Exhibit 10.4


 


EXECUTION VERSION


 


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


 


	Original Issue Date: September 30, 2015	Original Principal Amount: $3,055,556
	Note: 12% SSCPN-No - 1	 


 


 


12%
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE


DUE
September 29, 2016


 


THIS 12% SENIOR SECURED
CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued 12% Convertible Notes of Amarantus Bioscience
Holdings, Inc., a Nevada corporation, (the “Company”), having its principal place of business at 655 Montgomery
Street, Suite 900, San Francisco, California 94111, designated as its 12% Senior Secured Convertible Promissory Note due September
29, 2016 (this “Note”, or the “Note” and collectively with the other Notes of such series,
the “Notes”).


 


FOR VALUE RECEIVED,
the Company promises to pay to Delafield Investments Limited or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $3,055,556 on September 29, 2016 (the “Maturity Date”)
or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This
Note is subject to the following additional provisions:


 


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


 


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


 




     


     


    

 


“Alternate
Conversion Price” means 60% of the lowest of traded price of a share of Common Stock in the thirty (30) consecutive Trading
Days prior to the Conversion Date.


 


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


 


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


 


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


 


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


 


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


 




    	 	2	 



     


    

 


“Common
Stock Equivalents” means any securities of the Company or any of its subsidiaries which would entitle the holder thereof
to acquire at any time shares of Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants
or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the Holder to
receive, Common Stock.


 


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


 


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


 


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


 


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


 


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


 


“Default
Redemption Amount” means the product of (i) 130% multiplied by (ii) the sum of (x) the aggregate principal amount outstanding
of this Note through and including the Default Redemption Date; (y) all accrued but unpaid principal due on this Note including,
but not limited to, as provided in the last sentence of Section 6 hereof, and (z) all other amounts owed under this Note including,
but not limited to, Late Fees and liquidated damages, all through and including the date all amounts herein are paid in cash to
the Holder.


 


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


 


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


 


“DTC”
means the Depository Trust Company.


 


“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.


 


“DWAC
Eligible” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements,
including without limitation transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by
the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion
Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting
delivery of the Conversion Shares via DWAC.


 




    	 	3	 



     


    

 


“Equity
Conditions” means, during the period in question, (a) no Event
of Default shall have occurred, (b) the Company has timely filed (or obtain extensions in respect thereof and file within
the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest and/or principal, the average
daily dollar volume of the Common Stock for the previous twenty (20) consecutive trading days must be greater than $60,000, (d)
the shares of Common Stock must be DWAC Eligible and not subject to a “DTC Freeze,” or a “DTC chill” (or
other similar term), (e) the Conversion Shares are (i) neither “restricted shares” nor “control shares”
as defined pursuant to Rule 144 of the Securities Act, and (ii) may be sold (x) pursuant to Rule 144 without restriction and/or
volume limitation; or (y) pursuant to an effective registration statement (which in both cases the Equity Conditions set forth
in “(e)” shall be satisfied by the Company’s regular securities counsel providing a legal opinion that the statements
in e(i), e(ii)(x) (or, if applicable, e(ii)(y)) have been satisfied to the Holder which shall be delivered to the Holder each time
the Company is required to certify to the Holder that all of the Equity Conditions have been met), in both cases, however, sales
shall be limited pursuant to the Beneficial Ownership Limitations.


 


“Event
of Default” shall have the meaning set forth in Section 6(a).


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or other
equity awards (including, without limitation, restricted awards) to employees, officers or directors of the Company pursuant to
any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or
a majority of the members of a committee of non-employee directors established for such purpose and subsequently ratified by the
Shareholders of the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder
and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, provided that such securities have not been amended since June 1, 2015 to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price of such securities, financings, commercial property
lease transactions or similar transactions, (c) securities issued to (or securities issued upon exercise conversion of exchange
of Common Stock Equivalents issued to any such persons), Delafield Investments Limited (“Delafield”),
and/or Dominion Holdings, LLC (“Dominion,”) or (d) strategic
transactions, which are 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 equityholders 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, and provided further
that the Holders shall have provided their consent.


 


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


 


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


 




    	 	4	 



     


    

 


“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Note and accrued and unpaid interest
hereon, in addition to the payment of all other amounts, costs, expenses, late fees, and liquidated damages due in respect of this
Note.


 


“New
York Courts” shall have the meaning set forth in Section 8(d).


 


“Note
Register” shall have the meaning set forth in Section 2(b).


 


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


 


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


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of September 30, 2015 by and among the Company, the original
Holder, and the other parties named therein, if any, as amended, modified or supplemented from time to time in accordance with
its terms.


 


“Public
Offering” means any firm commitment underwritten public offering of gross proceeds of at least $4,000,000 of securities
of the Company pursuant to a registration statement on Form S-1 or Form S-3.


 


“Qualified
Public Offering” means (i) a firm commitment underwritten public offering of shares of Common Stock (and any other securities
of the Company that may be sold along with shares of Common Stock in any such underwritten firm commitment public offering including,
but not limited to, any Common Stock Equivalents), (ii) the gross proceeds resulting from such underwritten firm commitment public
offering equal or exceed, $9,000,000, and (iii) (x) the shares of Common Stock including, but not limited to, all Underlying Shares
have been approved for listing on one of the exchanges or markets set forth below in this definition of Qualified Public Offering,
and (y) on the next trading day following the date the SEC declares the registration statement registering under the Securities
Act the sale of the shares of Common Stock being sold to investors in such firm commitment underwritten public offering effective,
and any of securities of the Company being issued and/or sold in addition to shares of Common Stock by the Company therein including,
but not limited to, any Common Stock Equivalent (the “Qualified Offering Conversion Date”), the shares of Common
Stock commence trading on the New York Stock Exchange, NYSE MKT, the Nasdaq Global Market, the Nasdaq Global Select Market or the
Nasdaq Capital Market.


 


“Qualified
Public Offering Conversion Amount” means the product of (i) 130%, multiplied by (ii) the sum of (x) the aggregate principal
amount owed of this Note on and including the Qualified Public Offering Conversion Date, (y) all accrued but unpaid interest, and
(z) all liquated damages, Late Fees, and/or any other amounts owed to a Holder pursuant to this Note through and including the
Qualified Public Offering Conversion Date, including, but not limited to, premium payments, redemption payments and all other fees
and expenses owed to the Holder and/or its legal counsel or otherwise.


 




    	 	5	 



     


    

 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, by and among
the Company, the original Holders, and such other parties named therein in the form attached as an exhibit to the
Purchase Agreement.


 


“Registration
Statement” means a registration statement covering the resale of the Underlying Shares by each Holder.


 


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


 


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


 


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


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other
Person that references the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC
Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange,
NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by
OTC Markets Group Inc. (or any successor to any of the foregoing).


 


“VWAP”
means, for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading
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. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.


 




    	 	6	 



     


    

 


Section 2.            Interest.


 


a)          Payment
of Interest in Cash or Kind. The Company shall pay interest to the Holder in an amount equal to the product of (i) 12% (which
interest rate may be increased as provided elsewhere herein), multiplied by (ii) (x) the Original Principal Amount, for the 12
month period beginning on the Original Issuance Date (the “Initial 12 Month Period”), and (y) the aggregate
principal amount of this Note outstanding on the first day following the last day (the “First Day of a New 12 Month Period”)
of the (I) Initial 12 Month Period, and (II) each succeeding 12 month anniversary date of the Original Issue Date (each a “New
12 Month Period”), provided any amount due under this Note is outstanding on the First Day of a New 12 Month Period.
Interest provided for in this Section 2(a), shall be guaranteed and deemed earned in full (i) on the first day following the Original
Issuance Date for the Initial 12 Month Period, and (ii) on the First Day of each New 12 Month Period for each New 12 Month Period.
All interest provided for in this Section (2)(a) shall be due and payable with respect to (x) the Initial 12 Month Period, on the
Maturity Date, and with respect to each New 12 Month Period, 30 days following the First Day of a New 12 Month Period (as applicable,
each a “Fixed Interest Payment Date”); provided, however, notwithstanding anything to the contrary
provided herein or elsewhere, interest due hereunder will be due and payable prior to the applicable Fixed Interest Payment Date,
upon any conversion, prepayment, Event of Default, and/or other acceleration of principal outstanding on this Note, with respect
to the interest relating to the principal so converted, prepaid and/or accelerated whether as a result of an Event of Default,
or otherwise. All interest payments hereunder will be payable in cash, or subject to satisfaction of all of the Equity Conditions,
in cash or Common Stock in the Company’s discretion. Interest paid in Common Stock will be at the lower of (i) the Conversion
Price, and (ii) at 65% of the average of the VWAPs for the 15 consecutive Trading Days ending on the Trading Day that is immediately
prior to such date of payment.


 


b)          Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and
shall accrue and compound daily commencing on the Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest
hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration
and transfers of this Note (the “Note Register”).


 


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


 




    	 	7	 



     


    

 


Section 3.            Registration
of Transfers and Exchanges.





 


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





 


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


 


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


 


Section 4.            Conversion.





 


a)          Voluntary
Conversion. At any time after the Original Issue Date until all amounts due under this have been paid in full, this Note shall
be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(e) hereof). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note and/or any other amounts due under this Note to be converted and the date
on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified
in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder.
No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Note to the Company unless the entire principal amount of this Note, all accrued and unpaid interest thereon and
all other amounts due under this Note have been so converted. Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to the applicable conversion amount. The Holder and the Company shall maintain
a Conversion Schedule showing the principal amount(s) and/or any other amounts due under this Note converted and the date of such
conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such
Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative
in the absence of manifest error. The Holder, and any assignee by acceptance of this 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 may be less than the amount stated on the face hereof.


 




    	 	8	 



     


    




 


(b)         Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to the lowest of (i) $2.50, (ii) 75% of the lowest
daily VWAP in the fifteen (15) trading days prior to the Conversion Date, or (iii) (A) if a Public Offering that is not a Qualified
Public Offering has occurred, 75% or (B) if a Qualified Public Offering has occurred, 80% of the lowest of the (x) per share price
of shares of Common Stock, and (y) the lowest conversion price, exercise price or exchange price of any Common Stock Equivalents,
that are sold or issued to the public in the Public Offering or the Qualified Public Offering, respectively (the “Conversion
Price”). Notwithstanding anything herein to the contrary, at any time after the occurrence of any Event of Default the
Holder may require the Company to, at such Holder’s option and otherwise in accordance with the provisions for conversion
herein, convert all or any part of this Note into Common Stock at the Alternative Conversion Price. All such foregoing determinations
will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction
that proportionately decreases or increases the Common Stock during such measuring period. Nothing herein shall limit a Holder’s
right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right
to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant
to any other Section hereof or under applicable law.


 


c)          Mandatory
Conversion. Effective on the closing (the “Mandatory Conversion Date”) of a Qualified Public Offering, the
Qualified Public Offering Conversion Amount shall automatically (without further act or deed of the Holder or the Company) convert
(the “Mandatory Conversion”) into such number of shares of Common Stock as shall equal the quotient of (i) the
Qualified Public Offering Conversion Amount outstanding as of and including the Mandatory Conversion Date, divided by (ii) a conversion
price equal to the lowest of (i) the Conversion Price on the Mandatory Conversion Date, and (ii) eighty percent (80%) of the lowest
of (x) the price per share at which the Company sells shares of Common Stock, and (y) the lowest conversion price, exercise price
or exchange price of any Common Stock Equivalents, if any, sold and or issued to the public in a Qualified Public Offering, if
any, up to the Beneficial Ownership Limitation as set forth in Section 4(e). Notwithstanding anything to the contrary provided
herein or elsewhere, the conversion price of any portion this Note that the Holder is not able to convert into Conversion Shares
as a result of the Beneficial Ownership Limitation, shall following the Mandatory Conversion Date, be the Qualified Public Offering
Conversion Price. The Company shall cause notice of the Mandatory Conversion (the “Mandatory Conversion Notice”)
to be mailed to the Holder, at such Holder’s address, at least ten (10) days prior to the Mandatory Conversion Date. 
Notwithstanding the foregoing provisions of this Section 4(c), the Holder may convert any portion of this Note pursuant to Section
4(a) on or prior to the date immediately preceding the date of such Mandatory Conversion.


 


		d)	Mechanics of Conversion.



 


i.            Conversion
Shares Issuable Upon a Conversion. The number of Conversion Shares issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the sum of all outstanding (i) principal, (ii) interest, and (iii) any other amount due
under this Note to be converted as provided in the applicable Notice of Conversion by (y) the Conversion Price.


 




    	 	9	 



     


    

 


ii.          Delivery
of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing
the Conversion Shares which, on or after the date on which if the resale of such Conversion Shares are covered by and are being
sold pursuant to an effective Registration Statement or such Conversion Shares are eligible to be sold under Rule 144 without the
need for current public information and the Company has received an opinion of counsel to such effect reasonably acceptable to
the Company (which opinion the Company will be responsible for obtaining at its own cost) shall be free of restrictive legends
and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion
Shares being acquired or being sold, as the case may be, upon the conversion of this Note, and (B) a bank check in the amount of
accrued and unpaid interest (if the Company has elected to pay accrued interest in cash). All certificate or certificates required
to be delivered by the Company under this Section 4(d) shall be delivered electronically through DTC or another established clearing
corporation performing similar functions, unless the Company or its Transfer Agent does not have an account with DTC and/or is
not participating in the DTC Fast Automated Securities Transfer Program, then the Company shall issue and deliver to the address
as specified in such Conversion Notice, a certificate (or certificates), registered in the name of the Holder or its designee,
for the number of Conversion Shares to which the Holder shall be entitled. If the Conversion Shares are not being sold pursuant
to an effective Registration Statement or if the Conversion Date is prior to the date on which such Conversion Shares are eligible
to be sold under Rule 144 without the need for current public information, the Conversion Shares shall bear a restrictive legend
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 COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS 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.”


 




    	 	10	 



     


    

 


Notwithstanding the foregoing,
commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public information requirements,
the Company, upon request and at the Company’s expense, shall obtain a legal opinion to allow for such sales under Rule 144.





 


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





 


iv.         Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder
of this Note shall elect to convert any or all of the outstanding principal or interest amount hereof, the Company may not refuse
conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation
of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining
conversion of all or part of this Note shall have been sought. If the injunction is not granted, the Company shall promptly comply
with all conversion obligations herein. If the injunction is obtained, the Company must post a surety bond for the benefit of the
Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall
remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable
to the Holder to the extent it obtains judgment. In the absence of seeking such injunction, the Company shall issue Conversion
Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder
such certificate or certificates pursuant to Section 4(d)(ii) by the Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, $1,000 per Trading Day for each Trading Day after such Share Delivery Date
until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to
pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the Company’s failure to deliver Conversion
Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.


 




    	 	11	 



     


    

 


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


 




    	 	12	 



     


    

 


vi.         Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock a number of shares of Common Stock at least equal to 300% of the Required Minimum for the sole
purpose of issuance upon conversion of this Note and payment of interest on this Note, each as herein provided, free from preemptive
rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not
less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase
Agreement) be issuable (taking into account the adjustments and restrictions of Section 5, but ignoring any Beneficial Ownership
Limitations or other restrictions and/or limitations on conversions set forth herein or elsewhere) upon the conversion of the then
outstanding principal amount of this Note and payment of interest hereunder. The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable, and, at such times
as a Registration Statement covering such shares is then effective under the Securities Act, will be registered for public resale
in accordance with such Registration Statement. For purposes of this Note, the “Required Minimum” shall be defined
as all outstanding debt plus interest and any fees divided by the lower of (a)
the Conversion Price as on the date of Closing or, (b) in the event that the price of the Company’s Common Stock is below
the Conversion Price, the Alternate Conversion Price. The Company shall be required to calculate the Required Minimum on the first
trading day of each month that the Note is outstanding and provide such calculation to the Holder and the transfer agent promptly.
For purposes of calculating the Required Minimum, Company shall assume that all principal will remain outstanding for eighteen
(18) months and all accrued but unpaid interest hereon accrues at the rate of 18% per annum, is paid on the date 18 months from
the Original Issue Date and all amounts convert into shares of Common Stock at the Alternative Conversion Price.


 


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


 


viii.       Transfer
Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note
so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any
Notice of Conversion.


 




    	 	13	 



     


    

 


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


 




    	 	14	 



     


    




 


Section 5.            Certain
Adjustments.


 


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


 




    	 	15	 



     


    

 


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


 


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





 


d)          Intentionally
Omitted.


 




    	 	16	 



     


    

 


e)          Fundamental
Transaction. The Company shall not, directly or indirectly, in one or more related transactions, effect any merger or consolidation
of the Company and/or or any of its Subsidiaries with and/or into another Person, without the express written consent of 90% of
the then issued and outstanding principal amount of Notes (the “90% Amount”). If, subject to the Company obtaining
written consent of the 90% Amount, at any time while this Note is outstanding (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note,
the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately
prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(e) on the conversion of
this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior
to such Fundamental Transaction (without regard to any limitation in Section 4(e) on the conversion of this Note). For purposes
of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents (as defined in the
Purchase Agreement) in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor
Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking
into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic
value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this 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.


 




    	 	17	 



     


    




 


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


 


g)           Notice
to the Holder.


 


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





 


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


 




    	 	18	 



     


    

 


Section 6.            Events
of Default.


 


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


 


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


 


ii.          the
Company shall fail to observe or perform any other material covenant or agreement contained in the Notes (and other than a breach
by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in
clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice
of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or
should have become aware of such failure;


 


iii.         a
material default or material event of default (subject to any grace or cure period provided in the applicable agreement, document
or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument
to which the Company or any Subsidiary is obligated and/or which any of their respective assets are subject to or bound by (and
not covered by clause (vi) below);


 




    	 	19	 



     


    

 


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


 


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


 


vi.         the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $50,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;


 


vii.        the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through the Depository
Trust Company System is no longer available, “frozen” or “chilled”;


 


viii.       the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all
or a portion of its assets in one transaction or a series of related transactions, without the approval of the Holder or Holders
as provided in the Purchase Agreement (whether or not such sale would constitute a Change of Control Transaction);


 


ix.          the
Company does not meet the current public information requirements under Rule 144 in respect of the Registrable Securities (as defined
in the Registration Rights Agreement);


 


x.           if,
during the Effectiveness Period (as defined in the Registration Rights Agreement), either (a) the effectiveness of the Registration
Statement lapses for any reason or (b) the Holder shall not be permitted to resell any Registrable Securities (as defined in the
Registration Rights Agreement) under the Registration Statement for a period of more than 20 consecutive Trading Days or 30 non-consecutive
Trading Days during any 12 month period; provided, however, that if the Company is negotiating a merger, consolidation,
acquisition or sale of all or substantially all of its assets or a similar transaction and, in the written opinion of counsel to
the Company, the Registration Statement would be required to be amended to include information concerning such pending transaction(s)
or the parties thereto which information is not available or may not be publicly disclosed at the time, the Company shall be permitted
an additional 10 consecutive Trading Days during any 12 month period pursuant to this Section 6(a)(x);


 




    	 	20	 



     


    

 


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


 


xii.         the
Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not
in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);


 


xiii.        the
Company or any Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of
it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title
11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or a petition or an answer
seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against
it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance of or for the purpose of
effecting any of the foregoing;


 


xiv.       if
any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Subsidiary,
by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary,
or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part
of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days;


 


xv.        the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or
any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after
the date thereof;


 


xvi.       the
Company shall fail to maintain sufficient reserved shares pursuant to Section 4.1(n) of the Purchase Agreement and/or there is
a Breach (as defined in the Letter Agreement) by the Company of the Letter Agreement;


 


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


 




    	 	21	 



     


    

 


xviii.     the
Company, without the written consent of the Holders, shall enter into, create, incur, assume, guarantee or suffer to exist any
indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;


 


xix.        the
Company, without the written consent of the Holders, shall enter into, create, incur, assume or suffer to exist any liens of any
kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income
or profits therefrom;


 


xx.         the
Company, without the written consent of the Holders, shall repay, repurchase or offer to repay, repurchase or otherwise acquire
of any shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion Shares or Warrant
Shares (as those terms are defined the in Certificate Of Designation of Preferences, Rights And Limitations of Series H 12% Convertible
Preferred Stock) as permitted or required under the Transaction Documents (as that term is defined in the Securities Purchase Agreement
of even date hereof);


 


xxi.        the
Company, without the written consent of the Holders, pays cash dividends or distributions on Junior Securities (as that term is
defined the in Certificate Of Designation of Preferences, Rights And Limitations of Series H 12% Convertible Preferred Stock) of
the Company;


 


xxii.       the
Company enters into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing
with the Commission.


 




    	 	22	 



     


    

 


b)          Remedies
Upon Event of Default. Subject to the Beneficial Ownership Limitation as set forth in Section 4(e), if any Event of Default
occurs, then the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts
owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable
in cash at the Mandatory Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration
of this Note, the interest rate on this Note shall accrue at an additional interest rate equal to the lesser of 2% per month (24%
per annum) or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder
may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other
remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment
pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon. Alternatively, at the election of the Holder, the Holder require the Company to redeem all of the Notes then
held by such Holder though the issuance to such Holder of such number of shares of Common Stock equal to the quotient of (x) the
Default Redemption Amount, divided by (y) the lowest of (1) the Conversion Price, (2) the Qualified Public Offering Conversion
Price and (3) 75% of the average of the 10 VWAPs immediately prior to the date of election hereunder, or (ii) increase the
dividend rate on all of the outstanding Notes held by such Holder retroactively to the initial Closing Date to 18% per annum
thereafter. The Default Redemption Amount, whether payable in cash or in shares, shall be due and payable or issuable, as the case
may be, within five (5) Trading Days of the date on which the notice for the payment therefor is provided by a Holder (the “Default
Redemption Payment Date”). If the Company fails to pay in full the Default Redemption Amount hereunder on the date such
amount is due in accordance with this Section (whether in cash or shares of Common Stock), the Company will pay interest thereon
at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law, accruing and compounding daily
from such date until the Default Redemption Amount, plus all such interest thereon, is paid in full.


 


Section 7.          Prepayment


 


At any time
upon five (5) days prior written notice to the Holder, but subject to the Holder’s conversion rights set forth herein, the
Company may prepay any portion of the principal amount of this Note, all accrued and unpaid interest relating to such prepaid portion
of the principal and all other amounts due under this Note. The written notice shall, among other items, state the date such Prepayment
Amount (as defined below) is to be paid to the Holder, which shall not in any event be later than 5 days from the date of mailing
of the prepayment notice to the Holder (“the Prepayment Date”). If the Company exercises its right to prepay
the Note, the Company shall make payment to the Holder of an amount in cash equal to the product of (i) the sum of (x) the then
outstanding principal amount of this Note, (y) all accrued but unpaid interest and (z) all other amounts owed pursuant to this
Note including, but not limited to, all Late Fees and liquidated damages (collectively the “Prepayment Amount”),
multiplied by (ii) (x) 120%, or (y) 130%, if a Qualified Public Offering has previously occurred. The Holder may continue to convert
the Note from the date notice of the prepayment is given until the date the Holder receives in full, the Prepayment Amount. If
the entire Prepayment Amount is not received by the Holder in immediately available funds by wire transfer pursuant to wire transfer
instructions provided to the Company by the Holder, on or before the Prepayment Date, such shall, (at the election of the Holder)
be an Event of Default of the payment of principal pursuant to Section 6(a)(1) hereof.


 




    	 	23	 



     


    

 


Section 8.            Miscellaneous.


 


a)          Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 655 Montgomery Street, Suite 900, San Francisco, California 94111, or such other
facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this
Section 8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing
and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at
the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address
appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement.
Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the
party to whom such notice is required to be given.





 


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





 


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


 


d)          Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict
of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated
hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in
the investigation, preparation and prosecution of such action or proceeding.


 




    	 	24	 



     


    




 


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





 


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


 




    	 	25	 



     


    




 


g)          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.


 


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


 


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


 


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


 


(Signature Pages Follow)


 




    	 	26	 



     


    

 


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


 


	 	Amarantus Bioscience Holdings, Inc.
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	Facsimile No. for delivery of Notices: 	 


 




    	 	27	 



     


    

 


ANNEX A


 


NOTICE OF CONVERSION


 


The undersigned hereby
elects to convert principal, accrued but unpaid interest and/or any of amounts due under the 12% Senior Secured Convertible Promissory
Note due September 29, 2016 of Amarantus Bioscience Holdings, Inc., a Nevada corporation (the “Company”), into
shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date
written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested
by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes,
if any.


 


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


 


The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock, if the resale of any such shares of Common Stock are covered by and are being sold pursuant to
an effective Registration Statement.


 


Conversion calculations:


 





	 	Date
    to Effect Conversion:	 


 


	 	Principal
    Amount of Note to be Converted:	 


 


	 	Payment
    of Interest in Common Stock __ yes __ no
	 	If
    yes, $_____ of Interest Accrued on Account of Conversion at Issue.


 


	 	Other
    Amounts Owed Under this Note to be Converted
	 	including
    Late Fees:	 


 


	 	Number
    of shares of Common Stock to be issued:	 


 


	 	Signature:	 
	 	 	 
	 	Name:	 


 


	 	Delivery
    Instructions:	 







 




    	 	28	 



     


    

 


Schedule 1


 


CONVERSION SCHEDULE


 


This 12% Senior Secured Convertible Promissory
Note due on September 29, 2016 in the original principal amount of $3,055,556 is issued by Amarantus Bioscience Holdings, Inc.,
a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.


 


Dated:





 


	Date of Conversion

(or for first entry,

Original Issue Date)	 	Amount of

Conversion	 	Aggregate

Principal

Amount

Remaining

Subsequent to

Conversion

(or original

Principal

Amount)	 	Company Attest
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 


 




    	 	29