EXHIBIT 10.2

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

Original Issue Date: June ____, 2018

Purchase Price: ____________

 

10% SENIOR SECURED CONVERTIBLE NOTE

 

DUE AUGUST 1, 2019

 

THIS NOTE is a duly authorized and 10% Senior Secured Convertible Note of
Oncolix, Inc., a Florida corporation, having a principal place of business at
14405 Walters Road, Suite 780, Houston, Texas 77014 (the “Company”), designated
as its 10% Senior Secured Convertible Notes due August 1, 2019 (this Note, the
“Note” and, collectively with the other notes of such series, the “Notes”).

 

FOR VALUE RECEIVED, the Company promises to pay to _____________
_____________________ or its registered assigns (the “Holder”), the principal
sum of $____________ on August 1, 2019 or such earlier date as the Notes are
required or permitted to be repaid as provided hereunder (the “Maturity Date”),
and to pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Note in accordance with the provisions
hereof. This Note is subject to the following additional provisions:

 

Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Note: (a) capitalized terms not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement, and (b)
the following terms shall have the following meanings:

 

“Alternate Consideration” shall have the meaning set forth in Section 5(e)(iii).

 

“August 2017 Notes” shall have the meaning assigned to that term in the Purchase
Agreement.

 

“Business Day” means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

 

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“Change of Control Transaction” means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company, or (ii) a replacement at one time or within a
three year period of more than one-half of the members of the Company’s board of
directors which is not approved by a majority of those individuals who are
members of the board of directors on the date hereof (or by those individuals
who are serving as members of the board of directors on any date whose
nomination to the board of directors was approved by a majority of the members
of the board of directors who are members on the date hereof), or (iii) Michael
Redman shall no longer be employed by the Company as President on a full time
basis, or (iv) the execution by the Company of an agreement to which the Company
is a party or by which it is bound, providing for any of the events set forth
above in (i) or (ii).

 

“Closing Bid Price” means on any particular date (a) the last reported closing
bid price per share of Common Stock on such date on the Trading Market (as
reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there
is no such price on such date, then the closing bid price on the Trading Market
on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15
p.m. (New York City time)), or (c) if the Common Stock is not then listed or
quoted on a Trading Market and if prices for the Common Stock are then reported
in the “pink sheets” published by The OTC Markets, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) if the
shares of Common Stock are not then publicly traded the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

“Common Stock” means the common stock, par value $.0001 per share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.

 

“Conversion” shall have the meaning ascribed to such term in Section 4.

 

“Conversion Date” shall have the meaning set forth in Section 4(a).

 

“Conversion Price” shall have the meaning set forth in Section 4(b).

 

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1
attached hereto.

 

“Conversion Shares” means the shares of Common Stock issuable upon conversion of
Notes or as payment of interest in accordance with the terms hereof.

 

“Note Register” shall have the meaning set forth in Section 2(c).

 

“Dilutive Issuance” shall have the meaning set forth in Section 5(b).

 

“Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

 

“Effectiveness Period” shall have the meaning set forth in the Registration
Rights Agreement.

 

“Event of Default” shall have the meaning set forth in Section 7.

 

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“Equity Conditions” means, during the period in question, (a) the Company shall
have duly honored all conversions and redemptions scheduled to occur or
occurring by virtue of one or more Notices of Conversion of the Holder, if any,
(b) the Company shall have complied with all conversion and other provisions of
the Notes and Transaction Documents and shall have paid all liquidated damages
and other amounts owing to the Holder in respect of this Note, (c)(i) there is
an effective Registration Statement pursuant to which the Holder is permitted to
utilize the prospectus thereunder to resell all of the shares of Common Stock
issuable pursuant to the Transaction Documents (and the Company believes, in
good faith, that such effectiveness will continue uninterrupted for the
foreseeable future) or (ii) all of the Conversion Shares and Warrant Shares
issuable pursuant to the Transaction Documents may be resold pursuant to Rule
144 without volume or manner-of-sale restrictions or current public information
requirements as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Transfer Agent
and the Holder, (d) the Common Stock is trading on a Trading Market and all of
the shares issuable pursuant to the Transaction Documents are listed or quoted
for trading on such Trading Market (and the Company believes, in good faith,
that trading of the Common Stock on a Trading Market will continue uninterrupted
for the foreseeable future), (e) there is a sufficient number of authorized but
unissued and otherwise unreserved shares of Common Stock for the issuance of
five times (5x) all of the shares issuable pursuant to the Notes and Warrants,
(f) there is no existing Event of Default or no existing event which, with the
passage of time or the giving of notice, would constitute an Event of Default,
(g) the issuance of the shares in question (or, in the case of an Optional
Redemption or Monthly Redemption, the shares issuable upon conversion in full of
the Optional Redemption Amount or Monthly Redemption Amount) to the Holder would
not violate the limitations set forth in Section 4(c) herein, (h) there has been
no public announcement of a pending or proposed Fundamental Transaction or
Change of Control Transaction that has not been consummated, (i) the Holder is
not in possession of any information provided by the Company that constitutes,
or may constitute, material non-public information, (j) the Company’s Common
Stock is DWAC eligible and not subject to a DTC “chill;” and (k) for each
Trading Day in a period of 10 consecutive Trading Days prior to the applicable
date in question (a) the daily dollar trading volume for the Common Stock on the
principal Trading Market exceeds $75,000 per Trading Day and (b) the weighted
average stock price for the Common Stock on the principal Trading Market is
above 50% of the closing stock price on the initial Closing Date (as adjusted
for all stock splits stock dividends, stock combinations, reclassifications and
other transactions).

 

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

 

“Fundamental Transaction” shall have the meaning set forth in Section 5(e)(iii)
hereof.

 

“Interest Conversion Rate” means the lesser of (a) the Conversion Price or (b)
75% of the average of the 5 lowest Closing Bid Prices of the Common Stock for
the 20 consecutive Trading Days ending on the Trading Day that is immediately
prior to the applicable Interest Payment Date.

 

“Interest Conversion Shares” shall have the meaning set forth in Section 2(a).

 

“Interest Notice Period” shall have the meaning set forth in Section 2(a).

 

“Interest Payment Date” shall have the meaning set forth in Section 2(a).

 

“Interest Share Amount” shall have the meaning set forth in Section 2(a).

 

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“Late Fees” shall have the meaning set forth in the second paragraph to this
Note.

 

“Mandatory Prepayment Amount” for any Notes shall equal the sum of (i) 135% of
the principal amount of Notes to be prepaid, plus all accrued and unpaid
interest thereon, and (ii) all other amounts, costs, expenses and liquidated
damages due in respect of such Notes.

 

“Monthly Conversion Period” shall have the meaning set forth in Section 6(b)
hereof.

 

“Monthly Conversion Price” shall have the meaning set forth in Section 6(b)
hereof.

 

“Monthly Redemption” means the redemption of this Note pursuant to Section 6(b)
hereof.

 

“Monthly Redemption Amount” means, as to a Monthly Redemption, 1/5th of the
original Principal Amount of this Note, plus accrued but unpaid interest,
liquidated damages and any other amounts then owing to the Holder in respect of
this Note.

 

“Monthly Redemption Date” means the 1st day of each month, commencing
immediately upon April 1, 2019, and terminating upon the full redemption of this
Note.

 

“Monthly Redemption Notice” shall have the meaning set forth in Section 6(b)
hereof.

 

“New York Courts” shall have the meaning set forth in Section 9(d).

 

“Notice of Conversion” shall have the meaning set forth in Section 4(a).

 

“Optional Redemption” shall have the meaning set forth in Section 6(a).

 

“Optional Redemption Amount” means the sum of (a) 135% of the then outstanding
principal amount of the Note, (b) accrued but unpaid interest and (c) all
liquidated damages and other amounts due in respect of the Note.

 

“Optional Redemption Date” shall have the meaning set forth in Section 6(a).

 

“Optional Redemption Notice” shall have the meaning set forth in Section 6(a).

 

“Optional Redemption Notice Date” shall have the meaning set forth in Section
6(a).

 

“Optional Redemption Period” shall have the meaning set forth in Section 6(a).

 

“Original Issue Date” shall mean the date of the first issuance of the Notes
regardless of the number of transfers of any Note and regardless of the number
of instruments which may be issued to evidence such Note.

 

“Permitted Indebtedness” means (i) indebtedness described in Schedule 3.1(g) of
the Purchase Agreement; provided, that the principal amount of such indebtedness
is not increased, the terms of such indebtedness are not modified to impose more
burdensome terms upon the Company or any of its Subsidiaries and the terms of
such indebtedness are not materially changed in any manner that adversely
affects any Holder, (ii) unsecured indebtedness incurred by the Company that
matures after the Notes and is made expressly subordinate in right of payment to
the Notes, on terms satisfactory to the Majority Holders (collectively, the
“Subordinated Indebtedness”), (iii) obligations in respect of performance, bid,
appeal and surety bonds and guarantees and similar obligations provided in the
ordinary course of business, (iv) indebtedness consisting of the financing of
insurance premiums or take-or-pay obligations in each case, incurred in the
ordinary course of business, (v) capital leases entered into in the ordinary
course of business and consistent with past practices, not to exceed $250,000,
and (vi) indebtedness related to trade payables incurred in the ordinary course
of the Company’s or its Subsidiaries’ business and consistent with past
practices, not to exceed $250,000.

 

  Page 4 of 27

   

 

“Permitted Liens” means (i) any lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory lien
arising in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, (iv) leases or subleases and licenses and sublicenses
granted to others in the ordinary course of the Company’s business and
consistent with past practices, not interfering in any material respect with the
business of the Company and its Subsidiaries taken as a whole, and (v) liens in
favor of customs and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of goods.

 

“Person” means a corporation, an association, a partnership, organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.

 

“Pre-Redemption Conversion Shares” shall have the meaning set forth in Section
6(b) hereof.

 

“Purchase Agreement” means the Securities Purchase Agreement, dated as of June
1, 2018, to which the Company and the original Holder are parties, as amended,
modified or supplemented from time to time in accordance with its terms.

 

“Qualified Offering” means an equity or debt financing for the account of the
Company or its Subsidiaries in which shares of common stock, or securities,
directly or indirectly, convertible into or exchangeable or exercisable for
shares of common stock, or indebtedness is issued, which financing results in
cumulative aggregate proceeds to the Company of at least $8 million.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Share Delivery Date” shall have the meaning set forth in Section 4(d)(ii).

 

“Subsidiary” shall have the meaning given to such term in the Purchase
Agreement.

 

“Trading Day” means a day on which the Common Stock is traded on a Trading
Market

on the date in question.

 

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, the NYSE MKT LLC, any trading platform maintained by
OTC Markets, Inc., including, but not limited to, the OTCQX, OTCQB and OTC Pink.

 

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“Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

 

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

 

Section 2. Interest.

 

a) Payment of Interest in Cash or Kind. The Company shall pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Note at the rate of 10% per annum, payable monthly in arrears commencing
April 1, 2019, then monthly thereafter on each Monthly Redemption Date (as to
that principal amount then being redeemed), on each Conversion Date (as to that
principal amount then being converted), on each Optional Redemption Date (as to
that principal amount then being redeemed) and on the Maturity Date (each such
date, an “Interest Payment Date”) (if any Interest Payment Date is not a
Business Day, then the applicable payment shall be due on the next succeeding
Business Day), in cash or, at the Company’s option, in duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock at the Interest
Conversion Rate (the dollar amount to be paid in shares, the “Interest Share
Amount”) or a combination thereof; provided, however, that payment in shares of
Common Stock may only occur if (i) all of the Equity Conditions have been met
(unless waived by the Holder in writing) during the 10 Trading Days immediately
prior to the applicable Interest Payment Date (the “Interest Notice Period”) and
through and including the date such shares of Common Stock are actually issued
to the Holder, and (ii) the Company shall have given the Holder notice in
accordance with the notice requirements set forth below (the “Interest
Conversion Shares”).

 

b) Company’s Election to Pay Interest in Cash or Shares of Common Stock. Subject
to the terms and conditions herein, the decision whether to pay interest
hereunder in cash, shares of Common Stock or a combination thereof shall be at
the sole discretion of the Company. Prior to the commencement of any Interest
Notice Period, the Company shall deliver to the Holder a written notice of its
election to pay interest hereunder on the applicable Interest Payment Date
either in cash, shares of Common Stock or a combination thereof and the Interest
Share Amount as to the applicable Interest Payment Date. During any Interest
Notice Period, the Company’s election (whether specific to an Interest Payment
Date or continuous) shall be irrevocable as to such Interest Payment Date.
Subject to the aforementioned conditions, failure to timely deliver such written
notice to the Holder shall be deemed an election by the Company to pay the
interest on such Interest Payment Date in cash. The aggregate number of shares
of Common Stock otherwise issuable to the Holder on an Interest Payment Date
shall be reduced by the number of Interest Conversion Shares previously issued
to the Holder in connection with such Interest Payment Date

 

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c) Interest Calculations. Interest shall be calculated on the basis of a 360-day
year, consisting of twelve 30 calendar day periods, and shall accrue daily
commencing on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest, liquidated damages and
other amounts which may become due hereunder, has been made. Interest shall
cease to accrue with respect to any principal amount converted, provided that,
the Company actually delivers the Conversion Shares within the time period
required by Section 4(d)(ii) herein. Interest hereunder will be paid to the
Person in whose name this Note is registered on the records of the Company
regarding registration and transfers of this Note (the “Note Register”). Except
as otherwise provided herein, if at any time the Company pays interest partially
in cash and partially in shares of Common Stock to the holders of the Notes,
then such payment of cash shall be distributed ratably among the holders of the
then-outstanding Notes based on their (or their predecessor’s) initial purchases
of Notes pursuant to the Purchase Agreement.

 

d) Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall
entail a late fee at the rate of 24% per annum (or such lower maximum amount of
interest permitted to be charged under applicable law) (“Late Fee”) which will
accrue daily, from the date such interest is due hereunder through and including
the date of payment.

 

Section 3. Registration of Transfers and Exchanges.

 

a) Different Denominations. This Note is exchangeable for an equal aggregate
principal amount of Notes of different authorized denominations as requested by
the Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.

 

b) Investment Representations. This Note has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations.

 

c) Reliance on Note Register. Prior to due presentment to the Company for
transfer of this Note, the Company and any agent of the Company may treat the
Person in whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Note is overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.

 

Section 4. Conversion.

 

a) Voluntary Conversion. At any time after the Original Issue Date until this
Note is no longer outstanding, this Note shall be convertible, in whole or in
part, into shares of Common Stock at the option of the Holder, at any time and
from time to time (subject to the conversion limitations set forth in Section
4(c) hereof). The Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as Annex A (each, a
“Notice of Conversion”), specifying therein the principal amount of this Note to
be converted and the date on which such conversion shall be effected (such date,
the “Conversion Date”). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Note to the Company unless the
entire principal amount of this Note, plus all accrued and unpaid interest
thereon, has been so converted. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Note in an amount equal to the
applicable conversion. The Holder and the Company shall maintain records showing
the principal amount(s) converted and the date of such conversion(s). The
Company may deliver an objection to any Notice of Conversion within 1 Business
Day of delivery of such Notice of Conversion. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder, and any assignee by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Note, the unpaid and
unconverted principal amount of this Note may be less than the amount stated on
the face hereof.

 

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b) Conversion Procedures. Upon conversion of this Note as provided in Section
4(a), each Noteholder shall surrender its Note(s), appropriately endorsed, to
the Company at its principal office, accompanied by written notice to the
Company setting forth the name or names (with address(es)) in which the
Conversion Shares shall be issued and registered on the books of the Company. On
the Conversion Date, the Company shall deliver to Purchaser Common Stock in
respect of the Notes to be converted. The Note(s) surrendered by the Noteholder
shall be marked cancelled on the books of the Company as of the Conversion Date,
whether or not surrendered. The Company shall have the right to cancel the
Note(s) and issue to the Noteholder the Conversion Shares in the event that the
Noteholder fails to promptly comply with the conversion procedures set forth
above.

 

c) Conversion Price. The conversion price in effect on any Conversion Date shall
be equal to $0.03 (the “Conversion Price”).

 

d) Conversion Limitations; Holder’s Restriction on Conversion. The Company shall
not effect any conversion of this Note, and the Holder shall not have the right
to convert any portion of this Note, pursuant to Section 4(a) or otherwise, to
the extent that after giving effect to such conversion, the Holder (together
with the Holder’s affiliates), as set forth on the applicable Notice of
Conversion, would beneficially own in excess of 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to such conversion.
For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include 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, nonconverted portion of this Note beneficially owned by the
Holder or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Notes or the Warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 4(c), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this section applies, the
determination of whether this Note is convertible (in relation to other
securities owned by the Holder) and of which a portion of this Note is
convertible shall be in the sole discretion of such Holder. To ensure compliance
with this restriction, the Holder will be deemed to represent to the Company
each time it delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set forth in this paragraph and the Company shall
have no obligation to verify or confirm the accuracy of such determination. For
purposes of this Section 4(c), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form
10-K, as the case may be, (y) a more recent public announcement by the Company
or (z) any other notice by the Company or the Company’s Transfer Agent setting
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within two Trading Days confirm orally
and in writing 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 or its affiliates since the date
as of which such number of outstanding shares of Common Stock was reported. The
provisions of this Section 4(c) may be waived by the Holder upon, at the
election of the Holder, not less than 61 days’ prior notice to the Company, and
the provisions of this Section 4(c) shall continue to apply until such 61st day
(or such later date, as determined by the Holder, as may be specified in such
notice of waiver).

 

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e) Mechanics of Conversion

 

i. Conversion Shares Issuable Upon Conversion of Principal Amount. The number of
shares of Common Stock issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the outstanding principal amount of
this Note to be converted by (y) the Conversion Price. Pursuant to the terms of
the Notice of Conversion, the Company will issue instructions to the Transfer
Agent within two (2) business days of the Conversion Date accompanied by an
opinion of counsel to Company of the Notice of Conversion.

 

ii. Delivery of Certificate Upon Conversion. Delivery of Certificate Upon
Conversion. Not later than two Trading Days after each Conversion Date (the
“Share Delivery Date”), the Company shall deliver, or cause to be delivered, to
the Holder (A) a certificate or certificates representing the Conversion Shares
which, on or after the earlier of (i) the six month anniversary of the Original
Issue Date or (ii) the Effective Date, shall be free of restrictive legends and
trading restrictions (assuming compliance, and in accordance with, the Purchase
Agreement) representing the number of Conversion Shares being acquired upon the
conversion of this Note (including, if the Company has given continuous notice
pursuant to Section 2(b) for payment of interest in shares of Common Stock at
least 20 Trading Days prior to the date on which the Notice of Conversion is
delivered to the Company, shares of Common Stock representing the payment of
accrued interest otherwise determined pursuant to Section 2(a) but assuming that
the Interest Notice Period is the 20 Trading Days period immediately prior to
the date on which the Notice of Conversion is delivered to the Company and
excluding for such issuance the condition that the Company deliver Interest
Conversion Shares as to such interest payment) and (B) a bank check in the
amount of accrued and unpaid interest (if the Company has elected or is required
to pay accrued interest in cash). On or after the earlier of (i) the six month
anniversary of the Original Issue Date or (ii) the Effective Date, the Company
shall use its best efforts to deliver any certificate or certificates required
to be delivered by the Company under this Section 4(d) electronically through
the Depository Trust Company or another established clearing corporation
performing similar functions (assuming compliance, and in accordance with, the
Purchase Agreement).

 

iii. Failure to Deliver Certificates. If in the case of any Notice of Conversion
such certificate or certificates are not delivered to or as directed by the
applicable Holder by the second Trading Day after a Conversion Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the principal amount of Notes tendered for conversion.

 

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iv. Obligation Absolute; Partial Liquidated Damages. If the Company fails for
any reason to deliver to the Holder such certificate or certificates pursuant to
Section 4(f)(ii) by the second Trading Day after the Conversion Date, the
Company shall pay to such Holder, in cash, as liquidated damages and not as a
penalty, of $1000 for each Trading Day after such second Trading Day until such
certificates are delivered. In addition if the Company fails to deliver
instructions to the Transfer Agent by the day required above, the Company shall
be required to pay an additional amount in cash, as liquidated damages and not
as a penalty, of $1,000 for each date until such notice is given to the Transfer
Agent as required. The Company’s obligations to issue and deliver the Conversion
Shares upon conversion of this Note in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares; provided, however, such delivery shall not
operate as a waiver by the Company of any such action the Company may have
against the Holder. In the event a Holder of this Note shall elect to convert
any or all of the outstanding principal amount hereof, the Company may not
refuse conversion based on any claim that the Holder or any one associated or
affiliated with the Holder of has been engaged in any violation of law,
agreement or for any other reason, unless, an injunction from a court, on
notice, restraining and or enjoining conversion of all or part of this Note
shall have been sought and obtained and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the principal amount of this Note
outstanding, which is subject to the injunction, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of an injunction precluding the same, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly noticed
conversion. Nothing herein shall limit a Holder’s right to pursue actual damages
or declare an Event of Default pursuant to Section 8 herein for the Company’s
failure to deliver Conversion Shares within the period specified herein and such
Holder shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the
Holders from seeking to enforce damages pursuant to any other Section hereof or
under applicable law. In the absence of such injunction, the Company shall issue
Conversion Shares or, if applicable, cash, upon a properly noticed conversion.
If the Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(d)(ii) by the secondTrading Day after the
Conversion Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of principal amount being
converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth
(5th) Trading Day after such liquidated damages begin to accrue) for each
Trading Day after such second (2nd) Trading Day until such certificates are
delivered. Nothing herein shall limit a Holder’s right to pursue actual damages
or declare an Event of Default pursuant to Section 8 hereof for the Company’s
failure to deliver Conversion Shares within the period specified herein and the
Holder shall have the right to pursue all remedies available to it hereunder, at
law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other Section hereof or
under applicable law

 

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v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(f)(ii) by the second Trading Day after the
Conversion Date, and if after such third Trading Day the Holder is required by
its brokerage firm to purchase (in an open market transaction or otherwise)
Common Stock to deliver in satisfaction of a sale by such Holder of the
Conversion Shares which the Holder anticipated receiving upon such conversion (a
“Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to
any remedies available to or elected by the Holder) the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder anticipated receiving from the
conversion at issue multiplied by (2) the actual sale price of the Common Stock
at the time of the sale (including brokerage commissions, if any) giving rise to
such purchase obligation and (B) at the option of the Holder, either reissue
Notes in principal amount equal to the principal amount of the attempted
conversion or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its delivery
requirements under Section 4(f)(ii). For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of Notes with respect to which the actual sale price of
the Conversion Shares at the time of the sale (including brokerage commissions,
if any) giving rise to such purchase obligation was a total of $10,000 under
clause (A) of the immediately preceding sentence, the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
Notwithstanding anything contained herein to the contrary, if a Holder requires
the Company to make payment in respect of a Buy-In for the failure to timely
deliver certificates hereunder and the Company timely pays in full such payment,
the Company shall not be required to pay such Holder liquidated damages under
Section 4(f)(iv) in respect of the certificates resulting in such Buy-In.

 

vi. Reservation of Shares Issuable Upon Conversion. The Company covenants that
it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock solely for the purpose of issuance upon
conversion of the Notes and payment of interest on the Note and exercise of the
Warrants, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holders, not less
than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement and the Irrevocable Transfer Agent Instructions)
be the number of shares issuable (taking into account the adjustments and
restrictions of Section 5) upon the conversion of the outstanding principal
amount of the Notes hereunder and under the Notes issuable under the Purchase
Agreement and interest thereon and exercise of the Warrants. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly and validly authorized, issued and fully paid, nonassessable.

 

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vii. Fractional Shares. Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the VWAP at such time. If the Company
elects not, or is unable, to make such a cash payment, the Holder shall be
entitled to receive, in lieu of the final fraction of a share, one whole share
of Common Stock.

 

f) Transfer Taxes. The issuance of certificates for shares of the Common Stock
on conversion of the Notes shall be made without charge to the Holders thereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such Notes so converted and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.

 

Section 5. Certain Adjustments.

 

a) Stock Dividends and Stock Splits. If the Company, at any time while the Notes
are outstanding: (A) shall pay a stock dividend or otherwise make a distribution
or distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Note, including as interest thereon), (B) subdivide outstanding
shares of Common Stock into a larger number of shares, (C) combine (including by
way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (D) issue by reclassification of shares of the Common Stock
any shares of capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

 

b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as
applicable, at any time while this Note is outstanding shall offer, sell, grant
any option to purchase or offer, sell or grant any right to reprice its
securities, or otherwise dispose of or issue (or announce any offer, sale, grant
or any option to purchase or other disposition) any Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the then Conversion Price (such lower price,
the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued in
connection with such issuance, be entitled to receive shares of Common Stock at
an effective price per share which is less than the Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price),
then, the Conversion Price shall be reduced to equal the Base Share Price and
the number of Conversion Shares issuable hereunder shall be increased. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder in writing, no later than the
Trading Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of
clarification, whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to receive a
number of Conversion Shares based upon the Base Share Price regardless of
whether the Holder accurately refers to the Base Share Price in the Notice of
Conversion.

 

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

 

d) Subsequent Rights Offerings. If the Company, at any time while the Note is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share that is lower than the VWAP on the record date
referenced below, then the Conversion Price shall be multiplied by a fraction of
which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the numerator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered (assuming delivery to the Company in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at such VWAP.
Such adjustment shall be made whenever such rights or warrants are issued, and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights, options or warrants.

 

e) Fundamental Transaction. If, at any time while this Note is outstanding, (A)
the Company effects any merger or consolidation of the Company with or into
another Person, (B) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental Transaction”),
then upon any subsequent conversion of this Note, the Holder shall have the
right to receive, for each Conversion Share that would have been issuable upon
such conversion absent such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of one share of Common Stock (the
“Alternate Consideration”). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any conversion of this Note
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Company or surviving entity in
such Fundamental Transaction shall issue to the Holder a new note consistent
with the foregoing provisions and evidencing the Holder’s right to convert such
note into Alternate Consideration. The terms of any agreement pursuant to which
a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph
(c) and insuring that this Note (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

 

  Page 13 of 27

   

 

f) Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. The number
of shares of Common Stock outstanding at any given time shall not include shares
of Common Stock owned or held by or for the account of the Company, and the
description of any such shares of Common Stock shall be considered on issue or
sale of Common Stock. For purposes of this Section 5, the number of shares of
Common Stock deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding treasury shares, if any)
issued and outstanding.

 

g) Notice to Holders.

 

i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any of this Section 5, the Company shall promptly mail to each
Holder a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. If the
Company issues a variable rate security, despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible conversion or exercise price at
which such securities may be converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement), or the lowest possible
adjustment price in the case of an MFN Transaction (as defined in the Purchase
Agreement).

 

ii. Notice to Allow Conversion by Holder. If (A) the Company shall declare a
dividend (or any other distribution) on the Common Stock; (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Notes, and shall cause
to be mailed to the Holders at their last addresses as they shall appear upon
the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert Notes during the 20-day period
commencing the date of such notice to the effective date of the event triggering
such notice.

 

  Page 14 of 27

   

 

h) Exempt Issuance. Notwithstanding the foregoing, no adjustment will be made
under this Section 5 in respect of an Exempt Issuance.

 

Section 6. Redemption; Automatic Conversion.

 

a) Optional Redemption at Election of Company. Subject to the provisions of this
Section 6(a), at any time after Original Issue Date, the Company may, deliver a
written notice to the Holder (an “Optional Redemption Notice” and the date such
notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of
its irrevocable election to redeem all of the then outstanding principal amount
of this Note for cash in an amount equal to the Optional Redemption Amount on
the 20th Trading Day following the Optional Redemption Notice Date (such date,
the “Optional Redemption Date”, such 20 Trading Day period, the “Optional
Redemption Period” and such redemption, the “Optional Redemption”). The Optional
Redemption Amount is payable in full on the Optional Redemption Date. The
Company may only effect an Optional Redemption if each of the Equity Conditions
shall have been met (unless waived in writing by the Holder) on each Trading Day
during the period commencing on the Optional Redemption Notice Date through to
the Optional Redemption Date and through and including the date payment of the
Optional Redemption Amount is actually made in full. If any of the Equity
Conditions shall cease to be satisfied at any time during the Optional
Redemption Period, then the Holder may elect to nullify the Optional Redemption
Notice by notice to the Company within 3 Trading Days after the first day on
which any such Equity Condition has not been met (provided that if, by a
provision of the Transaction Documents, the Company is obligated to notify the
Holder of the nonexistence of an Equity Condition, such notice period shall be
extended to the third Trading Day after proper notice from the Company) in which
case the Optional Redemption Notice shall be null and void, ab initio. The
Company covenants and agrees that it will honor all Notices of Conversion
tendered from the time of delivery of the Optional Redemption Notice through the
date all amounts owing thereon are due and paid in full. The Company’s
determination to pay an Optional Redemption in cash shall be applied ratably to
all of the holders of the then outstanding Notes based on their (or their
predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.

 

  Page 15 of 27

   

 

b) Monthly Redemption. On each Monthly Redemption Date, the Company shall redeem
the Monthly Redemption Amount (the “Monthly Redemption”). The Monthly Redemption
Amount payable on each Monthly Redemption Date shall be paid in cash and shall
equal 110% of the Monthly Redemption Amount; provided, however, as to any
Monthly Redemption and upon 20 Trading Days’ prior written irrevocable notice
(the “Monthly Redemption Notice”), in lieu of a cash redemption payment the
Company may elect to pay all or part of a Monthly Redemption Amount in
Conversion Shares based on a conversion price equal to the lesser of (i) the
then Conversion Price and (ii) 75% of the average of the 5 lowest Closing Bid
Prices for the 20 consecutive Trading Days ending on the Trading Day that is
immediately prior to the applicable Monthly Redemption Date (subject to
adjustment for any stock dividend, stock split, stock combination or other
similar event affecting the Common Stock during such 20 Trading Day period) (the
price calculated during the 20 Trading Day period immediately prior to the
Monthly Redemption Date, the “Monthly Conversion Price” and such 20 Trading Day
period, the “Monthly Conversion Period”); provided, further, that the Company
may not pay the Monthly Redemption Amount in Conversion Shares unless (x) the
aggregate Monthly Redemption Amount (as to Monthly Redemption Amounts payable
with Conversion Shares) under all Notes to which are to receive Monthly
Redemption Amounts as to such Monthly Redemption is less than 20% of the total
dollar trading volume of the Common Stock for the 20 Trading Days prior to the
applicable Monthly Redemption Date, (y) from the date the Holder receives the
duly delivered Monthly Redemption Notice through and until the date such Monthly
Redemption is paid in full, the Equity Conditions have been satisfied, unless
waived in writing by the Holder, and (z) as to such Monthly Redemption, prior to
such Monthly Conversion Period (but not more than 5 Trading Days prior to the
commencement of the Monthly Conversion Period), the Company shall have delivered
to the Holder’s account with The Depository Trust Company a number of shares of
Common Stock to be applied against such Monthly Redemption Amount equal to the
quotient of (x) the applicable Monthly Redemption Amount divided by (y) the
lesser of (A) the Conversion Price and (B) 75% of the average of the 5 lowest
Closing Bid Prices during the 20 Trading Day period ending on the 3rd Trading
Day immediately prior to the date of the Monthly Redemption Notice (the
“Pre-Redemption Conversion Shares”). The Holder may convert, pursuant to Section
4(a), any principal amount of this Note subject to a Monthly Redemption at any
time prior to the date that the Monthly Redemption Amount, plus accrued but
unpaid interest, liquidated damages and any other amounts then owing to the
Holder are due and paid in full. Unless otherwise indicated by the Holder in the
applicable Notice of Conversion, any principal amount of this Note converted
during the applicable Monthly Conversion Period until the date the Monthly
Redemption Amount is paid in full shall be first applied to the principal amount
subject to the Monthly Redemption Amount payable in cash and then to the Monthly
Redemption Amount payable in Conversion Shares. Any principal amount of this
Note converted during the applicable Monthly Conversion Period in excess of the
Monthly Redemption Amount shall be applied against the last principal amount of
this Note scheduled to be redeemed hereunder, in reverse time order from the
Maturity Date; provided, however, if any such conversion is applied against such
Monthly Redemption Amount, the Pre-Redemption Conversion Shares, if any were
issued in connection with such Monthly Redemption or were not already applied to
such conversions, shall be first applied against such conversion. The Company
covenants and agrees that it will honor all Notices of Conversion tendered up
until such amounts are paid in full. The Company’s determination to pay a
Monthly Redemption in cash, shares of Common Stock or a combination thereof
shall be applied ratably to all of the holders of the then outstanding Notes
based on their (or their predecessor’s) initial purchases of Notes pursuant to
the Purchase Agreement. At any time the Company delivers a notice to the Holder
of its election to pay the Monthly Redemption Amount in shares of Common Stock,
the Company shall file a prospectus supplement pursuant to Rule 424 disclosing
such election. Holders, at their option, upon 5 days’ notice to the Company may
postpone their right to receive an amortization payment on a Note to the
Maturity Date of the Note.

 

  Page 16 of 27

   

 

c) Redemption Procedure. The payment of cash or issuance of Common Stock, as
applicable, pursuant to an Optional Redemption or a Monthly Redemption or a
Mandatory Prepayment shall be payable on the Optional Redemption Date and
Monthly Redemption Date or Mandatory Prepayment Date, as applicable. If any
portion of the payment pursuant to an Optional Redemption or Monthly Redemption
or Mandatory Prepayment shall not be paid by the Company by the applicable due
date, interest shall accrue thereon at an interest rate equal to the lesser of
18% per annum or the maximum rate permitted by applicable law until such amount
is paid in full. Notwithstanding anything herein contained to the contrary, if
any portion of the Optional Redemption Amount or Monthly Redemption Amount or
Mandatory Prepayment remains unpaid after such date, the Holder may elect, by
written notice to the Company given at any time thereafter, to invalidate such
Optional Redemption or Monthly Redemption or Mandatory Prepayment, ab initio,
and, with respect to the Company’s failure to honor the Optional Redemption, the
Company shall have no further right to exercise such Optional Redemption.
Notwithstanding anything to the contrary in this Section 6, the Company’s
determination to redeem in cash or its elections under Section 6(b) shall be
applied ratably among the Holders of Notes. The Holder may elect to convert the
outstanding principal amount of the Note pursuant to Section 4 prior to actual
payment in cash for any redemption under this Section 6 by the delivery of a
Notice of Conversion to the Company.

 

d) Automatic Conversion. Upon a Qualified Offering of equity securities in
conjunction with an uplisting of the Common Stock onto the New York Stock
Exchange or the NASDAQ, subject to the provisions of subsections (x) and (y) of
Section 4(b) hereof and such Holder not being required to enter into a lock-up
agreement in respect of their shares, all outstanding Notes plus all accrued but
unpaid interest thereon shall automatically be converted into Common Stock at a
35% discount to the public offering price. No fractional shares are to be issued
upon the conversion of this Note, but rather the number of shares of Common
Stock to be issued shall be rounded to the nearest whole number. To the extent
that rounding up to the nearest whole number would result in a violation of
Section 4(d)(vi), the Company shall pay the applicable converting Holder an
amount in cash equal to the fractional share amount multiplied by the Closing
Bid Price for the Common Stock on the such date of conversion. Such Automatic
Conversions shall be subject to “down round protection” as provided in Section
4.16 of the Purchase Agreement.

 

e) Most Favored Nation. Other than an Exempt Issuance or an underwritten public
offering of Common Stock, during the term of the Note, if the Company engages in
any future financing transactions with a third party investor, the Company will
provide the Holder with written notice (the “MFN Notice”) thereof promptly but
in no event less than 10 days prior to closing any financing transactions.
Included with the MFN Notice shall be a copy of all documentation relating to
such financing transaction and shall include, upon written request of the
Holder, any additional information related to such subsequent investment as may
be reasonably requested by the Holder. In the event the Holder determines that
the terms of the subsequent investment are preferable to the terms of the
Securities of the Company issued to the Holder pursuant to the terms of the
Purchase Agreement, the Holder will notify the Company in writing. Promptly
after receipt of such written notice from the Holder, the Company agrees to
amend and restate the Securities, and, as necessary, adjust the number of bonus
shares, to be identical to the instruments evidencing the subsequent investment
and any bonus shares issued in connection therewith. Notwithstanding the
foregoing, this Section shall not apply in respect of (i) an Exempt Issuance, or
(ii) an underwritten public offering of Common Stock.

 

  Page 17 of 27

   

 

f) Mandatory Repayment. If the Company or any or its Subsidiaries (i) engages in
a Qualified Offering, (ii) shall be a party to any Change of Control Transaction
or Fundamental Transaction or (iii) shall agree to sell or dispose any of its
assets in one or more transactions (whether or not such sale would constitute a
Change of Control Transaction) or (iv) at maturity, the Company will be required
to offer to repay, in cash, the aggregate principal amount of the Notes not
converted to Common Stock at 135% of the principal amount thereof plus accrued
interest to such date of repayment. The Company shall give the Holder at least
ten (10) day’s prior written notice of its intention to repay the Note, during
which time the Holder shall have the right to convert any portion of the Note
into Common Stock.

 

Section 7. Negative Covenants. So long as any portion of this Note is
outstanding, without the consent of the Majority Holders, the Company will not,
and will not permit any of its Subsidiaries to directly or indirectly:

 

a) enter into, create, incur, assume or suffer to exist any indebtedness (except
for Permitted Indebtedness) or liens of any kind (other than Permitted Liens or
Liens shared with the August 2017 Notes), on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom that is senior to or pari passu with, in any
respect, the Company’s obligations under the Notes;

 

b) amend its certificate of incorporation, bylaws or other charter documents so
as to adversely affect any rights of the Holder, other than to increase
authorized shares of Common Stock;

 

c) repay, repurchase or offer to repay, repurchase, make any payment in respect
of or otherwise acquire any of its Common Stock, Preferred Stock, or other
equity securities outstanding on the date hereof.

 

d) engage in any transactions with any officer, director, employee or any
affiliate of the Company, including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $10,000 other than (i) for payment of salary for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and (iii) for other
employee benefits, including stock option agreements under any stock option plan
of the Company. Notwithstanding the foregoing, so long as any of the Notes are
outstanding, no cash payments shall be made to affiliates of or related parties
to the Company on account of accrued amounts owing to such parties; or

 

e) create or acquire any Subsidiary after the date hereof unless (i) such
Subsidiary is a wholly-owned Subsidiary of the Company and (ii) such Subsidiary
becomes party to the Security Agreement (either by executing a counterpart
thereof or an assumption or joinder agreement in respect thereof) and guarantees
the obligations under the Transaction Documents pursuant to an agreement
satisfactory in all respects to the Purchaser, to the extent required by the
Purchaser, satisfied each condition of this Agreement and the Transaction
Documents as if such Subsidiary were a Subsidiary on the Closing Date;

 

  Page 18 of 27

   

 

f) incur capital expenditures in excess of $100,000.

 

g) Make any new investments (whether through the purchase of stocks, obligations
or otherwise) in, or loans or advances to, any other Person, or acquire all or a
substantial part of the assets, business, stock or other evidence of beneficial
ownership of any other Person;

 

h) authorize or approve any reverse stock split of the Common Stock; or

 

i) enter into any agreement with respect to any of the foregoing.

 

Section 8. Events of Default.

 

a) “Event of Default”, wherever used herein, means any one of the following
events (whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

 

i. any default in the payment of (A) the principal (including redemption or
repayment amounts) of amount of any Note, or (B) interest (including Late Fees)
on, or liquidated damages in respect of, any Note, in each case free of any
claim of subordination, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default, solely in the case of an interest payment or other
default under clause (B) above, is not cured, within 5 Trading Days;

 

ii. the Company shall fail to observe or perform any other covenant or agreement
contained in this Note or any of the other Transaction Documents (other than a
breach by the Company of its obligations to deliver shares of Common Stock to
the Holder upon conversion which breach is addressed in clause (xviii) below)
which failure is not cured, if possible to cure, within the earlier to occur of
(A) 5 Trading Days after notice of such default sent by the Holder or by any
other Holder and (B) 10 Trading Days after the Company shall become or should
have become aware of such failure;

 

iii. a default or event of default (subject to any grace or cure period provided
for in the applicable agreement, document or instrument) shall occur under (A)
any of the Transaction Documents other than the Notes, or (B) any other material
agreement, lease, document or instrument to which the Company or any Subsidiary
is bound, which default, solely in the case of a default under clause (B) above,
is not cured, within 10 Trading Days;

 

iv. any representation or warranty made by the Company herein, in any other
Transaction Document, in any written statement pursuant hereto or thereto, or in
any other report, financial statement or certificate made or delivered to the
Holder by the Company or any other holder of Notes shall be untrue or incorrect
in any material respect as of the date when made or deemed made;

 

  Page 19 of 27

   

 

v. (i) the Company or any of its Subsidiaries shall commence, or there shall be
commenced against the Company or any such Subsidiary, a case under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company or any Subsidiary commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or any
Subsidiary thereof or (ii) there is commenced against the Company or any
Subsidiary thereof any such bankruptcy, insolvency or other proceeding which
remains undismissed for a period of 60 days; or (iii) the Company or any
Subsidiary thereof is adjudicated by a court of competent jurisdiction insolvent
or bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or (iv) the Company or any Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of 60 days; or
(v) the Company or any Subsidiary thereof makes a general assignment for the
benefit of creditors; or (vi) the Company shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they
become due; or (vii) the Company or any Subsidiary thereof shall call a meeting
of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (viii) the Company or any Subsidiary thereof
shall by any act or failure to act expressly indicate its consent to, approval
of or acquiescence in any of the foregoing; or (ix) any corporate or other
action is taken by the Company or any Subsidiary thereof for the purpose of
effecting any of the foregoing;

 

vi. the Company or any Subsidiary shall default in any of its obligations under
any mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement of the Company in an amount
exceeding $100,000, whether such indebtedness now exists or shall hereafter be
created and such default shall result in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;

 

vii. the Company shall redeem or repurchase more than a de minimis number of its
outstanding shares of Common Stock or other equity securities of the Company
(other than redemptions of Conversion Shares and repurchases of shares of Common
Stock or other equity securities of departing officers and directors of the
Company; provided such repurchases shall not exceed $50,000, in the aggregate,
for all officers and directors during the term of this Note);

 

viii. the Company shall fail for any reason to pay in full the amount of cash
due pursuant to a Buy-In within 10 Trading Days after notice therefor is
delivered hereunder or shall fail to pay all amounts owed on account of an Event
of Default within five Trading Days of the date due.

 

ix. the Company shall fail to fulfill its obligations under the Transaction
Documents;

 

x. documents in regard to reserving shares for the Holder are no longer in
effect.

 

xi. the Common Stock shall not be eligible for listing or quotation for trading
on a Trading Market and shall not be eligible to resume listing or quotation for
trading thereon within seven Trading Days;

 

xii. the Company shall be a party to any Change of Control Transaction or
Fundamental Transaction or shall agree to sell or dispose of all or in excess of
40% of its assets in one transaction or a series of related transactions
(whether or not such sale would constitute a Change of Control Transaction);

 

  Page 20 of 27

   

 

xiii. the Company does not meet the current public information requirements
under Rule 144;

 

xiv. if applicable, during the Effectiveness Period (as defined in the
Registration Rights Agreement), either (a) the effectiveness of the Registration
Statement lapses for any reason or (b) the Holder shall not be permitted to
resell Registrable Securities (as defined in the Registration Rights Agreement)
under the Registration Statement for a period of more than 20 consecutive
Trading Days or 30 non-consecutive Trading Days during any 12 month period;
provided, however, that if the Company is negotiating a merger, consolidation,
acquisition or sale of all or substantially all of its assets or a similar
transaction and, in the written opinion of counsel to the Company, the
Registration Statement would be required to be amended to include information
concerning such pending transaction(s) or the parties thereto which information
is not available or may not be publicly disclosed at the time, the Company shall
be permitted an additional 10 consecutive Trading Days during any 12 month
period pursuant to this Section 8(a)(xvii);

 

xv. the Company shall fail for any reason to deliver certificates to a Holder
prior to the fifth Trading Day after a Conversion Date pursuant to Section 4(d)
or the Company shall provide at any time notice to the Holder, including by way
of public announcement, of the Company’s intention to not honor requests for
conversions of any Notes in accordance with the terms hereof;

 

xvi. any Person shall breach any agreement to deliver items to the initial
Holders pursuant to Section 2.2 of the Purchase Agreement;

 

xvii. any monetary judgment, writ or similar final process shall be entered or
filed against the Company, any subsidiary or any of their respective property or
other assets for more than $50,000, and such judgment, writ or similar final
process shall remain unvacated, unbonded or unstayed for a period of 45 calendar
days;

 

xviii. any of the Equity Conditions (other than in subsections (c), (e) for the
first 45 days after the Closing Date, (g), (h) or (k) shall failed to be met;

 

xix. the Company fails to timely file, when due, a post-effective amendment to a
Registration Statement or SEC report (e.g., Forms 8-K, 10-Q or 10-K, or
Schedules 14A, 14C or 14(f)), or, if the filing date of such report is properly
extended pursuant to SEC Rule 12b-25, when the date of any such filing extension
lapses; or

 

xx. an event of default by the Company with respect to the August 2017 Notes.

 

b) Remedies Upon Event of Default. If any Event of Default occurs, of the full
principal amount of this Note, together with interest and other amounts owing in
respect thereof, to the date of acceleration shall become, at the Holder’s
election, immediately due and payable in cash. The aggregate amount payable upon
an Event of Default shall be equal to the Mandatory Prepayment Amount. In lieu
of a cash payment the Holder may elect to receive all or part of a Mandatory
Prepayment Amount in Conversion Shares, from time to time, based on a conversion
price equal to 65% of the average of the 5 lowest Closing Bid Prices for the 20
consecutive Trading Days ending on the Trading Day that is immediately prior to
each such conversion. Commencing 5 days after the occurrence of any Event of
Default that results in the eventual acceleration of this Note, the interest
rate on this Note shall accrue at the rate of 24% per annum, or such lower
maximum amount of interest permitted to be charged under applicable law. All
Notes for which the full Mandatory Prepayment Amount hereunder shall have been
paid in accordance herewith shall promptly be surrendered to or as directed by
the Company. The Holder need not provide and the Company hereby waives any
presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a Note
holder until such time, if any, as the full payment under this Section shall
have been received by it. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.

 

  Page 21 of 27

   

 

Section 9. Miscellaneous.

 

a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, sent by
a nationally recognized overnight courier service, addressed to the Company, at
the address set forth above, facsimile number 281-698-2070, or email Attn:
Michael Redman, at 14405 Walters Road, Suite 780, Houston, Texas 77014, or such
other address or facsimile number as the Company may specify for such purposes
by notice to the Holders delivered in accordance with this Section. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, by email,
sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile telephone number or address of such Holder appearing on
the books of the Company, or if no such facsimile telephone number, email or
address appears, at the principal place of business of the Holder. Any notice or
other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:30 p.m. (New York City time), (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section later than 5:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the second Business Day following the date of mailing, if sent
by nationally recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given.

 

b) Absolute Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, interest and liquidated damages (if
any) on, this Note at the time, place, and rate, and in the coin or currency,
herein prescribed. This Note is a direct debt obligation of the Company. This
Note ranks pari passu with all other Notes now or hereafter issued under the
terms set forth herein and pari passu with the August 2017 Notes, as amended
pursuant to the August 2017 Transaction Documents Amendment.

 

c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, and indemnity, if requested, all reasonably satisfactory to the Company.

 

d) Security Interest This Note is a direct debt obligation of the Company and,
pursuant to the Security Documents, secured by a first priority perfected
security interest (pari passu with the August 2017 Notes) in all of the assets
of the Company and the Subsidiaries.

 

  Page 22 of 27

   

 

e) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby 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 or
the transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of this Note, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorney’s fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

f) Waiver. Any waiver by the Company or the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note.
The failure of the Company or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note. Any waiver must be in writing.

 

g) Severability. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
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 or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been enacted.

 

  Page 23 of 27

   

 

h) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

 

i) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof.

 

j) Seniority. This Note is senior in right of payment to any and all other
indebtedness of the Company except for the August 2017 Notes, with which the
Notes and the August 2017 Notes rank pari passu in right of payment as is
provided for in the Security Documents.

 

k) Assumption. Any successor to the Company or any surviving entity in a
Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction,
all of the obligations of the Company under this Note and the other Transaction
Documents pursuant to written agreements in form and substance satisfactory to
the Holder (such approval not to be unreasonably withheld or delayed) and (ii)
issue to the Holder a new Note of such successor entity evidenced by a written
instrument substantially similar in form and substance to this Note, including,
without limitation, having a principal amount and interest rate equal to the
principal amount and the interest rate of this Note and having similar ranking
to this Note, which shall be satisfactory to the Holder (any such approval not
to be unreasonably withheld or delayed). The provisions of this Section 9(i)
shall apply similarly and equally to successive Fundamental Transactions and
shall be applied without regard to any limitations of this Note.

 

l) Amendment. This Note may be modified or amended, or the provisions hereof
waived, with the written consent of the Company and the Majority Holders.

 

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

 

  Page 24 of 27

   

  

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.

 

 

  ONCOLIX, INC.         

 

Name:

Michael T. Redman     Title: Chief Executive Officer  

 

  Page 25 of 27

   

 

ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert principal under the 10% Senior Secured
Convertible Note of Oncolix, Inc., a Florida corporation (the “Company”), due on
August 1, 2019, into shares of common stock, par value $0.0001 per share (the
“Common Stock”), according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

 

By the delivery of this Notice of Conversion the undersigned represents and
warrants to the Company that its ownership of the Common Stock does not exceed
the amounts determined in accordance with Section 13(d) of the Exchange Act,
specified under Section 4 of this Note.

 

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.

 

Conversion calculations:

 

 

Date to Effect Conversion:

      

 

Principal Amount of Notes to be Converted:

 

 

  

 

 

Payment of Interest in Common Stock __ yes __ no

 

 

 

 

 

If yes, $_____________ of Interest Accrued on Account of Conversion at Issue.

 

 

     

Number of shares of Common Stock to be issued:

        

 

Signature:

 

 

  

 

 

Name:

 

 

  

 

 

Address:

 

 

  Page 26 of 27

   

 

Schedule 1

 

CONVERSION SCHEDULE

 

The 10% Senior Secured Convertible Notes due on August 1, 2019, in the aggregate
principal amount of up to $ 3.0 million issued by Oncolix, Inc., a Florida
corporation. This Conversion Schedule reflects conversions made under Section 4
of the above referenced Note.

 

Dated:

Date of Conversion

(or for first entry,

Original Issue Date)

Amount of

Conversion

Aggregate

Principal Amount

Remaining Subsequent

To Conversion

(or original

Principal Amount)

Company Attest

                    

 

 

Page 27 of 27