Exhibit 4.1


 


EXHIBIT A


 


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


 


Original Issue Date: July [___], 2021


 


$_______________


 


12.5%
ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE


DUE
JULY [___]1, 2022


 


THIS 12.5% ORIGINAL ISSUE
DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 12.5% Original Issue Discount Senior
Secured Convertible Debentures of Sysorex, Inc., a Nevada corporation (the “Company”), having its principal place of
business at 13880 Dulles Corner Lane, Suite 175, Herndon, VA 20171, designated as its 12.5% Original Issue Discount Secured Convertible
Debenture due July [__]2, 2022 (this debenture, the “Debenture” and, collectively with the other debentures
of such series, the “Debentures”).


 


FOR VALUE RECEIVED, the Company
promises to pay to ________________________ or its registered assigns (the “Holder”), or shall have paid pursuant to
the terms hereunder, the principal sum of $_______________ on July [__], 2022 (subject to extension as provided herein, the “Maturity
Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest
to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof.
This Debenture is subject to the following additional provisions:


 


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


 


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


 





 



		1	12 months from the date the Debentures are first issued under
the Securities Purchase Agreement.



		2	12 months from the date the Debentures are first issued under
the Securities Purchase Agreement.



 






     


     


    

 


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


 


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


 


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


 


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


 


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


 


“Change
of Control Transaction” means the occurrence after the date hereof of any of: (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective
control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) equal to or in excess
of 50% of the voting securities of the Company (other than by means of conversion of the Debentures), (b) the Company merges into or consolidates
with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders
of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity
of such transaction, (c) the Company (and all of its Subsidiaries, taken as a whole) sells or transfers all or substantially all of its
assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate
voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a 3 year period of more
than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the
Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the
date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth in clauses (a) through (d) above.


 






    2 


     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


“Permitted
Indebtedness” means: (a) the indebtedness evidenced by the Debentures, (b) the indebtedness existing on the Original Issue Date
and set forth on Schedule 3.1(bb) attached to the Purchase Agreement, (c) indebtedness of up to an aggregate of $2,000,000, inclusive
of any interest, fees, penalties or other amounts due or payable thereunder, (d) indebtedness under agreements or arrangements with respect
to refinancing the Indebtedness set forth on Schedule 3.1(bb) to the Purchase Agreement, provided that the terms of such refinancing
relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as
a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument
issued in connection therewith, are no less favorable in any material respect to the Company than the existing Indebtedness being refinance,
(e) Indebtedness in respect of capital leases and purchase money obligations for fixed or capital assets, (f) indebtedness supported
by the U.S. Small Business Administration (the “SBA”) under the Payroll Protection Program and any future similar relief
programs pursuant to the (i) Coronavirus Aid, Relief, and Economic Security Act of 2020, as supplemented by regulations promulgated by
the SBA, and (ii) future Congressional legislation which is enacted into law and contains forgiveness of indebtedness provisions, and
(g) any trade accounts payable incurred in the ordinary course of business.


 


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


 






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“Prepayment
Amount” means: the product of (i) the sum of (a) the outstanding principal amount of this Debenture, plus (b) accrued and unpaid
interest hereon and any and all other amounts which may be payable pursuant hereto, multiplied by (ii) 1.15 if the Company prepays this
Debenture within 365 calendar days after the Original Issue Date, or (y) 1.30 if the Debenture is automatically extended pursuant to the
terms of Section 2(f) and the Company prepays this Debenture prior to the end of such extended term.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of July ___, 2021 by and among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.


 


“Qualified
Offering” shall mean an offering of Common Stock (and other securities potentially) for an aggregate price of at least $40,000,000
resulting in the listing for trading of the Common Stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).


 


“Qualified
Offering Conversion Price” shall mean 75% of the Qualified Offering Price.


 


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


 


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


 


“Senior
Indebtedness” means indebtedness owing pursuant to a non-recourse factoring and security agreement effective June 11, 2020 by
and between the Company and SouthStar Financial, LLC, as such indebtedness may be refinanced, replaced, amended, or extended from time
to time.


 


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


 


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


 


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


 






    5 


     


    

 


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


 


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


 


Section 2.Interest.


 


a) Payment
of Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this
Debenture at the rate of 8% per annum, payable quarterly on January 1, April 1, July 1, and October 1, beginning on the first such date
after the Original Issue Date, on each Conversion Date (as to that principal amount then being converted) and on the Maturity Date (each
such date, an “Interest Payment Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment
shall be due on the next succeeding Business Day), in cash (subject to the Holder’s right, in its sole discretion, to convert any
accrued but unpaid interest into shares of Common Stock in accordance with Section 4). To the extent that interest owing for any
given calendar quarter is in an amount less than $1,000, the Company shall be permitted to add the interest to the outstanding principal
balance and, in such event, shall not be required to make payment to the Holder for that calendar quarter.


 


b) Reserved.


 


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


 






    6 


     


    

 


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


 


e) Prepayment.
The Company shall have the option to prepay this Debenture at any time after the Original Issue Date, following seven (7) Trading Days
written notice to the Holder, at an amount equal to the Prepayment Amount.


 


f) Extension
of Maturity Date. In the event that any portion of this Debenture remains outstanding at the original Maturity Date of this Debenture
(for purposes of this Section 2(f) only, the “Original Maturity Date”), the Company and the Holder, upon mutual
agreement, have the right to automatically extend the Maturity Date of this Debenture for an additional 3 month period such that the Debenture
shall be due and payable on [___], 20223; provided however, that immediately after the expiration of the Original Maturity
Date, all amounts due and payable on the Debenture shall be increased by the Extension Amount. By way of example, if immediately prior
to the Original Maturity Date, the amount due and payable to the Holder on the Debenture is an aggregate of $1,000,000 including all accrued
but unpaid interest and all other amounts, costs, expenses and liquidated damages due in respect of this Debenture, then immediately following
the Original Maturity Date, with no further action by the Company or the Holder, the amount due and payable on this Debenture shall be
increased to $1,100,000 (for the avoidance of doubt, if immediately thereafter Company then determined to prepay the Debenture in full,
the Holder would be due the Prepayment Amount which would be $1,430,000). At least 10 Business Days prior to such extension, the Company
must file a Current Report on Form 8-K with the Commission and/or issue a press release disclosing its intention to extend the Maturity
Date, during which period the Holder shall retain the right to convert this Debenture, including accrued interest due thereon, on the
terms set forth herein.


 


Section 3.Registration
of Transfers and Exchanges.


 


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


 


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


 


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


 





 



		3	3 months from the Maturity Date.



 






    7 


     


    

 


Section 4.Conversion.


 


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


 


b) Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to lesser of: (i) $18.00, subject to adjustment
herein and (ii) 80% of the average of the VWAP of the Company’s Common Stock during the 5 Trading Day period immediately prior to
the applicable Conversion Date (on an as adjusted basis giving effect to any splits, dividend and the like during such 5 Trading Day period)
(the “Original Conversion Price”); provided however, that if at any time after the Original Issue Date there shall
be an Event of Default, the conversion price in effect on any Conversion Date shall be the lesser of: (i) the $18.00, subject to
adjustment herein, and (ii) 50% of the average of the VWAP of the Company’s Common Stock during the 5 Trading Day period immediately
prior to the applicable Conversion Date (on an as adjusted basis giving effect to any splits, dividend and the like during such 5 Trading
Day period) (the “Alternate Conversion Price” and, the Alternate Conversion Price, together with the Original Conversion
Price, the “Conversion Price”). Nothing in this Section 4(b) shall limit a Holder’s right to pursue actual
damages or declare an Event of Default pursuant to Section 8 hereof and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.
The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or
under applicable law.


 






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		c)	Mechanics of Conversion.



 


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


 


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


 


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


 


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


 


 



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


 


 



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vi. Reservation
of Shares Issuable Upon Conversion. On or before 90 days from the date of the Purchase Agreement, the Company covenants that it will
at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon
conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures), not less than 300% of such
aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable
(taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount
of this Debenture and payment of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if a registration statement covering the resale of the
Conversion Shares is then effective under the Securities Act, shall be registered for public resale in accordance with such registration
statement.


 


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


 


viii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Debenture shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided
that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery
of any such Conversion Shares upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall
not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of
the Conversion Shares. The Company shall pay all attorney fees required for the issuance of attorney legal opinions for removal of restrictive
legends on Conversion Shares.


 






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d) Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right to convert
any portion of this Debenture, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the
Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of
this Debenture with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any
of its Affiliates or Attribution Parties, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation,
any other Debentures or the Warrants) beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set
forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in
this Section 4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by
the Holder together with any Affiliates and Attribution Parties) and of which principal amount of this Debenture is convertible shall
be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination
of whether this Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates or Attribution
Parties) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial Ownership Limitation. To
ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion
that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation
to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice
by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written
or oral request of a Holder, the Company shall within 1 Trading Day confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be
4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon conversion of this Debenture held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99%
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue
to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is
delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor
holder of this Debenture.


 






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


 


Section 5.Certain Adjustments.


 


a) Stock
Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of principal
of or interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the
event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 5 shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.


 




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


 






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


 


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


 




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


 




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


 


g) Notice
to the Holder.


 


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


 


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


 






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Section 6.Ranking.
The indebtedness evidenced by this Debenture and the payment of the principal amount and interest shall be Senior (as hereinafter defined)
to, and have priority in right of payment over, all indebtedness of Company, now outstanding or hereinafter incurred. “Senior,”
as used herein, shall be deemed to mean that, in the event of any default in the payment of the obligations represented by this Debenture
(after giving effect to “cure” provisions, if any) or of any liquidation, insolvency, bankruptcy, reorganization or
similar proceedings relating to Company, all sums payable on this Debenture shall first be paid in full, with interest, if any, before
any payment is made upon any other indebtedness, now outstanding or hereinafter incurred, except for the Senior Indebtedness, and, in
any such event, any payment or distribution of any character which shall be made in respect of any other indebtedness of Company, other
than the Senior Indebtedness, shall be paid over to Holders of the Debentures for application to the payment hereof and thereof, unless
and until the obligations under this Debenture (which shall mean the principal amount, interest and any costs and expenses payable under
this Debenture) shall have been paid and satisfied in full.


 


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


 


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


 






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


 


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


 


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


 


e) repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than (i) the Debentures if on a pro-rata basis,
(ii) the repayment of certain Indebtedness as set forth in the Transaction Documents, and (iii) regularly scheduled principal and interest
payments as such terms are in effect as of the Original Issue Date or subsequently in effect with respect to any Permitted Indebtedness
which is refinanced after the Original Issue Date, provided that such payments shall not be permitted if, at such time, or after giving
effect to such payment, any Event of Default exist or occur;


 


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


 


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


 


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


 


Section 8.Events of Default.


 


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


 


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


 






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


 


iii. a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur
under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or
any Subsidiary is obligated other than those that pertain to Permitted Indebtedness or Permitted Liens;


 


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


 


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


 


vi. the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness
for borrowed money or money due under any long term leasing or factoring arrangement that: (a) involves an obligation greater than $250,000,
whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise become due and payable;


 






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


 


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


 


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


 


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


 


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


 


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


 


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


 


b) Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but unpaid
interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s
election, immediately due and payable in cash at the Mandatory Default Amount. Commencing upon the occurrence of any Event of Default,
the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted
under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to
or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby
waives, any presentment, demand, protest or other notice of any kind, and the Holder may upon the expiration of any applicable grace period
enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration
may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the
Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent thereon.


 






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Section 9.Miscellaneous.


 


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


 


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


 


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


 






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


 


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


 


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


 




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g) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative
and in addition to all other remedies available under this Debenture and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Debenture. The Company covenants to the Holder
that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach,
the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened
breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide
all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance
with the terms and conditions of this Debenture.


 


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


 


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


 


j) Secured
Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and each Subsidiary pursuant
to the Security Agreement, dated as of July ___, 2021 by and among the Company, the Subsidiaries of the Company and the Secured Parties
(as defined therein).


 






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Section 10. Disclosure.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Debenture, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material nonpublic information relating to the Company or its Subsidiaries,
the Company shall within 2 Business Days after such receipt or delivery publicly disclose such material nonpublic information on a Current
Report on Form 8-K or otherwise. If the Company believes that a notice contains material non-public information relating to the Company
or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of
any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material nonpublic
information relating to the Company or its Subsidiaries.


 


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


 


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


 


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


 


(Signature Page Follows)


 




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


 


	 	SYSOREX, Inc.
	 	 
	 	By:	                                                   
	 	Name:  	 Wayne Wasserberg
	 	Title:	 Chief Executive Officer
	 	 	 
	 	E-Mail for delivery of Notices:

 vincentloiacono@sysorexinc.com



 


 


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