapitalizations, Reclassifications,
Consolidations, Mergers and Sales.

 

(i)               Generally. If there occurs:

 

(1)              recapitalization, reclassification or change of the Common
Stock (other than (x) changes solely resulting from a subdivision or combination
of the Common Stock, (y) a change only in par value or from par value to no par
value or no par value to par value and (z) stock splits and stock combinations
that do not involve the issuance of any other series or class of securities);

 

(2)              consolidation, merger, combination or binding or statutory
share exchange involving the Company;

 

(3)              sale, lease or other transfer of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a whole, to any Person;
or

 

(4)              other similar event,

 

and, in each case, as a result of such occurrence, the Common Stock is converted
into, or is exchanged for, or represents solely the right to receive, other
securities or other property (including cash or any combination of the
foregoing) (such an event, a “Common Stock Change Event,” and such other
securities or other property, the “Reference Property,” and the amount and kind
of Reference Property that a holder of one (1) share of Common Stock would be
entitled to receive on account of such Common Stock Change Event (without giving
effect to any arrangement not to issue fractional shares of securities or other
property), a “Reference Property Unit”), then, notwithstanding anything to the
contrary in this Note, at the effective time of such Common Stock Change Event,
(x) the Conversion Consideration due upon conversion of any Note will be
determined in the same manner as if each reference to any number of shares of
Common Stock in this Section 8 (or in any related definitions) were instead a
reference to the same number of Reference Property Units; (y) for purposes of
Section 8(A), each reference to any number of shares of Common Stock in such
Section (or in any related definitions) will instead be deemed to be a reference
to the same number of Reference Property Units; and (z) for purposes of the
definition of “Fundamental Change,” the term “Common Stock” and “common equity”
will be deemed to mean the common equity, if any, forming part of such Reference
Property. For these purposes, (I) the Daily VWAP of any Reference Property Unit
or portion thereof that consists of a class of common equity securities will be
determined by reference to the definition of “Daily VWAP,” substituting, if
applicable, the Bloomberg page for such class of securities in such definition;
and (II) the Daily VWAP of any Reference Property Unit or portion thereof that
does not consist of a class of common equity securities, and the Last Reported
Sale Price of any Reference Property Unit or portion thereof that does not
consist of a class of securities, will be the fair value of such Reference
Property Unit or portion thereof, as applicable, determined in good faith by the
Company (or, in the case of cash denominated in U.S. dollars, the face amount
thereof).

 

- 39 -

 

 

If the Reference Property consists of more than a single type of consideration
to be determined based in part upon any form of stockholder election, then the
composition of the Reference Property Unit will be deemed to be the weighted
average of the types and amounts of consideration actually received, per share
of Common Stock, by the holders of Common Stock. The Company will notify the
Holder of such weighted average as soon as practicable after such determination
is made.

 

At or before the effective date of such Common Stock Change Event, the Company
and the resulting, surviving or transferee Person (if not the Company) of such
Common Stock Change Event (the “Successor Person”) will execute and deliver such
instruments or agreements that (x) provides for subsequent conversions of this
Note in the manner set forth in this Section 8(I); (y) provides for subsequent
adjustments to the Conversion Rate pursuant to Section 8(F), Section 8(G) and
Section 8(H) in a manner consistent with this Section 8(I); and (z) contains
such other provisions as the Company reasonably determines are appropriate to
preserve the economic interests of the Holder and to give effect to the
provisions of this Section 8(I). If the Reference Property includes shares of
stock or other securities or assets of a Person other than the Successor Person,
then such other Person will also execute such instruments or agreements and such
instruments or agreements will contain such additional provisions the Company
reasonably determines are appropriate to preserve the economic interests of the
Holder.

 

(ii)              Notice of Common Stock Change Events. As soon as practicable
after learning the anticipated or actual effective date of any Common Stock
Change Event, the Company will provide written notice to the Holder of such
Common Stock Change Event, including a brief description of such Common Stock
Change Event, its anticipated effective date and a brief description of the
anticipated change in the conversion right of this Note.

 

(iii)             Compliance Covenant. The Company will not become a party to
any Common Stock Change Event unless its terms are consistent with this Section
8(I).

 

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(J)            Limitations on Conversions.

 

