Exhibit 4.1


 


THIS INSTRUMENT CONTAINS
AN AFFIDAVIT OF CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS BORROWER MAY HAVE AND ALLOWS THE
HOLDER TO OBTAIN A JUDGMENT AGAINST BORROWER WITHOUT ANY FURTHER NOTICE.


 


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 (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE
PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. 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.


 


	Principal Amount: $1,500,000.00	Issue Date: March 11, 2021
	Purchase Price: $1,500,000.00	 


 


SENIOR SECURED PROMISSORY
NOTE


 


FOR
VALUE RECEIVED, NEXGEL, INC., a Delaware corporation (hereinafter called the “Borrower” or the “Company”),
hereby promises to pay to the order of AUCTUS FUND, LLC, a Delaware limited liability company, or registered assigns (the
 “Holder”), in the form of lawful money of the United States of America, the principal sum of $1,500,000.00 (subject
to adjustment herein) (the “Principal Amount”) and to pay interest on the unpaid Principal Amount hereof at the rate
of twelve percent (12%) (the “Interest Rate”) per annum (with the understanding that the first twelve months of interest
(equal to $180,000.00) shall be guaranteed and earned in full as of the Issue Date) from the date hereof (the “Issue Date”)
until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise, as further provided
herein. The maturity date shall be twelve (12) months from the Issue Date (the “Maturity Date”), and is the date upon
which the Principal Amount as well as any accrued and unpaid interest and other fees, shall be due and payable.


 


This Note may not be prepaid or repaid in whole or
in part except as otherwise explicitly set forth herein.


 


Any
Principal Amount or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) sixteen
percent (16%) per annum or (ii) the maximum amount permitted by law from the due date thereof until the same is paid (“Default
Interest”). Default Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.


 


All
payments due hereunder (to the extent not converted into shares of common stock, $0.001 par value per share, of the Borrower (the
 “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.
All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. 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.


 


Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”).
As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial
banks in the city of New York, New York are authorized or required by law or executive order to remain closed. As used herein,
the term “Trading Day” means any day that a Principal Market (as defined in the Purchase Agreement) is open for trading.


 


This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.





 






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The following terms shall also apply to this Note:


 


ARTICLE I. CONVERSION
RIGHTS


 


1.1
Conversion Right. The Holder shall have the right, at any time on or following the Issue Date, to convert all or any portion
of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) into fully paid and non-assessable
shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the
Borrower into which such Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as defined below) determined
as provided herein (a “Conversion”); provided, however, that notwithstanding anything to the contrary contained
herein, the a Holder shall not have the right to convert any portion of this Note, pursuant to Section 1 or otherwise, to the
extent that after giving effect to such issuance after conversion as set forth on the applicable Notice of Conversion, the Holder
(together with the Holder’s affiliates (the “Affiliates”), and any other Persons (as defined below) acting as
a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares
of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion of this
Note beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to
the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set
forth in the preceding sentence, for purposes of this Section 1.1, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that
the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 1.1, in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by
the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and
in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the
Common Stock outstanding at the time of the respective calculation hereunder. “Person” and “Persons” means
an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and any governmental entity or any department or agency thereof. The limitations contained in this paragraph
shall apply to a successor holder of this Note. The number of Conversion Shares to be issued upon each conversion of this Note
shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on
the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”),
delivered to the Borrower or Borrower’s transfer agent by the Holder in accordance with Section 1.4 below; provided that
the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result
in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time on such conversion date
(the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note,
the sum of (1) the Principal Amount of this Note to be converted in such conversion plus (2) at the Holder’s option,
accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the Conversion Date, plus (3) at
the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or
(2). The Holder covenants and agrees that it will not, until the Common Stock is listed for trading on any tier of the NASDAQ
Stock Market, the New York Stock Exchange, the NYSE American, or any other national securities exchange, directly or indirectly,
effect or agree to effect any “short sale” (as defined in Rule 200 under Regulation SHO of the Exchange Act) of the
Common Stock which establishes a net short position with respect to the Common Stock, except that the Holder may engage in these
transactions as follows: (i) for up to ten percent (10%) of the total number of the unconverted Conversion Shares and (ii) for
up to one hundred percent (100%) of the total number of converted Conversion Shares which are then held by the Holder.


 






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		1.2	Conversion Price.



 


(a)   
Calculation of Conversion Price. The per share conversion price into which Principal Amount and interest (including
any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the “Conversion Price”)
shall equal $0.10. If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value
of the Common Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such
conversion and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional
Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number
of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had
the Conversion Price not been adjusted by the Holder to the par value price. The Conversion Price is subject to equitable adjustments
for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities
of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events.
The Borrower shall reimburse to Holder actual out-of-pocket fees to cover Holder’s fees associated with each Notice of Conversion
so long as such Notice of Conversion relates to a number of shares of Common Stock which equals or exceeds 500,000.


 


1.3    Authorized and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, the
Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights,
to provide for the issuance of a number of Conversion Shares equal to the greater of: (a) 45,000,000 shares of Common Stock or
(b) the sum of (i) the number of Conversion Shares issuable upon the full conversion of this Note (assuming no payment of Principal
Amount or interest) at the time of such calculation (taking into consideration any adjustments to the Conversion Price as provided
in this Note) multiplied by (ii) three (3) (the “Reserved Amount”). The Borrower represents that upon issuance,
the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The Borrower (i) acknowledges that it has
irrevocably instructed its transfer agent to issue certificates for the Conversion Shares or instructions to have the Conversion
Shares issued as contemplated by Section 1.4(f) hereof, and (ii) agrees that its issuance of this Note shall constitute full authority
to its officers and agents who are charged with the duty of executing stock certificates or cause the Company to electronically
issue shares of Common Stock to execute and issue the necessary certificates for the Conversion Shares or cause the Conversion
Shares to be issued as contemplated by Section 1.4(f) hereof in accordance with the terms and conditions of this Note.


 


If, at
any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default (as defined in this Note)
under this Note unless the Borrower causes its transfer agent to increase the amount of the reserved Common Stock to the Reserved
Amount within five business days’ written notice by the Holder to the Borrower of such deficiency.


 


		1.4	Method of Conversion.



 


(a) 
Mechanics of Conversion. This Note may be converted by the Holder in whole or in part, at any time on or following
the Issue Date, by submitting to the Borrower or Borrower’s transfer agent a Notice of Conversion (by facsimile, e-mail or
other reasonable means of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New York time). Any Notice
of Conversion submitted after 11:59 p.m., New York, New York time, shall be deemed to have been delivered and received on the next
Trading Day.


 


(b)   Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in
accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid Principal Amount is so converted. The Holder and the Borrower shall maintain records showing the Principal
Amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder
and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute
or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of
manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not
transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will
forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by
the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid Principal Amount
of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of
this Note represented by this Note may be less than the amount stated on the face hereof.


 






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(c)    Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note
in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such
shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose
street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the
Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.


 


(d)   Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates
for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof)
within three (3) Trading Days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire
unpaid Principal Amount and interest (including any Default Interest) under this Note, surrender of this Note). If the Company
shall fail for any reason or for no reason to issue to the Holder on or prior to the Deadline a certificate for the number of
Conversion Shares or to which the Holder is entitled hereunder and register such Conversion Shares on the Company’s share
register or to credit the Holder’s balance account with DTC (as defined below) for such number of Conversion Shares to which
the Holder is entitled upon the Holder’s conversion of this Note (a “Conversion Failure”), then, in addition
to all other remedies available to the Holder, (i) the Company shall pay in cash to the Holder on each day after the Deadline
and during such Conversion Failure an amount equal to 1.0% of the product of (A) the sum of the number of Conversion Shares not
issued to the Holder on or prior to the Deadline and to which the Holder is entitled and (B) the closing sale price of the Common
Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such Conversion Shares
to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon written notice to the Company, may void its Notice
of Conversion 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 Notice of Conversion; provided that the voiding of an Notice of Conversion shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice. In addition to the foregoing, if on or prior
to the Deadline the Company shall fail to issue and deliver a certificate to the Holder and register such Conversion Shares on
the Company’s share register or credit the Holder’s balance account with DTC for the number of Conversion Shares to
which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant
to clause (ii) below, and if on or after such Trading Day 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 shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company, then the Company shall, within three (3) Trading Days after 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 reasonable and customary out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such Conversion Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Conversion
Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the closing sales price of the
Common Stock on the date of exercise. 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 the Conversion Shares (or to electronically
deliver such Conversion Shares) upon the conversion of this Note as required pursuant to the terms hereof.


 






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(e)    Obligation
of Borrower to Deliver Common Stock. At the time that the Holder submits the Notice of Conversion to the Borrower or
Borrower’s transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon
such conversion, the outstanding Principal Amount and the amount of accrued and unpaid interest (including any Default
Interest) under this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations
under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except
the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If
the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver
the certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by
Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to
the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such
obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of
Conversion shall be the Conversion Date so long as the Notice of Conversion is sent to the Borrower or Borrower’s
transfer agent before 11:59 p.m., New York, New York time, on such date.


 


(f)    
Delivery of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the
Conversion Shares issuable upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance with
the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer
agent to electronically transmit the Conversion Shares issuable upon conversion hereof to the Holder by crediting the account of
Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.


 


1.5  
Concerning the Shares. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the 1933 Act or (ii) the Borrower or its
transfer agent shall have been furnished with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined
in the Purchase Agreement)) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration (to the extent the Conversion Shares are eligible to be sold pursuant to an exemption) or (iii) such shares
are sold or transferred pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption, or (iv) such shares are transferred
to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only
in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise
provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the Conversion Shares
have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable
exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, each
certificate for the Conversion Shares that has not been so included in an effective registration statement or that has not been
sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially
in the following form, as appropriate:


 


“NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
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 (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED
IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A, REGULATION S UNDER SAID ACT, OR OTHER APPLICABLE EXEMPTION. 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.”


 






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The
legend set forth above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion
Shares without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by
electronic delivery by crediting the account of such holder’s broker with DTC, if, unless otherwise required by
applicable state securities laws: (a) such Conversion Shares are registered for sale under an effective registration
statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other
applicable exemption without any restriction as to the number of securities as of a particular date that can then be
immediately sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as contemplated by and in accordance
with Section 4(n) of the Purchase Agreement) to the effect that a public sale or transfer of such Conversion Shares may be
made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is
effected. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such
issuance. The Holder agrees to sell all Conversion Shares, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the
Company does not accept the opinion of counsel provided by the Holder with respect to the transfer of Conversion Shares
pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, or other applicable exemption, at the
Deadline, notwithstanding that the conditions of Rule 144, Rule 144A, Regulation S, or other applicable exemption, as
applicable, have been met, it will be considered an Event of Default under this Note.


 


		1.6	Effect of Certain Events.



 


(a)   
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or
substantially all of the assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with
or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be
an Event of Default pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition
to such transaction an amount equal to the Default Amount (defined in Section 3.20) or (ii) be treated pursuant to Section 1.6(b)
hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust
or other entity or organization.


 


(b)  
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior
to conversion of all of this Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization,
or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different
number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or
conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation
of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the
basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable
upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had
this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this
Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and
of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in
relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not effectuate any transaction
described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, at least thirty (30) days prior written
notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders
to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and
(b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.


 


(c)    
Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to
acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including
any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock
of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.


 






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(d)   Purchase
Rights. If, at any time when all or any portion of this Note is issued and outstanding, the Borrower issues any
convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase
Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note
(without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.


 


(e)   
Dilutive Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues,
sells or grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants
any right to reprice, or otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant
or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for, or otherwise
entitle any person or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of this
Note, and any convertible notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective
price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such
issuances, collectively, a “Dilutive Issuance”) (it being agreed that if the holder of the Common Stock or other securities
so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance
shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion
Price shall be reduced, at the option of the Holder, to a price equal to the Base Conversion Price. Such adjustment shall be made
whenever such Common Stock or other securities are issued. By way of example, and for the avoidance of doubt, if the Company issues
a convertible promissory note (including but not limited to a Variable Rate Transaction), and the holder of such convertible promissory
note has the right to convert it into Common Stock at an effective price per share that is lower than the then Conversion Price
(including but not limited to a conversion price with a discount that varies with the trading prices of or quotations for the Common
Stock), then the Holder has the right to reduce the Conversion Price to such Base Conversion Price (including but not limited to
a conversion price with a discount that varies with the trading prices of or quotations for the Common Stock) in perpetuity regardless
of whether the holder of such convertible promissory note ever effectuated a conversion at the Base Conversion Price. Notwithstanding
the foregoing, no adjustment will be made under this Section 1.6(e) in respect of an Exempt Issuance. In the event of an issuance
of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall be calculated as if
all such securities were issued at the initial closing.


 


An
 “Exempt Issuance” shall mean the issuance of (a) shares of Common Stock or other securities to officers or directors
of the Company pursuant to any stock or option or similar equity incentive plan duly adopted for such purpose, by a majority of
the non-employee members of the Company’s Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose in a manner which is consistent with the Company’s prior business practices; (b) securities
issued pursuant to a merger, consolidation, acquisition or similar business combination approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which
is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business
of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include
a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities; (c) securities issued pursuant to any equipment loan or leasing arrangement, real property
leasing arrangement or debt financing from a bank or similar financial institution approved by a majority of the disinterested
directors of the Company; or (d) securities issued with respect to which the Holder waives its rights in writing under this Section
1.6(e).


 






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(f)     Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events
described in this Section 1.6, the Borrower shall, at its expense and within three (3) Trading Days after the occurrence of
each respective adjustment or readjustment of the Conversion Price, compute such adjustment or readjustment and prepare and
furnish to the Holder a certificate setting forth (i) the Conversion Price in effect at such time based upon the Dilutive
Issuance, (ii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment or readjustment is based,
and (iv) copies of the documentation (including but not limited to relevant transaction documents) that evidences the
adjustment or readjustment. The Borrower shall, within three (3) Trading Days after each written request from the Holder,
furnish to such Holder a like certificate setting forth (i) the Conversion Price in effect at such time based upon the
Dilutive Issuance, (ii) the number of shares of Common Stock and the amount, if any, of other securities or property which at
the time would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment or readjustment
is based, and (iv) copies of the documentation (including but not limited to relevant transaction documents) that evidences
the adjustment or readjustment.


 


1.7  
  [Intentionally Omitted].


 


1.8   
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the Conversion Shares covered thereby
(other than the Conversion Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated
portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s
rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates
for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because
of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect
to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a
holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to
such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder
or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted.
In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure to convert this Note.


 


1.9   
Prepayment. At any time on or prior to the 180th calendar day after the Issue Date, and so long as an
Event of Default has not occurred under this Note, the Borrower shall have the right, exercisable on three (3) Trading Days prior
written notice to the Holder of the Note (for the avoidance of doubt, the last day that the Borrower may exercise its right to
prepay (so long as an Event of Default has not occurred under this Note) shall be three (3) Trading Days prior to the 180th
calendar day after the Issue Date), to prepay the outstanding Principal Amount and interest then due under this Note in accordance
with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note,
and (2) the date of prepayment which shall be three (3) Trading Days from the date of the Optional Prepayment Notice (the “Optional
Prepayment Date”) (for the avoidance of doubt, the Optional Prepayment Date must be on or prior to the 180th calendar
day after the Issue Date). The Holder shall have the right, at all times prior to the actual receipt of the full prepayment amount
on the Optional Prepayment Date, to instead convert all or any portion of the Note pursuant to the terms of this Note, including
the amount of this Note to be prepaid by the Borrower in accordance with this Section 1.9. On the Optional Prepayment Date, the
Borrower shall make payment of the amounts designated below to or upon the order of the Holder as specified by the Holder in writing
to the Borrower. If the Borrower exercises its right to prepay the Note in accordance with this Section 1.9, the Borrower shall
make payment to the Holder of an amount in cash equal to the sum of: (w) the Prepayment Factor (as defined below) multiplied by
the Principal Amount then outstanding plus (x) the Prepayment Factor multiplied by the accrued and unpaid interest on the
Principal Amount to the Optional Prepayment Date. The “Prepayment Factor” shall mean 110%.


 


If the Borrower delivers
an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note as provided in this
Section 1.9, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section 1.9.


 


1.10  
Repayment from Proceeds. If, at any time after the date that is six (6) calendar months after the Issue Date and
prior to the full repayment or full conversion of all amounts owed under this Note, the Company receives cash proceeds from any
source or series of related or unrelated sources, including but not limited to, from payments from customers, the issuance of
equity or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line
of credit of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of Borrower’s receipt of
such proceeds, inform the Holder of or publicly disclose such receipt, following which the Holder shall have the right in its
sole discretion to require the Borrower to immediately apply up to 50% (provided, however, that 50% shall be reduced to 25% with
respect to cash proceeds from payments from customers) of such proceeds to repay all or any portion of the outstanding Principal
Amount and interest (including any Default Interest) then due under this Note.


 






    8


     


    

 


ARTICLE II. RANKING
AND CERTAIN COVENANTS


 


2.1   
Ranking and Security. This Note, subject to the terms of the Security Agreement (as defined below), shall be a senior
secured obligation of the Borrower, with priority over all existing and future indebtedness of the Borrower, as provided in that
certain security agreement entered into between the Borrower and the Holder on the Issue Date (the “Security Agreement”).


 


2.2  
Other Indebtedness. In addition to all obligations under the Security Agreement, and so long as the Borrower shall
have obligations under this Note which equal or exceed $250,000 in Principal Amount, the Borrower shall not (directly or indirectly
through any Subsidiary or affiliate) incur or suffer to exist or guarantee any indebtedness that is senior to or pari passu with
(in priority of payment and performance) the Borrower’s obligations hereunder, including but not limited to (a) all indebtedness
of the Borrower for borrowed money or for the deferred purchase price of property or services, including any type of letters of
credit, (b) all obligations of the Borrower evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money
indebtedness hereafter incurred by the Borrower to finance the purchase of fixed or capital assets, including all capital lease
obligations of the Borrower which do not exceed the purchase price of the assets funded, (d) all guarantee obligations of the Borrower
in respect of obligations of the kind referred to in clauses (a) through (c) above that the Borrower would not be permitted to
incur or enter into, and (e) all obligations of the kind referred to in clauses (a) through (d) above that the Borrower is not
permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation has an existing
right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including accounts and
contract rights) owned by the Borrower, whether or not the Borrower has assumed or become liable for the payment of such obligation;
provided, however, the terms of this Section 2.2 shall not apply in the event any indebtedness described above so long as the proceeds
of such transaction are used to prepay this Note in its entirety as described in Section 1.9 above within three (3) business days
after the closing of such transaction.


 


2.3   
Distributions on Capital Stock. So long as the Borrower shall have obligations under this Note which equal or exceed
$250,000 in Principal Amount, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for
such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other
than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly
or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant
to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.


 


2.4  
Restriction on Stock Repurchases and Debt Repayments. So long as the Borrower shall have any obligation under this
Note which equal or exceed $250,000 in Principal Amount, the Borrower shall not without the Holder’s written consent redeem,
repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction
or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or
acquire any such shares, or repay any pari passu or subordinated indebtedness of Borrower.


 


2.5   
Sale of Assets. So long as the Borrower shall have obligations under this Note which equal or exceed $250,000 in
Principal Amount, the Borrower shall not, without the Holder’s written consent, sell, divest, lease or otherwise dispose
of any significant portion of its assets outside the ordinary course of business. Any consent by Holder to the disposition of any
assets may be conditioned on a specified use of the proceeds of disposition; provided, however, the terms of this Section 2.5 shall
not apply in the event any indebtedness described above so long as the proceeds of such transaction are used to prepay this Note
in its entirety as described in Section 1.9 above within three (3) business days after the closing of such transaction.


 


2.6     Advances
and Loans; Affiliate Transactions. So long as the Borrower shall have obligations under this Note which equal or exceed
$250,000 in Principal Amount, the Borrower shall not, without the Holder’s written consent, lend money, give credit,
make advances to or enter into any transaction with any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the Issue Date and which the Borrower has informed Holder in writing prior to the Issue
Date, (b) in regard to transactions with unaffiliated third parties, made in the ordinary course of business or (c) in regard
to transactions with unaffiliated third parties, not in excess of $100,000. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder’s written consent, repay any affiliate (as defined in Rule
144) of the Borrower in connection with any indebtedness or accrued amounts owed to any such party.


 






    9


     


    

 


2.7 
   Section 3(a)(9) or 3(a)(10) Transaction. So long as the Borrower shall have obligations under this Note which equal
or exceed $250,000 in Principal Amount, the Borrower shall not enter into any transaction or arrangement structured in accordance
with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities Act (a “3(a)(9)
Transaction”) or Section 3(a)(10) of the Securities Act (a “3(a)(10) Transaction”). In the event that the Borrower
does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10) Transaction while this note
is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than $25,000,
will be assessed and will become immediately due and payable to the Holder at its election in the form of a cash payment or added
to the balance of this Note (under Holder's and Borrower's expectation that this amount will tack back to the Issue Date).


 


2.8   
Preservation of Business and Existence, etc. So long as the Borrower shall have obligations under this Note which
equal or exceed $250,000 in Principal Amount, the Borrower shall not, without the Holder’s written consent, (a) change the
nature of its business; (b) enter into any Variable Rate Transaction; or (c) enter into any merchant cash advance transactions.
In addition, so long as the Borrower shall have any obligation under this Note, the Borrower 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 (other than dormant Subsidiaries that have no or minimum assets) 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.


 


2.9   
Noncircumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate
or Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action
as may be required to protect the rights of the Holder.


 


2.10   
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, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary 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.


 


ARTICLE III. EVENTS
OF DEFAULT


 


It shall
be considered an event of default if any of the following events listed in this Article III shall occur and shall have not been
cured within three (3) business days of written notice by the Holder to the Borrower of such event of default (if such event of
default is able to be cured) (each, an “Event of Default”), provided, however, that such three (3) business day cure
period shall not apply to any Event of Default under Sections 3.1 or 3.2:


 


3.1   
Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when
due on this Note, whether at maturity, upon acceleration or otherwise, or fails to fully comply with Section 1.10 of this Note.


 


3.2    Conversion
and the Shares. The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue)
(electronically or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by this Note, (iii) fails to reserve the Reserved Amount at all times
(subject to a five business day cure period beginning on the date that written notice of such deficiency is given by the
Holder to the Borrower), (iv) the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its
transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for the Conversion
Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or
fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from
removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any Conversion Shares issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in
this paragraph) except for the exceptions contained in this Note and any such failure shall continue uncured (or any written
announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) Trading Days
after the Holder shall have delivered a Notice of Conversion, and/or (v) fails to remain current in its obligations to its
transfer agent (including but not limited to payment obligations to its transfer agent). It shall be an Event of Default of
this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its
transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order
to process a conversion, such advanced funds shall be added to the principal balance of the Note.


 






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3.3   
Breach of Agreements and Covenants. The Borrower breaches any covenant, agreement, or other term or condition contained
in the Purchase Agreement, this Note, Irrevocable Transfer Agent Instructions, Warrants (as defined in the Purchase Agreement)
(the “Warrants”), Registration Rights Agreement (as defined in the Purchase Agreement) (the “Registration Rights
Agreement”), Security Agreement, or in any agreement, statement or certificate given in writing pursuant hereto or in connection
herewith or therewith.


 


3.4    Breach of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement,
this Note, Irrevocable Transfer Agent Instructions, Warrants, Registration Rights Agreement, Security Agreement, or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith or therewith shall be false or misleading in
any material respect when made.


 


3.5    
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.


 


3.6    Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower
or any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period of
sixty (60) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


3.7    
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or
involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower
or any subsidiary of the Borrower which such proceedings the Borrower has not caused to be dismissed within sixty (60) calendar
days of such filing date.


 


3.8    Failure
to Comply with the 1934 Act. At any time after the Issue Date, the Borrower shall fail to comply with the reporting requirements
of the 1934 Act and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act.


 


3.9     Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.


 


3.10  
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable
to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.


 


3.11   Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or in the future).


 


3.12  
Financial Statement Restatement. The material restatement of any financial statements filed by the Borrower with
the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding.


 


3.13   Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.


 



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3.14  Cross-Default. The declaration of an event of default by any lender or other extender of credit to the Company under
any notes, loans, agreements or other instruments of the Company evidencing any indebtedness of the Company in excess of $100,000
(including those filed as exhibits to or described in the Company’s filings with the SEC), after the passage of all applicable
notice and cure or grace periods.


 


3.15 Variable Rate Transactions. The Borrower consummates a Variable Rate Transaction at any time on or after the Issue
Date.


 


3.16 Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey,
disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of,
material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately
cured by Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.


 


3.17 
Unavailability of Rule 144. If, at any time on or after the date that is six (6) calendar months after the Issue
Date, the Holder is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable
to the Holder, the Holder’s brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order
to facilitate the Holder’s conversion of any portion of the Note into free trading shares of the Borrower’s Common
Stock pursuant to Rule 144, and/or (ii) thereupon deposit such shares into the Holder’s brokerage account.


 


3.18 Delisting, Suspension, or Quotation of Trading of Common Stock. If, at any time on or after the date that is one
hundred and twenty (120) calendar days after the Issue Date, the Borrower’s Common Stock (i) is suspended from trading, (ii)
halted from trading, and/or (iii) fails to be quoted or listed (as applicable) on the OTCQB, OTCQX, any tier of the NASDAQ Stock
Market, the New York Stock Exchange, or the NYSE American.


 


3.19
Failure to File Form 211 or Registration Statement. The Borrower fails to (i) have caused a Form 211 to be filed
with FINRA (as defined in the Purchase Agreement) that complies in all material respects with the requirements of FINRA within
fifteen (15) calendar days following the Issue Date, (ii) file a registration statement covering the Holder’s resale at prevailing
market prices (and not fixed prices) of all of the Common Stock (the “Registration Statement”) underlying the Note
and Warrants within thirty (30) calendar days following the Issue Date, (ii) cause the Registration Statement to become effective
within one hundred and fifty (150) calendar days following the Issue Date, (iii) cause the Registration Statement to remain effective
until the Note is extinguished in its entirety and the Warrants are exercised in the entirety, (iv) comply with the provisions
of the Registration Rights Agreement in all material respects, or (v) immediately amend the Registration Statement or file a new
Registration Statement (and cause such Registration Statement to become effective as soon as possible) if there are no longer sufficient
shares registered under the initial Registration Statement for the Holder’s resale at prevailing market prices (and not fixed
prices) of all of the Common Stock underlying the Note and Warrants.


 


3.20 Rights and Remedies Upon an Event of Default. Upon the occurrence of any Event of Default specified in this Article
III, this Note shall become immediately due and payable, and the Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest)
through the date of full repayment multiplied by 125% (collectively the “Default Amount”), as well as all costs, including,
without limitation, legal fees and expenses, of collection, all without demand, presentment or notice, all of which hereby are
expressly waived by the Borrower. Holder may, in its sole discretion, determine to accept payment part in Common Stock and part
in cash. For purposes of payments in Common Stock, the conversion formula set forth in Section 1.2 shall apply as well as all other
provisions of this Note. The Holder shall be entitled to exercise all other rights and remedies available at law or in equity.


 


Upon the occurrence
of any Event of Default, and in addition to any other right or remedy of the Holder hereunder, under the related transaction
documents, or otherwise at law or in equity, the Borrower hereby irrevocably authorizes and empowers Holder or its legal
counsel, each as the Borrower’s attorney-in-fact, to appear ex parte and with notice to the Borrower to confess
judgment against the Borrower for the unpaid amount of this Note. The judgment shall set forth the amount then due hereunder,
plus attorney’s fees and cost of suit, and to release all errors, and waive all rights of appeal. The Borrower waives
the right to contest Holder’s rights under this section, including without limitation the right to any stay of
execution and the benefit of all exemption laws now or hereafter in effect. No single exercise of the foregoing right and
power to confess judgment will be deemed to exhaust such power, whether or not any such exercise shall be held by any court
to be invalid, voidable, or void, and such power shall continue undiminished and may be exercised from time to time as the
Holder may elect until all amounts owing on this Note have been paid in full. The Borrower shall provide a signed and
notarized copy of the affidavit of confession of judgment attached hereto as Exhibit “B” on or before the Closing
Date.


 



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ARTICLE IV. MISCELLANEOUS


 


4.1  
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 privileges. All rights and remedies of the
Holder existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


4.2   
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated
by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:


 


If to the Borrower, to:


 


NEXGEL, INC.


2150 Cabot Blvd West, Suite B


Langhorne, PA 19047


Attention: Adam Levy


e-mail: alevy@nexgel.com


 


If to the Holder:


 


AUCTUS FUND, LLC


545 Boylston Street, 2nd Floor


Boston, MA 02116


 


 


4.3  
Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower
and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument
as originally executed, or if later amended or supplemented, then as so amended or supplemented.


 


4.4   Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder
and its successors and assigns. The Borrower shall not assign this Note or any rights or obligations hereunder without the
prior written consent of the Holder. The Holder may assign its rights hereunder to any “accredited investor” (as
defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder or to any of its “affiliates”,
as that term is defined under the 1934 Act, without the consent of the Borrower. Notwithstanding anything in this Note to the
contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.
The Holder and any assignee, by acceptance of this Note, acknowledge and agree that following conversion of a portion of this
Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on
the face hereof.


 






    13


     


    

 


4.5  
Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs
of collection, including reasonable attorneys’ fees.


 


4.6   Governing Law; Venue; Attorney’s Fees. This Note shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Note or any other agreement, certificate, instrument or document contemplated
hereby shall be brought only in the state courts located in the Commonwealth of Massachusetts or federal courts located in the
Commonwealth of Massachusetts. The Borrower hereby irrevocably waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, 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 TRANSACTIONS CONTEMPLATED HEREBY. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Note or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party
in any action or dispute brought in connection with this the Note or any other agreement, certificate, instrument or document contemplated
hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs.


 


4.7  
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
Principal Amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest
on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this
Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty
and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the
sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to
the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of
Common Stock.


 


4.8  Purchase
Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement and the documents entered
into in connection herewith and therewith.


 


4.9  
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a
Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the
Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any
other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to
vote in connection with any change in control or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower
shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior
to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of
any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance
with the terms of this Section 4.9.


 


4.10  Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by
vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the
remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or
threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions
restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof,
without the necessity of showing economic loss and without any bond or other security being required.


 






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4.11 
Construction; Headings. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall
not be construed against any 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.


 


4.12 
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner
whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever
enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in
order to enforce any right or remedy under this Note. Notwithstanding any provision to the contrary contained in this Note, it
is expressly agreed and provided that the total liability of the Company under this Note for payments which under the applicable
law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them,
when aggregated with any other sums which under the applicable law in the nature of interest that the Company may be obligated
to pay under this Note exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by applicable
law and applicable to this Note is increased or decreased by statute or any official governmental action subsequent to the Issue
Date, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Note from the effective
date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in
excess of the Maximum Rate is paid by the Company to the Holder with respect to indebtedness evidenced by this the Note, such excess
shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at the Holder’s election.


 


4.13  Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute
or rule of law (including any judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.


 


4.14 Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its
subsidiaries of any security, or amendment to a security that was originally issued before the Issue Date, with any term that the
Holder reasonably believes is more favorable to the holder of such security or with a term in favor of the holder of such security
that the Holder reasonably believes was not similarly provided to the Holder in this Note, then (i) the Borrower shall notify the
Holder of such additional or more favorable term within one (1) business day of the issuance and/or amendment (as applicable) of
the respective security, and (ii) such term, at Holder’s option, shall become a part of the transaction documents with the
Holder (regardless of whether the Borrower complied with the notification provision of this Section 4.14). The types of terms contained
in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing
prepayment rate, interest rates, and original issue discounts.


 


4.15 Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount,
any prepayment amount or Default Amount, Issue, Closing or Maturity Date, the closing bid price, or fair market value (as the
case may be) or the arithmetic calculation of the Conversion Price or the applicable prepayment amount(s) (as the case may be),
the Borrower or the Holder shall submit the disputed determinations or arithmetic calculations via facsimile (i) within two (2)
Trading Days after receipt of the applicable notice giving rise to such dispute to the Borrower or the Holder or (ii) if no notice
gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder
and the Borrower are unable to agree upon such determination or calculation within two (2) Trading Days of such disputed determination
or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder, then the Borrower shall, within
two (2) Trading Days, submit (a) the disputed determination of the Conversion Price, the closing bid price, the or fair market
value (as the case may be) to an independent, reputable investment bank selected by the Borrower and approved by the Holder or
(b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, to
an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower shall cause
at its expense the investment bank or the accountant to perform the determinations or calculations and notify the Borrower and
the Holder of the results no later than two (2) Trading Days from the time it receives such disputed determinations or calculations.
Such investment bank’s or accountant’s determination or calculation shall be binding upon all parties absent demonstrable
error.


 


[signature page follows]






    15


     


    

 


IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer on March 11, 2021.


 


	NEXGEL, INC.	 




 


	By: 	 	 
	 	Name: Adam Levy	 
	 	Title: Chief Executive Officer	 


 


 


	AGREED TO AND ACCEPTED BY:	 
	 	 
	AUCTUS FUND, LLC	 




 


	By:	 	 
	 	Name: LOU POSNER	 
	 	Title: MANAGING DIRECTOR	 



 






    16


     


    

 


EXHIBIT A -- NOTICE
OF CONVERSION


 


The
undersigned hereby elects to convert $                           
principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the
conversion of the Note (“Common Stock”) as set forth below, of NEXGEL, INC., a Delaware corporation (the “Borrower”),
according to the conditions of the senior secured promissory note of the Borrower dated as of March 11, 2021 (the “Note”),
as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.


 


Box Checked as to applicable instructions:


 


	 ̈	The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	 	 
	 	Name of DTC Prime Broker:
	 	Account Number:


 


	 ̈	
        The undersigned hereby
        requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below
        (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if
        additional space is necessary, on an attachment hereto:



 


	Date of Conversion:	 
	Applicable Conversion Price:	$
	Number of Shares of Common Stock to be Issued Pursuant to Conversion of the Note:	   
	Amount of Principal Balance Due remaining Under the Note after this conversion:	   



 


	By:	 
	Name:	 
	Title:	 
	Date:	 


 






     


     


    

 


EXHIBIT B –
CONFESSION OF JUDGMENT


 


(see attached)


 






     


     


    

 


Affidavit of Confession of Judgment


 


	COMMONWEALTH OF MASSACHUSETTS	 	 	 
	 	X	 	 
	 	 	 	 
	AUCTUS FUND, LLC,	 	 	 
	 	 	 	Index No.
	Plaintiff,	 	 	 
	 	 	 	AFFIDAVIT OF CONFESSION OF
	- against -	 	 	JUDGMENT
	NEXGEL, INC.,	 	 	 
	      	 	 	 
	Defendant.	 	 	 
	 	 X	 	 
	 	 	 	 
	COMMONWEALTH OF MASSACHUSETTS             )	 	 	 
	      )	ss.: 	 	 




 


Adam Levy, being duly sworn, hereby deposes and says:


 


1.       
I am the Chief Executive Officer of defendant NEXGEL, INC., a Delaware corporation (“Borrower”). As such, I am fully
familiar with all the facts and circumstances recited herein on personal knowledge. Borrower has its principal place of business
at 2150 Cabot Blvd West, Suite B, Langhorne, PA 19047. On behalf of the Borrower, I hereby confess judgment in favor of Auctus
Fund, LLC (“Auctus Fund”), residing at 545 Boylston Street, 2nd Floor, Boston, MA 02116, in the amount of
$1,500,000.00, less any payments made on or after the date of this affidavit of confession of judgment, plus Default Interest (as
defined in the Note (as defined herein)) on said amount and all other applicable penalties under the Note. In no event shall interest
payable hereunder exceed the maximum permissible under applicable law.


 


2.       I
hereby authorize the federal courts and/or state courts located in the Commonwealth of Massachusetts to enter judgment against
Borrower in the amount of in the amount of $1,500,000.00, less any payments made on or after the date of this affidavit of confession
of judgment, plus Default Interest on said amount and all other applicable penalties under the Note, plus the costs and attorneys’
fees that are set forth below, less any payments made on or after the date of this affidavit of confession of judgment, upon Borrower’s
failure for any reason to timely make any payment to Auctus Fund called for by the senior secured promissory note between of the
parties, dated March 11, 2021 (the “Note”), due to the occurrence of an Event of Default (as defined in the Note) under
the Note.


 


3.       In
order to secure these obligations, Borrower agreed to simultaneously deliver with the execution of the Note this Affidavit of Confession
of Judgment.


 


4.       The
sums confessed pursuant to this affidavit of confession of judgment are justly due and owing to Auctus Fund under the following
circumstances: Borrower entered into the Note pursuant to which Borrower promised to pay to the order of Auctus Fund the principal
sum of $1,500,000.00 plus interest as provided for therein. The amounts confessed by this affidavit represent a senior secured
promissory note investment by Auctus Fund in Borrower and arise out of Borrower’s breach of its obligations under the Note.


 


5.       Borrower
agrees to pay any and all costs and expenses incurred by Auctus Fund in enforcing the terms of this affidavit of confession of
judgment, including reasonable attorneys’ fees and expenses at the rate of $475.00 per hour that Auctus Fund incurs or is
billed for in connection with enforcing the terms of the affidavit of confession of judgment, entering any Judgment, collecting
upon said Judgment, and defending or prosecuting any appeals.


 


[signature page to follow] 


 



     


     


    

 


	 	NEXGEL, INC.
	 	 
	 	By:	 
	 	Name:	Adam Levy
	 	Title:	Chief Executive Officer




 


 


	STATE OF 		)	 
		ss.:		 
	COUNTY OF		)	 




 


ACKNOWLEDGMENT


 


On __________, 2021 before me personally
came ________________________________________, to me known, who, by me duly sworn, did depose and say that deponent is an officer
of NEXGEL, INC., the corporation described in, and which executed the foregoing affidavit of confession of judgment, that deponent
knows the seal of the corporation, that the seal affixed to the affidavit of confession of judgment is the corporation’s
seal, that it was affixed by order of the board of directors of the corporation and that deponent signed deponent’s name
by like order.


 


_____________________________


Notary Public


 


SEAL:


 


[Signature Page to Affidavit of Confession
of Judgment]