Exhibit 10.2


 


[FORM OF SENIOR SECURED CONVERTIBLE 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. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.


 


Axion
Power International, Inc.


 


Senior
Secured Convertible Note


 


	Issuance Date:  [●] 2015	Original Principal Amount: U.S. $[●]


 


FOR VALUE RECEIVED,
Axion Power International, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order
of [BUYER] or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount (as
reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when
due, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date
(each as defined below), or upon acceleration, redemption 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 out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable,
whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date, or
upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured
Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”)
is one of an issue of Senior Secured Convertible Notes issued pursuant to the Securities Purchase Agreement, dated as of November
4, 2015 (the “Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time, and/or pursuant to a Permitted Exchange (as defined in the Securities Purchase
Agreement) (if any) (collectively, the “Notes”, and such other Senior Secured Convertible Notes, the “Other
Notes”). Certain capitalized terms used herein are defined in Section 31.


 




     


     


    

 


1.          PAYMENTS
OF PRINCIPAL. On each Installment Date, the Company shall pay to the Holder an amount equal to the Installment Amount due on
such Installment Date in accordance with Section 8. On the Maturity Date, the Company shall pay to the Holder an amount in cash
(excluding any amounts paid in shares of Common Stock on the Maturity Date in accordance with Section 8) representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 24(c)) 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 the Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day
months and shall be payable in arrears on each Interest Date and shall compound each calendar month and shall be payable in accordance
with the terms of this Note. Interest shall be paid (i) on each Interest Date occurring on an Installment Date in accordance with
Section 8 as part of the applicable Installment Amount due on the applicable Installment Date and (ii) with respect to each other
Interest Date, on such Interest Date in cash.


 


(b)          Prior
to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of
inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i) or upon any
redemption in accordance with Section 11 or any required payment upon any Bankruptcy Event of Default. From and after the occurrence
and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to eighteen percent (18.0%)
per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence
shall cease to be effective as of the calendar 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.


 


3.          CONVERSION
OF NOTES. This Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined
below), on the terms and conditions set forth in this Section 3.


 




    	2 



     


    

 


(a)          Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled
to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue
any fraction of a share of Common Stock 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)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion
of any Conversion Amount.


 


(b)          Conversion
Rate. The number of shares of Common Stock 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, redeemed or otherwise with respect to which this
determination is being made (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 and (z) the applicable Make-Whole Amount,
if any.


 


(ii)         “Conversion
Price” means, as of any Conversion Date or other date of determination, $1.23, subject to adjustment as provided herein.


 






    	3 



     


    

  


(c)          Mechanics
of Conversion.


 


(i)          Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (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”) to the Company. If required by Section 3(c)(iii), within three (3) 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 its loss, theft or destruction as contemplated
by Section 18(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall
transmit by facsimile or electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of
receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”)
which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the
terms herein. On or before the third (3rd) 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 Depository
Trust Company’s (“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 its 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 its 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 five
(5) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note
(in accordance with Section 18(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive
the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date. In the event of a partial conversion of this Note pursuant hereto, (x) the
Principal amount converted shall be deducted from the Installment Amount(s) relating to the Installment Date(s) as set forth in
the applicable Conversion Notice and (y) the amount of Restricted Principal converted, if any, shall be set forth in the applicable
Conversion Notice. Notwithstanding anything to the contrary contained in this Note or the Registration Rights Agreement, after
the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the Holder’s
receipt of the notice of a Grace Period (as defined in the Registration Rights Agreement) (and thereafter, so long as no Grace
Period is continuing), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or
its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) with respect
to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, and for which the Holder has not yet settled.


 




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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, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
to issue and deliver to the Holder (or its 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) or (II) if the Registration Statement covering the resale of the shares of Common Stock that are the subject
of the Conversion Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable
Conversion Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights
Agreement (x) so notify the Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by
crediting such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event
described in clause (I) above, a “Conversion Failure”) and, if such Notice Failure or Conversion Failure, as
applicable, continues for five (5) consecutive Trading Days, 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% per month, pro rated, 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 either (A) 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 or (B) a Notice Failure occurs, and if on or after such Share Delivery Deadline 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 all or any portion
of the number of shares of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a
“Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within three
(3) Business 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 holders of each Note and the principal amount of the Notes and Restricted Principal held by such holders held
by such holders (the “Registered Notes”). The entries in the Register shall be conclusive and binding for all
purposes absent manifest error. The Company and the holders of the Notes 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. A Registered Note may 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 any 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 18, 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 (2) Business Days
of its receipt 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 as contemplated by Section 3(c)(i)) 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) or Restricted Principal becoming unrestricted and the dates of such conversions, Controlled
Account Release (as defined below) 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) or Restricted Principal
becoming unrestricted and the dates of such conversions, Controlled Account Release and/or payments (as the case may be) within
two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.


 




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(iv)        Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for
the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion,
the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro
rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted
for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on
such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion
of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute
in accordance with Section 23.


 






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(d)          Limitations
on Conversions.


 


(i)          Beneficial
Ownership Limitation. The Company shall not affect the conversion of any portion of this Note, and the Holder shall not have
the right to convert any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be
null and void and treated as if never made, to the extent that after giving effect to such conversion, the Holder together with
the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock
issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or
warrants, including, without limitation, the Warrants) beneficially owned by the Holder or any other Attribution Party subject
to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d)(i). For purposes of this Section
3(d)(i), 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 this Note without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the
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)(i), to exceed the Maximum Percentage, the Holder must notify
the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at
any time, upon the written or oral request of the Holder, the Company shall within one (1) Business 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
this Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported.
In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of
outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time
to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice;
provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed
to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934
Act. No prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions
of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d)(i) to the extent necessary
to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial
ownership limitation contained in this Section 3(d)(i) or to make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of
this Note.


 




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(ii)         Principal
Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of this Note or otherwise pursuant
to the terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common
Stock which the Company may issue upon conversion or exercise (as the case may be) of the Notes and the Warrants or otherwise pursuant
to the terms of this Note without breaching the Company’s obligations under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such rules and regulations, including rules related to the aggregate
of offerings under NASDAQ Listing Rule 5635(d), the “Exchange Cap”), except that such limitation shall not apply
in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal
Market for issuances of shares of Common Stock upon conversion or exercise (as the case may be) of the Notes and the Warrants or
otherwise pursuant to the terms of this Note in excess of such amount or (B) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder. Until such approval
or such written opinion is obtained, no Buyer shall be issued in the aggregate, upon conversion or exercise (as the case may be)
of any Notes or any of the Warrants or otherwise pursuant to the terms of this Note, shares of Common Stock in an amount greater
than the product of (i) the Exchange Cap multiplied by (ii) the quotient of (A) the aggregate original principal amount of Notes
issued to such Buyer pursuant to the Securities Purchase Agreement on the Closing Date (as defined in the Securities Purchase Agreement)
(and pursuant to any Permitted Exchange to such Buyer, if any) divided by (B) the aggregate original principal amount of all Notes
issued to the Buyers pursuant to the Securities Purchase Agreement on the Closing Date (and pursuant to any Permitted Exchange
to any Buyer, if any) (with respect to each Buyer, the “Exchange Cap Allocation”). In the event that any Buyer
shall sell or otherwise transfer any of such Buyer’s Notes, the transferee shall be allocated a pro rata portion of such
Buyer’s Exchange Cap Allocation with respect to such portion of such Notes so transferred, and the restrictions of the prior
sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee.
Upon conversion and exercise in full of a holder’s Notes and Warrants, the difference (if any) between such holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder’s conversion
in full of such holder’s Notes and exercise in full of such Warrants shall be allocated to the respective Exchange Cap Allocations
of the remaining holders of Notes and Warrants on a pro rata basis in proportion to the shares of Common Stock underlying the Notes
and Warrants then held by each such holder. At any time after the earlier to occur of (x) the Stockholder Approval Date (as defined
in the Securities Purchase Agreement) and (y) the Stockholder Meeting Deadline (as defined in the Securities Purchase Agreement,
in the event that the Company is prohibited from issuing shares of Common Stock pursuant to this Section 3(d)(ii) (the “Exchange
Cap Shares”), the Company shall pay cash in exchange for the cancellation of such shares of Common Stock at a price equal
to the sum of (i) the product of (x) such number of Exchange Cap 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 Exchange Cap Shares to the Company and ending on the date of such issuance and payment under this Section 3(d)(ii) 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 Exchange Cap Shares, any Buy-In Payment Amount, any brokerage commissions and other out-of-pocket expenses,
if any, of the Holder incurred in connection therewith (collectively, the “Exchange Cap Share Cancellation Amount”);
provided, that no Exchange Cap Share Cancellation Amount shall be due and payable to the Holder to the extent that (x) on or prior
to the applicable Share Delivery Deadline, the Exchange Cap Allocation of a Holder is increased (whether by assignment by a holder
of Notes and/or Warrants or all, or any portion, of such holder's Exchange Cap Allocation or otherwise) (an “Exchange
Cap Allocation Increase”) and (y) after giving effect to such Exchange Cap Allocation Increase, the Company delivers
the applicable Exchange Cap Shares to the Holder (or its designee) on or prior to the applicable Share Delivery Deadline.


 




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4.          RIGHTS
UPON EVENT OF DEFAULT.


 


(a)          Event
of Default. Each of the following events shall constitute an “Event of Default” and each of the events in
clauses (ix), (x) and (xi) shall constitute a “Bankruptcy Event of Default”:


 


(i)          the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on
or prior to the date that is ten (10) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement)
or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is ten
(10) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);


 


(ii)         while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of
a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable
Securities (as defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance
with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive
days or for more than an aggregate of twenty (20) days in any 365-day period (excluding days during an Allowable Grace Period (as
defined in the Registration Rights Agreement));


 




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(iii)        the
suspension (or threatened suspension) from trading or the failure (or threatened failure) of the Common Stock to be trading or
listed (as applicable) on an Eligible Market for a period of five (5) consecutive Business Days or for more than an aggregate of
ten (10) Business Days in any 365-day period;


 


(iv)        the
Company’s (A) failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of the
required number of shares of Common Stock within eight (8) Trading Days after the applicable Conversion Date or exercise date (as
the case may be) or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way
of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for
conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than
pursuant to Section 3(d), or a request for exercise of any Warrants for shares of Common Stock in accordance with the provisions
of the Warrants;


 


(v)         except
to the extent the Company is in compliance with Section 10(b) below, at any time following the tenth (10th) consecutive
day that the Holder’s Authorized Share Allocation (as defined in Section 10(a) below) is less than (A) the number of shares
of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without
regard to any limitations on conversion set forth in Section 3(d) or otherwise), and (B) the number of shares of Common Stock that
the Holder would be entitled to receive upon exercise in full of the Holder’s Warrants (without regard to any limitations
on exercise set forth in the Warrants);


 


(vi)        the
Company’s or any Subsidiary’s (as defined in the Securities Purchase Agreement) failure to pay to the Holder any amount
of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s
or any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined
in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and
as due, in which case only if such failure remains uncured for a period of at least five (5) days;


 


(vii)       the
Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion
or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under
the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement,
unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five
(5) Trading Days;


 


(viii)      the
occurrence of any default under, redemption of or acceleration prior to maturity of an aggregate of at least $500,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other
Notes;


 




    	11 



     


    

 


(ix)         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 forty-five (45) days of their initiation;


 


(x)          the
commencement by the Company or any Subsidiary 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 or
any Subsidiary 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 or any Subsidiary or 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 or any Subsidiary 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;


 


(xi)         the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary 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 or any Subsidiary 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 or any Subsidiary 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 any Subsidiary 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 forty-five (45) consecutive days;


 




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(xii)        a
final judgment or judgments for the payment of money aggregating in excess of $500,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within forty-five (45) days after the entry thereof, bonded, discharged, settled
or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any
judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $500,000
amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which
written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within
forty-five (45) days of the issuance of such judgment;


 


(xiii)       the
Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $500,000 due to any third party (other than, with respect to
unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or
is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $500,000, which breach
or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer
to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely
to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition
(including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;


 


(xiv)      other
than as specifically set forth in another clause of this Section 4(a), the Company or any
Subsidiary breaches any representation, warranty, covenant or other term or condition of any 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
five (5) consecutive Trading Days;


 


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


 


(xvi)      any
breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 13 of this Note;


 


(xvii)     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;


 




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(xviii)    each
Controlled Account Agreement shall for any reason fail or cease to create a separate valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on the Collateral (as defined below) in favor of the Holder or any
material provision of any Controlled Account Agreement shall at any time for any reason cease to be valid and binding on or enforceable
against the Company or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be
commenced by the Company or any governmental authority having jurisdiction over the Company, seeking to establish the invalidity
or unenforceability thereof;


 


(xix)       any
Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs; or


 


(xx)        any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.


 


(b)          Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other
Note, the Company shall within one (1) Business 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. At any time after the
earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder
may require the Company to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note
by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event
of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note
subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater
of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of
(X) the Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default
Redemption Notice multiplied by (Y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date immediately preceding such Event of Default and ending on the date the Company makes the entire payment required to
be made under this Section 4(b) (the “Event of Default Redemption Price”). Redemptions required by this
Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions required by this Section
4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions
shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section
3(d), until the Event of Default Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount
submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be converted, in whole or in part,
by the Holder into Common Stock pursuant to the terms of this Note. In the event of a partial redemption of this Note pursuant
hereto, (x) the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment
Date(s) as set forth in the Event of Default Redemption Notice and (y) the amount of Restricted Principal redeemed, if any, shall
be set forth in the applicable Event of Default Redemption Notice. In the event of the Company’s redemption of any portion
of this Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 4(b) is intended by the parties to be, and shall be
deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. Any redemption
upon an Event of Default shall not constitute an election of remedies by the Holder, and all other rights and remedies of the Holder
shall be preserved.


 




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(c)          Mandatory
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion
that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity
Date, the Company shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal, accrued and
unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption Premium,
in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action by the
Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment
upon a Bankruptcy Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder,
including any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any right to payment of
the Event of Default Redemption Price or any other Redemption Price, as applicable.


 


5.            RIGHTS
UPON FUNDAMENTAL TRANSACTION.


 


(a)          Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) 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(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior
to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking and security to
the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any 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 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 Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
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 redemption of the Notes prior
to such Fundamental Transaction, 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 Fundamental Transaction
had this Note been converted immediately prior to such Fundamental Transaction (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 its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction
without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations on the conversion of this Note.


 




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(b)          Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior
to the consummation of a Change of Control (the “Change of Control Date”), 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 (a “Change of Control Notice”). At any time during the period beginning after the Holder’s
receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not
delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty
(20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice,
the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change
of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion
Amount the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed
by the Company in cash at a price equal to the greatest of (i) the product of (w) the Change of Control Redemption Premium multiplied
by (y) the Conversion Amount being redeemed, (ii) the product of (x) the Change of Control Redemption Premium multiplied by (y)
the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest
Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur
of (1) the consummation of the applicable Change of Control and (2) the public announcement of such Change of Control and ending
on the date the Holder delivers the Change of Control Redemption Notice by (II) the Conversion Price
then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied by (z) the product of
(A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration and the aggregate
cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common Stock upon
consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued
at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such
Change of Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of
such proposed Change of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public
announcement of such proposed Change of Control) divided by (II) the Conversion Price then in effect (the “Change of Control
Redemption Price”). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section
11 and shall have priority to payments to stockholders in connection with such Change of Control. To the extent redemptions required
by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company,
such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject
to Section 3(d), until the Change of Control Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion
Amount submitted for redemption under this Section 5(b) (together with any Late Charges thereon) may be converted, in whole or
in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant hereto,
(x) the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s)
as set forth in the Change of Control Redemption Notice and (y) the amount of Restricted Principal redeemed, if any, shall be set
forth in the applicable Change of Control Redemption Notice. In the event of the Company’s redemption of any portion of this
Note under this Section 5(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by the parties to be, and shall be
deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.