(i)               Beneficial Ownership Limitation. Notwithstanding anything to
the contrary contained herein, the Company shall not effect the conversion of
any portion of this Note, and the Holder shall not have the right to convert any
portion of this Note, pursuant to the terms and conditions of this Note and any
such conversion shall be null and void and treated as if never made, to the
extent that after giving effect to such conversion, the Holder together with the
other Attribution Parties collectively would beneficially own in excess of 4.99%
(the “Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such conversion. For purposes of the
foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number
of shares of Common Stock held by the Holder and all other Attribution Parties
plus the number of shares of Common Stock issuable upon conversion of this Note
with respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(A) conversion of the remaining, unconverted portion of this Note beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise analogous to
the limitation contained in this Section 8(J)(i). For purposes of this Section
8(J)(i), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act. For purposes of this Note, in determining the number
of outstanding shares of Common Stock the Holder may acquire upon the conversion
of this Note without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the
Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other public filing with the Commission, as the
case may be, (y) a more recent public announcement by the Company or (3) any
other written notice by the Company or the Transfer Agent (as defined in the
Securities Purchase Agreement) setting forth the number of shares of Common
Stock outstanding (the “Reported Outstanding Share Number”). If the Company
receives a conversion notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) promptly notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such
conversion notice would otherwise cause the Holder's beneficial ownership, as
determined pursuant to this Section 8(J)(i), to exceed the Maximum Percentage,
the Holder must notify the Company of a reduced number of conversion shares to
be issued pursuant to such conversion notice. For any reason at any time, upon
the written or oral request of the Holder, the Company shall within one (1)
Trading Day confirm in writing or by electronic mail to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Note, by the Holder and
any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common
Stock to the Holder upon conversion of this Note results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate,
more than the Maximum Percentage of the number of outstanding shares of Common
Stock (as determined under Section 13(d) of the Exchange Act), the number of
shares so issued by which the Holder's and the other Attribution Parties'
aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess
Shares”) shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. Upon
delivery of a written notice to the Company, the Holder may from time to time
increase or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% as specified in such notice; provided that (i) any such increase
in the Maximum Percentage will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company and (ii) any such increase or
decrease will apply only to the Holder and the other Attribution Parties and not
to any other holder of Notes that is not an Attribution Party of the Holder. For
purposes of clarity, the shares of Common Stock issuable pursuant to the terms
of this Note in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to
convert this Note pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of convertibility. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 8(J)(i) to the extent necessary to correct this
paragraph or any portion of this paragraph which may be defective or
inconsistent with the intended beneficial ownership limitation contained in this
Section 8(J)(i) or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitation contained in this
paragraph may not be waived and shall apply to a successor holder of this Note.

 

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(ii)              Stock Exchange Limitations. Notwithstanding anything to the
contrary in this Note, until the Requisite Stockholder Approval is obtained, in
no event will the number of shares of Common Stock issuable upon conversion of
this Note or otherwise pursuant to this Note, including pursuant to Section
8(H), together with any shares of Common Stock issuable pursuant to the Warrant
and all other shares, if any, theretofore issued upon conversion of this Note or
exercise of the Warrant, including any portion constituting an Optional
Redemption Payment, exceed 27,764,100 shares in the aggregate. If any one or
more shares of Common Stock are not delivered upon conversion of this Note as a
result of the operation of the preceding sentence (such shares, the “Withheld
Shares”), then (1) on the Conversion Settlement Date for such conversion, the
Company will pay to the Holder, in addition to the Conversion Consideration
otherwise due upon such conversion, cash in an amount equal to the product of
(x) the number of such Withheld Shares; and (y) the Daily VWAP per share of
Common Stock on the Conversion Date for such conversion; and (2) to the extent
the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in settlement of a sale by the Holder of such Withheld
Shares, the Company will reimburse the Holder for (x) any brokerage commissions
and other out-of-pocket expenses, if any, of the Holder incurred in connection
with such purchases and (y) the excess, if any, of (A) the aggregate purchase
price of such purchases over (B) the product of (I) the number of such Withheld
Shares purchased by the Holder; and (II) the Daily VWAP per share of Common
Stock on the Conversion Date for such conversion.

 

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Section 9.           Affirmative and Negative Covenants.

 

(A)          Stay, Extension and Usury Laws. To the extent that it may lawfully
do so, the Company (A) agrees that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law (wherever or whenever enacted or in force) that may
affect the covenants or the performance of this Note; and (B) expressly waives
all benefits or advantages of any such law and agrees that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
granted to the Holder by this Note, but will suffer and permit the execution of
every such power as though no such law has been enacted.

 

(B)           Corporate Existence. Subject to Section 9(A), Permitted
Investments and Permitted Transfers, the Company will cause to preserve and keep
in full force and effect:

 

(i)               its corporate existence in accordance with the organizational
documents of the Company; and

 

(ii)              the material rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries;

 

provided, however, that the Company need not preserve or keep in full force and
effect any such license or franchise if the Board of Directors determines in
good faith that (x) the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole;
and (y) the loss thereof is not, individually or in the aggregate, materially
adverse to the Holder.

 

(C)           Ranking. All payments due under this Note shall rank pari passu
with all Other Notes and shall rank senior to all other indebtedness of the
Company to the extent of the value of the Collateral and any Subordinated
Indebtedness.

 

(D)           Indebtedness; Amendments to Indebtedness. The Company shall not
and shall not permit any Subsidiary to: (a) create, incur, assume, guarantee or
be or remain liable with respect to any Indebtedness, other than Permitted
Indebtedness; (b) prepay any Indebtedness except by the conversion or exchange
of Indebtedness into equity securities (other than Disqualified Stock) and the
payment of cash in lieu of fractional shares in connection with such conversion;
or (c) amend or modify any documents or notes evidencing any Indebtedness in any
manner which shortens the maturity date or any amortization, redemption or
interest payment date thereof or otherwise imposes materially more burdensome
terms upon the Company or its Subsidiaries than exist in such Indebtedness prior
to such amendment or modification without the prior written consent of Holder.

 

(E)            Liens. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.

 

(F)            Investments. The Company shall not directly or indirectly acquire
or own, or make any Investment in or to any Person, or permit any of its
Subsidiaries so to do, other than Permitted Investments.

 

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(G)           Distributions. The Company shall not, and shall not allow any
Subsidiary to, (a) repurchase or redeem any class of stock or other equity
interest other than repurchases or redemptions of the Series C Preferred Stock
on the mandatory redemption date for such Series C Preferred Stock or pursuant
to employee, director or consultant repurchase plans or other similar agreements
approved by the Board of Directors, provided, however, in each case the
repurchase or redemption price does not exceed the original consideration paid
for such stock or equity interest, except that the Company may exchange shares
of Disqualified Stock for shares of Common Stock, or (b) declare or pay any cash
dividend or make a cash distribution on any class of stock or other equity
interest other than mandatory dividends or distributions on the Series C
Preferred Stock, except that a Subsidiary may pay dividends or make
distributions to the Company or a parent company that is a Subsidiary of the
Company), or (c) lend money to any employees, officers or directors (except as
permitted under clauses (F) or (G) of the definition of Permitted Investment),
or guarantee the payment of any such loans granted by a third party or (d)
waive, release or forgive any Indebtedness owed by any employees, officers or
directors. Notwithstanding anything to the contrary herein, the Company shall
not, and shall not allow any Subsidiary to, repurchase or redeem any class of
stock or other equity interest (including the Series C Preferred Stock) or (b)
declare or pay any cash dividend or make a cash distribution on any class of
stock or other equity interest (including the Series C Preferred Stock) if any
Event of Default has occurred hereunder.

 

(H)           Transfers. Except for Permitted Transfers and Permitted
Investments, the Company shall not, and shall not allow any Subsidiary to,
voluntarily or involuntarily transfer, sell, lease, license, lend or in any
other manner convey any equitable, beneficial or legal interest in any material
portion of its assets.

 

(I)             Taxes. The Company and its Subsidiaries shall pay when due all
taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against the Company
and its Subsidiaries or their respective assets or upon their ownership,
possession, use, operation or disposition thereof or upon their rents, receipts
or earnings arising therefrom. The Company and its Subsidiaries shall file on or
before the due date therefor all personal property tax returns. Notwithstanding
the foregoing, the Company and its Subsidiaries may contest, in good faith and
by appropriate proceedings, taxes for which they maintain adequate reserves
therefor in accordance with GAAP.

 

(J)            Minimum Liquidity. The Company shall have at all times liquidity
calculated as unrestricted, unencumbered Cash and Cash Equivalents in one or
more deposit accounts located in the United States and subject to a Control
Agreement (as defined in the Security Agreement) in favor of the Collateral
Agent in a minimum amount equal to ten million dollars ($10,000,000); provided
that, unless a Default or Event of Default has occurred hereunder, such amount
will be reduced to seven million dollars ($7,000,000) as of the Additional
Financing Date; provided, further, that, if the Specified Conditions Date has
occurred on or prior to October 31, 2020, such amount will be further reduced to
zero dollars ($0) on the Specified Conditions Date; provided, further, that
solely with respect to this Section 9(J), clause (B) of the definition of
Specified Conditions shall be deemed to be satisfied upon such date that the
Company has held a stockholder vote to obtain the Requisite Stockholder Approval
(regardless of the outcome of such vote) if the Company shall have used
commercially reasonable efforts to obtain the Requisite Stockholder Approval in
connection with such stockholder vote. Notwithstanding the foregoing, if any of
the Specified Conditions are no longer satisfied (or, if not satisfied, waived
by the Holder in its sole discretion) following the Specified Conditions Date,
the amount referred to in the immediately preceding sentence shall be set at
seven million dollars ($7,000,000).

 

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(K)           Minimum Revenue. As of the last day of each fiscal quarter
concluding on and after Issue Date, the Company and the Subsidiary Grantors
shall have revenue (determined in accordance with GAAP) of not less than sixty
million dollars ($60,000,000) for the preceding twelve (12) months.

 

(L)           Change in Nature of Business. The Company shall not, and the
Company shall cause each of its Subsidiaries to not, directly or indirectly,
engage in any material line of business substantially different from those lines
of business conducted by or publicly contemplated to be conducted by the Company
and each of its Subsidiaries on the Issue Date or any business substantially
related or incidental thereto. The Company shall not, and the Company shall
cause each of its Subsidiaries to not, directly or indirectly, modify its or
their corporate structure or purpose.

 

(M)          Maintenance of Properties, Etc. The Company shall maintain and
preserve, and the Company shall cause each of its Subsidiaries to maintain and
preserve, all of its material properties which are necessary or useful (as
determined by the Company in good faith) in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all material leases to which it is a party
as lessee or under which it occupies property, so as to prevent any loss or
forfeiture thereof or thereunder.

 

(N)           Maintenance of Intellectual Property. The Company will take, and
the Company shall cause each of its Subsidiaries to maintain, all action
necessary or advisable to maintain all of the Intellectual Property Rights (as
defined in the Securities Purchase Agreement) of the Company or such Subsidiary
that are necessary or material (as determined by the Company in good faith) to
the conduct of its business in full force and effect.

 

(O)           Maintenance of Insurance. The Company shall maintain, and the
Company shall cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering
such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated.

 

(P)            Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries shall enter into, renew, extend or be a party to, any transaction
or series of related transactions (including, without limitation, the purchase,
sale, lease, transfer or exchange of property or assets of any kind or the
rendering of services of any kind) with any affiliate (other than any wholly
owned Subsidiary), except transactions for fair consideration and on terms no
less favorable to it than would be obtainable in a comparable arm’s length
transaction with a Person that is not an affiliate thereof.

 

(Q)           Restricted Issuances. The Company shall not, directly or
indirectly, without the prior written consent of the holders of a majority in
aggregate principal amount of the Notes then outstanding, (i) issue any Notes
(other than as contemplated by the Securities Purchase Agreement and the Notes)
or (ii) issue any other securities or incur any Indebtedness that would cause a
breach or Default under the Notes or that by its terms would prohibit or
restrict the performance of any of the Company’s obligations under the Notes,
including without limitation, the payment of interest and principal thereon.

 

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(R)           Series C Preferred Stock. On or prior to October 1, 2020, the
Company shall either (i) convert or exchange the entire outstanding amount of
all Series C Preferred Stock into Common Stock of the Company or (ii) extend any
mandatory redemption date, final maturity date or other applicable repurchase
obligation with respect to any Series C Preferred Stock by at least twelve (12)
months.

 

(S)            Upon delivery by the Company to the Holder (or receipt by the
Company from the Holder) of any notice in accordance with the terms of this
Note, unless the Company has in good faith determined that the matters relating
to such notice do not constitute material, non-public information relating to
the Company or any of its Subsidiaries, the Company shall on or prior to 9:00
am, New York city time on the Business Day immediately following such notice
delivery date, publicly disclose such material, non-public information on a Form
8-K or otherwise. In the event that the Company believes that a notice contains
material, non-public information relating to the Company or any of its
Subsidiaries, the Company so shall indicate to the Holder explicitly in writing
in such notice (or immediately upon receipt of notice from the Holder, as
applicable), and in the absence of any such written indication in such notice
(or notification from the Company immediately upon receipt of notice from the
Holder), the Holder shall be entitled to presume that information contained in
the notice does not constitute material, non-public information relating to the
Company or any of its Subsidiaries. Nothing contained in this Section 9(S) shall
limit any obligations of the Company, or any rights of the Holder, under the
Securities Purchase Agreement.

 

(T)           The Company acknowledges and agrees that the Holder is not a
fiduciary or agent of the Company and that the Holder shall have no obligation
to (a) maintain the confidentiality of any information provided by the Company
or (b) refrain from trading any securities while in possession of such
information in the absence of a written non-disclosure agreement signed by an
officer of the Holder that explicitly provides for such confidentiality and
trading restrictions, unless such trading is otherwise prohibited by law. In the
absence of such an executed, written non-disclosure agreement, the Company
acknowledges that the Holder may freely trade in any securities issued by the
Company, may possess and use any information provided by the Company in
connection with such trading activity, and may disclose any such information to
any third party.

 

(U)           On and after the date that is six (6) months following the Issue
Date, this Note and any shares of Common Stock issuable upon conversion of this
Note shall be eligible to be offered, sold or otherwise transferred by the
Holder pursuant to Rule 144, without any requirements as to volume, manner of
sale, availability of current public information (whether or not then satisfied)
or notice under the Securities Act and without any requirement for registration
under any state securities or “blue sky” law.

 

(V)           On or before the date that is one month following the Issue Date,
the Company shall cause Pareteum Europe to enter into the Pareteum Europe
Security Agreement and to join the Security Agreement, Subsidiary Guaranty (as
defined in the Security Agreement) and each other applicable Security Document.

 

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(W)          On or before the date that is forty-five (45) days following the
Issue Date, the Company shall cause each domestic subsidiary of iPass Inc.
(other than iPass IP LLC) to join the Security Agreement, Subsidiary Guaranty
(as defined in the Security Agreement) and each other applicable Security
Document, except to the extent that such subsidiary has been dissolved or
otherwise liquidated prior to such date.

 

(X)           If the Pareteum Europe Pledge Agreement is not entered into by or
on behalf of the Company and Pareteum Europe on the Issue Date, then within one
(1) Business Day after the Issue Date, the Company shall enter into, and shall
cause Pareteum Europe to enter into, the Pareteum Europe Pledge Agreement.

 

Section 10.Successors.

 

The Company will not consolidate with or merge with or into, or (directly, or
indirectly through one or more of its Subsidiaries) sell, lease or otherwise
transfer, in one transaction or a series of transactions, all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, to
another Person, other than the Holder or any of its Affiliates (a “Business
Combination Event”), unless:

 

(A)           the resulting, surviving or transferee Person either (x) is the
Company or (y) if not the Company, is a corporation (the “Successor
Corporation”) duly organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia that expressly assumes
(by executing and delivering to the Holder, at or before the effective time of
such Business Combination Event, a supplement to this instrument) all of the
Company’s obligations under this Note; and

 

(B)           immediately after giving effect to such Business Combination
Event, no Default or Event of Default will have occurred and be continuing.

 

At the effective time of any Business Combination Event, the Successor
Corporation (if not the Company) will succeed to, and may exercise every right
and power of, the Company under this Note with the same effect as if such
Successor Corporation had been named as the Company in this Note, and, except in
the case of a lease, the predecessor Company will be discharged from its
obligations under this Note.

 

Section 11.Defaults and Remedies

 

(A)           Events of Default. “Event of Default” means the occurrence of any
of the following:

 

(i)               a default in the payment when due of the Principal Amount,
Fundamental Change Repurchase Price or Optional Redemption Payment of this Note;

 

(ii)              a default for three (3) Business Days in the payment when due
of interest on this Note;

 

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(iii)             a default in the Company’s obligation to convert this Note in
accordance with Section 8 upon the exercise of the conversion right with respect
thereto;

 

(iv)             a default in the Company’s obligation to deliver a Fundamental
Change Notice pursuant to Section 6(C), and such default continues for two (2)
Business Days;

 

(v)              a materially false or inaccurate certification (including a
false or inaccurate deemed certification) by the Company (A) that the Equity
Conditions are satisfied, (B) that there has been no failure of the Equity
Conditions, or (C) as to whether any Event of Default has occurred;

 

(vi)             a default in any of the Company’s obligations or agreements
under this Note or the Transaction Documents (in each case, other than a default
set forth in clause (i), (ii) or (iii) of this Section 11(A)), or a breach of
any representation or warranty in any material respect (other than
representations or warranties subject to material adverse effect or materiality,
which may not be breached in any respect) of any Transaction Document; provided,
however, that if such default or breach can be cured, then such default or
breach will not be an Event of Default unless the Company has failed to cure
such default within five (5) days after its occurrence;

 

(vii)            any provision of any Transaction Document at any time for any
reason (other than pursuant to the express terms thereof) ceases to be valid and
binding on or enforceable against the parties thereto, or the validity or
enforceability thereof is contested, directly or indirectly, by the Company or
any of its Subsidiaries, or a proceeding is commenced by the Company or any of
its Subsidiaries or any governmental authority having jurisdiction over any of
them, seeking to establish the invalidity or unenforceability thereof;

 

(viii)           any breach or default by the Company under Section 4(r) of the
Securities Purchase Agreement;

 

(ix)             the Company fails to use commercially reasonable efforts to
obtain the Requisite Stockholder Approval on or prior to October 31, 2020;

 

(x)              the Company fails to comply with Section 9(J), Section 9(R)
Section 9(V), Section 9(W), or Section 9(X) of this Note;

 

(xi)             the suspension from trading or failure of the Common Stock to
be trading or listed on an Eligible Exchange for a period of three (3)
consecutive Trading Days;

 

(xii)            a default by the Company or any of its Subsidiaries with
respect to any Indebtedness of at least one hundred thousand dollars ($100,000)
(or its foreign currency equivalent) in the aggregate of the Company or any of
its Subsidiaries, whether such Indebtedness exists as of the Issue Date or is
thereafter created, and whether such default has been waived for any period of
time or is subsequently cured;

 

(xiii)           one or more final judgments, orders or awards (or any
settlement of any litigation or other proceeding that, if breached, could result
in a judgment, order or award) for the payment of at least two hundred fifty
thousand dollars ($250,000) (or its foreign currency equivalent) in the
aggregate (excluding any amounts covered by insurance pursuant to which the
insurer has been notified and has not denied coverage), is rendered against the
Company or any of its Subsidiaries and remains unsatisfied and (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgment,
order, award or settlement or (ii) there shall be a period of ten (10)
consecutive Trading Days after entry thereof during which (A) a stay of
enforcement thereof is not in effect or (B) the same is not vacated, discharged,
stayed or bonded pending appeal;

 

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(xiv)           after October 31, 2020 (A) the Company fails to timely file its
quarterly reports on Form 10-Q or its annual reports on Form 10-K with the
Commission in the manner and within the time periods required by the Exchange
Act, or (B) the Company withdraws or restates any such quarterly report or
annual report previously filed with the Commission (except as contemplated by
Section 11(A)(xv) below);

 

(xv)            the Company fails to file restated financial statements with the
Commission for (A) the fiscal year ended December 31, 2018, (B) the quarter
ended March 31, 2019 and (C) the quarter ended June 30, 2019, in each case on or
prior to October 31, 2020 and in compliance with all requirements under the
Exchange Act.

 

(xvi)           any Security Document shall for any reason fail or cease to
create a separate valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority Lien on the Collateral in favor of the
Collateral Agent subject only to Permitted Liens or any material provision of
any Security Document shall at any time for any reason cease to be valid and
binding on or enforceable against the Company or the validity or enforceability
thereof shall be contested by any party thereto, or a proceeding shall be
commenced by the Company or any governmental authority having jurisdiction over
the Company, seeking to establish the invalidity or unenforceability thereof;

 

(xvii)          any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities at any facility of the
Company or any Subsidiary, if any such event or circumstance could have a
Material Adverse Effect (as defined in the Securities Purchase Agreement);

 

(xviii)         the Company fails to cause the transfer to a transferee without
restriction, unless otherwise then prohibited by applicable federal securities
laws, of any certificate or any shares of Common Stock issued to the Holder upon
conversion or exercise (as the case may be) of any Securities (as defined in the
Securities Purchase Agreement) acquired by the Holder under the Securities
Purchase Agreement (including this Note) as and when required by such Securities
or the Securities Purchase Agreement under circumstances where such transferee
is entitled to receive such shares without restriction, and any such failure
remains uncured for at least five (5) Trading Days;

 

(xix)            the Additional Financing Date has not occurred on or prior to
June 30, 2020;

 

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(xx)             the Company or any of its Significant Subsidiaries (other than,
for the avoidance of doubt, iPass India Private Limited, pursuant to or within
the meaning of any Bankruptcy Law, either:

 

(1)             commences a voluntary case or proceeding;

 

(2)             consents to the entry of an order for relief against it in an
involuntary case or proceeding;

 

(3)             consents to the appointment of a custodian of it or for any
substantial part of its property;

 

(4)             makes a general assignment for the benefit of its creditors;

 

(5)             takes any comparable action under any foreign Bankruptcy Law; or

 

(6)             generally is not paying its debts as they become due; or

 

(xxi)            a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that either:

 

(1)             is for relief against Company or any of its Significant
Subsidiaries in an involuntary case or proceeding;

 

(2)             appoints a custodian of the Company or any of its Significant
Subsidiaries, or for any substantial part of the property of the Company or any
of its Significant Subsidiaries;

 

(3)             orders the winding up or liquidation of the Company or any of
its Significant Subsidiaries; or

 

(4)             grants any similar relief under any foreign Bankruptcy Law,(in
each case, other than with respect to iPass India Private Limited) and, in each
case under this Section 11(A)(xxi), such order or decree remains unstayed and in
effect for at least thirty (30) days.

 

(B)           Acceleration.

 

(i)               Automatic Acceleration in Certain Circumstances. If an Event
of Default set forth in Section 11(A) (xx) or (xxi) occurs with respect to the
Company (and not solely with respect to a Significant Subsidiary of the
Company), then the then-outstanding portion of the Principal Amount of, and all
accrued and unpaid interest on, this Note will immediately become due and
payable without any further action or notice by any Person.

 

(ii)              Optional Acceleration. If an Event of Default (other than an
Event of Default set forth in Section 11(A) (xx) or (xxi) with respect to the
Company and not solely with respect to a Subsidiary of the Company) occurs and
is continuing, then the Holder, by notice to the Company, may declare this Note
to become due and payable immediately for cash in an amount equal to the Event
of Default Acceleration Amount.

 

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(C)           Notice of Events of Default. Promptly, but in no event later than
two (2) Business Days after an Event of Default, the Company will provide
written notice of such Event of Default (an “Event of Default Notice”) to the
Holder, which Event of Default Notice shall include (i) a reasonable description
of the applicable Event of Default, (ii) a certification as to whether, in the
opinion of the Company, such Event of Default is capable of being cured and, if
applicable, a reasonable description of any existing plans of the Company to
cure such Event of Default and (iii) a certification as to the date the Event of
Default occurred and, if cured on or prior to the date of such Event of Default
Notice, the date of such cure.

 

Section 12.Ranking.

 

All payments due under this Note shall rank (i) pari passu with all Other Notes,
(ii) effectively senior to all unsecured indebtedness of the Company to the
extent of the value of the Collateral securing the Notes for so long as the
Collateral so secures the Notes in accordance with the terms hereof and (iii)
senior to any Subordinated Indebtedness.

 

Section 13.Replacement Notes.

 

If the Holder of this Note claims that this Note has been mutilated, lost,
destroyed or wrongfully taken, then the Company will issue, execute and deliver
a replacement Note upon surrender to the Company of such mutilated Note, or upon
delivery to the Company of evidence of such loss, destruction or wrongful taking
reasonably satisfactory to the Company. In the case of a lost, destroyed or
wrongfully taken Note, the Company may require the Holder to provide such
security or an indemnity that is reasonably satisfactory to the Company to
protect the Company from any loss that it may suffer if this Note is replaced.

 

Section 14.Notices.

 

Any notice or communication to the Company will be deemed to have been duly
given if in writing and delivered in person or by first class mail (registered
or certified, return receipt requested), facsimile transmission, electronic
transmission (including e-mail) or other similar means of unsecured electronic
communication or overnight air courier guaranteeing next day delivery, or to the
other’s address, which initially is as follows:

 

Pareteum Corporation

1185 Avenue of the Americas, 37th Floor

New York, NY 10036

Attention: Laura Thomas, Interim Chief Financial Officer

Email address: laura.thomas@pareteum.com

 

The Company, by notice to the Holder, may designate additional or different
addresses for subsequent notices or communications.

 

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Any notice or communication to the Holder will be by email to its email address,
which initially are as set forth in the Securities Purchase Agreement. The
Holder, by notice to the Company, may designate additional or different
addresses for subsequent notices or communications.

 

If a notice or communication is mailed in the manner provided above within the
time prescribed, it will be deemed to have been duly given, whether or not the
addressee receives it.

 

Section 15.Successors.

 

All agreements of the Company in this Note will bind its successors.

 

Section 16.Severability.

 

If any provision of this Note is invalid, illegal or unenforceable, then the
validity, legality and enforceability of the remaining provisions of this Note
will not in any way be affected or impaired thereby.

 

Section 17.Headings, Etc.

 

The headings of the Sections of this Note have been inserted for convenience of
reference only, are not to be considered a part of this Note and will in no way
modify or restrict any of the terms or provisions of this Note.

 

Section 18.Amendments

 

This Note may not be amended or modified unless in writing by the Company and
the Required Holders (as defined in the Securities Purchase Agreement), and no
condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit.

 

Section 19.Governing Law; Waiver of Jury Trial.

 

THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE
THIS NOTE. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE.

 

Section 20.Submission to Jurisdiction.

 

The Company (A) agrees that any suit, action or proceeding against it arising
out of or relating to this Note may be instituted in any U.S. federal court with
applicable subject matter jurisdiction or New York State court sitting in The
City of New York; (B) waives, to the fullest extent permitted by applicable law,
(i) any objection that it may now or hereafter have to the laying of venue of
any such suit, action or proceeding; and (ii) any claim that it may now or
hereafter have that any such suit, action or proceeding in such a court has been
brought in an inconvenient forum; and (C) submits to the nonexclusive
jurisdiction of such courts in any such suit, action or proceeding.

 

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Section 21.Enforcement Fees.

 

The prevailing party shall have the right to collect from the other all costs
and expenses incurred by such prevailing party as a result of enforcement of
this Note and the collection of any amounts owed to such prevailing party
hereunder (whether in cash, Common Stock or otherwise), including, without
limitation, reasonable attorneys’ fees and expenses.

 

Section 22.Collateral Agent.

 

(A)           Appointment; Authorization. The Holder hereby irrevocably
appoints, designates and authorizes HT Investments SA LLC as collateral agent to
take such action on its behalf under the provisions of this Note and each
Security Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of each Security Document, together with
such powers as are reasonably incidental thereto. The provisions of this Section
22 are solely for the benefit of the Collateral Agent, and the Company shall not
have rights as a third-party beneficiary of any of such provisions. It is
understood and agreed that the use of the term “agent” herein or in any Security
Document (or any other similar term) with reference to the Collateral Agent is
not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead such term is used
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between contracting parties. Notwithstanding any
provision to the contrary contained elsewhere in this Note, any Security
Document or any other agreement, instrument or document related hereto or
thereto, the Collateral Agent shall not have any duty or responsibility except
those expressly set forth herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Note, any Security Document or any other agreement, instrument or document
related hereto or thereto or otherwise exist against the Collateral Agent.

 

(E)           Delegation of Duties. The Collateral Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any Security
Document by or through any one or more sub-agents appointed by the Collateral
Agent. The Collateral Agent and any such sub-agent may perform any and all of
its duties and exercise its rights and powers by or through its Affiliates,
partners, directors, officers, employees, agents, trustees, administrators,
managers, advisors and representatives, or the partners, directors, officers,
employees, agents, trustees, administrators, managers, advisors and
representatives of any of its Affiliates (collectively, the “Related Parties”).
The exculpatory provisions of this Section 22 shall apply to any such sub-agent
and to the Related Parties of the Collateral Agent and any such sub-agent. The
Collateral Agent shall not be responsible for the negligence or misconduct of
any sub-agents except to the extent that a court of competent jurisdiction
determines in a final and nonappealable judgment that the Collateral Agent acted
with gross negligence or willful misconduct in the selection of such sub-agents.

 

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(F)           Exculpatory Provisions.

 

(i)               The Collateral Agent shall not have any duties or obligations
except those expressly set forth in the Security Documents, and its duties shall
be administrative in nature. Without limiting the generality of the foregoing,
the Collateral Agent: (i) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or Event of Default has occurred and is
continuing; (ii) shall not have any duty to take any discretionary action or
exercise any discretionary powers; and (iii) shall not, except as expressly set
forth in the Security Documents, have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Company or
any of its Affiliates that is communicated to or obtained by the Collateral
Agent or any of its Affiliates in any capacity.

 

(ii)              The Collateral Agent shall not be liable for any action taken
or not taken by it in the absence of its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction by final and
nonappealable judgment. The Collateral Agent shall be deemed not to have
knowledge of any Default or Event of Default unless and until notice describing
such Default or Event of Default is given to the Collateral Agent in writing by
the Company.

 

(iii)             The Collateral Agent shall not be responsible for or have any
duty to ascertain or inquire into (a) any statement, warranty or representation
made in or in connection with this Note, any Security Document or any other
agreement, instrument or document related hereto or thereto, (b) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (c) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default or Event of Default, (d) the validity,
enforceability, effectiveness or genuineness of this Note, any Security Document
or any other agreement, instrument or document related hereto or thereto, or (e)
any failure of the Company or any other party to this Note, any Security
Agreement or any other agreement, instrument or document related hereto or
thereto to perform its obligations hereunder or thereunder. The Collateral Agent
shall not be under any obligation to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Note, any Security Document or any other agreement, instrument or
document related hereto or thereto, or to inspect the properties, books or
records of the Company or any Affiliate of the Company.

 

(G)           Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Collateral Agent also
may rely upon any statement made to it orally or by telephone and believed by it
to have been made by the proper Person, and shall not incur any liability for
relying thereon. The Collateral Agent may consult with legal counsel,
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

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(H)           Successor Agent. The Collateral Agent may resign as the Collateral
Agent at any time upon ten (10) days’ prior notice to the Holder and each Other
Holder and the Company. If the Collateral Agent resigns under this Note, the
Holder and each Other Holder shall appoint a successor agent. If no successor
agent is appointed prior to the effective date of the resignation of the
Collateral Agent, the Collateral Agent may appoint a successor Collateral Agent
on behalf of the Holder and each Other Holder after consulting with the Holder
and each other Holder. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Collateral Agent and the term “the Collateral Agent”
shall mean such successor agent, and the retiring Agent’s appointment, powers
and duties as the Collateral Agent shall be terminated. After the Collateral
Agent’s resignation hereunder as the Collateral Agent, the provisions of
this Section 22 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Collateral Agent. If no successor
agent has accepted appointment as the Collateral Agent by the date which is
thirty (30) days following a retiring Collateral Agent’s notice of resignation,
a retiring Collateral Agent’s resignation shall nevertheless thereupon become
effective and the Holder, together with each Other Holder, shall perform all of
the duties of the Collateral Agent hereunder until such time as the Holder and
each Other Holder shall appoint a successor agent as provided for above.

 

(I)             Non-Reliance on the Collateral Agent. The Holder acknowledges
that it has, independently and without reliance upon the Collateral Agent or any
of its Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Note. The Holder also acknowledges that it will, independently and without
reliance upon the Collateral Agent or any of its Related Parties and based on
such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Note, any Security Document or any related agreement or any document
furnished hereunder or thereunder.

 

(J)            Collateral Matters. The Holder irrevocably authorizes the
Collateral Agent to release any Lien granted to or held by the Collateral Agent
under any Security Document (i) when all Obligations (as defined in the Security
Agreement) have been paid in full; (ii) constituting property sold or to be sold
or disposed of as part of or in connection with any sale or other disposition
permitted under this Note and each other agreement, instrument or document
related hereto (it being agreed and understood that the Collateral Agent may
conclusively rely without further inquiry on a certificate of an officer of the
Company as to the sale or other disposition of property being made in compliance
with this Note and each other agreement, instrument or document related hereto);
or (iii) if approved, authorized or ratified in writing by the Holder and each
Other Holder. The Collateral Agent shall have the right, in accordance with the
Security Documents to sell, lease or otherwise dispose of any Collateral (as
defined in the Security Agreement) for cash, credit or any combination thereof,
and the Collateral Agent may purchase any Collateral at public or, if permitted
by law, private sale and, in lieu of actual payment of the purchase price, may
credit bid and setoff the amount of such price against the Obligations.

 

(K)           Reimbursement by Holder and Other Holders. To the extent that the
Company for any reason fails to indefeasibly pay any amount required under 
Sections 4(e) or 9(k) of the Securities Purchase Agreement to be paid by it to
the Collateral Agent (or any sub-agent thereof) or any Related Party of the
Collateral Agent (or any sub-agent thereof), the Holder hereby agrees, jointly
and severally with each Other Holder, to pay to the Collateral Agent (or any
such sub-agent) or such Related Party of the Collateral Agent (or any sub-agent
thereof), as the case may be, such unpaid amount.

 

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(L)              Marshaling; Payments Set Aside. Neither the Collateral Agent
nor the Holder shall be under any obligation to marshal any assets in favor of
the Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment or payments to the
Collateral Agent, or the Collateral Agent enforces its Liens or exercises its
rights of set-off, and such payment or payments or the proceeds of such
enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Collateral Agent in its
discretion) to be repaid to a trustee, receiver or any other party in connection
with any bankruptcy, insolvency or similar proceeding, or otherwise, then (i) to
the extent of such recovery, the obligation hereunder or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or set-off had not
occurred and (ii) the Holder agrees to pay to the Collateral Agent upon demand
its share of the total amount so recovered from or repaid by the Collateral
Agent to the extent paid to the Holder.

 

* * *

 

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CONVERSION NOTICE

 

Pareteum Corporation

 

Senior Secured Convertible Note due 2025

 

Subject to the terms of this Note, by executing and delivering this Conversion
Notice, the undersigned Holder of this Note directs the Company to convert the
following Principal Amount of this Note: $ _________________ ,000 in accordance
with the following details.

 

¨Check if the Conversion Date occurs during an Event of Default Conversion
Period.

 

Shares of Common Stock to be delivered: 

     

 

Accrued interest amount:

     

 

DTC Participant Number:

     

 

DTC Participant Name: 

     

 

Date:             (Legal Name of Holder)

 

  By:       Name:         Title:  

 

 

 

¨Check if the Conversion Rate is at a rate other than is otherwise currently
applicable (counter signature by the Company is not required unless a Conversion
Rate other than the currently applicable Conversion Rate is requested).

 

Requested Conversion Rate:           Date:             Pareteum Corporation    
  By:           Name:         Title: