Exhibit 10.3


 


Oncobiologics,
Inc.

Second Note and Warrant Amendment and Waiver


 


This Second Note and
Warrant Amendment and Waiver (this “Amendment”), dated November 5, 2018 (the “Effective Date”),
is with respect to those certain senior secured promissory notes (each, a “Note” and collectively, the
“Notes”) and those certain common stock purchase warrants (each, a “Warrant”
and collectively, the “Warrants”, and together with the Notes, the “Securities”,
in each case as amended by the Note, Warrant and Registration Rights Amendment and Waiver dated as of September 7, 2017 (the “September
2017 Amendment”)) issued to Purchasers pursuant to that certain Note and Warrant Purchase Agreement, dated as of
December 22, 2016 (as amended by that certain First Amendment to Note and Warrant Purchase Agreement, dated April 13, 2017, and
as further amended by the September 2017 Amendment, the “NWPA”), and is entered into by and among Oncobiologics,
Inc., a Delaware corporation (the “Company”), and the Purchasers identified on the signature
pages to this Amendment. Capitalized terms used in this Amendment and not otherwise defined in this Amendment have the respective
meanings ascribed to them in the NWPA.


 


Recitals


 


A.          The
Company and the Purchasers are parties to the NWPA.


 


B.          The
Company intends to enter into a transaction pursuant to a Purchase Agreement dated on or about the date hereof in substantially
the form attached hereto as Exhibit A (the “Purchase Agreement”) by and between the Company and BioLexis
Pte. Ltd., a Singapore private limited company (formerly known as GMS Tenshi Holdings Pte. Limited “BioLexis”)
for the private placement of $20,000,000 of shares of the Company’s common stock, par value $0.01 per share (the “Common
Stock”).


 


C.          It
is a condition to consummation of the transactions contemplated by the Purchase Agreement that the Company and Purchasers amend
certain terms in the Notes and the Warrants.


 


D.          It
is a condition to the effectiveness of this Amendment that the Company and BioLexis execute and deliver the Purchase Agreement.


 


E.          Subject
to Section 9 of each of the Notes, Section 7 of the NWPA provides that any provision of the NWPA or the Securities may be amended
and any provision thereof waived only by the written consent of the Company and the Majority Holders. Section 9 of each of the
Notes each provide that any amendment to any Note that changes the fixed maturity of any Loan or Note will not be effective without
the consent of each Purchaser.


 


F.          The
undersigned Purchasers represent all of the Purchasers as of the Effective Date.


 


G.         As
of the Effective Date, the aggregate outstanding principal of the Notes is $13,500,000 and the accrued and unpaid interest on the
Notes is $1,210,296.


 




    	 



     


    

 


H.         The
Purchasers are Holders of the Warrants to acquire 3,792,500 shares of Common Stock, and have requested that the Company modify
the Exercise Price and Termination Date (in each case as such terms are defined in the Warrants) of such Warrants as set forth
herein and the Company is in agreement with such request.


 


I.           Section
5(l) of the Warrants provides that the Warrant may be modified or amended with the written consent of the Company and the Holder
(as defined in the Warrants).


 


Agreement


 


In consideration of the mutual covenants
and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto agree as follows:


 


1.         This
Amendment will be effective as of the Effective Date upon the satisfaction of the following conditions:


 


(a)            The
Purchase Agreement shall have been executed and delivered by the Company and BioLexis in substantially the form attached as Exhibit
A.


 


(b)            Purchasers
holding 100% of the outstanding principal amount of the Notes and the Company shall have executed and delivered a counterpart to
this Amendment.


 


2.          Each
of the Notes is hereby amended as follows:


 


(a)            The
first paragraph of each Note is amended by replacing the phrase “in lawful money of the United States of America and in immediately
available funds” in the first sentence thereof with the phrase “in lawful money of the United States of America and
in immediately available funds (except in connection with any conversion of this Note as contemplated by Section 1 below or the
Second Amendment)”.


 


(b)            Section
1 of each of the Notes are hereby amended and restated as follows:


 


“1.            Principal
Repayment; Conversion. (a) Unless earlier converted into Common Stock in accordance with clause 1(b) below, the outstanding
principal amount of this Note, and all accrued and unpaid interest thereon, shall be due and payable on December 22, 2018 (the
“Maturity Date”); provided that if the Company shall pay in cash to the Purchasers on a pro rata basis
each of the principal and interest payments set forth Section 7(a) through (c) of that certain Second Note and Warrant Amendment
and Waiver, dated as of November 5, 2018, by and among the Purchasers, the Company and the other parties thereto (the “Second
Amendment”), then the Maturity Date shall be automatically extended to June 30, 2019 (if extended, the “Maturity
Date”); provided further that if (x) the Company shall pay in cash to the Purchasers on a pro rata basis the principal
and interest payment set forth in Section 7(e) of the Second Amendment and (y) not less than $20,000,000 of additional equity capital
(in addition to the $20,000,000 of capital raised pursuant to the Purchase Agreement) shall be invested in the Company on or before
June 30, 2019, then the Maturity Date shall be automatically extended to December 22, 2019 (if further extended, the “Maturity
Date”). Notwithstanding anything to the contrary contained in this paragraph or the Purchase Agreement (as amended),
in the event that (i) BioLexis shall fail to fund all or any portion of its committed investment (for any reason whatsoever) under
the Purchase Agreement (as such Purchase Agreement provides as of the date hereof, without any amendment, modification or waiver
thereof) on the dates set forth therein or (ii) the Company shall fail to pay on the date(s) set forth in Section 7 (a) through
(d) of the Second Amendment all or any portion of any payment of principal and interest due and payable on such date(s), then any
of the foregoing clauses (i) or (ii) shall be an “Event of Default” under this Note and the Maturity Date shall be
automatically (and without further action by any Purchaser) accelerated to the date that is five (5) business days after such event.


 




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(b) Subject to the following
provisions, Purchaser shall have right, at Purchaser’s option to convert the outstanding principal amount of this Note and
all accrued and unpaid interest on this Note at any time on or prior to the Maturity Date at a conversion price equal to 120% of
the price paid by BioLexis for the shares of Common Stock pursuant to the Purchase Agreement, otherwise subject to the terms and
conditions set forth in Annex A attached hereto.


 


(c) To convert this Note, Purchaser
shall deliver to the Company a completed and executed notice of conversion substantially in the form attached hereto as Exhibit
C (“Notice of Conversion”).


 


(d) Notwithstanding anything
in this Note or the Second Amendment to the contrary, in the event the Company makes a payment of principal or interest under this
Note after the Effective Date (a “Non-Scheduled Payment”), other than any payment of principal or interest
contemplated by the second proviso to Section 1(a) above or pursuant to clauses (a) through (e) of Section 7 of the Second Amendment
(any such contemplated payment of principal or interest, a “Scheduled Payment”) the aggregate amount
of principal or interest, as the case may be, attributable to the Scheduled Payments shall be reduced ratably by the aggregate
amount of principal or interest, as the case may be, paid in connection with such Non-Scheduled Payments.”


 


(c)            Section
2 of each of the Notes are hereby amended and restated as follows:


 


“2.            Interest.
The Company further promises to pay interest on the outstanding principal amount hereof from the date hereof, until payment in
full, which interest shall be payable at the rate of five percent (5.0%) per annum (the “Stated Interest Rate”)
or the maximum rate permissible by law (which under the laws of the State of New York shall be deemed to be the laws relating to
permissible rates of interest on commercial loans), whichever is less. Interest shall accrue daily and be due and payable on the
Maturity Date (unless paid sooner), and shall be calculated on the basis of a 365-day year for the actual number of days elapsed.
Upon the occurrence and during the continuance of an Event of Default, all amounts owing hereunder shall bear interest at the Stated
Interest Rate plus two percent (2%) per annum.”


 




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(d)            Section
4 of each of the Notes is hereby amended and restated as follows:


 


“4.            Application
of Payments. Except as set forth in the Second Amendment, payment on this Note shall be applied first to accrued interest
and thereafter to the outstanding principal balance hereof. This Note may be prepaid in whole or in part at any time without
penalty or premium. Except as otherwise provided in this Note, the Purchase Agreement or the Second Amendment, any interest
accrued on or prior to the date of any prepayment of this Note shall be paid on the Maturity Date as provided in Section 2 of
this Note.”


 


(e)            Clauses
(d) and (e) of Section 5 of each of the Notes are hereby amended by replacing each instance of the phrase “Indebtedness listed
under the heading ‘Investor Notes’ on Schedule II to the Purchase Agreement” with the phrase “Indebtedness
listed under the heading ‘Investor Notes’ on Schedule II to the Purchase Agreement (including to the extent any such
Indebtedness has been amended, modified or otherwise transferred, sold or assigned to another individual and/or entity)”.


 


(f)           Clause
(h) of Section 5 of each of the Notes are hereby amended by adding at the end thereof the phrase “(in each case, other than
with respect to any of the Indebtedness listed under the heading ‘Investor Notes’ on Schedule II to the Purchase Agreement
(including to the extent any such Indebtedness has been amended, modified, or otherwise transferred, sold or assigned to another
individual and/or entity).


 


3.          Section
2(b) of each Warrant held by a Purchaser signatory hereto is hereby amended and restated as follows:


 


“b)           Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $1.50 subject to adjustment hereunder
(the “Exercise Price”).”


 


4.          The
Termination Date in the introductory paragraph of each Warrant held by a Purchaser signatory hereto is hereby amended, such that
the Warrants must be exercised on or prior to the close of business on the eight year anniversary of the Initial Exercise Date
and the phrase “Termination Date” in each such Warrant shall mean such eighth year anniversary.


 


5.          Each
Purchaser hereby waives any requirement that the Company provide notice of the adjustment to the Exercise Price to it, as a Holder
(as such term is defined in the Warrants) provided for in this Amendment as contemplated by Section 3(g) of the Warrants.


 


6.          Schedule
II of the NWPA is hereby amended and restated by Schedule II attached hereto as Exhibit B.


 


7.          In
consideration for each Purchaser’s agreement to enter into this Amendment, subject to clause 7(g) below, the Company agrees
to make the following payments with respect to each Note in the amounts and on the dates set forth in this Section 7:


 




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(a)            On
the Initial Closing Date under the Purchase Agreement (the “Initial Closing Date”), a principal payment
of $150 for each $1,000 in principal on each Note (with such principal amount measured as of the Effective Date but without giving
effect to any principal payments on the Notes made on the Initial Closing Date) plus a pro rata portion of accrued interest (i.e.
$180,990 in the aggregate) such that the aggregate amount of principal and interest paid on the Notes pursuant to this clause (a)
is equal to $2,205,990.


 


(b)            On
or prior to December 7, 2018, a principal payment of $80 for each $1,000 in principal on each Note (with such principal amount
measured as of the Effective Date but without giving effect to any principal payments on the Notes made on the Initial Closing
Date) plus a pro rata portion of accrued interest (i.e. $86,549 in the aggregate) such that the aggregate amount of principal and
interest paid on the Notes pursuant to this clause (b) is equal to $1,166,549.


 


(c)            On
or prior to December 22, 2018, a pro rata portion of accrued interest on all of the Notes in an aggregate amount equal to $1,027,072.


 


(d)            On
or prior to February 15, 2019, an additional principal payment of $110 for each $1,000 in principal on each Note (with such principal
amount measured as of the Effective Date but without giving effect to any principal payments on the Notes made on the Initial Closing
Date) plus a pro rata portion of accrued interest (i.e. $15,000 in the aggregate) such that the aggregate amount of principal and
interest paid on the Notes pursuant to this clause (d) is equal to $1,500,000.


 


(e)            If,
on or prior to June 30, 2019, not less than $20,000,000 of additional equity capital (in addition to the $20,000,000 of capital
raised pursuant to the Purchase Agreement) has been invested in the Company, the Company shall make an additional principal payment
of $222 for each $1,000 in principal on each Note (with such principal amount measured as of the Effective Date but without giving
effect to any principal payments on the Notes made on the Initial Closing Date) plus a pro rata portion of accrued interest of
(i.e. $3,000 in the aggregate) such that the aggregate amount of principal and interest paid on the Notes pursuant to this clause
(e) is equal to $3,000,000,


 


(f)             If,
on or prior to June 30, 2019, not less than $20,000,000 of additional equity capital (in addition to the $20,000,000 of capital
raised pursuant to the Purchase Agreement) has been invested in the Company and the Company has made the principal and interest
payment on the Notes pursuant to clause (e) above required to extend the Maturity Date (as defined in the Notes) to December 22,
2019, the Company shall make an additional principal payment of $148 for each $1,000 in principal on each Note (with such principal
amount measured as of the Effective Date but without giving effect to any principal payments on the Notes made on the Initial Closing
Date) plus a pro rata portion of accrued interest (i.e. $2,000 in the aggregate) such that the aggregate amount of principal and
interest paid on the Notes pursuant to this clause (f) is equal to $2,000,000, which payment shall be due and payable as follows:
(i) 50% of such payment shall be due and payable on or prior to July 31, 2019 and (ii) 50% of such payment shall be due and payable
on or prior to August 31, 2019.


 




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(g)            Notwithstanding
anything in this Amendment or in any Note to the contrary, in the event the Company makes a payment of principal or interest under
the Notes after the Effective Date (a “Non-Scheduled Payment”), other than any payment of principal or
interest contemplated by the second proviso to Section 1(a) of the Notes or pursuant to clauses (a) through (f) of this Section
7 (any such contemplated payment of principal or interest, a “Scheduled Payment”) the aggregate amount
of principal or interest, as the case may be, attributable to the Scheduled Payments shall be reduced ratably by the aggregate
amount of principal or interest, as the case may be, paid in connection with such Non-Scheduled Payments.


 


The Company
and Purchasers agree that a failure by the Company to make any of the payments set forth in this Section 7 on the dates and in
the amounts set forth above (to the extent required) shall constitute a failure to make a payment on each Note on the date due
and payable thereunder for purposes of Section 5(a) of each Note and shall be an “Event of Default”.


 


8.          All
other terms and conditions of the Notes and the Warrants will be unaffected hereby and remain in full force and effect. A copy
of this Amendment may be attached to each of the Notes as an allonge thereto and shall be deemed to be an amendment to each of
the Notes.


 


9.          Upon
giving effect to this Amendment, each reference in the NWPA, the Security Agreement or any Note or Warrant to “this Note”,
“this Warrant” or words of similar import referring to any Note or Warrant, as applicable, shall be and mean, in each
case, a reference to any Note or any Warrant, as applicable, as amended by this Amendment. Any reference in the Notes to the Purchase
Agreement, shall be and mean a reference to the NWPA, as amended by this Second Amendment.


 


10.        The
Company undertakes to take all action as may be reasonably necessary to reduce the exercise price of its issued and outstanding
Series A Warrants (Nasdaq: ONSIW; CUSIP number 68235M 113) to $1.50 per share, and further extend the expiration date of such warrants
to February 18, 2022.


 


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


 


12.        This
Amendment and all actions arising out of or in connection with this Amendment shall be governed by and construed in accordance
with the internal laws of the State of New York, without regard to the conflicts of law provisions. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Amendment and the transactions contemplated hereby. Each of the parties hereto irrevocably consents to
the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient
forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AMENDMENT
AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.


 




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13.        This
Amendment may only be amended, waived, supplemented or otherwise varied by a document, in writing, of even or subsequent date of
this Amendment, executed by the Company and the Majority Holders; provided that, any amendment, modification, supplement
or waiver to the definition of “Maturity Date” (as defined in the Notes) or that otherwise reduces the principal of
any of the Notes that has the effect of changing the fixed maturity of the Notes or reduces the principal amount of the Notes or
reduces the Conversion Rate (as defined in the Notes) will be subject to the consent of the Majority Holders and each affected
Purchaser.


 


14.        The
provisions of this Amendment shall inure to the benefit of, and be binding upon, the parties to this Amendment, the Purchasers
and their respective successors, assigns, heirs, executors and administrators and other legal representatives.


 


15.        The
Company hereby acknowledges and confirms that the modifications to the Note contained herein shall not in any way affect the rights
set forth in the Security Agreement and IP Security Agreement, each dated as of December 22, 2016 (as amended from time to time)
and hereby reaffirms that the obligations of the Company under the Notes (as amended) are secured by substantially all the Company’s
assets pursuant to such agreements.


 


16.        The
Company agrees to reimburse the Purchasers for reasonable and documented out-of-pocket costs and expenses incurred by the Purchasers
in connection with this Amendment up to an amount not to exceed $25,000.


 


17.        This
Amendment may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will
constitute one and the same agreement. Facsimile copies or copies in “.pdf” format of signed signature pages will be
deemed binding originals.


 


[Signatures Follow]


 




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The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Company:
	 	 
	 	Oncobiologics, Inc. 
	 	 
	 	By:	/s/ Lawrence A. Kenyon
	 	Name: 	Lawrence A. Kenyon
	 	Title: 	Chief Executive Officer and Chief Financial Officer


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 







    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 
	 	Advent Engineering
	 	 
	 	By:	/s/ Albert Dyrness
	 	Name: 	Albert Dyrness
	 	Title: 	Managing Director


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




  




    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 
	 	By:	/s/ Dennis M. O’Donnell
	 	Name: 	Dennis M. O’Donnell
	 	Title: 	 


 


[Second
Note and Warrant Amendment and Waiver Signature Page]




 




    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 
	 	Trutek Corp.
	 	 
	 	By:	/s/ Ashok Wahi
	 	Name: 	Ashok Wahi
	 	Title: 	President


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 




    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


	 	 
	 	Purchaser:
	 	 
	 	venBio Select Fund LLC
	 	 	 
	 	By:	/s/ Scott Epstein
	 	Name:	Scott Epstein
	 	Title:	CFO & CCO


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 







    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 
	 	Steelmill Master Fund LP
	 	 
	 	By:	/s/ Alfred J. Barbagallo
	 	Name:	Alfred J. Barbagallo
	 	Title:	Managing Director & General Counsel


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 







    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 
	 	Sabby Healthcare Master Fund, Ltd. 
	 	 	 
	 	By:	/s/ Robert Grundstein
	 	Name:	Robert Grundstein
	 	Title:	COO of Investment Manager


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 







    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 
	 	Sabby Volatility Warrant Master Fund, Ltd. 
	 	 
	 	By:	/s/ Robert Grundstein
	 	Name:	Robert Grundstein
	 	Title:	COO of Investment Manager


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 







    	 



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	Purchaser:
	 	 	 
	 	By:	/s/ Scott Canute
	 	Name:	Scott Canute
	 	Title:	 


 





[Second
Note and Warrant Amendment and Waiver Signature Page]




 







    	 



     


    








 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	PURCHASER:
	 	 	 
	 	By:	/s/ Nailesh A. Bhatt
	 	Name:	Nailesh A. Bhatt
	 	Title:	 


 


[Second Note and Warrant Amendment and
Waiver Signature Page]


 




    	



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	PURCHASER:
	 	 	 
	 	By:	/s/ Arunkumar B. Vyas
	 	Name:	Arunkumar B. Vyas
	 	Title:	 


 


[Second Note and Warrant Amendment and
Waiver Signature Page]


 




    	



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	PURCHASER:
	 	 	 
	 	By:	/s/ Ajitesh Rai
	 	Name:	Ajitesh Rai
	 	Title:	 


 


[Second Note and Warrant Amendment and
Waiver Signature Page]


 




    	



     


    

 


The parties have executed this Second
Note and Warrant Amendment and Waiver as of the date first above written.


 


	 	PURCHASER:
	 	 	 
	 	By:	/s/ Simon Woodhouse
	 	Name:	Simon Woodhouse
	 	Title:	 


 


[Second Note and Warrant Amendment and
Waiver Signature Page]


 




    	



     


    

 


Annex A


 


Terms of Conversion


 


1.         Voluntary
Conversion. At any time until the Notes are no longer outstanding, the Notes shall be convertible (“Conversion”),
in whole or in part, into shares of Common Stock at the option of the holder of the Note (the “Holder”),
at any time and from time to time (subject to the conversion limitations set forth in Section 9 below. The Holder shall effect
conversions by delivering to the Company a Notice of Conversion, specifying therein the principal amount of the Notes 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. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required
to physically surrender the Notes to the Company unless the entire principal amount of the Notes, plus all accrued and unpaid
interest thereon, has been so converted in which case the Holder shall surrender the Notes as promptly as is reasonably practicable
after such conversion without delaying the Company’s obligation to deliver the shares on the Share Delivery Date (as defined
below). Conversions hereunder shall have the effect of lowering the outstanding principal amount of the Notes 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 one (1) Business Day of
delivery of such Notice of Conversion. The Holder, and any assignee by acceptance of the Notes, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of a portion of the Notes, the unpaid and unconverted principal
amount of the Notes may be less than the amount stated on the face hereof. For all purposes of this Annex A, all references to
“Notes” in this Annex A shall be a reference only to the Note(s) held by the Holder.


 


2.          Delivery
of Conversion Shares Upon Conversion. Not later than two (2) Trading Days (as defined below) after each Conversion Date (the
“Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) the shares
of Common Stock issuable upon conversion of the Notes (the “Conversion Shares” which shall be free of
restrictive legends and trading restrictions representing the number of Conversion Shares being acquired upon the conversion of
the Notes. The Company shall deliver any Conversion Shares required to be delivered by the Company under this Section 2 electronically
through the Depository Trust Company or another established clearing corporation performing similar functions. “Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing). “Trading Day”
means a day on which the principal Trading Market is open for trading.


 



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3.         Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or
as directed by the Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at
any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Company shall promptly
return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Conversion
Shares issued to such Holder pursuant to the rescinded Conversion Notice.


 


4.         Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of the Notes 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, that 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 the Holder
of the Notes 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 anyone associated or affiliated with the Holder has been engaged in any violation of law,
agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion
of all or part of the Notes 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 outstanding principal amount of the Notes, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable
to the Holder to the extent it obtains judgment. 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
Conversion Shares pursuant to Section 2 by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of 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 Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion. 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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5.         Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares 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 Conversion Shares by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in
addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total
purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate
number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the
actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions)
and (B) at the option of the Holder, either reissue (if surrendered) the Notes in a principal amount equal to the principal amount
of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares
of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 2.
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 the Notes with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) 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 and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver Conversion Shares upon conversion of the Notes as required pursuant to the terms hereof.


 


6.         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 for the sole purpose of issuance upon conversion of the Notes and payment of interest
on the Notes, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other
than the Holder (and the other holders of the Notes), not less than such aggregate number of shares of the Common Stock as shall
be issuable upon the conversion of the then outstanding principal amount of the Notes and payment of interest hereunder. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully
paid and nonassessable.


 


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


 


8.         Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of the Notes shall be made without charge to the Holder
hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares,
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 Conversion Shares upon conversion in a name other than that of the Holder of the Notes so converted
and the Company shall not be required to issue or deliver such Conversion Shares 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. The Company shall pay all transfer agent fees required for same-day processing of any Notice
of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions)
required for same-day electronic delivery of the Conversion Shares.


 




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9.         Holder’s
Conversion Limitations. The Company shall not effect any conversion of the Notes, and a Holder shall not have the right
to convert any portion of the Notes, to the extent that after giving effect to the conversion set forth on the applicable
Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group
together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). 
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates and Attribution Parties shall include the number of shares of
Common Stock issuable upon conversion of the Notes with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of
the Notes beneficially owned by the Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the
Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including,
without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates or
Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 9, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this Section 9 applies, the determination of whether the Notes are
convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of
which principal amount of the Notes are convertible shall be in the sole discretion of the Holder, and the submission of a
Notice of Conversion shall be deemed to be the Holder’s determination of whether the Notes may be converted (in
relation to other securities owned by the Holder together with any Affiliates or
Attribution Parties) and which principal amount of the Notes are convertible, in each case subject to the Beneficial
Ownership Limitation. 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. In
addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For
purposes of this Section 9, in determining the number of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most
recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the
Company, or (iii) a more recent written 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 a Holder, the Company shall within one
Trading Day 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 the Notes, by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of
the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of the Notes held by the Holder. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this Section 9, provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon conversion of the Notes held by the Holder and the Beneficial Ownership
Limitation provisions of this Section 9 shall continue to apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the
terms of this Section 9 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of the Notes.


 




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10.       Stock
Dividends and Stock Splits. If the Company, at any time while the Notes are outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents
(as defined below) (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle
the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.


 


11.       Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 10 above, if at any time the Company grants, issues or
sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Notes (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 




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12.       Pro
Rata Distributions. During such time as the Notes are outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of the Notes, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete conversion of the Notes (without regard to any limitations on conversion hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, that, to the extent that the Holder's right to participate in any such
Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such
Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 


13.       Fundamental
Transaction. If, at any time while the Notes are outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion
of the Notes, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 9 on the conversion
of the Notes), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as
a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which the Notes are convertible
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 9 on the conversion of the Notes).
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 (1) 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 the Notes following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under the Notes
and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 13
pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of the Notes, deliver to the
Holder in exchange for the Notes a security of the Successor Entity evidenced by a written instrument substantially similar in
form and substance to the Notes which is convertible for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of the Notes (without
regard to any limitations on the conversion of the Notes) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of the Notes immediately prior
to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of the Notes and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under the Notes and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Company herein.


 




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14.       Calculations.
All calculations under this Annex A shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Annex A, 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 any treasury shares of the Company) issued and outstanding.


 


15.       Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Annex A, the Company shall
promptly deliver 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.


 


16.       Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)
the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Notes, and shall cause to be delivered to the Holder at its last address
as it shall appear upon the Note Register, at least twenty (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 deliver such notice or any defect therein or in the delivery thereof shall not affect
the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to convert the
Notes during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.


 




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Exhibit A


 


Purchase Agreement


 




     


     


    

 


Exhibit B


 


Schedule of Indebtedness


 




     


     


    

 


Exhibit C


 


Notice of Conversion