 


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 (without taking into
account any limitations or restrictions on the convertibility 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 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 right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held
similarly in abeyance) to the same extent as if there had been no such limitation).


 




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(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 redemption of this Note.


 


7.           RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.


 


(a)          Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company issues or
sells, or in accordance with this Section 7(a) is deemed to have issued or sold, any shares of Common Stock (including the issuance
or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities issued
or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less
than a price equal to the Conversion Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such
Conversion Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive
Issuance”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an
amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted
Conversion Price and the New Issuance Price under this Section 7(a)), the following shall be applicable:


 




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(i)          Issuance
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share. For purposes of this Section 7(a)(i), the “lowest price per
share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall
be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion,
exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof
and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of
any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option
or otherwise pursuant to the terms thereof, minus (2) the sum of all amounts paid or payable to the holder of such Option (or any
other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange
of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of
any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except
as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common
Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.


 


(ii)         Issuance
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is
issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to
(1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect
to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of
such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to
the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person)
upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or
benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment
of the Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant
to other provisions of this Section 7(a), except as contemplated below, no further adjustment of the Conversion Price shall be
made by reason of such issuance or sale.


 




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(iii)        Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other
than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b)
below), the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued
or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of
the Subscription Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if such
adjustment would result in an increase of the Conversion Price then in effect.


 




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(iv)        Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales
of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity
to each other and/or (C) are consummated under the same plan of financing), the aggregate consideration per share of Common Stock
with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which
one share of Common Stock was issued (or was deemed to be issued pursuant to Section 7(a)(i) or 7(a)(ii) above, as applicable)
in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities,
the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as determined by
the Holder in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III)
the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined on a per
share basis in accordance with this Section 7(a)(iv). If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the
consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares
of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security,
but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the
Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days
immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners
of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration
therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not
for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all
parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.


 


(v)         Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the
issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).


 




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(b)          Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 5 or Section
7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, stock combination,
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. Without limiting
any provision of Section 5 or Section 7(a), if the Company at any time on or after the Subscription Date combines (by
any stock split, stock dividend, 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(b) shall become effective immediately after the effective
date of such subdivision or combination. If any event requiring an adjustment under this Section 7(b) 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.


 


(c)          Holder’s
Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section 7, if the
Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities
(any such securities, “Variable Price Securities”), after the Subscription Date that are issuable pursuant to
such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary
with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of
such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and
similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”),
the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the date of such agreement
and the issuance of such Convertible Securities or Options. From and after the date the Company enters into such agreement or issues
any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price for the Conversion Price upon conversion of this Note by designating in the Conversion Notice delivered upon
any conversion of this Note that solely for purposes of such conversion the Holder is relying on the Variable Price rather than
the Conversion Price then in effect. The Holder’s election to rely on a Variable Price for a particular conversion of this
Note shall not obligate the Holder to rely on a Variable Price for any future conversion of this Note. In addition, from and after
the date the Company enters into such agreement or issues any such Variable Price Securities, for purposes of calculating the Pre-Installment
Conversion Price and Installment Conversion Price as of any time of determination, the “Conversion Price” as used therein
shall mean the lower of (x) the Conversion Price as of such time of determination and (y) the Variable Price as of such time of
determination.


 




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(d)          Stock
Combination Event Adjustments. If at any time and from time to time on or after the Subscription Date there occurs any stock
split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a “Stock
Combination Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market
Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 7(b) above), then on the
sixteenth (16th) Trading Day immediately following such Stock Combination Event Date, the Conversion Price then in effect
on such sixteenth (16th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall be reduced
(but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding
sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made.


 


(e)          Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly
applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated
by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting
of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors
shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the
Holder, provided that no such adjustment pursuant to this Section 7(e) will increase the Conversion Price as otherwise determined
pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith,
upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination
shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.


 


(f)          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.


 


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


  



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8.            INSTALLMENT
CONVERSION OR REDEMPTION.


  


(a)          General.
On each applicable Installment Date the Company shall pay to the Holder of this Note the applicable Installment Amount due on such
date by converting such Installment Amount in accordance with this Section 8 (an “Installment Conversion”);
provided further that the Company shall not be entitled to effect an Installment Conversion with respect to any portion of such
Installment Amount and shall be required to pay the entire amount of such Installment Amount in cash (an “Installment
Redemption”) if on the applicable Installment Notice Due Date or on the applicable Installment Date (as the case may
be) there is an Equity Conditions Failure, except that an Installment Conversion may still occur on the applicable Installment
Date in accordance with Section 8(b) with the written consent of the Holder. On the date which is the twenty-first (21st) Trading
Day prior to each Installment Date (or, with respect to the initial Installment Date, the Initial Installment Notice Due Date)
(each, an “Installment Notice Due Date”), the Company shall deliver written notice (each, an “Installment
Notice” and the date all of the holders receive such notice is referred to as to the “Installment Notice Date”),
to each holder of Notes and such Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of such
holder’s Note shall be converted in whole pursuant to an Installment Conversion or (B) (1) state that the Company is required
to redeem, in accordance with the provisions of the Notes, in whole or in part, the applicable Installment Amount pursuant to an
Installment Redemption and (2) specify the portion of the applicable Installment Amount which the Company is required to redeem,
pursuant to an Installment Redemption (such amount to be redeemed in cash, the “Installment Redemption Amount”)
and the portion of the applicable Installment Amount, if any, with respect to which the Company will, and is permitted to, effect
an Installment Conversion (such amount of the applicable Installment Amount so specified to be so converted pursuant to this Section
8 is referred to herein as the “Installment Conversion Amount”), which amounts when added together, must equal
the entire applicable Installment Amount and (ii) if the applicable Installment Amount is to be paid, in whole or in part, pursuant
to an Installment Conversion, certify that there is not then an Equity Conditions Failure as of the date of the Installment Notice.
Each Installment Notice shall be irrevocable and may not be revoked by the Company. If the Company does not timely deliver an Installment
Notice in accordance with this Section 8 with respect to a particular Installment Date, then the Company shall be deemed to have
delivered an irrevocable Installment Notice confirming an Installment Conversion of the entire Installment Amount payable on such
Installment Date and shall be deemed to have certified that there is not then an Equity Conditions Failure in connection with such
Installment Conversion. No later than two (2) Trading Days after delivery or deemed delivery (as applicable) of the applicable
Installment Notice setting forth an Installment Conversion Amount, the Company shall deliver to the Holder’s account with
DTC such number of shares of Common Stock (the “Pre-Installment Conversion Shares”) equal to the quotient of
(x) such Installment Conversion Amount divided by (y) the Pre-Installment Conversion Price, and as to which the Holder shall be
the owner thereof as of such time of delivery or deemed delivery (as the case may be) of such Installment Notice. Except as expressly
provided in this Section 8(a), the Company shall convert and/or redeem the applicable Installment Amount of this Note pursuant
to this Section 8 and the corresponding Installment Amounts of the Other Notes pursuant to the corresponding provisions of the
Other Notes in the same ratio of the applicable Installment Amount being converted and/or redeemed hereunder. The applicable Installment
Conversion Amount (whether set forth in the applicable Installment Notice or by operation of this Section 8) shall be converted
in accordance with Section 8(b) and the applicable Installment Redemption Amount shall be redeemed in accordance with Section 8(c).


 




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(b)         Mechanics
of Installment Conversion. Subject to Section 3(d), if the Company delivers an Installment Notice or is deemed to have delivered
an Installment Notice certifying that such Installment Amount is being paid, in whole or in part, in an Installment Conversion
in accordance with Section 8(a), then the remainder of this Section 8(b) shall apply. The applicable Installment Conversion Amount,
if any, shall be converted on the applicable Installment Date at the applicable Installment Conversion Price and the Company shall,
on such Installment Date, deliver to the Holder’s account with DTC such shares of Common Stock issued upon such conversion
(subject to the reduction contemplated by the immediately following sentence and, if applicable, the penultimate sentence of this
Section 8(b)), provided that the Equity Conditions are then satisfied (or waived in writing by the Holder) on such Installment
Date and an Installment Conversion is not otherwise prohibited under any other provision of this Note. The number of shares of
Common Stock to be delivered upon such Installment Conversion shall be reduced by the number of any Pre-Installment Conversion
Shares delivered in connection with such Installment Date. If an Event of Default occurs during any applicable Equity Conditions
Measuring Period, then, at the option of the Holder designated in writing to the Company, either (i) the Holder shall return to
the Company all, or any part, of such Pre-Installment Conversion Shares delivered in connection with the applicable Installment
Date or (ii) the Conversion Amount used to calculate the Event of Default Redemption Price shall be reduced by the product of (x)
the Installment Conversion Amount applicable to such Installment Date (as adjusted downward proportionally with respect to any
Pre-Installment Conversion Shares returned to the Company pursuant to clause (i) above) multiplied by (y) the Conversion Share
Ratio (as defined below). If any of the Equity Conditions are not satisfied (or waived in writing by the Holder) on such Installment
Date or an Installment Conversion is not otherwise permitted under any other provision of this Note, then, at the option of the
Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following: (i) the
Company shall redeem all or any part designated by the Holder of the unconverted Installment Conversion Amount (such designated
amount is referred to as the “Designated Redemption Amount”) and the Company shall pay to the Holder within
three (3) days of such Installment Date, by wire transfer of immediately available funds, an amount in cash equal to 125% of such
Designated Redemption Amount, and/or (ii) the Installment Conversion shall be null and void with respect to all or any part designated
by the Holder of the unconverted Installment Conversion Amount and the Holder shall be entitled to all the rights of a holder of
this Note with respect to such designated part of the Installment Conversion Amount; provided, however, the Conversion Price for
such designated part of such unconverted Installment Conversion Amount shall thereafter be adjusted to equal the lesser of (A)
the Installment Conversion Price as in effect on the date on which the Holder voided the Installment Conversion and (B) the Installment
Conversion Price that would be in effect on the date on which the Holder delivers a Conversion Notice relating thereto as if such
date was an Installment Date. In addition, if any of the Equity Conditions are not satisfied (or waived in writing by the Holder)
on such Installment Date or an Installment Conversion is not otherwise permitted under any other provision of this Note, then,
at the Holder’s option, either (I) the Holder shall return any Pre-Installment Conversion Shares delivered in connection
with the applicable Installment Date or (II) the applicable Designated Redemption Amount shall be reduced by the product of (X)
the Installment Conversion Amount applicable to such Installment Date multiplied by (Y) the Conversion Share Ratio. If the Company
fails to redeem any Designated Redemption Amount by the third (3rd) day following the applicable Installment Date by
payment of such amount by such date, then the Holder shall have the rights set forth in Section 11(a) as if the Company failed
to pay the applicable Installment Redemption Price (as defined below) and all other rights under this Note (including, without
limitation, such failure constituting an Event of Default described in Section 4(a)(vi)). Notwithstanding anything to the contrary
in this Section 8(b), but subject to 3(d), until the Company delivers Common Stock representing the Installment Conversion Amount
to the Holder, the Installment Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3. In the
event that the Holder elects to convert the Installment Conversion Amount prior to the applicable Installment Date as set forth
in the immediately preceding sentence, the Installment Conversion Amount so converted shall be deducted from the Installment Amount(s)
relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice. If, with respect to an Installment
Date, the number of Pre-Installment Conversion Shares delivered to the Holder exceeds the number of Post-Installment Conversion
Shares with respect to such Installment Date, then the number of shares of Common Stock equal to such excess shall constitute a
credit against the number of shares of Common Stock to be issued to such Holder pursuant to Section 8(a) hereof, at the option
of the Holder, either (x) against any conversion of this Note pursuant to Section 3(c)(i) as selected by the Holder or (y) on the
Maturity Date, or, if earlier, the last Installment Date, reducing the number of shares of Common Stock required to be actually
issued by the Company to the Holder on such date by the amount of such excess on a share-for-share basis. The Company shall pay
any and all taxes that may be payable with respect to the issuance and delivery of any shares of Common Stock in any Installment
Conversion hereunder.


 




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(c)         Mechanics
of Installment Redemption. If the Company is required to effect an Installment Redemption, in whole or in part, in accordance
with Section 8(a), then the Installment Redemption Amount, if any, shall be redeemed by the Company in cash on the applicable Installment
Date by wire transfer to the Holder of immediately available funds in an amount equal to 105% of the applicable Installment Redemption
Amount (the “Installment Redemption Price”). If the Company fails to redeem such Installment Redemption Amount
on such Installment Date by payment of the Installment Redemption Price, then, at the option of the Holder designated in writing
to the Company (any such designation shall be a “Conversion Notice” for purposes of this Note), the Holder may
require the Company to convert all or any part of the Installment Redemption Amount at the Installment Conversion Price (determined
as of the date of such designation as if such date were an Installment Date). Conversions required by this Section 8(c) shall be
made in accordance with the provisions of Section 3(c). Notwithstanding anything to the contrary in this Section 8(c), but subject
to Section 3(d), until the Installment Redemption Price (together with any Late Charges thereon) is paid in full, the Installment
Redemption Amount (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock
pursuant to Section 3. In the event the Holder elects to convert all or any portion of the Installment Redemption Amount prior
to the applicable Installment Date as set forth in the immediately preceding sentence, the Installment Redemption Amount so converted
shall be deducted from the Installment Amounts relating to the applicable Installment Date(s) as set forth in the applicable Conversion
Notice. Redemptions required by this Section 8(c) shall be made in accordance with the provisions of Section 11.


 




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(d)         Deferred
Installment Amount. Notwithstanding any provision of this Section 8(d) to the contrary, the Holder may, at its option and in
its sole discretion, deliver a written notice to the Company no later than the Trading Day immediately prior to an Installment
Date electing to have the payment of all or any portion of an Installment Amount payable on such Installment Date deferred (such
amount deferred, the “Deferral Amount”) until any subsequent Installment Date selected by the Holder, in its
sole discretion, in which case, the Deferral Amount shall be added to, and become part of, such subsequent Installment Amount and
such Deferral Amount shall continue to accrue Interest hereunder. Any notice delivered by the Holder pursuant to this Section 8(d)
shall set forth (i) the Deferral Amount and (ii) the date that such Deferral Amount shall now be payable.


 


(e)         Accelerations.
Notwithstanding anything herein to the contrary, during the period commencing on an Installment Date (a “Current Installment
Date”) and ending on the Trading Day immediately prior to the next Installment Date (each, an “Installment Period”),
at the option of the Holder, at one or more times, the Holder may convert other Installment Amounts of this Note (each, an “Acceleration”),
in whole or in part, at the Installment Conversion Price of such Current Installment Date in accordance with the conversion procedures
set forth in Section 3 hereunder, mutatis mutandis. Notwithstanding the foregoing, with respect to any given Installment
Period, the Holder may not elect to effect any Acceleration during such Installment Period if either (x) in the aggregate, all
the Accelerations in such Installment Period exceeds the sum of two (2) other Installment Amounts, or (y) Accelerations have been
consummated in four (4) prior Installment Periods. For the avoidance of doubt, this Section 8(e) shall apply independently to each
Note held by a Holder.


 


9.          NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined
in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) 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 nonassessable shares of Common Stock upon the conversion of this Note.
Notwithstanding anything herein to the contrary, if after the sixty (60) calendar 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)(i)
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.


 




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10.         RESERVATION
OF AUTHORIZED SHARES.


 


(a)          Reservation.
The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each
of the Notes equal to 200% of the entire Conversion Rate with respect to the entire Conversion Amount of each such Note as of the
Issuance Date. So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, 200%
of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then
outstanding, provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares
required to be reserved by the previous sentence (without regard to any limitations on conversions) (the “Required Reserve
Amount”). The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the
number of shares so reserved shall be allocated pro rata among the holders of the Notes based on the original principal amount
of the Notes held by each holder on the Closing Date (and pursuant to any Permitted Exchange to any Buyer, if any) or increase
in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that
a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion
of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases
to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then
held by such holders.


 


(b)          Insufficient
Authorized Shares. If, notwithstanding Section 10(a), and not in limitation thereof, at any time while any of the Notes remain
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 Notes 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 Notes 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 ninety (90) 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 redemption 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 10(a); 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. Nothing contained in Section
10(a) or this Section 10(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.


 




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11.         REDEMPTIONS.


 


(a)          Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days
after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change
of Control Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption
Price to the Holder in cash concurrently with the consummation of such Change of Control if such notice is received prior to the
consummation of such Change of Control and within five (5) Business Days after the Company’s receipt of such notice otherwise.
The Company shall deliver the applicable Installment Redemption Price to the Holder in cash on the applicable Installment Date.
Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time the Holder is entitled to
receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered in writing to the Company,
the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder under such other
Transaction Document and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s payment
obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount of this
Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 18(d)) representing
the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price
to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in
full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any
portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption
Price (together with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable
Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately return this
Note, or issue a new Note (in accordance with Section 18(d)), to the Holder, and in each case the principal amount of this
Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable Redemption
Price (as the case may be, and as adjusted pursuant to this Section 11, if applicable) minus (2) the Principal portion of the Conversion
Amount submitted for redemption and (z) the Conversion Price of this Note or such new Notes (as the case may be) shall be automatically
adjusted with respect to each conversion effected thereafter by the Holder to the lowest of (A) the Conversion Price as in effect
on the date on which the applicable Redemption Notice is voided, (B) 85% of the lowest Closing Bid Price of the Common Stock during
the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending
on and including the date on which the applicable Redemption Notice is voided and (C) 85% of the VWAP of the Common Stock for the
five (5) Trading Day period immediately preceding the Conversion Date of the applicable conversion. The Holder’s delivery
of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Company’s obligations
to make any payments of Late Charges which have accrued prior to the date of such notice with respect to the Conversion Amount
subject to such notice.


 




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(b)          Redemption
by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment
as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(b)
(each, an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day
of its receipt thereof, forward to the Holder by facsimile or electronic mail a copy of such notice. If the Company receives a
Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including
the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s applicable Redemption Notice
and ending on and including the date which is three (3) Business Days after the Company’s receipt of the Holder’s applicable
Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice
and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata
amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day
period.


 


12.         VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation,
the Delaware Business Corporation Act) and as expressly provided in this Note.


 


13.         COVENANTS.
Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:


 


(a)          Rank.
All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness
of the Company and its Subsidiaries.


 


(b)          Incurrence
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the
Other Notes and (ii) other Permitted Indebtedness).


 




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(c)          Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow
or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”)
other than Permitted Liens.


 


(d)          Restricted
Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem,
defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness
(other than the Notes) whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness
if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event
of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute
an Event of Default has occurred and is continuing.


 


(e)          Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.


 


(f)          Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the
Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other
than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company
and its Subsidiaries in the ordinary course of business consistent with its past practice and (ii) sales of inventory and product
in the ordinary course of business.


 


(g)          Maturity
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
permit any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.


 


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


 


(i)           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.


 




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(j)           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.


 


(k)          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 Intellectual Property Rights (as defined in the Securities Purchase Agreement) 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.


 


(l)           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.


 


(m)         Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with any affiliate, except in the ordinary course of
business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its
business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arm’s length transaction with a Person that is not an affiliate thereof.


 


(n)          Restricted
Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in
aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the Securities Purchase
Agreement and the Notes) or (ii) issue any other securities that would cause a breach or default under the Notes or the Warrants.


 






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(o)          Controlled
Accounts; Controlled Account Release; Collateral.


 


(i)        General.
The Company shall establish and maintain a bank account for each holder of Notes (collectively, including the Holder Master Restricted
Account, the “Master Restricted Accounts”) at a Controlled Account Bank, which Master Restricted Account applicable
to a holder of Notes shall be subject to a deposit account control agreement in form and substance reasonably acceptable to such
holder of Notes (each, a “Controlled Account Agreement”). On the Issuance Date, the Company shall have directed
the initial Buyers to deposit an aggregate of $7,150,000 of the Purchase Price (as defined in the Securities Purchase Agreement)
into Master Restricted Accounts.


 


(ii)       Controlled
Account Release. Upon the occurrence of any Controlled Account Release Event, the Holder shall, as soon as commercially practicable,
but in no event later than two (2) Trading Days thereafter, cause the applicable Controlled Account Release Amount to be released
from the Holder Master Restricted Account and deposited into an bank account specified in writing by the Company on or prior to
such date (each a “Controlled Account Release”); provided, that if the Company fails to select a bank account
in a writing delivered to the Holder on or prior to such second Trading Day, the Holder shall effect such Controlled Account Release
as soon as commercially practicable after receipt of such bank account election from the Company.


 


(iii)      Grant
of Security Interest. The Company hereby grants and pledges to the Holder a continuing security interest in any cash or other
assets, from time to time, in that certain deposit account called the Holder Master Restricted Account, including any and all cash,
proceeds, funds, credits, rights and other assets therein or arising therefrom, from time to time, and any additions, dividends,
profits and interest in the foregoing and any replacements or substitutions therefore (collectively, the “Collateral”)
to secure prompt repayment of any and all amounts outstanding hereunder from time to time and to secure prompt performance by the
Company of each of its covenants and duties under the Transaction Documents (as defined in the Securities Purchase Agreement).
Such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute
a valid, first priority security interest in later-acquired Collateral. Notwithstanding any filings undertaken related to Holder’s
rights under the New York Uniform Commercial Code, the Holder’s Lien (as defined in the Notes) on the Collateral shall remain
in effect for so long as any Restricted Principal remains outstanding. Notwithstanding the foregoing, upon any Controlled Account
Release, but solely with respect to such portion of the Restricted Principal hereunder subject to such Controlled Account Release
(each, a “Controlled Account Release Amount”), the Holder hereby automatically releases any lien hereunder on
such Controlled Account Release Amount.


 




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(iv)      Cash
Payment Obligations. Notwithstanding anything herein to the contrary, at the option of the Holder, the Holder may satisfy all,
or any part, of any redemption or other cash payment obligation of the Company hereunder and/or pursuant to any other Transaction
Document (as defined in the Securities Purchase Agreement) (each, a “Cash Payment Obligation”) from the Collateral
in the Holder Master Restricted Account, including, without limitation, in connection with any Event of Default, Change of Control,
Installment Redemption or payment due at the Maturity Date.  In connection with any Cash Payment Obligation hereunder, the
Company hereby irrevocably consents to the Holder’s delivery of an instruction letter to the Controlled Account Bank to release
Collateral from the Holder Master Restricted Account, in each case, in an amount not to exceed any Cash Payment Obligation to the
Holder.  Notwithstanding the foregoing, in the absence of any such election by the Holder, the Company shall remain obligated
to pay such Cash Payment Obligation to the Holder without regard to any Collateral in the Holder Master Restricted Account. Upon
the occurrence of any event which could reasonably be expected to result in a Cash Payment Obligation (including, without limitation,
any breach of an Equity Condition (other than clauses (i) and (vii) of the definition of Equity Condition prior to the six month
anniversary of the initial Issuance Date)), the Holder may, at the Holder’s option, withdraw all, or any part, of the Collateral
in the Holder Master Restricted Account; provided that such withdrawal shall not constitute the delivery of a Redemption Notice
hereunder or payment hereunder unless the Holder specifies in writing to the Company that the Holder has applied such Collateral
in satisfaction of such Cash Payment Obligation.


 


(v)       Breach
of Controlled Account Agreement. If the Controlled Account Bank breaches any covenant or other term or condition of any Controlled
Account Agreement or otherwise fails to promptly comply with the instructions of the Holder in connection with the Collateral,
the Holder may, at its option, withdraw the Collateral from the Controlled Account Bank and hold such Collateral until such time
as (x) the Company and the Holder have agreed upon a replacement Controlled Account Bank and (y) a Controlled Account Agreement
with respect to such Collateral and a new account shall have been duly executed by the Company, the Holder and the replacement
Controlled Account Bank. Notwithstanding anything herein to the contrary, if the Company or any of its Subsidiaries receives any
of the Collateral in breach of any Controlled Account Agreement (or receives notice from any holder of Notes that an amount was
wired to the Company from a Master Restricted Account attributable to such holder of Notes without the proper authorization of
such holder of Notes), the Company shall promptly cause such amounts to be returned to such applicable Master Restricted Account.


 




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(p)          Independent
Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing,
(y) upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z)
at any time the Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent,
reputable investment bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note
has occurred (the “Independent Investigator”). If the Independent Investigator determines that such breach of
this Note has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written
notice to each holder of a Note of such breach. In connection with such investigation, the Independent Investigator may, during
normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company
and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the
records of its legal advisors and accountants (including the accountants’ work papers) and any books of account, records,
reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client
or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as the Independent
Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and operating data
and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably
request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with,
and to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent
public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent
Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice,
and as often as may be reasonably requested.


 


14.        SECURITY.
This Note is secured to the extent and in the manner set forth in this Note.


 


15.        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) 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).


 




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16.         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.


 


17.         TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.


 


18.         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 18(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 Section 18(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 redemption 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 18(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 18(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 18(a) or Section 18(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (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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19.         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 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
Note (including, without limitation, compliance with Section 7).


 


20.         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, reasonable 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.


 


21.         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.


 




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22.         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 22
shall permit any waiver of any provision of Section 3(d).


 


23.         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, an Installment Conversion Price,
a Pre-Installment Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, the Restricted
Principal, or the applicable Redemption 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 (2) Business 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 Installment Conversion Price, such Pre-Installment Conversion Price, such VWAP or such fair market
value, or the arithmetic calculation of such Conversion Rate, the Restricted Principal or such applicable Redemption Price (as
the case may be), at any time after the second (2nd) Business 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 23 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 (5th) Business 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).


 




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(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 ten (10) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, 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 23 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil Practice Law and Rules
(“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR §
7503(a) in order to compel compliance with this Section 23, (ii) a dispute relating to a Conversion Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 7(a), (B) the
consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed
issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii)
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, (iv) the Holder (and only the Holder), in
its sole discretion, shall have the right to submit any dispute described in this Section 23 to any state or federal court sitting
in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 23 and (v) nothing
in this Section 23 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 23).


 






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24.         NOTICES;
CURRENCY; PAYMENTS.


 


(a)          Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. 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
fifteen (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, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) 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.


 


(b)          Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing
under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the
U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate”
means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange
rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an
amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period
of time).


 


(c)          Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth
herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of
the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction
Documents which is not paid when due 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 eighteen percent (18%) per annum from the date such amount was due until the same is
paid in full (“Late Charge”).


 


25.         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.


 




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26.         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 and the
Securities Purchase Agreement.


 


27.         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
23 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, 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 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 23. THE COMPANY 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.


 


28.         JUDGMENT
CURRENCY.


 


(a)          If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being hereinafter in this Section 28 referred to as the “Judgment
Currency”) an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing
on the Trading Day immediately preceding:


 


(i)          the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or


 


(ii)         the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 28(a)(ii) being hereinafter referred to as the “Judgment Conversion
Date”).


 




    	40 



     


    

 


(b)          If
in the case of any proceeding in the court of any jurisdiction referred to in Section 28(a)(ii) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with
the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion
Date.


 


(c)          Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.


 


29.         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).


 


30.         MAXIMUM
PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, 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.


 


31.         CERTAIN
DEFINITIONS. For purposes of this Note, the following 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)         
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than
rights of the type described in Section 6(a) hereof) that could result in a decrease in the net consideration received by the Company
in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment
or other similar rights).


 




    	41 



     


    

 


(d)          “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.


 


(e)          “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to
or subsequent to the Subscription Date pursuant to which shares of Common Stock and standard options to purchase Common Stock may
be issued to any employee, officer or director for services provided to the Company in their capacity as such.


 


(f)          “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.


 


(g)          “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the
case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such
Option, Convertible Security or Adjustment Right (as the case may be), (ii) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may
be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost
of borrow and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT”
function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the
date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).


 


(h)          “Bloomberg”
means Bloomberg, L.P.


 




    	42 



     


    

 


(i)           “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.


 


(j)           “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, or (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.


 


(k)          “Change
of Control Redemption Premium” means 125%.


 


(l)           “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 4:00:00 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
in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). 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 23. All such determinations shall be appropriately
adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such
period.


 


(m)        
“Common Stock” means (i) the Company’s shares of 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.


 




    	43 



     


    

 


(n)         
“Controlled Account Release Event” means, as applicable, (i) with respect to any Restricted Principal designated
to be converted in a Conversion Notice, the Company’s receipt of both (A) such Conversion Notice hereunder executed by the
Holder in which all, or any part, of the Principal to be converted includes any Restricted Principal and (B) written confirmation
by the Holder that the shares of Common Stock issued pursuant to such Conversion Notice have been properly delivered in accordance
with Section 3(c) (in each case, as adjusted, if applicable, to reflect the withdrawal of any Conversion Notice, in whole or in
part, by the Holder, whether pursuant to Section 3(c)(ii) or otherwise), (ii) the Company’s receipt of a notice by the Holder
electing to effect a release of any Restricted Principal to the Company, and (iii) on the first Trading Day of each calendar month
commencing on the thirtieth (30th) Trading Day after the Registration Release Date, the lesser of (x) the amount of
Restricted Principal then outstanding hereunder and (y) the Holder Pro Rata Amount of $1,000,000; provided, in the case of clauses
(iii) above, as of such date of determination, no Equity Conditions Failure then exists.


 


(o)         
“Conversion Share Ratio” means as to any applicable Installment Date, the quotient of (i) the number of Pre-Installment
Conversion Shares delivered in connection with such Installment Date divided by (ii) the number of Post-Installment Conversion
Shares applicable to such Installment Date.


 


(p)          “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.


 


(q)         
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq
Global Market, the OTCQX, the OTCQB or the Principal Market.


 




    	44 



     


    

 


(r)           “Equity
Conditions” means, with respect to any given date of determination: (i) on each day during the period beginning thirty
calendar days prior to such applicable date of determination and ending on and including such applicable date of determination
(or, with respect to the initial Installment Date, during the period beginning on the Initial Installment Notice Due Date and ending
on and including the initial Installment Date) either (x) one or more Registration Statements filed pursuant to the Registration
Rights Agreement shall be effective and the prospectus contained therein shall be available on such applicable date of determination
(with, for the avoidance of doubt, any shares of Common Stock previously sold pursuant to such prospectus deemed unavailable) for
the resale of all shares of Common Stock to be issued in connection with the event requiring this determination (or issuable upon
conversion of the Conversion Amount being redeemed or amount of Restricted Principal being released, as applicable, in the event
requiring this determination at the Conversion Price then in effect (without regard to any limitations on conversion set forth
herein)) (each, a “Required Minimum Securities Amount”), in each case, in accordance with the terms of the Registration
Rights Agreement and there shall not have been during such period any Grace Periods (as defined in the Registration Rights Agreement)
or (y) all Registrable Securities shall be eligible for sale pursuant to Rule 144 (as defined in the Securities Purchase Agreement)
without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation
on conversion of the Notes, other issuance of securities with respect to the Notes and exercise of the Warrants) and no Current
Information Failure (as defined in the Registration Rights Agreement) exists or is continuing; (ii) on each day during the period
beginning thirty calendar days prior to the applicable date of determination and ending on and including the applicable date of
determination (the “Equity Conditions Measuring Period”), the Common Stock (including all Registrable Securities)
is listed or designated for quotation (as applicable) on an Eligible Market; (iii) during the Equity Conditions Measuring Period,
the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth
in Section 3 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth
in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination
(or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination) may be issued in
full without violating Section 3(d) hereof; (v) any shares of Common Stock to be issued in connection with the event requiring
determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without
regards to any limitations on conversion set forth herein)) may be issued in full without violating the rules or regulations of
the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during
the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall
have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that
would reasonably be expected to cause (1) any Registration Statement required to be filed pursuant to the Registration Rights Agreement
to not be effective or the prospectus contained therein to not be available for the resale of the applicable Required Minimum Securities
Amount of Registrable Securities in accordance with the terms of the Registration Rights Agreement or (2) any Registrable Securities
to not be eligible for sale pursuant to Rule 144 without the need for registration under any applicable federal or state securities
laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Notes
and exercise of the Warrants) and no Current Information Failure exists or is continuing; (viii) the Holder shall not be in (and
no other holder of Notes shall be in) possession of any material, non-public information provided to any of them by the Company,
any of its Subsidiaries or any of their respective affiliates, employees, officers, representatives, agents or the like; (ix) on
each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with each, and shall
not have breached any representation or warranty in any material respect (other than representations or warranties subject to material
adverse effect or materiality, which may not be breached in any respect) or any covenant or other term or condition of any Transaction
Document, including, without limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction
Document; (x) on each Trading Day during the Equity Conditions Measuring Period, there shall not have occurred any Volume Failure
or Price Failure as of such applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share
Failure shall exist or be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are available
under the certificate of incorporation of the Company and reserved by the Company to be issued pursuant to the Notes and (B) all
shares of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the
Conversion Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion set
forth herein)) may be issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Equity Conditions
Measuring Period, there shall not have occurred and there shall not exist an Event of Default or an event that with the passage
of time or giving of notice would constitute an Event of Default; and (xiii) the shares of Common Stock issuable pursuant the event
requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction
on an Eligible Market.


 




    	45 



     


    

 


(s)          “Equity
Conditions Failure” means that on any day during the period commencing (x) twenty (20) Trading Days prior to the applicable
Installment Notice Date through the later of the applicable Installment Date and the date on which the applicable shares of Common
Stock are actually delivered to the Holder or (y) twenty (20) Trading Days prior to the date of the applicable Controlled Account
Release Event through the date of the applicable Controlled Account Release Event, the Equity Conditions have not been satisfied
(or waived in writing by the Holder).


 


(t)          “Event
Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum
of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the fifteen (15) consecutive Trading Day period
ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event
Date, divided by (y) five (5).


 




    	46 



     


    

 


(u)          “Excluded
Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued to directors, officers
or employees of the Company for services rendered to the Company in their capacity as such pursuant to an Approved Stock Plan (as
defined above), provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of
such options) after the Subscription Date pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the Common
Stock issued and outstanding immediately prior to the Subscription Date and (B) the exercise price of any such options is not lowered,
none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock
issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that the conversion
price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion
of the Notes or otherwise pursuant to the terms of the Notes; provided, that the terms of the Notes are not amended, modified or
changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the
Subscription Date), (iv) the shares of Common Stock issuable upon exercise of the Warrants; provided, that the terms of the Warrants
are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms
thereof in effect as of the Subscription Date); and (v) shares of Common Stock, Options and Convertible Securities issued pursuant
to equipment strategic mergers or acquisitions of other assets or businesses, or strategic licensing or development transactions;
provided that (x) the primary purpose of such issuance is not to raise capital as determined in good faith by the Buyers, (y) the
purchaser or acquirer of such shares of Common Stock in such issuance solely consists of either (1) the actual participants in
such strategic licensing or development transactions, (2) the actual owners of such assets or securities acquired in such merger
or acquisition or (3) the shareholders, partners or members of the foregoing Persons, and (z) the number or amount (as the case
may be) of such shares of Common Stock issued to such Person by the Company shall not be disproportionate to such Person’s
actual participation in such strategic licensing or development transactions or ownership of such assets or securities to be acquired
by the Company (as applicable).


 




    	47 



     


    

 


(v)         “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 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.


 


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


 


(x)          “Governmental
Indebtedness” means the principal of (and premium, if any), interest on, and all fees and other amounts (including, without
limitation, any reasonable out-of-pocket costs, enforcement expenses (including reasonable out-of-pocket legal fees and disbursements),
collateral protection expenses and other reimbursement or indemnity obligations relating thereto) payable by Company and/or its
Subsidiaries, from time to time, under or in connection with any financing facility by any governmental or quasi-governmental agency
the purpose of which is to fund plant, property and equipment acquisitions by the Company or any of its Subsidiaries and which
will be secured solely by a first lien on the plant, property and equipment so acquired (each, a “Governmental Indebtedness
Lien”); provided, however, that the aggregate outstanding amount of the Governmental Indebtedness does not at any time
exceed $1,000,000.


 




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(y)         
“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.


 


(z)         
“Holder Master Restricted Account” means, solely with respect to the Holder, account number [ ] at [
], or such other account as may be directed by the Holder, from time to time, subject to a Controlled Account Agreement in favor
of the Holder in a form reasonably acceptable to the Holder.


 


(aa)       
“Holder Pro Rata Amount” means, as of any date of determination, a fraction (i) the numerator of which is the
original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal
amount of all Notes issued (other than pursuant to the Permitted Exchange, if any) pursuant to the Securities Purchase Agreement
on the Closing Date.


 


(bb)      
“Indebtedness” shall have the meaning ascribed to such term in the Securities Purchase Agreement.


 


(cc)       
“Initial Installment Notice Due Date” means the earlier of (x) the later of (A) the Issuance Date and (B) the
Effective Date (as defined in the Registration Rights Agreement) of the initial Registration Statement, and (y) January __, 2016.


 


(dd)       “Installment
Amount” means the sum of (A) (i) with respect to any Installment Date other than the Maturity Date, the lesser of (x)
the quotient of (I) the Principal amount outstanding under this Note as of the initial Installment Date, divided by (II) the number
of Installment Dates occurring hereunder (as determined as of the initial Installment Date assuming no Deferrals, Accelerations,
redemptions or conversions hereunder prior to the Maturity Date) and (y) the Principal amount then outstanding under this Note
as of such Installment Date, and (ii) with respect to the Installment Date that is the Maturity Date, the Principal amount then
outstanding under this Note as of such Installment Date (in each case, as any such Installment Amount may be reduced pursuant to
the terms of this Note, whether upon conversion, redemption or otherwise), (B) any Deferral Amount deferred pursuant to Section
8(d) and included in such Installment Amount in accordance therewith, (C) any Acceleration Amount accelerated pursuant to Section
8(e) and included in such Installment Amount in accordance therewith and (D) in each case of clauses (A) through (C) above, the
sum of any accrued and unpaid Interest as of such Installment Date under this Note, if any, the applicable Make-Whole Amount with
respect to such Installment Amount, if any, and accrued and unpaid Late Charges, if any, under this Note as of such Installment
Date. In the event the Holder shall sell or otherwise transfer any portion of this Note, the transferee shall be allocated a pro
rata portion of the each unpaid Installment Amount hereunder.


 


(ee)        “Installment
Conversion Price” means, with respect to a particular date of determination, the lowest of (i) the Conversion Price then
in effect, (ii) 85% of the VWAP of the Common Stock on the Trading Day immediately prior to the applicable Installment Date and
(iii) the price which shall be computed as 85% of the quotient of (I) the sum of the three (3) lowest VWAPs of the Common Stock
of each Trading Day during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately prior to
the applicable Installment Date, divided by (II) three (3). All such determinations to be appropriately adjusted for any stock
split, stock dividend, stock combination or other similar transaction during any such measuring period.


 




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(ff)        
“Installment Date” means (i) the twenty-first (21st) Trading Day after the Initial Installment Notice Due Date,
(ii) then, (x) if the first Trading Day of the calendar month immediately following the initial Installment Date occurs less than
twenty (20) Trading Days after the initial Installment Date, the first Trading Day of the second calendar month immediately following
the initial Installment Date or (y) otherwise, the first Trading Day of the calendar month immediately following the initial Installment
Date, (iii) thereafter, the first Trading Day of the calendar month immediately following the previous Installment Date until the
Maturity Date, and (iv) the Maturity Date.


 


(gg)       “Interest
Date” means, with respect to any given calendar month, (x) if prior to the initial Installment Date or after the Maturity
Date, the first Trading Day of such calendar month or (y) if on or after the initial Installment Date, but on or prior to the Maturity
Date, such Installment Date, if any, in such calendar month.


 


(hh)       “Interest
Rate” means nine percent (9%) per annum, as may be adjusted from time to time in accordance with Section 2.


 


(ii)          “Make-Whole
Amount” means, as of any given date, the amount of any Interest that, but for any conversion, Installment Conversion,
Acceleration or redemption hereunder on such given date, would have accrued with respect to the Conversion Amount or Installment
Amount being converted or redeemed under this Note at the Interest Rate for the period from such given date through the Maturity
Date.


 


(jj)          “Maturity
Date” shall mean [ ]1; 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 twenty (20) Business 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.


 


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


 





 



1
Insert the fourteen month anniversary of the Closing Date (as defined the Securities Purchase Agreement).


 




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(ll)          “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.


 


(mm)      “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set forth on Schedule
3(s) to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) Governmental Indebtedness, (iv) Indebtedness
secured by Permitted Liens or unsecured but as described in clauses (iv) and (v) of the definition of Permitted Liens and (v) up
to $1 million of aggregate principal amount of Indebtedness incurred by the Company that is made expressly subordinate in right
of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Holder, and which
Indebtedness does not provide at any time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly,
of any principal or premium, if any, thereon until at least ninety-one (91) days after the Maturity Date and (2) total interest
and fees at a rate in excess of eight percent (8%) per annum.


 


(nn)       “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 or inventory acquired or held by the Company or any of its Subsidiaries to secure the purchase
price of such equipment or inventory or indebtedness incurred solely for the purpose of financing the acquisition or lease of such
equipment or inventory, or (B) existing on such equipment or inventory 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 or inventory, in either
case, with respect to indebtedness, (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, (vii) Governmental Indebtedness Liens and (viii) Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 4(a)(xii).


 


(oo)      
“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.


 




    	51 



     


    

 


(pp)        “Post-Installment
Conversion Shares” means that number of shares of Common Stock that would be required to be delivered pursuant to Section
8 on an applicable Installment Date without taking into account the delivery of any Pre-Installment Conversion Shares.


 


(qq)        “Pre-Installment
Conversion Price” means, with respect to a particular date of determination, the lowest of (i) the Conversion Price then
in effect, (ii) 85% of the VWAP of the Common Stock on the Trading Day immediately preceding the delivery or deemed delivery of
the applicable Installment Notice and (iii) the price which shall be computed as 85% of the quotient of (I) the sum of the three
(3) lowest VWAPs of the Common Stock of each Trading Day during the ten (10) consecutive Trading Day period ending and including
the Trading Day immediately preceding the delivery or deemed delivery of the applicable Installment Notice, divided by (II) three
(3). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar
transaction during any such measuring period.


 


(rr)         “Price
Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock on any Trading Day during
the fifteen (15) consecutive Trading Day period ending on the Trading Day immediately preceding such date of determination (such
period, the “Price Failure Measuring Period”) fails to exceed $0.25 (as adjusted for stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions). All such determinations to be appropriately adjusted for
any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such Price Failure
Measuring Period.


 


(ss)        “Principal
Market” means the Nasdaq Capital Market (or, if the shares of Common Stock are not listed on the Nasdaq Capital Market
and are listed on one or more Eligible Markets, the primary Eligible Market in which the shares of Common Stock are then listed).


 


(tt)          “Redemption
Notices” means, collectively, the Event of Default Redemption Notices, the Installment Notices with respect to any Installment
Redemption and the Change of Control Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”


 


(uu)       “Redemption
Premium” means 125%.


 


(vv)       “Redemption
Prices” means, collectively, Event of Default Redemption Prices, the Change of Control Redemption Prices and the Installment
Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”


 


(ww)      “Registration
Release Date” means the earlier to occur of (i) the Effective Date (as defined in the Registration Rights Agreement)
of a Registration Statement registering any of the Registrable Securities (as defined in the Registration Rights Agreement) and
(ii) the later of (x) the initial date all of the Registrable Securities are eligible to be sold pursuant to Rule 144 and (y) the
date no Current Information Failure (as defined in the Registration Rights Agreement) exists or is continuing.


 




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(xx)        
“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date,
by and among the Company and the initial holders of the Notes relating to, among other things, the registration of the resale of
the Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes and exercise of the Warrants,
as may be amended from time to time.


 


(yy)        “Restricted
Principal” means, as of any given date, the difference of (i) all cash amounts held in the Master Restricted Account
of the Holder as of the Closing Date and (ii) all cash amounts released from the Master Restricted Account of the Holder to the
Company (or at the Company’s direction) on or prior to such given date.


 


(zz)        
“SEC” means the United States Securities and Exchange Commission or the successor thereto.


 


(aaa)      “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among
the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to
time.


 


(bbb)    
“Subscription Date” means November 4, 2015.


 


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


 


(ddd)    
“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.


 


(eee)      “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 4:00:00 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.


 




    	53 



     


    

 


(fff)        “Volume
Failure” means, with respect to a particular date of determination, either (x) the quotient of (A) the sum of the aggregate
daily dollar trading volume (as reported on Bloomberg) of the Common Stock on each Trading Day over the fifteen (15) consecutive
Trading Day period ending on the Trading Day immediately preceding such date of determination (such period, the “Volume
Failure Measuring Period”), divided by (B) fifteen (15) is less than $70,000 (as adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions) or (y) the aggregate daily dollar trading volume
(as reported on Bloomberg) of the Common Stock on the Principal Market on more than three (3) Trading Days during the Volume Failure
Measuring Period is less than $60,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions). All such determinations to be appropriately adjusted for any stock splits, stock dividends, stock
combinations, recapitalizations or other similar transactions during such Volume Failure Measuring Period.


 


(ggg)    
“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 9:30:01 a.m., New
York time, and ending at 4:00:00 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 9:30:01 a.m., New York time, and ending
at 4:00:00 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 in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). 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
23. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.


 


(hhh)     “Warrants”
has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.


 


32.        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 (1) Business 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. Nothing contained in this Section 32 shall limit any obligations
of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.


 




    	54 



     


    

 


[signature page follows]


 




    	55 



     


    

 


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


  





	 	Axion Power International, Inc.
	 	 
	 	By:	 
	 	 	 Name:
	 	 	 Title:







 





Senior Convertible Note - Signature Page







  




     


     


    

 





EXHIBIT
I


 

Axion Power International, Inc.



CONVERSION NOTICE


 


Reference is made to
the Senior Secured Convertible Note (the “Note”) issued to the undersigned by Axion Power International, 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 Common Stock, $0.0001
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 Make-Whole Amount (if any)	 
	 	 
	AGGREGATE CONVERSION AMOUNT

TO BE CONVERTED:	 
	 
	Please confirm the following information:
	 	 
	Conversion Price:	 
	 	 
	Number of shares of Common Stock to be issued:	 
	 	 
	Installment Amount(s) to be reduced (and corresponding Installment Date(s)) and amount of reduction:	 
	 	 	 	 


 




     


     


    

  


	 ̈     Check here if all or any portion of the aggregate Principal being converted includes any Restricted Principal.  Please specify the amount Restricted Principal being converted :__________________
	 
	 ̈     Check here if electing a Variable Price in lieu of the Conversion Price.  Please specify the applicable Variable Price:__________________
	 
	Notwithstanding anything to the contrary contained herein, this Conversion Notice shall constitute a representation by the Holder of the Note submitting this Conversion Notice that (i) after giving effect to the conversion provided for in this Conversion Notice, such Holder (together with its affiliates) will not have beneficial ownership (together with the beneficial ownership of such Person’s affiliates) of a number of shares of Common Stock which exceeds the Maximum Percentage (as defined in the Note) of the total outstanding shares of Common Stock of the Company as determined pursuant to the provisions of Section 3(d) of the Note and (ii) the representations set forth in Section 4(d) of the Registration Rights Agreement with respect to the shares of Common Stock issuable in connection herewith are true and correct in all respects.
	 
	 ̈     If this Conversion Notice is being delivered with respect to an Acceleration, check here if Holder is electing to use _________ as the Installment Conversion Price or Installment Conversion Price (as applicable) related to the following Installment Date:____________
	 
	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:	 


 




     


     


    

  


ACKNOWLEDGMENT


 


The Company hereby
acknowledges this Conversion Notice and 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 ________________________.


 


	 	Axion Power International, Inc.
	 	 
	 	By:	 
	 	 	 Name:
	 	 	 Title: