Exhibit 4.1


 


SENIOR CONVERTIBLE NOTE


 


NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 17(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.


 


VIRTUS
OIL AND GAS CORP.


 


Senior
Convertible Note


 


	Issuance Date:  October 7, 2015	Original Principal Amount: U.S. $600,000.00


 


FOR VALUE RECEIVED,
VIRTUS OIL AND GAS CORP., a Nevada corporation (the “Company”), hereby promises to pay to the
order of HIMMIL INVESTMENTS, LTD. or its registered assigns (“Holder”) the amount set out above
as the Original Principal Amount (as increased by any Additional Amount added thereto and as reduced pursuant to the terms hereof
pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity
Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest
(“Interest”) on any outstanding Principal (as defined below) (as such interest on any outstanding Principal
may be reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise) at the applicable Interest Rate (as
defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until
the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each
case in accordance with the terms hereof). This Senior Convertible Note (this “Note”, including all Senior
Convertible Notes issued in exchange, transfer or replacement hereof, collectively, the “Notes” and such
other Senior Convertible Notes, if any, the “Other Notes”) is one of a series of Senior Convertible Notes
issued pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date (as defined below) (collectively, the
“Notes”). Certain capitalized terms used herein are defined in Section 28 or in the Securities Purchase
Agreement, as applicable.


 




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1.PAYMENTS OF
PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal,
accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 23(c)) on such Principal and Interest (as
adjusted with respect to any Note Reduction (as defined in Section 12)). Other than as specifically permitted by this Note, the
Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges
on Principal and Interest, if any.


 


2.INTEREST;
INTEREST RATE.


 


(a)Interest on this
Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day months,
shall be payable in arrears on the Maturity Date or any applicable Redemption Date (each, an “Interest Date”),
subject to adjustment with respect to any Note Reduction. Interest shall be payable on each Interest Date, to the record holder
of this Note on the applicable Interest Date, in shares of Common Stock (“Interest Shares”) so long as
there has been no Equity Conditions Failure; provided, however, that the Company may, at its option following written notice to
the Holder, pay Interest on any Interest Date in cash (“Cash Interest”) or in a combination of Cash Interest
and Interest Shares. The Company shall deliver a written notice (each, an “Interest Election Notice”)
to each holder of the Notes on or prior to the Interest Notice Due Date (the date such notice is delivered to all of the holder,
the “Interest Notice Date”) which notice (i) either (A) confirms that Interest to be paid on such Interest
Date shall be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest or a combination of Cash Interest
and Interest Shares and specifies the amount of Interest that shall be paid as Cash Interest and the amount of Interest, if any,
that shall be paid in Interest Shares and (ii) if any Interest is to be paid in Interest Shares, certifies that there has been
no Equity Conditions Failure. If an Equity Conditions Failure has occurred as of the Interest Notice Date, then unless the Company
has elected to pay such Interest as Cash Interest, the Interest Notice shall indicate that unless the Holder waives the Equity
Conditions Failure, the Interest shall be paid as Cash Interest. Notwithstanding anything herein to the contrary, if no Equity
Conditions Failure has occurred as of the Interest Notice Date but an Equity Conditions Failure occurs at any time prior to the
Interest Date, (A) the Company shall provide the Holder a subsequent notice to that effect and (B) unless the Holder waives the
Equity Conditions Failure, the Interest shall be paid in cash. Interest to be paid on an Interest Date in Interest Shares shall
be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a))
of Common Stock equal to the quotient of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and
(2) the Conversion Price in effect on the applicable Interest Date. If the Company fails to deliver an Interest Election Notice
with respect to an Interest Date on or prior to the applicable Interest Notice Due Date, the Company shall be deemed to have delivered
an Interest Election Notice confirming that Interest to be paid on such Interest Date shall be paid entirely in Interest Shares
and certifying that no Equity Conditions Failure then exists.


 




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(b)When any Interest
Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company’s transfer agent (the “Transfer
Agent”) is participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of Interest Shares to which the Holder shall be entitled to the Holder’s or
its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer Agent
is not participating in the DTC Fast Automated Securities Transfer Program or the shares of Common Stock may not be issued without
restrictive legend in accordance with Section 4.5 of the Securities Purchase Agreement, issue and deliver on the applicable Interest
Date, to the address set forth in the register maintained by the Company for such purpose pursuant to the Securities Purchase Agreement
or to such address as specified by the Holder in writing to the Company at least two (2) Business Days prior to the applicable
Interest Date, a certificate, registered in the name of the Holder or its designee (and without any restrictive legend or stop
transfer order maintained against it unless required pursuant to Section 4.5 of the Securities Purchase Agreement), for the number
of Interest Shares to which the Holder shall be entitled and (ii) with respect to each Interest Date, pay to the Holder, in cash
by wire transfer of immediately available funds, the amount of any Cash Interest. 


 


(c)Prior to the payment
of Interest on any Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of inclusion of
the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i). From and after the occurrence
and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to eighteen percent (18.0%)
per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence
shall cease to be effective as of the calendar day immediately following the date of such cure; provided that the Interest as calculated
and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating
to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.
The Company shall pay any and all stamp taxes that may be payable with respect to the issuance and delivery of Interest Shares.


 


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


 


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


 




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


 


(i)“Conversion
Amount” means the sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to
which this determination is being made, (B) all accrued and unpaid Interest with respect to such portion of the Principal amount
and accrued and unpaid Late Charges with respect to such portion of such Principal and such Interest and (C) the applicable Make-Whole
Amount.


 


(ii)“Conversion
Price” means, for any date of determination, the lesser of (A) the product of (x) the lowest VWAP of the Common Stock
during the twelve (12) consecutive Trading Days ending and including the Trading Day immediately preceding the applicable Conversion
Date (the “Variable Conversion Base Price”) and (y) sixty-five percent (65%), and (B) $0.30 (as adjusted
for stock splits, stock dividends, stock combinations or other similar transactions) (the “Fixed Conversion Price”).
If, from and after the earliest of (x) the Effectiveness Deadline (as defined in the Registration Rights Agreement), (y) the date
the initial Registration Statement (as defined in the Registration Rights Agreement) is initially declared effective by the SEC
and (z) April 7, 2016, the Company fails to effect or maintain an effective Registration Statement registering the resale by the
Holder of all of the Conversion Shares under the 1933 Act, the Variable Conversion Base Price with respect to the Conversion Shares
not covered by an effective Registration Statement shall equal the product of (x) the lowest VWAP of the Common Stock on any Trading
Day during the twelve (12) consecutive Trading Days ending and including the Trading Day immediately preceding the applicable Conversion
Date and (y) fifty percent (50%). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock
combination or other similar transaction during any such measuring period.


 


(c)Mechanics of
Conversion.


 


(i)Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date,
a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), the Holder shall surrender this Note to a nationally recognized overnight delivery
service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft
or destruction as contemplated by Section 17(b)). On or before the first (1st) Trading Day following the date of receipt
of a Conversion Notice, the Company shall transmit by facsimile an acknowledgment of confirmation, in the form attached hereto
as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer
Agent”) . On or before the third (3rd) Trading Day following the date of receipt of a Conversion Notice,
the Company shall (1) provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program and
such shares of Common Stock may be issued without restrictive legend in accordance with Section 4.5 of the Securities Purchase
Agreement, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or
its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer Program or such shares of Common Stock may not be issued without
restrictive legend in accordance with Section 4.5 of the Securities Purchase Agreement, issue and deliver (via reputable overnight
courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee,
for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion
as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after receipt
of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 17(d))
representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable
upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock
on the Conversion Date.


 




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(ii)Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to the Holder within three
(3) Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile or otherwise) (the “Share
Delivery Deadline”), a certificate for the number of shares of Common Stock to which the Holder is entitled and register
such shares of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s balance
account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of
any Conversion Amount (as the case may be) (a “Conversion Failure”) then, in addition to all other remedies
available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the
issuance of such shares of Common Stock is not timely effected, an amount equal to 2.0% of the product of (A) the sum of the number
of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (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 shares of Common Stock to the Holder without violating Section 3(c)(i), and (2) the Holder, upon written notice
to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of
this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall
not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to
this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline, the Company shall
fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register
or credit the Holder’s or its designee’s balance account with DTC for the number of shares of Common Stock to which
the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if on or after such Share Delivery
Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock
equal to all or any portion of the number of shares of Common Stock, issuable upon such conversion that the Holder so anticipated
receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3)
Business Days after receipt of the Holder’s request and in the Holder’s discretion, either: (I) pay cash to the Holder
in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf,
of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver
such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder
is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall
terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which
the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y)
the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Conversion Notice and ending on the date of such issuance and payment under this clause (II).


 




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(iii)Book-Entry.
Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in
accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A)
the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company
following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written
notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this
Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid
and/or adjusted (as the case may be) and the dates of such conversions and/or payments and/or adjustments (as the case may be)
or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender
of this Note upon conversion.


 


(iv)Pro Rata
Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve
such dispute in accordance with Section 22.


 




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


 




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4.RIGHTS UPON
EVENT OF DEFAULT.


 


(a)Event of Default.
Each of the following events shall constitute an “Event of Default” and each of the events in clauses
(iv), (v) and (vi) shall constitute a “Bankruptcy Event of Default”::


 


(i)the suspension
from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of ten
(10) consecutive days or for more than an aggregate of thirty (30) days in any 365-day period;


 


(ii)the Company’s
or any Subsidiary’s (as defined in the Securities Purchase Agreement) failure to pay to the Holder any amount of Principal,
Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s or
any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined
in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and
as due, in which case only if such failure remains uncured for a period of at least ten (10) days after written notice to the Company
of such default;


 


(iii)the occurrence
of any redemption or acceleration prior to maturity of any Indebtedness (as defined in the Securities Purchase Agreement) of the
Company or any of its Subsidiaries, only if such acceleration or redemption obligation remains in effect for a period of 15 calendar
days following the occurrence thereof;


 




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(iv)bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed
within forty-five (45) days of their initiation;


 


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


 


(vi)the entry
by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or
insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;


 


(vii)a final judgment
or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or any of its Subsidiaries
and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within forty-five (45) days after the expiration of such stay; provided, however, any judgment which is covered
by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount set forth above
so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the
Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days
of the issuance of such judgment;


 




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(viii)other than
as specifically set forth in another clause of this Section 4(a), the Company and/or any Subsidiary,
individually or in the aggregate, fails to pay, when due, or within any applicable grace period, any payment with respect to any
Indebtedness in excess of $100,000 due to any third party (other than (A) Permitted Indebtedness and (B) with respect to unsecured
Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings
and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise
in breach or violation of any agreement for monies owed or owing in an amount in excess of $100,000, which breach or violation
permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder (other than Permitted Indebtedness);


 


(ix)other than
as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary
breaches any representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of
a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of ten (10)
consecutive Trading Days after written notice to the Company of such breach;


 


(x)any Registration
Statement (as defined in the Registration Rights Agreement) covering the resale of the Registrable Securities (as defined in the
Registration Rights Agreement) covered thereby shall not have been (i) filed with the SEC on or prior to the Filing Deadline (as
defined in the Registration Rights Agreement) with respect to such Registration Statement or (ii) declared effective under the
1933 Act by the SEC on or prior to the Effectiveness Deadline (as defined in the Registration Rights Agreement) with respect to
such Registration Statement;


 


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


 


(xii)any Material
Adverse Effect (as defined in the Securities Purchase Agreement);


 


(xiii)any Change
of Control occurs (other than as a result of Common Stock issuances pursuant to the Transaction Documents); or


 


(xiv)Reserved.


