Exhibit
4.1


 


Execution
Version


 


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


 


Original
Issue Date: May 28, 2020


Original
Conversion Price (subject to adjustment herein): $1.60


 


$
________________


 


12.5%
ORIGINAL ISSUE DISCOUNT SENIOR SUBORDINATED SECURED


CONVERTIBLE
DEBENTURE


DUE
MAY 28, 2021


 


THIS
12.5% ORIGINAL ISSUE DISCOUNT SENIOR SUBORDINATED SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and
validly issued 12.5% Original Issue Discount Senior Subordinated Secured Convertible Debentures of Recruiter.com Group, Inc.,
a Nevada corporation (the “Company”), having its principal place of business at 100 Waugh Dr. Suite 300,
Houston, Texas, 77007, designated as its 12.5% Original Issue Discount Subordinated Secured Convertible Debenture due May 28,
2021 (this debenture, the “Debenture” and, collectively with the other debentures of such series, the
“Debentures”).


 






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FOR
VALUE RECEIVED, the Company promises to pay to __________ or its registered assigns (the “Holder”), or
shall have paid pursuant to the terms hereunder, the principal sum of $ __________ on May 28, 2021 (subject to extension as
provided herein, the “Maturity Date”) or such earlier date as this Debenture is required or permitted to
be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture in accordance with the provisions hereof. This Debenture is subject to the following
additional provisions:


 





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


 


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


 


“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof
any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary
thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered,
(d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company
or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the
Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.


 


“Base
Conversion Price” shall have the meaning set forth in Section 5(b).


 


“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).


 


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


 


“Buy-In”
shall have the meaning set forth in Section 4(c)(v).


 






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“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date
hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 33% of the voting securities of the Company (other than by means of conversion of the
Debentures), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates
with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such
transaction own less than 66% of the aggregate voting power of the Company or the successor entity of such transaction, (c)
the Company (and all of its Subsidiaries, taken as a whole) sells or transfers all or substantially all of its assets to
another Person and the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate
voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year
period of more than one-half of the members of the Board of Directors which is not approved by a majority of those
individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as
members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to
which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d)
above.


 


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


 


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


 


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


 


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


 


“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with
the terms hereof.


 


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


 


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


 


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


 


“Event
of Default” shall have the meaning set forth in Section 8(a).


 


“Extension
Amount” means 110% of the sum of (a) the outstanding principal amount of this Debenture at the expiration of the original
Maturity Date, plus (b) accrued and unpaid interest thereon at the expiration of the original Maturity Date, plus (c) all other
amounts, costs, expenses and liquidated damages due in respect of this Debenture at the expiration of the original Maturity Date.


 


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


 




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


 


“Late
Fees” shall have the meaning set forth in Section 2(d).


 


“Mandatory
Default Amount” means the sum of (a) 130% of the outstanding principal amount of this Debenture, plus (b) 130% of accrued
and unpaid interest hereon, and (c) 130% of all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.


 


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


 


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


 


“Original
Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence such Debentures.


 


“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(bb) attached to the Purchase Agreement, (c) indebtedness of up to an
aggregate of $50,000, inclusive of any interest, fees, penalties or other amounts due or payable thereunder, (d) indebtedness
under agreements or arrangements with respect to refinancing the Indebtedness set forth on Schedule 3.1(bb) to the
Purchase Agreement, provided that the terms of such refinancing are more favorable to the Company and are no more favorable
to the holders of such Indebtedness than the terms of the Debentures, (e) indebtedness supported by the U.S. Small Business
Administration (the “SBA”) under the Payroll Protection Program and any future similar relief programs pursuant
to the (i) Coronavirus Aid, Relief, and Economic Security Act of 2020, as supplemented by regulations promulgated by the SBA,
and (ii) future Congressional legislation which is enacted into law and contains forgiveness of indebtedness provisions, and
(f) indebtedness under a factoring agreement, merchant cash advance agreement or similar arrangement, provided that
(i) such indebtedness is junior to the indebtedness evidenced by the Debentures, and (ii) the amount of such indebtedness
(not including the Indebtedness existing on the Original Issue Date and set forth on Schedule 3.1(bb) attached to the
Purchase Agreement) shall not exceed $250,000 at any time.


 


“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other
governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being
contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the
management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the
ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and
which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable
future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred in connection with Permitted
Indebtedness under clauses (a) and (b) thereunder, and (d) Liens incurred in connection with Permitted Indebtedness under
clause (f) thereunder, provided that such Liens are not secured by assets of
the Company or its Subsidiaries other than the assets acquired or leased.


 






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“Prepayment
Amount” means the product of (i) the sum of (a) the outstanding principal amount of this Debenture, plus (b) accrued
and unpaid interest hereon, plus (c) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture,
multiplied by (ii) (x) 1.15 if the Company prepays this Debenture within 365 calendar days after the Original Issue Date, or (y)
1.30 if the Debenture is automatically extended pursuant to the terms of Section 2(f) and the Company prepays this Debenture prior
to the end of such extended term.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of May 28, 2020 by and among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.


 


“Qualified
Offering” shall mean an offering of Common Stock (and other securities potentially) for an aggregate price of at least
$5,000,000 resulting in the listing for trading of the Common Stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq
Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).


 


“Qualified
Offering Conversion Price” shall mean the lower of (i) the Conversion Price, (ii) the price per share equal to the quotient
of (A) the sum of (x) the number of shares Common Stock issued and outstanding on the date immediately prior to the closing date
of the Qualified Offering, plus (y) the number of shares of Common Stock issuable upon conversion of any shares of preferred stock
of the Company that are issued and outstanding on the date immediately prior to the closing date of the Qualified Offering, plus
(z) the number of shares of Common Stock issuable upon vesting of the Company’s restricted stock units, divided by (B) $36
million, and (iii) 80% of the Qualified Offering Price.


 


“Qualified
Offering Price” shall mean the price per share (or unit, if units are offered in the Qualified Offering) at which the
Qualified Offering is made. For the avoidance of doubt, if a unit includes more than one share of Common Stock, “Qualified
Offering Price” shall mean the unit price divided by the number of shares of Common Stock contained in a unit.


 


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


 


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


 




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“Successor
Entity” shall have the meaning set forth in Section 5(e).


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).


 


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


 


Section
2.Interest.


 


a) Payment
of Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount
of this Debenture at the rate of 8% per annum, payable quarterly on January 1, April 1, July 1 and October 1, beginning on the
first such date after the Original Issue Date, on each Conversion Date (as to that principal amount then being converted) and
on the Maturity Date (each such date, an “Interest Payment Date”) (if any Interest Payment Date is not a Business
Day, then the applicable payment shall be due on the next succeeding Business Day), in cash (subject to the Holder’s right,
in its sole discretion, to convert any accrued but unpaid interest into shares of Common Stock in accordance with Section 4).


 


 b) [Reserved].




 


c) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods,
and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made.
Interest shall cease to accrue with respect to any principal amount converted, provided that, the Company actually delivers
the Conversion Shares within the time period required by Section 4(c)(ii) herein. Interest hereunder will be paid to the
Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this
Debenture (the “Debenture Register”).


 






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d) Late
Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue
daily from the date such interest is due hereunder through and including the date of actual payment in full.


 


e) Prepayment.
The Company shall have the option to prepay this Debenture at any time after the Original Issue Date at an amount equal to the
Prepayment Amount.


 


f) Extension
of Maturity Date. In the event that any portion of this Debenture remains outstanding at the original Maturity Date of
this Debenture (for purposes of this Section 2(f) only, the “Original Maturity Date”), the Company, at its sole
discretion and with no further action of the Holder, has the right to automatically extend the Maturity Date of this
Debenture for an additional six (6) month period such that the Debenture shall be due and payable on November 28, 2021; provided,
however, that immediately after the expiration of the Original Maturity Date, all amounts due and payable on the
Debenture shall be increased by the Extension Amount. By way of example, if immediately prior to the Original Maturity Date,
the amount due and payable to the Holder on the Debenture is an aggregate of $1,000,000 including all accrued but unpaid
interest and all other amounts, costs, expenses and liquidated damages due in respect of this Debenture, then immediately
following the Original Maturity Date, with no further action by the Company or the Holder, the amount due and payable on this
Debenture shall be increased to $1,100,000 (for the avoidance of doubt, if immediately thereafter Company then determined to
prepay the Debenture in full, the Holder would be due the Prepayment Amount which would be $1,430,000). At least ten (10)
Business Days prior to such extension, the Company must file a Current Report on Form 8-K with the Commission and/or issue a
press release disclosing its intention to extend the Maturity Date, during which period the Holder shall retain the right to
convert this Debenture, including accrued interest due thereon, on the terms set forth herein. Failure to file a Form 8-K and
issue a press release on a timely basis shall not preclude the Company from automatically extending the Maturity Date, but if
the Company has not paid the outstanding amounts under this Debenture on or prior to the expiration of the Original Maturity
Date, notwithstanding the automatic extension of the Maturity Date, this Debenture shall be deemed to be in default under
Section 8 hereof.


 


Section
3. Registration of Transfers and Exchanges.


 


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


 




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


 


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


 


Section
4.Conversion.


 


a) Voluntary
Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture (including
all accrued but unpaid interest and all other amounts, costs, expenses and liquidated damages due in respect of this Debenture)
shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time
to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected
(such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion
Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be
required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company
unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so converted in which
case the Holder shall surrender this Debenture as promptly as is reasonably practicable after such conversion without delaying
the Company’s obligation to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the
Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver
an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of
any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error.
The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture
may be less than the amount stated on the face hereof.


 






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b) Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to $1.60, subject to adjustment herein
(the “Original Conversion Price”); provided, however, that if at any time after the Original
Issue Date there shall be an Event of Default, beginning on the six (6) month anniversary of the Original Issue Date, the
conversion price in effect on any Conversion Date shall be the lesser of (i) the Original Conversion Price and (ii) 60% of
the second lowest closing price of the Company’s Common Stock during the 20 Trading Day period immediately prior to the
applicable Conversion Date (on an as adjusted basis giving effect to any splits, dividend and the like during such 20 Trading
Day period) (the “Alternate Conversion Price” and, the Alternate Conversion Price, together with the
Original Conversion Price, the “Conversion Price”). Nothing in this Section 4(b) shall limit a
Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from
seeking to enforce damages pursuant to any other Section hereof or under applicable law.


 


c)
Mechanics of Conversion.




 


i. Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted
by (y) the Conversion Price.


 


ii. Delivery
of Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares representing the number of Conversion
Shares being acquired upon the conversion of this Debenture and (B) a bank check in the amount of accrued and unpaid interest
or it may deliver such sum by wire transfer. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common
Stock as in effect on the date of delivery of the Notice of Conversion.


 


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


 






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


 






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v. Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to
the Holder, if the Company fails for any reason to deliver to the Holder such Conversion Shares by the Share Delivery Date
pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive
upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x)
the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y)
the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in
a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had
timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Debenture with
respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such
purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver Conversion Shares upon conversion of this Debenture as required pursuant to the terms hereof.


 


vi. Reservation
of Shares Issuable Upon Conversion. On or before 90 days from the date of the Purchase Agreement, the Company covenants that
it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose
of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive
rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures),
not less than 400% of such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth
in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion
of the then outstanding principal amount of this Debenture and payment of interest hereunder. The Company covenants that all shares
of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable
and, if a registration statement covering the resale of the Conversion Shares is then effective under the Securities Act, shall
be registered for public resale in accordance with such registration statement.


 


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


 






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viii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Debenture shall be made without charge to the
Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion
Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holder of this Debenture
so converted and the Company shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of
any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing
similar functions) required for same-day electronic delivery of the Conversion Shares. For the avoidance of doubt, if the Holder
is required to pay any Transfer Agent fees in connection with the processing of any Notice of Conversion or Notice of Exercise
of the Warrants, the amount of such fees not to exceed $250 per notice, due to the Company being in arrears of its fees and other
monies owed to the Transfer Agent, the then outstanding principal amount of this Debenture shall be increased by the amount of
such fees properly documented fees paid by the Holder.


 






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d)  Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall not have the
right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth on the
applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a
group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and
Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Debenture with
respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any
of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Debentures or the Warrants) beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 4(d),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of
whether this Debenture is convertible (in relation to other securities owned by the Holder together with any Affiliates and
Attribution Parties) and of which principal amount of this Debenture is convertible shall be in the sole discretion of the
Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this
Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates or Attribution
Parties) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it
delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as
stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the
Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice
by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the
Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by
the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of
this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is
delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make
changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Debenture.


 


e) Mandatory
Conversion. If the Company consummates a Qualified Offering on or before the date of the repayment in full of this
Debenture, then the outstanding principal balance of this Debenture, along with any unpaid accrued interest and all other
amounts, costs, expenses and liquidated damages due in respect of this Debenture will automatically be converted, with no
further action of the Holder, on the closing date of such Qualified Offering, into shares of Common Stock (or units of Common
Stock and warrants to purchase Common Stock, if units are offered to the public in the Qualified Offering) at the Qualified
Offering Conversion Price.


 






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Section
5. Certain Adjustments.


 


a) Stock
Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.


 


b) Subsequent
Equity Sales. If, at any time while this Debenture is outstanding, the Company or any Subsidiary, as applicable, sells or
grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any
sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such
lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive
Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares
of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to
have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then simultaneously with the
consummation (or, if earlier, the announcement) of each Dilutive Issuance the Conversion Price shall be reduced to equal the
Base Conversion Price (subject to adjustment for reverse and forward stock splits, recapitalizations and similar transactions
following the date of the Purchase Agreement). Notwithstanding the foregoing, no adjustment will be made under this Section
5(b) in respect of an Exempt Issuance. If the Company enters into a Variable Rate Transaction, despite the prohibition set
forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the
lowest possible conversion price at which such securities may be converted or exercised. The Company shall notify the Holder
in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to
this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of
clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the
occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base
Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the
Base Conversion Price in the Notice of Conversion.


 






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c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard
to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 


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


 






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e) Fundamental
Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly, in one or more
related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (and
all of its Subsidiaries, taken as a whole), directly or indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the
Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other
Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the
other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such
stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then,
upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that
would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without
regard to any limitation in Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the
number of shares of Common Stock for which this Debenture is convertible immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 4(d) on the conversion of this Debenture). For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on
the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this
Debenture and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of
this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by
the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this
Debenture, deliver to the Holder in exchange for this Debenture a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this Debenture which is convertible for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Debenture (without regard to any limitations on the conversion of this Debenture)
prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such
shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such
conversion price being for the purpose of protecting the economic value of this Debenture immediately prior to the
consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of this Debenture 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 Debenture and the other Transaction
Documents with the same effect as if such Successor Entity had been named as the Company herein.


 






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f) Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.


 


g) Notice
to the Holder.




 


i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.


 


ii. Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the
Company(and all of its Subsidiaries, taken as a whole) is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or
property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear
upon the Debenture Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the
delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent
that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of
the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form
8-K. The Holder shall remain entitled to convert this Debenture during the 20-day period commencing on the date of such
notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth
herein.


 


Section
6. Ranking. The indebtedness evidenced by this Debenture and the payment of the principal amount and interest
shall be Senior (as hereinafter defined) to, and have priority in right of payment over, all indebtedness of Company, now
outstanding or hereinafter incurred, except for Senior Indebtedness (as hereinafter defined). “Senior,” as
used herein, shall be deemed to mean that, in the event of any default in the payment of the obligations represented by this
Debenture (after giving effect to “cure” provisions, if any) or of any liquidation, insolvency, bankruptcy,
reorganization or similar proceedings relating to Company, all sums payable on this Debenture shall first be paid in full,
with interest, if any, before any payment is made upon any other indebtedness, now outstanding or hereinafter incurred,
except for the Senior Indebtedness, and, in any such event, any payment or distribution of any character which shall be made
in respect of any other indebtedness of Company, other than the Senior Indebtedness, shall be paid over to Holders of the
Debentures for application to the payment hereof and thereof, unless and until the obligations under this Debenture (which
shall mean the principal amount, interest and any costs and expenses payable under this Debenture) shall have been paid and
satisfied in full. “Senior Indebtedness” shall mean the following Permitted Indebtedness outstanding as of
May 28, 2020: (i) the Company’s obligations to Change Capital Holdings I LLC pursuant to those certain Merchant
Receivables Purchase & Security Agreements, effective December 6, 2019 and December 12, 2019, as amended May 18, 2020;
(ii) the obligations of Recruiter.com, Inc., a wholly-owned subsidiary of the Company, under the Loan Agreement with Celtic
Bank Corporation; and (iii) the obligations of Recruiter.com, Inc., a wholly-owned subsidiary of the Company, under the Line
of Credit Agreement with Bank of America, N.A.


 






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Section
7. Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of at least
67% in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall
not, and shall not permit any of the Subsidiaries to, directly or indirectly:


 


a) other
than Permitted Indebtedness, except with the prior written consent of the Agent (as defined in the Security Agreement), enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not
limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom (for the avoidance of doubt, this shall include that the Company shall not enter into any factoring
agreement, merchant cash advance agreement or similar arrangement without prior written consent of the Agent, provided however
that the Holder shall negotiate with the Company in good faith in the event such an arrangement is required for the Company to
continue operations);


 


b) other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;


 


c) amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;


 


d) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock
or Common Stock Equivalents other than as to (i) the Conversion Shares or Warrant Shares as permitted or required under the Transaction
Documents, (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided
that such repurchases shall not exceed an aggregate of $25,000 for all officers and directors during the term of this Debenture,
or (iii) shares of Common Stock and Common Stock Equivalents which do not vest or are otherwise forfeited, provided (in
case of forfeiture) that such Common Stock and Common Stock Equivalents are not acquired for cash;


 


e) repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata basis,
other than regularly scheduled principal and interest payments as such terms are in effect as of the Original Issue Date, provided
that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exist
or occur;


 


 f) pay cash dividends or distributions on any equity securities of the Company;


 






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g) enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors
of the Company (even if less than a quorum otherwise required for board approval); or


 


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




 


Section
8.Events of Default.


 


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


 


i. any
default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts owing
to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B)
above, is not cured within 3 Trading Days;


 


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


 


iii. a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under


(A)
any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any
Subsidiary is obligated (and not covered by clause (vi) below);


 


iv. any
material representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be
untrue or incorrect in any material respect as of the date when made or deemed made;


 


v. the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;


 




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vi. the
Company or any Subsidiary 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 $25,000, 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;


 


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


 


viii. the
Company (and all of its Subsidiaries, taken as a whole) shall be a party to any Change of Control Transaction or Fundamental Transaction
or shall agree to sell or dispose of all or in excess of 33% of its assets in one transaction or a series of related transactions
(whether or not such sale would constitute a Change of Control Transaction);


 


ix. the
Company does not meet the current public information requirements under Rule 144 in respect to the Conversion Shares based upon
the deadline for filing SEC Reports pursuant to the Rules or other authority of the SEC;


 


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


 


xi. any
Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement;


 


xii. the
electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a “chill”; or


 


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


 




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b) Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but
unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days after the
occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture
shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon
the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the
Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any
presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration
may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder
of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such rescission
or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.


 


Section
9.Miscellaneous.


 


a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by email attachment, or
sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such
other facsimile number, email address, or address as the Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section 9(a). Any and all notices or other communications or deliveries to be provided by
the Company hereunder shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a
nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or address of
the Holder appearing on the books of the Company, or if no such facsimile number or email attachment or address appears on
the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any
notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the
email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the
next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile
number or email attachment to the email address set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom
such notice is required to be given.


 




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b) Absolute
Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable,
on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt
obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the
terms set forth herein.


 


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


 


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


 




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


 


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


 


g) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative
and in addition to all other remedies available under this Debenture 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 Debenture. 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 an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic
loss and without any bond or other security being required. 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 Debenture.


 




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


 


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


 


j) Secured
Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and each Subsidiary
pursuant to the Security Agreement, dated as of May 28, 2020 by and among the Company, the Subsidiaries of the Company and the
Secured Parties (as defined therein).


 


Section
10. Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Debenture, unless
the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall within two (2) Business Days after such receipt or delivery publicly
disclose such material, nonpublic 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 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, nonpublic information relating to the Company
or its Subsidiaries.


 


Section
11. Amendments; Waivers. Any modifications, amendments or waivers of the provisions hereof shall be subject to Section
5.5 of the Purchase Agreement.


 


Section
12. Equal Treatment of Purchasers. No consideration (including any modification of this Debenture) shall be offered or
paid to any Person (as such term is defined in the Purchase Agreement) to amend or consent to a waiver or modification of any
provision hereof unless the same consideration is also offered to all of the parties to the Purchase Agreement. Further, the Company
shall not make any payment of principal or interest on the Debentures in amounts which are disproportionate to the respective
principal amounts outstanding on the Debentures at any applicable time. For clarification purposes, this provision constitutes
a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group
with respect to the purchase or disposition of the Debentures or otherwise.


 


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


 


(Signature
Page Follows)


 




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


 


 


	 	RECRUITER.COM GROUP, INC.
	 	 
	 	By:	 
	 	 	Name: 	 Evan Sohn
	 	 	Title: 	Chief Executive Officer
	 	 
	 	Facsimile
    No. for delivery of Notices: _______________





 





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ANNEX
A


 


NOTICE
OF CONVERSION


 


The
undersigned hereby elects to convert principal under the 12.5% Original Issue Discount Subordinated Secured Convertible Debenture
due May 28, 2021 of Recruiter.com Group, Inc., a Nevada corporation (the “Company”), into shares of common
stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below.
If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.


 


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


 


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


 


Conversion
calculations:


 


	 	Date to Effect Conversion:
	 	 
	 	Principal Amount of Debenture to be Converted:
	 	 
	 	Payment of Interest in Common Stock__yes__no

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

	 	 
	 	Number of shares of Common Stock to be issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Address for Delivery of Common Stock Certificates:
	 	 
	 	Or
	 	 
	 	DWAC Instructions:
	 	 
	 	Broker No:_______________
	 	Account No: _____________



 




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Schedule
1


 


CONVERSION
SCHEDULE


 


The
12.5% Original Issue Discount Subordinated Secured Convertible Debentures due on May 28, 2021 in the aggregate principal amount
of $225,000 are issued by Recruiter.com Group, Inc., a Nevada corporation. This Conversion Schedule reflects conversions made
under Section 4 of the above referenced Debenture.


 


Dated:


 


	Date of Conversion

                                                                      (or for first entry, Original Issue Date)
	 	Amount of

 Conversion	 	Aggregate Principal Amount Remaining Subsequent to Conversion (or original 
Principal Amount)	 	Company Attest
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 



 


 


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