Exhibit 4.1


 


CONVERTIBLE PROMISSORY NOTE


 


NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. 


 


DPW HOLDINGS, INC.


CONVERTIBLE PROMISSORY NOTE DUE JULY
4, 2020


 


	Issuance Date: November 4, 2019	Principal Amount: $350,000.00


 


 


FOR VALUE RECEIVED,
DPW HOLDINGS, INC., a Delaware corporation (the “Company”), hereby promises to pay to the order of _______________,
or his registered assigns (“Holder”) the amount set forth above as the original principal amount (the “Principal”)
when due, whether upon July 4, 2020 (the “Maturity Date”), or upon acceleration, prepayment or otherwise (in
each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal
at the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon the Maturity Date or upon acceleration, conversion, prepayment or otherwise
(in each case in accordance with the terms hereof). This Convertible Promissory Note (this “Note”) is issued
to the Holder as of the Issuance Date by the Company pursuant to the Exchange Agreement. Certain capitalized terms used herein
are defined in Section 30.


 


1.       PAYMENTS
OF PRINCIPAL.


 


On the Maturity
Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest
and accrued and unpaid Late Charges on such Principal and Interest. Other than as specifically permitted by this Note, the Company
may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal
and Interest, if any.


 


2.       INTEREST;
INTEREST RATE.


 


(a)       Interest
on this Note shall commence accruing on November 4, 2019 at 12% per annum subject to adjustment in accordance with the terms of
this Section 2 (the “Interest Rate”), shall be calculated on the basis of a 360-day year and twelve 30-day months,
compounded daily, and shall be payable by the Company to the Holder, in cash, on the Maturity Date.


 


(b)       From
and after the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased
to the lower of 18.0% per annum or the highest amount permitted by law, shall compounded daily (the “Default Interest”),
and shall be due and payable on the first Trading Day of each calendar month during the continuance of such Event of Default (a
“Default Interest Payment Date”). In the event that such Event of Default is subsequently cured (and no other
Event of Default then exists (including, without limitation, for the Company’s failure to pay such Interest at the Default
Rate on the applicable Default Interest Payment Date), the adjustment referred to in the preceding sentence shall cease to be effective
as of the day immediately following the date of such cure; provided that the Interest as calculated and unpaid at such increased
rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence
of such Event of Default through and including the date of such cure of such Event of Default.


 






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3.       CONVERSION
OF NOTES. Provided that Exchange Approval shall have been obtained, this Note shall be convertible into validly issued, fully
paid and non-assessable shares (the “Conversion Shares”) of the Company’s common Stock, par value $0.001
per share (the “Common Stock”), on the terms and conditions set forth in this Section 3.


 


(a)       Conversion
Right. Subject to the provisions of Section 3(d), at any time following the Issuance Date, the Holder shall be entitled to
convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into Conversion Shares in accordance with
Section 3(b), at the Conversion Rate (as defined below). The Company shall not issue any fraction of a Conversion Share upon any
conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance
and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)
and legal opinions) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion
Amount or issuance of shares in consideration of the payment of the True-Up Amount pursuant to Section 33 herein.


 


(b)       Conversion
Rate. The number of Conversion Shares issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).


 


(i)       “Conversion
Amount” means the sum of (x) portion of the Principal to be converted, prepaid or otherwise with respect to which this
determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued
and unpaid Late Charges with respect to such portion of such Principal and such Interest, if any.


 


(ii)       “Conversion
Price” means, as of any Conversion Date, $1.20. The Company shall issue irrevocable instructions to its Transfer
Agent regarding conversions such that the transfer agent shall be authorized and instructed to issue shares of Common Stock upon
its receipt of a Conversion Notice without further approval or authorization from the Company.


 


(c)       Mechanics
of Conversion.


 


(i)       Optional
Conversion. To convert any Conversion Amount into Conversion Shares on any date following the Issuance Date (a “Conversion
Date”), the Holder shall deliver to the Company (whether via facsimile, electronic mail or otherwise), for receipt on
or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as
Exhibit I (the “Conversion Notice”). If required pursuant to Section 3(c)(iii) hereof, within two Trading
Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight
delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of his loss,
theft or destruction as contemplated by Section 15(b)). On or before the first Trading Day following the date of receipt of a Conversion
Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation and representation as to whether
such Conversion Shares may then be resold pursuant to Rule 144 or an effective and available registration statement, in the form
attached hereto as Exhibit II, of receipt of such Conversion Notice to the Holder and the Transfer Agent which confirmation
shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein, provided,
however, if the Company fails to deliver such acknowledgement of confirmation to the Transfer Agent, the Transfer Agent shall be
authorized to act pursuant to the Irrevocable Transfer Agent Instruction Letter which has been executed in connection herewith
and shall be permitted to issue shares to the Holder without further confirmation from the Company. On or before the second Trading
Day following the date on which the Company has received a Conversion Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date
of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share Delivery Deadline”),
the Company shall (1) provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program,
credit such aggregate number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion to the
Holder’s or his designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the
Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, upon the request of the Holder, issue
and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in
the name of the Holder or his designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant
to such conversion. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding Principal
of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as
practicable and in no event later than two Trading Days after receipt of this Note and at its own expense, issue and deliver to
the Holder (or his designee) a new Note (in accordance with Section 15(d)) representing the outstanding Principal not converted.
The Person or Persons entitled to receive the Conversion Shares shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date.


 






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(ii)       Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share
Delivery Deadline, if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, to issue and
deliver to the Holder (or his designee) a certificate for the number of shares of Common Stock to which the Holder is entitled
and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the
DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee with
DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of this Note (as
the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to the Holder,
(1) the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the issuance of such shares
of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock
not issued to the Holder on or prior to the Share Delivery Deadline and to which the Holder is entitled, multiplied by (B) any
trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the
applicable Conversion Date and ending on the applicable Share Delivery Deadline and (2) the Holder, upon written notice to the
Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note
that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect
the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section
3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline, if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver to the Holder
(or its designee) a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance
account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled
upon the Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant to clause (II) below, and if
on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock
corresponding to all or any portion of the number of shares of Common Stock issuable upon such conversion that the Holder is entitled
to receive from the Company and has not received from the Company in connection with such Conversion Failure or Notice Failure,
as applicable (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall,
within two Trading Days after receipt of the Holder’s request and in the Holder’s discretion, either: (I) pay cash
to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or
on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and
deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s
designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly honor its
obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied
by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Conversion Notice and ending on the date of such issuance and payment under this clause (II) (the “Buy-In Payment Amount”).
Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion
of this Note as required pursuant to the terms hereof.


 






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(iii)       Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and
addresses of the Holder of the Note and the principal amount of the Note (the “Registered Note”). The entries
in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holder or holders of
the Note shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without
limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. The Registered
Note may, subject to Section 27 hereof, be assigned, transferred or sold in whole or in part only by registration of such assignment
or sale on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of the Registered Note by
the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered
Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee
or transferee pursuant to Section 15, provided that if the Company does not so record an assignment, transfer or sale (as
the case may be) of all or part of any Registered Note within two Trading Days of such a request, then the Register shall be automatically
deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set
forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder
shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this
Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof) or (B) the Holder
has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance
of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest
and Late Charges converted and/or paid (as the case may be) and the dates of such conversions, and/or payments (as the case may
be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender
of this Note upon conversion. If the Company does not update the Register to record such Principal, Interest and Late Charges converted
and/or paid (as the case may be) and the dates of such conversions, and/or payments (as the case may be) within two Trading Days
of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.


 


(d)       Limitations
on Conversions. The Company shall not effect the conversion of any portion of the Note and the Holder shall not have the right
to convert any portion of the Note and any such conversion shall be null and void and treated as if never made, to the extent that
after giving effect to such conversion, the Holder would beneficially own in excess of 4.99% of the shares of Common Stock outstanding
immediately after giving effect to such conversion (the “Maximum Percentage”) (which provision may be waived
by the Holder by written notice from the Holder to the Company, which notice shall be effective 61 days after the date of such
notice). For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder
shall include the number of shares of Common Stock held by the Holder plus the number of shares of Common Stock issuable upon conversion
of the Note and all other Convertible Securities with respect to which the determination of such sentence is being made subject
to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d). For purposes of this Section
3(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the
number of outstanding shares of Common Stock the Holder may acquire upon the conversion of the Note without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Securities
and Exchange Commission (the “SEC”), as the case may be, (y) a more recent public announcement by the Company
or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock
outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion Notice from the
Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number,
the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that
such Conversion Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 3(d),
to exceed the Maximum Percentage, the Company must notify the Holder of a reduced number of Conversion Shares to be acquired pursuant
to such Conversion Notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall within
one Trading Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including such Note, by the Holder since the date as of which the Reported Outstanding Share Number
was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of such portion of the Note
results in the Holder being deemed to beneficially own, in the aggregate,


 






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more than the Maximum Percentage of the number of outstanding
shares of Common Stock (as determined under Section 13(d) of the 1934 Act and Rule 13b-3 thereunder), the number of conversion
shares so issued by which the Holder’s beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”)
shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote, sell, or to transfer
the Excess Shares. For purposes of clarity, the shares of Common Stock issuable to the Holder pursuant to the terms of this Note
in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes
of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert the Note pursuant to this Section 3(d) shall
have any effect on the applicability of the provisions of this Section 3(d) with respect to any subsequent determination of convertibility.
The provisions of this Section 3(d) shall be construed and implemented in a manner otherwise than in strict conformity with the
terms of this Section 3(d) to the extent necessary to correct any portion of this Section 3(d) which may be defective or inconsistent
with the intended beneficial ownership limitation contained in this Section 3(d) or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The provisions of this Section 3(d) shall be of no further force or effect
if the Holder participates in a subsequent transaction with the Company and acquires Common Stock and/or securities convertible
into Common Stock which do not contain a beneficial ownership limitation. In such event, the Maximum Percentage limitation shall
be (i) deemed modified to be identical to any limitation on beneficial ownership contained in the subsequent transaction or (ii)
eliminated if there is no such limitation on beneficial ownership.


 








4.       RIGHTS
UPON EVENT OF DEFAULT.


 


(a)       Event
of Default. Each of the following events shall constitute an “Event of Default”:


 


(i)       the
suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on a Principal Market for a
period of five consecutive Trading Days and failure to relist the Common Stock on the OTC Markets or another Principal Market within
such five consecutive Trading Days shall be an event of Default;


 


(ii)       the
Company’s default under this Note or the other Transaction Documents, including a failure to pay to the Holder any amount
of Principal, Interest, Late Charges or other amounts when and as due under this Note, the other Transaction Documents, subject
to a cure period of ten (10) Trading Days;


 


(iii)       bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed
within 30 days of their initiation;


 


(iv)       the
commencement by the Company of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree, order, judgment or other similar document in respect of the Company in an involuntary case or proceeding
under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the
Company of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the execution
of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it
in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company in furtherance
of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other
similar action under federal, state or foreign law;


 



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(v)       the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company of a voluntary or involuntary
case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or
(ii) a decree, order, judgment or other similar document adjudging the Company as bankrupt or insolvent, or approving as properly
filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company under
any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or
other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period
of 10 consecutive days;


 


(vi)       other
than as specifically set forth in another clause of this Section 4(a), the Company breaches any representation or warranty in any
material respect (other than representations or warranties subject to materiality limitations, which may not be breached in any
respect) or any covenant or other term or condition of this Note or any other Transaction Document, except, in the case of a breach
of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of ten (10) consecutive
Trading Days;


 


(vii)       a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company as to whether any Event
of Default has occurred, subject to a cure period of ten (10) Trading Days;


 


(viii)     any
Material Adverse Effect occurs and remains uncured for a period of ten (10) Trading Days;


 


(ix)       any
provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease
to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested
by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having
jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary
shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document, subject to
a cure period of ten (10) Trading Days;


 


(x)         the Company or any “Significant Subsidiary” as defined in Rule 1.02 of Reg S-X
shall default on 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 that (a) involves an
obligation greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and
payable;


 


(xi)       the Company fails to timely file any reports required under the 1934 Act;


 


(xii)       the
Company fails to maintain its status as “DTC Eligible” for any reason with the DTC’s Fast program;


 


(xiii)      an Authorized Share Failure shall have occurred;


 


(xiv)      the
Company effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder; and


 


(xv)       in
the event that the Company proposes to replace its transfer agent, the Company fails to provide, prior to the effective date of
such replacement, a fully executed irrevocable transfer agent instructions in a form as initially delivered in conjunction with
this Note (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Required Reserve Amount)
signed by the successor transfer agent to the Company and the Company.


 



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(b)       Notice
of an Event of Default; Upon the occurrence of an Event of Default with respect to this Note, the Company shall within one
Trading Day deliver written notice thereof via facsimile or electronic mail and overnight courier (with next day delivery specified)
(an “Event of Default Notice”) to the Holder.


 


(c)       Upon
the occurrence of any Event of Default, the Note shall become immediately due and payable and the Company shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to (w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment
Date”) plus (y) Default Interest. In addition, upon the occurrence of any Event of Default specified in Sections 4(a)(i),
4(a)(xi), 4(a)(xii), 4(xiii), 4(xiv) and 4(xv), the Note shall become immediately due and payable and the Company shall pay to
the Holder, in full satisfaction of its obligations hereunder, an amount equal to 125% times the sum of (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to Mandatory Prepayment
Date plus (y) Default Interest, if any. The then outstanding principal amount of this Note to the date of payment plus the amounts
referred to herein shall collectively be known as the “Default Sum.” Upon the occurrence of any Event of Default,
All other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of
which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection,
and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity. Provided that Exchange
Approval shall have been obtained at any such time, the Holder shall have the right at any time, to require the Company to immediately
issue, in lieu of the Default Sum, the number of shares of Common Stock of the sum equal to the Default Sum divided by the Conversion
Price then in effect, subject to the terms of this Note. This requirement by the Company shall automatically apply upon the occurrence
of an Event of Default without the need for any party to give any notice or take any other action.


 


5.       RIGHTS
UPON CHANGE OF CONTROL. The Company shall not enter into or consummate a transaction constituting a Change of Control unless:
(i) No sooner than 20 Trading Days nor later than 10 Trading Days prior to the consummation of a Change of Control, but not prior
to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic
mail and overnight courier to the Holder; (ii) the Successor Entity assumes in writing all of the obligations of the Company
under this Note and the other Transaction Documents in accordance with the provisions of this Section 5 pursuant to written agreements
in form and substance satisfactory to the Holder and approved by the Holder prior to such Change of Control, including agreements
to deliver to each holder of the Note in exchange for such Note a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to the Note, including, without limitation, having a principal amount and interest
rate equal to the principal amounts then outstanding and the interest rates of the Note held by such holder, having similar conversion
rights as the Note and having similar ranking and security to the Note, and satisfactory to the Holder and (iii) the Successor
Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on
a Principal Market. Upon the occurrence of any Change of Control, the Successor Entity shall succeed to, and be substituted for
(so that from and after the effective date of such Change of Control, the provisions of this Note 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 this Note and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the Company herein. Upon consummation of a Change of Control, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or prepayment of this Note at any time
after the consummation of such Change of Control, in lieu of the shares of Common Stock (or other securities, cash, assets or other
property (except such items still issuable under Sections 6 and 15, which shall continue to be receivable thereafter) issuable
upon the conversion or prepayment of the Note prior to such Change of Control, such shares of the publicly-traded common stock
(or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive
upon the happening of such Change of Control had this Note been converted immediately prior to such Change of Control (without
regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding
the foregoing, the Holder may elect, at his sole option, by delivery of written notice to the Company to waive this Section 5 to
permit the Change of Control to occur without the assumption of this Note. The provisions of this Section 5 shall apply similarly
and equally to successive transactions constituting a Change of Control and shall be applied without regard to any limitations
on the conversion of this Note.


 






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6.          RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.


 


(a)       Purchase
Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially
all of the record holders of any class 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 this Note immediately prior
to 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 and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess)
and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date, maturity
date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the benefit
of the Holder until such time or times, if ever, as his right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right
granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance (and, if
such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number
of days held in abeyance, if applicable)) to the same extent as if there had been no such limitation).


 


(b)       Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option
(i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder
would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon
the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of
this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as
the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions
of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations
on the conversion or prepayment of this Note.


 


7.       RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.


 


(a)       Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Issuance Date
subdivides (by any stock split, stock dividend, recapitalization or other similar transaction) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will
be proportionately reduced. If the Company at any time on or after the Issuance Date combines (by any reverse stock split, or stock
combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.
Any adjustment pursuant to this Section 7(a) shall become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this Section 7(a) occurs during the period that a Conversion Price is calculated
hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.


 



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(b)      Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.


 


(c)       Voluntary
Adjustment by Company. The Company may at any time during the term of this Note, with the prior written consent of the Holder,
reduce the then current Conversion Price of the Note to any amount and for any period of time deemed appropriate by the board of
directors of the Company.


 


8.       NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of the Company’s Certificate of Incorporation
or other charter documents, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action
as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other
provision of this Note or the other Transaction Documents, the Company (a) shall not increase the par value of any shares
of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, and (b) shall take all
such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the conversion of this Note. Notwithstanding anything herein to the contrary, if after the 60 day anniversary
of the Issuance Date, the Holder is not permitted to convert this Note in full for any reason (other than pursuant to restrictions
set forth in Section 3(d) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation,
obtaining such consents or approvals as necessary to permit such conversion into shares of Common Stock.


 


9.       RESERVATION
OF AUTHORIZED SHARES.


 


(a)       Reservation.
So long as the Note remains outstanding, the Company shall at all times reserve five (5) times the amount of its Common Stock sufficient
to convert this Note, subject to adjustment for stock splits, stock dividends, combinations and similar events (the “Required
Reserve Amount”).


 


(b)       Insufficient
Authorized Shares. If, notwithstanding Section 9(a), and not in limitation thereof, at any time while any of the Note remains
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon conversion of the Note at least a number of shares of Common Stock equal to the Required Reserve Amount
(an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve
Amount for the portion of the Note then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure, but in no event later than 60 days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement
and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock
and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company
is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number
of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such Authorized Failure Shares
to the Holder, the Company shall pay cash in exchange for the prepayment of such portion of the Conversion Amount convertible into
such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure Shares and
(y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder
delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date
of such issuance and payment under this Section 9(b); and (ii) to the extent the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.


 



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10.       OPTIONAL
PREPAYMENT. At any time during the period beginning on the Issuance Date and expiring upon the Maturity Date, the Company shall
have the right, exercisable on not less than ten (10) days prior written notice to the Holder of the Note, to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 10. Any notice of prepayment hereunder (an “Optional
Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that
the Company is exercising its right to prepay the Note, and (2) the date of prepayment which shall be no later than thirty (30)
days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”),
the Company shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Company at least three (3) Trading Days prior to the Optional Prepayment Date. If the Company exercises
its right to prepay the Note, the Company shall make payment to the Holder of an amount in cash (the “Optional Prepayment
Amount”) equal to the Multiple (as hereinafter defined), multiplied by the Default Sum. For purposes hereof, the “Multiple”
shall be: 122.5%.


 


11.       COVENANTS.
Until all of the principal amount of and accrued but unpaid interest under Note has been repaid, prepaid or otherwise satisfied
in accordance with their terms:


 


(a)       Rank.
All payments due under this Note (a) shall rank senior to all other notes of the Company issued prior to the Closing Date and (b)
shall be senior to all other Indebtedness of the Company and its Subsidiaries, except as provided on Schedule 11(a).


 


(b)       Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.


 


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


 


(d)       Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable
to maintain all of the rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service
names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations,
trade secrets and other intellectual property rights and all applications and registrations therefor of the Company and/or any
of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.


 


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


 



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12.       DISTRIBUTION
OF ASSETS. In addition to any adjustments pursuant to Section 7, if the Company shall declare or make any dividend or other
distributions of its assets (or rights to acquire its assets) to any or all 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)
(the “Distributions”), then the Holder will be entitled to such Distributions as if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations
or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the greater of
(a) the Conversion Price or (b) 80% of the lowest daily VWAP after the Closing Date) on the date immediately prior to the date
on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common
Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the
Holder shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent
of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time
or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such
limitation).


 



13.       AMENDING
THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change, waiver or amendment to this
Note. Any change, waiver or amendment so approved shall be binding upon all existing and future holders of this Note; provided,
however, that no such change, waiver or, as applied to the Note held by any particular holder of the Note, shall, without the written
consent of that particular holder, (i) reduce the amount of Principal, reduce the amount of accrued and unpaid Interest, or extend
the Maturity Date, of the Note, (ii) disproportionally and adversely affect any rights under the Note of any holder of any other
portion of the Note; or (iii) modify any of the provisions of, or impair the right of any holder of the Note under this Section
13.


 


14.       RESERVED.


 


15.       REISSUANCE
OF THIS NOTE.


 


(a)       Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 15(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred,
a new Note (in accordance with Section15(d)) to the Holder representing the outstanding Principal not being transferred. The Holder
and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following
conversion or prepayment of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.


 


 


(b)       Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal.


 


(c)       Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 15(d) and in principal amounts of at least $1,000) representing
in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.


 


(d)       Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 15(a) or Section 15(c), the Principal designated by the Holder which
does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of a new Note), (iii) shall
have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall
have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal
and Interest of this Note, from the Issuance Date.


 



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16.       REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The
Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm
the Company’s compliance with the terms and conditions of this Note (including, without limitation, compliance with Section
7).


 


17.       PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly
acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price
paid for this Note was less than the original Principal amount hereof.


 


18.       CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed
against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed
to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Note
instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections
of this Note. Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have
the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing
by the Holder.


 


19.       FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 19
shall permit any waiver of any provision of Section 3(d).


 



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20.       DISPUTE
RESOLUTION.


 


(a)       Submission
to Dispute Resolution.


 


(i)       In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, a Black-Scholes Consideration
Value, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, or the applicable Prepayment Price (as
the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company
or the Holder (as the case may be) shall submit the dispute to the other party via facsimile or electronic mail (A) if by the Company,
within two Trading Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time
after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly
resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Redemption Conversion
Price, such Black-Scholes Consideration Value, such VWAP or such fair market value, or the arithmetic calculation of such Conversion
Rate or such applicable Prepayment Price (as the case may be), at any time after the second Trading Day following such initial
notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then
the Holder may, at its sole option, select an independent, reputable investment bank to resolve such dispute.


 


(ii)       The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 20 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth Trading Day immediately following the date on which
the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the
immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”)
(it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer
be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment
bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation
that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by
both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled
to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other
than the Required Dispute Documentation).


 


(iii)       The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than 10 Trading Days immediately following the Dispute Submission Deadline. The fees and
expenses of such investment bank shall be borne solely by the Company and the Holder in equal parts, and such investment bank’s
resolution of such dispute shall be final and binding upon all parties absent manifest error.


 


(b)       Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 20 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under the New York  Civil
Practice Law and Rules, as amended, (ii) the terms of this Note and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled
(and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are
required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such
investment bank shall apply such findings, determinations and the like to the terms of this Note and any other applicable Transaction
Documents, (iii) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described
in this Section 20 to any state or federal court sitting in New York County, New York in lieu of utilizing the procedures set forth
in this Section 20 and (iv) nothing in this Section 20 shall limit the Holder from obtaining any injunctive relief or other equitable
remedies (including, without limitation, with respect to any matters described in this Section 20).


 



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21.       NOTICES.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in writing
with an e-mail copy to the last address provided by the Holder or its agents in writing to the Company. The Company shall provide
the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description
of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying,
the calculation of such adjustment and (ii) at least 15 days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common Stock, or (B) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the Holder.


 


22.       
CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been
paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall
not be reissued.


 


23.       WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all
other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.


 


24.       GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Except as otherwise required by Section
20 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York
County, New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, 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, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall be deemed or operate
to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect
on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit,
any provision of Section 20. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.


 


25.       SEVERABILITY.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 


26.       MAXIMUM
PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed
by the Company to the Holder and thus refunded to the Company.


 


27.       ASSIGNMENT.
Neither this Note nor the rights contained herein may be assigned, by operation of law or otherwise, by either party without the
prior written consent of the other; provided, however, that this Note and/or the rights contained herein may be assigned without
the Company’s consent by the Holder to any other entity who controls, is controlled by or is under common control with the
Holder.


 



    	 	14 	 



    	 



    



 


28. RESERVED.


 


29. VARIABLE RATE
TRANSACTIONS. So long as this Note remains outstanding, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock involving a Variable Rate Transaction.
For purposes of this Note, a “Variable Rate Transaction” means a transaction in which the Company issues or
sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive,
additional Common Stock at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies
with, the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities
(other than pursuant to terms and conditions applicable to such Common Stock equivalents in effect as of the date hereof and disclosed
in filings of the Company with the SEC prior to the date hereof), provided that the sale of Common Stock pursuant to any at-the
market offering or similar arrangement shall not constitute a Variable Rate Transaction.


 


30. CERTAIN DEFINITIONS.
For purposes of this Note, the following words and terms shall have the following meanings:


 


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


 


(b)       “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.


 


(c)       “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


 


(d)       “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.


 


(e)       
“Bloomberg” means Bloomberg, L.P., or any successor.


 


(f)       
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its,
direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of
the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
(iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries, or (iv) a reorganization or other change in the composition in the Company’s board of directors.


 






    	 	15 	 



    	 



    

 


(g)       “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York time,
as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
by OTC Markets Group Inc. If the closing bid price or the closing sale price cannot be calculated for a security on a particular
date on any of the foregoing bases, the closing bid price or the closing sale price (as the case may be) of such security on such
date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable
to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in
Section 20. All such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions during such period.


 


(h)       
“Common Stock” means (i) the Company’s shares of Class A common stock, $0.001 par value per share, and
(ii) any capital stock into which such Common Stock shall have been changed or any share capital resulting from a reclassification
of such Common Stock.


 


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


 


(j)       “Current
Subsidiary” means any Person in which the Company on the Issuance Date, directly or indirectly, (i) owns any of the outstanding
capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business,
operations or administration of such Person, and all of the foregoing, collectively, “Current Subsidiaries”.


 


(k)       
“Exchange Agreement” means that certain Exchange Agreement, dated as of November 4, 2019, by and between the
Company and the Holder.


 


(l)       “Exchange
Approval” means the approval of the NYSE American required to be obtained by Company pursuant to any applicable rules
of the NYSE American to issue the Conversion Shares, including, if applicable approval by the Company’s stockholders.


 


(m)       
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or
(z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated


 



    	 	16 	 



    	 



    



 


with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of
the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.


 


(n)       “GAAP”
means United States generally accepted accounting principles, consistently applied.


 


(o)       “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.


 


(p)       
“Indebtedness” means (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance
with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession
or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even
though the Person that owns such assets or property has not assumed or become liable for the payment of such indebtedness, and
(H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through
(G) above; and “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent
or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary
purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with,
or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.


 



    	 	17 	 



    	 



    



 


(q)       “Late
Charge” means any amount of Principal or other amounts due under the Transaction Documents which is not paid when due
which shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at
the rate of 18% per annum from the date such amount was due until the same is paid in full.


 


(r)       “Material
Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including
results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a
whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments
to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries
to perform any of their respective obligations under any of the Transaction Documents (as defined below). As of the date hereof
and as of the Closing Date, the Company has no Subsidiaries.


 


(s)       “Maturity
Date” shall mean the date listed in the preamble hereto as the Maturity Date; provided, however, the Maturity Date may
be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and
be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result
in an Event of Default or (ii) through the date that is 20 Trading Days after the consummation of a Fundamental Transaction in
the event that a Fundamental Transaction is publicly announced or a Change of Control Notice is delivered prior to the Maturity
Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion
Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as
such provision shall not limit the conversion of this Note.


 


(t)       “New
Subsidiary” means, as of any date of determination, any Person in which the Company after the Issuance Date, directly
or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest of such Person
or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing,
collectively, “New Subsidiaries”.


 


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


 


(v)       “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.


 


(w)       “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note, (ii) Indebtedness set forth on Schedule 2.16 of the
Exchange Agreement, as in effect as of the Issuance Date and (iii) Indebtedness secured by Permitted Liens or unsecured but as
described in clauses (iv) and (v) of the definition of Permitted Liens.


 


(x)       “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) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price
of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B)
existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such equipment, in either case, with respect to Indebtedness in an aggregate amount
not to exceed $50,000, (v) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured
by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited
to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced
does not increase, (vi) 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, and (vii) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 4(a).


 



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(y)       “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.


 


(z)       “Principal
Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select
Market, the Nasdaq Global Market, the OTCQB or the OTCQX or any successors of any of these exchanges or markets.


 


(aa) “Subsidiaries”
means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing,
individually, a “Subsidiary.”


 


(bb) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.


 


(cc) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.


 


(dd) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market
for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on
such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange
or market, then during the hour ending at 4:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in
writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any
day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.


 


(ee) “Transaction
Documents” means this Note, the Exchange Agreement, and any other documents relating to the issuance of this Note by
the Company to the Holder.


 


(ff) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m.,
New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average
of the highest Closing Bid Price and the lowest closing ask price of any of the market makers for such security as reported by
OTC Markets Group Inc. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP
of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 20. All such determinations shall be appropriately adjusted for any stock dividend, stock split,
stock combination, recapitalization or other similar transaction during such period.


 



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31.       DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall within one Trading Day after any such receipt or delivery publicly disclose such
material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to
the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company
or any of its Subsidiaries. If the Company or any of its Subsidiaries provides material non-public information to the Holder that
is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information,
the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries
or any of their respective officers, directors, employees, Affiliates or agents with respect to, or a duty to any of the foregoing
not to trade on the basis of, such material non-public information.


 


32.       PERSONAL
GUARANTY. In consideration of the Holder having made certain financial accommodations to the Company, which such amount has
personally benefited Milton C. Ault III (the “Guarantor”), as the Guarantor is an officer and member of the
board of directors of the Company and has received substantial material consideration as a direct result of such financial accommodations
by the Holder to the Company, plus other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Guarantor personally guarantees the prompt, full and complete payment of the outstanding principal amount, interest, default interest
(if any), the Default Sum, and applicable fees (if any), owing by the Company to the Holder (the “Company’s Debt”),
provided, however, the Holder shall not seek recourse against the Guarantor until such time as the Company fails to perform all
of its reporting and other obligations hereunder to enable the Company to be a remain a reporting company pursuant to the 1934
Act. To the extent permitted by law, the Guarantor waives all defenses, counterclaims or offsets that are legally available
to the Guarantor with respect to the payment of the Company’s Debt. This personal guarantee embodies the entire promise of
Guarantor to personally guarantee Company’s Debt and supersedes all prior agreements and understandings relating to the subject
matter here, whether oral or in writing. This personal guarantee may not be assigned or transferred without a written document,
signed by the Guarantor, Company, and Holder, permitting such assignment or transfer.


 


33.       TRUE-UP.
In the event the Holder’s proceeds from the sale of all the shares of Common Stock received by the Holder pursuant to the
Conversion Notice(s) under this Note, do not equal at least 100% of the sum of the Principal balance of this Note and the interest
accrued thereon, the Company shall owe the difference to the Holder (the “True-Up Amount”). Upon notice from
the Holder (the “True-Up Notice”), the Company shall within two (2) Trading Days have the option to pay the
True-Up Amount to the Holder in cash or through the delivery of free trading shares of Common Stock; provided, however,
that if the approval of the Principal Market is required for the Common Stock to be issued for the True-Up Amount, the two (2)
Trading Days shall be delayed until the Company has obtained such approval, which the Company shall use its best efforts to obtain
as promptly as practicable. The number of shares of Common Stock to be issued for the True-Up Amount shall be determined using
the average closing price of the Common Stock on the Principal Market for the ten (10) Trading Days immediately preceding the date
of the True-Up Notice. To the extent that the True-Up Amount is paid in the form of shares of Common Stock, in the event that after
the sale of the shares the aggregate proceeds do not equal the True-Up Amount, the Holder shall be permitted to deliver additional
True-Up Notices and be issued additional shares of Common Stock until such time as the True-Up Amount has been satisfied.


 

 


[signature page follows]


 



    	 	20 	 



    	 



    



 


IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date set out above.


 


 


	 	 	DPW HOLDINGS, INC.


 


 


	 
	 	 	By:	 	 
	 	 	 	 	 
	 	 	Name: Milton C. Ault, III	 
	 	 	 	 
	 	 	Title: Chief Executive Officer	 
	 	 	 	

       	 
	 	 	 	 	 
	ACKNOWLEDGED AND AGREED:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	MILTON C. AULT III	 	 	 	 


 



    	 	21 	 



    	 



    



 




EXHIBIT
I


 


DPW HOLDINGS, INC.


 

CONVERSION NOTICE


 


 


Reference is made to
the Convertible Promissory Note (the “Note”) issued to the undersigned by DPW Holdings, Inc., a Delaware corporation
(the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Class A Common Stock, $0.001 par value per share (the
“Common Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall
have the meaning as set forth in the Note.


 


	Date of Conversion:	 
	 	 
	Aggregate Principal to be converted:	 
	 	 
	Aggregate accrued and unpaid 

Interest and accrued and unpaid Late 

Charges with respect to such portion 

of the Aggregate Principal and such 

Aggregate Interest to be converted:	 
	 	 
	AGGREGATE CONVERSION 

AMOUNT

TO BE CONVERTED:	 
	 
	Please confirm the following information:
	 	 
	Conversion Price:	 
	 	 
	Number of shares of Common Stock 

to be issued:	 
	 
	
        Please issue the Common Stock into which
        the Note is being converted to Holder, or for its benefit, as follows:

         

        £          Check
        here if requesting delivery as a certificate to the following name and to the following address:

	 
	Issue to:	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	£         Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: 
	 
	DTC Participant:	 
	 	 
	DTC Number:	 
	 	 
	Account Number:	 
	 	 	 	 	 	 




 


  


Date: _____________ __,                              


	 	 
	 	 
	Name of Registered Holder	 
	 	 


 


	By: 	 	 
	 	
        Name:

        Title:
	 
	 	 	 
	 	 	 
	 	Tax ID:	 	 
	 	 	 
	 	Facsimile:  	 	 
	 	 	 
	E-mail Address:	 


 



    	 	22 	 



    	 



    




 


EXHIBIT II


ACKNOWLEDGMENT


 


The Company hereby
(a) acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not]
eligible to be resold by the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the
Company of a customary 144 representation letter) or (ii) an effective and available registration statement and (c) hereby directs
_________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions
dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.


 


	 	
        DPW HOLDINGS, INC.


	 
	 	 	 
	 	 	 
	 	By: 	 	 
	 	 	 	 
	 	
        Name:

         

        Title:
	 




 


 


23