 




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(b)Notice of an
Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note, the Company shall
within one (1) Business Day deliver written notice thereof via facsimile and overnight courier (with next day delivery specified)
(an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s receipt
of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem,
at any time during the period commencing on the date the Holder first becomes aware of such Event of Default through and including
the twentieth (20th) Trading Day after the later of (x) the date the Holder receives the applicable Event of Default
Notice with respect thereto and (y) the date such Event of Default has been cured, all or any portion of this Note by delivering
written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default
Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to
redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i)
the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the
Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption
Notice multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the
date the Company makes the entire payment required to be made under this Section 4(b) (the “Event of Default
Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions
of Section 10. To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction
to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything
to the contrary in this Section 4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any
Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any
Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note.
In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages
would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty
of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under
this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss
of its investment opportunity and not as a penalty.


 


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


 




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5.RIGHTS UPON
FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.


 


(a)Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing
all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of
this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior
to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes,
and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction,
the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company
under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Section 14, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of
the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental
Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on
the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder
may elect, at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental
Transaction without the assumption of this Note.


 




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(b)Purchase Rights.
In addition to any adjustments pursuant to Section 6 below, if at any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record
holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any
limitations or restrictions on the convertibility of this Note) immediately prior to the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that
to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right
to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a
result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent
shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result
in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted
such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held
similarly in abeyance) to the same extent as if there had been no such limitation).


 


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


 


(d)The provisions
of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied
without regard to any limitations on the conversion of this Note.


 




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6.RIGHTS UPON
ISSUANCE OF OTHER SECURITIES.


 


(a)Adjustment
of Fixed Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date, the Company issues
or sells, or in accordance with this Section 6(a) is deemed to have issued or sold, any shares of Common Stock (including the issuance
or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed
to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share (the "New
Issuance Price") less than a price (the "Applicable Price") equal to the Fixed Conversion
Price in effect immediately prior to such issuance or sale or deemed issuance or sale (the foregoing a "Dilutive Issuance"),
then immediately after such Dilutive Issuance, the Fixed Conversion Price then in effect shall be reduced to an amount equal to
the New Issuance Price. For all purposes of the foregoing (including, without limitation, the determining the adjusted Fixed Conversion
Price and the New Issuance Price under this Section 6(a)), the following shall be applicable:


 


(i)Issuance
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share. For purposes of this Section 6(a)(i), the “lowest price per
share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall
be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion,
exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof
and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of
any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option
or otherwise pursuant to the terms thereof, minus (2) the sum of all amounts paid or payable to the holder of such Option (or any
other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange
of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of
any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except
as contemplated below, no further adjustment of the Fixed Conversion Price shall be made upon the actual issuance of such share
of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof
or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or
otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 6(a)(ii), the “lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be
equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange
of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest Fixed Conversion Price set forth in
such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any
other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further
adjustment of the Fixed Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale
of such Convertible Securities is made upon exercise of any Options for which adjustment of the Fixed Conversion Price has been
or is to be made pursuant to other provisions of this Section 6(a), except as contemplated below, no further adjustment of the
Fixed Conversion Price shall be made by reason of such issuance or sale.


 




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(ii)Change in
Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any,
payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exchangeable or exercisable for shares of Common Stock increases or decreases at any time, the Fixed Conversion
Price in effect at the time of such increase or decrease shall be adjusted to the Fixed Conversion Price which would have been
in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 6(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Subscription
Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been
issued as of the date of such increase or decrease. No adjustment pursuant to this Section 6(a) shall be made if such adjustment
would result in an increase of the Fixed Conversion Price then in effect.


 


(iii)Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales
of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity
to each other and/or (C) are consummated under the same plan of financing), the aggregate consideration per share of Common Stock
with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which
one share of Common Stock was issued (or was deemed to be issued pursuant to Section 6(a)(i) or 6(a)(ii) above, as applicable)
in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities,
the sum of (I) the Option Value of each such Option, if any, (II) the fair market value (as determined by the Holder in good faith)
or the Option Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Holder)
of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 7(a)(iv).
If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Option Value) will be deemed to be the net amount of consideration
received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid
for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Option Value) will be
the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the
amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security
for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Option Value) will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities
will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration
will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding
upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company..


 




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


 


(v)No Readjustments.
For the avoidance of doubt, in the event the Fixed Conversion Price has been adjusted pursuant to this Section 6(a) and the Dilutive
Issuance that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled after the facts for any
reason whatsoever, in no event shall the Fixed Conversion Price be readjusted to the Fixed Conversion Price that would have been
in effect if such Dilutive Issuance had not occurred or been consummated.


 


(b)Adjustment
of Fixed Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Subscription
Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares
of Common Stock into a greater number of shares, the Fixed Conversion Price in effect immediately prior to such subdivision will
be proportionately reduced. If the Company at any time on or after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Fixed Conversion
Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section
6(b) shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an
adjustment under this Section 6(b) occurs during the period that a Conversion Price is calculated hereunder, then the calculation
of such Conversion Price shall be adjusted appropriately to reflect such event.


 


(c)Holder’s
Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section 6, if the
Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities
(any such securities, “Variable Price Securities”), after the Subscription Date that are issuable pursuant
to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may
vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive
of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and
similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable
Price”), the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the
date of such agreement and the issuance of such Convertible Securities or Options. From and after the date the Company enters into
such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole
discretion to substitute the Variable Price for the Conversion Price upon conversion of this Note by designating in the Conversion
Notice delivered upon any conversion of this Note that solely for purposes of such conversion the Holder is relying on the Variable
Price rather than the Conversion Price then in effect. The Holder’s election to rely on a Variable Price for a particular
conversion of this Note shall not obligate the Holder to rely on a Variable Price for any future conversion of this Note.


 




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(d)Other Events.
In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable,
or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the
provisions of this Section 6 but not expressly provided for by such provisions (including, without limitation, the granting of
stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors shall
in good faith determine and implement appropriate adjustment in the Fixed Conversion Price so as to protect the rights of the Holder
under this Note; provided, that no such adjustment will increase the Fixed Conversion Price as otherwise determined pursuant
to this Section 6 provided further that if the Holder does not accept such adjustments as appropriately protecting its interests
hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an
independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be borne by the Company.


 


(e)Calculations.
All calculations under this Section 6(e) shall be made by rounding to the nearest cent or the nearest 1/100th of
a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.


 


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


 


7.NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will
at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights
of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as any of the Notes are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the Notes, the maximum number of shares of Common Stock as shall from time to time be necessary
to effect the conversion of the Notes then outstanding (without regard to any limitations on conversion). Notwithstanding anything
herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not permitted to convert
this Note in full for any reason (other than pursuant to restrictions set forth in Section3(d) hereof), the Company shall use its
best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary
to permit such conversion into shares of Common Stock.


 




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8.RESERVATION
OF AUTHORIZED SHARES.


 


(a)Reservation.
So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, a number of shares of Common
Stock, as of any date of determination, for each of the Notes in accordance with the following formula:


 


            P

------------------ x 3 = Share Reserve


 


(T x B)


 


P = The aggregate principal
amount of the Notes issued on or prior to such date of determination;


 


T = The applicable Conversion
Price as of such date of determination;


 


B = 0.20;


 


provided, that, the Share
Reserve shall in no event be less than 150% of the number of shares of Common Stock as shall from time to time be necessary to
effect the conversion of all of the Notes then outstanding (without regard to any limitations on conversions) (the “Required
Reserve Amount”).


 


(b)Insufficient
Authorized Shares. If, notwithstanding Section 8(a), and not in limitation thereof, at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve
Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary
to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required
Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence
of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy
statement and shall use its best efforts (including, without limitation, retaining a proxy solicitation firm reasonably acceptable
to the Holder, at the Company’s expense) to solicit its stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event
that the Company is prohibited from issuing shares of Common Stock upon any conversion due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number
of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering such Authorization
Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount
convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization
Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the
date the Holder delivers the applicable Conversion Notice with respect to such Authorization Failure Shares to the Company and
ending on the date of such issuance and payment under this Section 8(b) and (ii) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure
Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith (the
foregoing sum of clause (i) and (ii), an “Additional Amount”). Notwithstanding the foregoing, the Holder
shall have the option to require that, in lieu of the Company’s obligation to pay an Additional Amount in cash to the Holder,
such Additional Amount shall be added to the outstanding Principal amount of this Note. Nothing contained in Section 8(a) or this
Section 8(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.


 




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9.Company
Optional Redemption. At any time after the Issuance Date, if no Equity Conditions Failure exists, the Company shall
have the right to redeem all, but not less than all, of the Conversion Amount then remaining under this Note (the “Company
Optional Redemption Amount”) on the Company Optional Redemption Date (as defined below) (a “Company Optional
Redemption”). The portion of this Note subject to redemption pursuant to this Section 9 shall be redeemed by the
Company in cash at a price (the “Company Optional Redemption Price”) equal to 130% of the Conversion
Amount of this Note then outstanding. The Company may exercise its right to require redemption under this Section 9 by delivering
an irrevocable written notice thereof by facsimile and overnight courier to the Holder (the “Company Optional Redemption
Notice” and the date the Holder receives such notice is referred to as the “Company Optional Redemption
Notice Date”). The Company Optional Redemption Notice shall (a) state the date on which the Company Optional Redemption
shall occur (the “Company Optional Redemption Date”) which date shall not be less than thirty (30) calendar
days nor more than ninety (90) calendar days following the Company Optional Redemption Notice Date, (b) state the aggregate Conversion
Amount of the Notes which is being redeemed in such Company Optional Redemption from the Holder pursuant to this Section 9 on the
Company Optional Redemption Date, (c) if any Interest portion of the Company Optional Redemption Amount is being paid in Interest
Shares, state the information required in an Interest Election Notice in accordance with Section 2(a) and (d) certify that there
has been no Equity Conditions Failure. Notwithstanding anything herein to the contrary, (i) if an Equity Conditions Failure occurs
at any time prior to the Company Optional Redemption Date, (A) the Company shall provide the Holder a subsequent notice to that
effect and (B) unless the Holder waives the applicable Equity Conditions Failure, the Company Optional Redemption shall be cancelled
and the applicable Company Optional Redemption Notice shall be null and void and (ii) at any time prior to the date the Company
Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the
Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the Holder after the Company Optional
Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company
Optional Redemption Date. The parties hereto agree that in the event of the Company's redemption of any portion of the Note under
this Section 9, the Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict
future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly,
any redemption premium due under this Section 9 is intended by the parties to be, and shall be deemed, a reasonable estimate of
the Holder's actual loss of its investment opportunity and not as a penalty. Redemptions made pursuant to this Section 9 shall
be made in accordance with Section 10 and any payments of any Interest portion of the Company Optional Redemption Amount in Interest
Shares shall be made in accordance with Section 2.


 




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10.REDEMPTIONS.


 


(a)Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days
after the Company’s receipt of the Holder’s Event of Default Redemption Notice. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. Notwithstanding anything
herein to the contrary, in connection with any redemption hereunder at a time the Holder is entitled to receive a cash payment
under any of the other Transaction Documents, at the option of the Holder delivered in writing to the Company, the applicable Redemption
Price hereunder shall be increased by the amount of such cash payment owed to the Holder under such other Transaction Document
and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s payment obligation under such
other Transaction Document. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall
promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding
Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the Holder
within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder
shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this
Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together
with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption
Notice shall be null and void with respect to such Conversion Amount, and (y) the Company shall immediately return this Note, or
issue a new Note (in accordance with Section 17(d)), to the Holder, and in each case the principal amount of this Note or
such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable Redemption
Price (as the case may be, and as adjusted pursuant to this Section 10, if applicable) minus (2) the Principal portion of the Conversion
Amount submitted for redemption. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights
following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued
prior to the date of such notice with respect to the Conversion Amount subject to such notice.


 


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


 




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11.VOTING RIGHTS.
The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, the
Nevada Revised Statutes) and as expressly provided in this Note.


 


12.NOTE REDUCTION.


 


(a)Note Reduction.
(i) If as of the Trading Day immediately following the Filing Deadline (as such term is defined in the Registration Rights Agreement),
the Company has properly filed a registration statement with the SEC on or prior to the Filing Deadline covering the resale by
the Holder of all of the shares of Common Stock issued or issuable upon conversion of the Notes or otherwise pursuant to the terms
of the Notes in accordance with the 1933 Act and the Registration Rights Agreement, (ii) if as of the Trading Day immediately following
the Effectiveness Deadline with respect to the Registration Statement, the Registration Statement has been declared effective by
the SEC on or prior to the Effectiveness Deadline for the Registration Statement and the prospectus contained therein is available
for use by the Holder for the resale by the Holder of all of the shares of Common Stock issued or issuable upon conversion of the
Notes or otherwise pursuant to the terms of the Notes and (iii) no Event of Default or an event that with the passage of time or
giving of notice would constitute an Event of Default has occurred on or prior to such date, then $200,000 of the outstanding Principal
hereunder (together with any accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and unpaid
Late Charges with respect to such portion of such Principal and such Interest) shall be automatically extinguished and shall no
longer remain outstanding hereunder without any payment thereof by the Company; notwithstanding anything to the contrary herein,
in the event that the Holder is deemed an “underwriter” and in accordance with Section 2(c) of the Registration Rights
Agreement the resale of any Interest Shares or Conversion Shares is not registered under the 1933 Act, then $200,000 of the outstanding
Principal hereunder (together with any accrued and unpaid Interest with respect to such portion of the Principal amount and accrued
and unpaid Late Charges with respect to such portion of such Principal and such Interest) shall be automatically extinguished and
shall no longer remain outstanding hereunder without any payment thereof by the Company, provided that the Registration Statement
was filed prior to the Filing Deadline, the decision not to register the resale of the Interest Shares and Conversion Shares in
accordance with Section 2(c) of the Registration Rights Agreement was made prior to the Effectiveness Deadline, and no Event of
Default has occurred prior to such date or an event that with the passage of time or giving of notice would constitute an Event
of Default has occurred prior to such date.


 




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(b)Disputes.
In the event of a dispute as to the arithmetic calculation of any Note Reduction, the Company and the Holder shall resolve such
dispute in accordance with Section 22.


 


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


 


(a)Rank. All
payments due under this Note (i) shall rank pari passu with all Notes and the notes issued in the Investor May 2015 Financing
and (ii) shall be senior to all other Indebtedness of the Company and its Subsidiaries, except for any Permitted Indebtedness.


 


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


 


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


 


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


 


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


 


(f)Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock (other than the
repurchase of Common Stock upon the termination of an employee or consultant).


 


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


 




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


 


(i)Change in Nature
of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
engage in any material line of business substantially different from those lines of business conducted by the Company and each
of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The Company shall not, and
the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
For the purposes of this section, the nature of the Company’s business is an oil and gas exploration and production company.


 


(j)Preservation
of Existence, Etc. Except for instances that would not have a Material Adverse Effect, the Company shall maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause
each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.


 


(k)Maintenance
of Properties, Etc. Except for instances that would not have a Material Adverse Effect, the Company shall maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its
Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies
property, so as to prevent any loss or forfeiture thereof or thereunder.


 


(l)Maintenance
of Intellectual Property. Except for instances that would not have a Material Adverse Effect, the Company will, and will cause
each of its Subsidiaries to, take all action necessary or advisable to maintain all of the Intellectual Property Rights of the
Company and/or any of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.


 


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


 




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


 


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


 


14.DISTRIBUTION
OF ASSETS. In addition to any adjustments pursuant to Section 14, if the Company shall declare or make any dividend or other
distributions of its assets (or rights to acquire its assets) to all holders of shares of Common Stock, by way of return of capital
or otherwise (including without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “Distributions”),
then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this
Note) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as
of which the record holders of Common Stock are to be determined for such Distributions (provided, however, that to the extent
that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to the extent of the
Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution
(and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for
the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and
any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to
the same extent as if there had been no such limitation).


 




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15.AMENDING
THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment to this Note.


 


16.TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company, subject only to the provisions of Section 4.5 of the Securities Purchase Agreement.


 


17.REISSUANCE
OF THIS NOTE.


 


(a)Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 17(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred,
a new Note (in accordance with Section 17(d)) to the Holder representing the outstanding Principal not being transferred. The Holder
and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following
conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.


 


(b)Lost, Stolen
or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such
evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary
and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and
deliver to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal.


 




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(c)Note Exchangeable
for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in accordance with Section 17(d) and in principal amounts of at least $1,000) representing
in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.


 


(d)Issuance of
New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions
as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note,
from the Issuance Date.


 


18.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.


 


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


 




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20.CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and 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. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include
the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Note
instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections
of this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms
on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.


 


21.FAILURE OR
INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 21
shall permit any waiver of any provision of Section 3(d).


 


22.DISPUTE RESOLUTION.


 


(a)Submission
to Dispute Resolution.


 


(i)In the case
of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, a VWAP or a fair market value or the arithmetic
calculation of a Conversion Rate, or the applicable Redemption Price (as the case may be) (including, without limitation, a dispute
relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute
to the other party via facsimile or electronic mail (A) if by the Company, within two (2) Business Days after the occurrence of
the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder learned of the circumstances
giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Closing
Bid Price, such Closing Sale Price, such Conversion Price, , such VWAP or such fair market value, or the arithmetic calculation
of such Conversion Rate or such applicable Redemption Price (as the case may be), at any time after the second (2nd)
Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or
the Holder (as the case may be), then the Holder may, at its sole option, select an independent, reputable investment bank to resolve
such dispute.


 




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(ii)The Holder
and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 22 and (B) written documentation supporting its position with respect to such dispute,
in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date
on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all
of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required
Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither
the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).


 


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


 


(b)Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 22 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil Practice Law and Rules
(“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR §
7503(a) in order to compel compliance with this Section 22, (ii) a dispute relating to a Conversion Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 6(a), (B) the
consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed
issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii)
the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s
resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings,
determinations and the like that such investment bank determines are required to be made by such investment bank in connection
with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Note and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in
its sole discretion, shall have the right to submit any dispute described in this Section 22 to any state or federal court sitting
in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 22 and (v) nothing
in this Section 22 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 22).


 


 


 




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23.NOTICES;
CURRENCY; PAYMENTS.


 


(a)Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 8.4 of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting
the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the
Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen
(15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the Holder.


 


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


 


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


 




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


 


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


 


26.GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Except as otherwise required by Section
22 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The Cityof
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit,
any provision of Section 22. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.


 


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


 




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28.JUDGMENT
CURRENCY.


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


(c) “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any
issuance or sale (or deemed issuance or sale in accordance with Section 6) of shares of Common Stock (other than rights of the
type described in Section 5(b) hereof) that could result in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other
similar rights).


 


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


 


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


 


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


 


(g) “Bloomberg”
means Bloomberg, L.P.


 


(h)“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.


 




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


 


(j)“Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing
bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or,
if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m.,
New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market
for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for
such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security
as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or
the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.


 


(k)“Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially
issued the Note pursuant to the terms of the Securities Purchase Agreement.


 


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


 


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


 




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(n)“Eligible
Market” means 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, the OTCQX Marketplace or the OTCQB Marketplace operated by OTC Markets
Group Inc. (or any successor to any of the foregoing).


 


(o)“Equity
Conditions” means that each of the following conditions is satisfied: (i) on each day during the period beginning
sixty (60) calendar days prior to the applicable date of determination and ending on and including the applicable date of determination
(the “Equity Conditions Measuring Period”), either (x) the Registration Statement filed pursuant to the Registration
Rights Agreement shall be effective and the prospectus contained therein, as supplemented, shall be available for the resale by
the Holder of all shares of Common Stock issuable upon conversion of the Notes and as Interest Shares or (y) all shares of Common
Stock issuable upon conversion of the Notes and as Interest Shares shall be eligible for resale by the Holder without restriction
and without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation
on conversion of the Notes and other issuance of securities with respect to the Notes); (ii) on each day during the Equity Conditions
Measuring Period, the Common Stock (including all shares of Common Stock issuable upon conversion of this Note and as Interest
Shares) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading
on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of determination
due to business announcements by the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with
a reasonable prospect of delisting occurring) or pending either (A) in writing by such Eligible Market or (B) by falling below
the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then listed or designated for
quotation (as applicable); (iii) on each day during the Equity Conditions Measuring Period, the Company shall have delivered all
shares of Common Stock issuable upon conversion of this Note and as Interest Shares on a timely basis as set forth in Section 3
hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other
Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination may be
issued in full without violating Section 3(d) hereof; (v) on each day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated
or consummated; (vi) the Company shall have no knowledge of any fact that would reasonably be expected to cause (1) the Registration
Statement to not be effective or the prospectus contained therein, as supplemented, to not be available for the resale by the Holder
of all shares of Common Stock issuable upon conversion of the Notes and as Interest Shares or (2) any shares of Common Stock issuable
upon conversion of the Notes or as Interest Shares to not be eligible for resale by the Holder without restriction and without
the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion
of the Notes and other issuance of securities with respect to the Notes); (vii) the Holder shall not be in possession of any material,
non-public information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, officers,
directors (unless consented to by Holder); (viii) on each day during the Equity Conditions Measuring Period, the Company otherwise
shall have been in material compliance with each, and shall not have breached any provision, covenant, representation or warranty
of any Transaction Document; (ix) on each day during the Equity Conditions Measuring Period, there shall not have occurred any
Volume Failure or Price Failure; and (x) on each day during the Equity Conditions Measuring Period, there shall not have occurred
an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default.


 




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(p)“Equity
Conditions Failure” means, for any determination date, that on any day during the period commencing ten (10) calendar
days prior to such date of determination, the Equity Conditions have not been satisfied (or waived in writing by the Holder).


 


(q)“Excluded
Securities” means (A) shares of Common Stock or standard options to purchase Common Stock to directors, consultants,
officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan, provided that (1) all such issuances
(taking into account the shares of Common Stock issuable upon exercise of such options) after the date hereof pursuant to this
clause (A) do not, in the aggregate, exceed more than 15% of the Common Stock issued and outstanding immediately prior to the date
hereof and (2) the exercise price of any such options is not lowered, none of such options are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner
that adversely affects the Holder; (B) shares of Common Stock issued upon the conversion or exercise of Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A)
above) issued prior to the date hereof, including the Convertible Securities issued in the Investor May 2015 Financing, provided
that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (A) above) is not lowered, none of such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A) above) are amended
to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other
than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A) above)
are otherwise materially changed in any manner that adversely affects the Holder; (C) the Securities, shares of Common Stock issued
pursuant to the Notes and shares of Common Stock issued pursuant to the Registration Rights Agreement, and (D) shares of Common
Stock or Convertible Securities issued or issuable in connection with strategic alliances, acquisitions, mergers, and strategic
partnerships, provided, that (1) the primary purpose of such issuance is not to raise capital, (2) the purchasers or acquirers
of the securities in such issuance does not include any affiliate of the Company or any of its Subsidiaries and solely consists
of either (x) the actual participants in such strategic alliance or strategic partnership, (y) the actual owners of such assets
or securities acquired in such acquisition or merger or (z) the stockholders, partners or members of the foregoing Persons, (3)
the number or amount of securities issued to such Person by the Company shall not be disproportionate to such Person’s actual
participation in such strategic alliance or strategic partnership or ownership of such assets or securities to be acquired by the
Company, as applicable, (E) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution,
(F) the issuance of up to $500,000 of Common Stock to be sold in private placement transactions during the 12-month period from
the date hereof to Fieldstone Partners (or its affiliates) and/or Mablewood Investments (or its affiliates); provided that (1)
the terms of issuance of such Common Stock (or any securities convertible, exercisable or exchangeable into Common Stock) do not
contemplate the issuance of additional shares of Common Stock including by way of any reset, make-whole or similar provisions and
(2) the terms of such issuance do not provide for the right to include the registration of such shares of Common Stock on any registration
statement filed pursuant to the Registration Rights Agreement, and (G) shares of Common Stock to be issued pursuant to the employment
agreement dated May 13, 2014 by and between the Company and Rupert Ireland and the consulting agreement dated June 1, 2014 by and
between the Company and Brett A. Murray & Associates dated prior to the date hereof, provided that (1) such agreements are
not amended to increase the number of shares issuable thereunder and the terms of issuance of such Common Stock (or any securities
convertible, exercisable or exchangeable into Common Stock) do not contemplate the issuance of additional shares of Common Stock
including by way of any reset, make-whole or similar provisions and (2) such agreements do not provide for the right to include
the registration of such shares of Common Stock on any registration statement filed pursuant to the Registration Rights Agreement.


 




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(r)“Fundamental
Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more
related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving
corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange
offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company 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),
or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined
in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Voting Stock of the Company.


 


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


 


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


 


(u) “Closing
Date” shall have the meaning ascribed to such term in the Securities Purchase Agreement, which date is the date the
Company initially issued Notes (as defined in the Securities Purchase Agreement) pursuant to the terms of the Securities Purchase
Agreement.


 




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(v)“Interest
Notice Due Date” means the third (3rd) Trading Day immediately prior to the applicable Interest Date


 


(w)“Interest
Rate” means seven percent (7.0%) per annum, as may be adjusted from time to time in accordance with Section 2.


 


(x)“Make-Whole
Amount” means, as to any Conversion Amount on any Conversion Date, as to any Event of Default Redemption on any Event
of Default Redemption Date, or as to any Company Optional Redemption on any Company Optional Redemption Date, the amount of any
Interest that, but for (i) the Holder’s exercise of its conversion right pursuant to Section 3(c)(i); (ii) an Event of Default
Redemption pursuant to Section 4(b), or (ii) a Company Optional Redemption pursuant to Section 9, would have accrued with respect
to the Conversion Amount being converted or redeemed under this Note at the Interest Rate for the period from the applicable Conversion
Date, Event of Default Redemption Date or Company Optional Redemption Date, as the case may be, through the Maturity Date.


 


(y)“Maturity
Date” shall mean October 7, 2016 provided, however, the Maturity Date may be extended at the option of the Holder
through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental
Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity Date, provided further
that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited
pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not
limit the conversion of this Note.


 


(z)"Option
Value" means the value of an Option based on the Black and Scholes Option Pricing model obtained from the "OV"
function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the applicable Option if the issuance
of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Option if the
issuance of such Option is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination,
(ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg
as of the day immediately following the public announcement of (A) the Trading Day immediately following the public announcement
of the applicable Option if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the
issuance of the applicable Option if the issuance of such Option is not publicly announced, (iii) the underlying price per share
used in such calculation shall be the highest Weighted Average Price during the period beginning on the day prior to the execution
of definitive documentation relating to the issuance of the applicable Option and the public announcement of such issuance, (iv)
a zero cost of borrow and (v) a 360 day annualization factor.


 


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


 




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


 


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


 


(dd)“Permitted
Indebtedness” means (i) Indebtedness evidenced by the Notes, (ii) Indebtedness outstanding as of the quarter ended
May 30, 2015 (including the Investor May 2015 Financing), (iii) Indebtedness secured by Permitted Liens, (iv) Indebtedness incurred
by the Company that is made expressly subordinate in right of payment to the Notes, (v) obligations in respect of performance,
bid, appeal and surety bonds and completion guarantees and similar obligations provided in the ordinary course of business, (vi)
Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, (vii) Indebtedness consisting of the financing of insurance premiums or
take-or-pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business, (viii) capital
leases entered into in the ordinary course of business, (ix) Indebtedness related to trade payables incurred in the ordinary course
of the Company’s or its Subsidiaries’ business or credit card debt associated with the payment of the foregoing, (x)
Trade Indebtedness, and (xi) hedging activities relating to the Company’s oil and gas operations.


 


(ee)“Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings,
(iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price
of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B)
existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal or refinancing
of the indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase, (vi) Liens that do not have a Material Adverse Effect, (vii) any Liens from Permitted
Indebtedness, (vii) leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s
business, not interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (viii)
Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection
with the importation of goods, (ix) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event
of Default.


 




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(ff)“Price
Failure” means, with respect to a particular date of determination, the average VWAP of the Common Stock during the
five (5) consecutive Trading Day period ending on the Trading Day immediately preceding such date of determination (such period,
the “Price Failure Measuring Period”) fails to exceed $.15 (as adjusted for stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions). All such determinations to be appropriately adjusted for
any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such Price Failure
Measuring Period.


 


(gg)“Principal
Market” means, as of any date of determination, the principal securities exchange or securities market on which the
Common Stock is then traded.


 


(hh)“Qualified
Real Property” means real property reasonably prospective for oil and gas resources.


 


(ii)“Redemption
Notices” means, collectively, the Event of Default Redemption Notices and the Company Optional Redemption Notice,
and each of the foregoing, individually, a “Redemption Notice.”


 


(jj)“Redemption
Premium” means (i) in the case of the Events of Default described in Section 4(a) (other than Sections 4(a)(iv) through
4(a)(vi)), 135% or (ii) in the case of the Events of Default described in Sections 4(a)(iv) through 4(a)(vi), 100%.


 


(kk)“Redemption
Prices” means, collectively, Event of Default Redemption Prices and the Company Optional Redemption Price and each
of the foregoing, individually, a “Redemption Price.”


 


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


 


(mm)“Registration
Statement” means any registration statement required to be filed pursuant to the Registration Rights Agreement.


 


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


 


(oo)“Securities
Purchase Agreement” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and between
the Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.


 


(pp)“Subsidiaries”
shall have the meaning as set forth in the Securities Purchase Agreement.


 




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


 


(rr)“Trade
Indebtedness” means Indebtedness incurred by the Company in the normal course of drilling, operating, producing and
maintaining Qualified Real Property in connection with (i) vendor contracts, (ii) partnership, joint venture, farm-in, farm-out,
joint operating and similar arrangements or agreements, and (iii) related contractual obligations.


 


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


 


(tt)“Volume
Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading volume (as
reported on Bloomberg) of the Common Stock on the Principal Market on any Trading Day during the thirty (30) consecutive Trading
Day period ending on the Trading Day immediately preceding such date of determination (such period, the “Volume Failure
Measuring Period”) is less than $20,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions). All such determinations to be appropriately adjusted for any stock splits, stock dividends, stock
combinations, recapitalizations or other similar transactions during such Volume Failure Measuring Period.


 


(uu)“Voting
Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof
have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers,
trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other
class or classes shall have or might have voting power by reason of the happening of any contingency).


 


(vv)“VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its “AQR” function 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 VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.


 




    	40



     

    

 


31.DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose
such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate
to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company
or its Subsidiaries. Nothing contained in this Section 31 shall limit any obligations of the Company, or any rights of the Holder,
under Section 4.4 of the Securities Purchase Agreement.


 


[Signature page follows]


 




 


 


 


 


 


 






    	41



     

    

 





 


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


 


	
        VIRTUS
        OIL AND GAS CORP.

         

	By:_________________________________
	Name: M. Rupert Ireland
	Title: President and Chief Executive Officer

 


 


 


 


 


 


 


 


 


 


 


 


Senior Convertible Note - Signature Page


 






    	 



     

    

 


EXHIBIT
I



VIRTUS OIL AND GAS CORP.

CONVERSION NOTICE


 


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


 





	Date of Conversion:	 
	Aggregate Principal to be converted:	 
	Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted:	 
	AGGREGATE CONVERSION AMOUNT	 
	 TO BE CONVERTED:	 
	Please confirm the following information:	 
	Conversion Price:	 
	Number of shares of Common Stock to be issued:  	 












 


Please issue the Common Stock into which the Note is being converted in the following name and to the following address:




 





	Issue to:	 
	 	 
	 	 
	Facsimile Number:	 
	Holder:	 
	By:	 
	Title:	 
	Dated:	 
	Account Number:	 
	 if electronic book entry transfer)	 
	Transaction Code Number:	 
	(if electronic book entry transfer)	 




 


 






    	 



     

    

 





ACKNOWLEDGMENT


 


The Company hereby acknowledges
this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.


 


	VIRTUS OIL AND GAS CORP.
	 
	By:_________________________________
	Name:
	Title: