Exhibit 10.4


 


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 BUT HAVE BEEN ISSUED 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: ___________________, 2012


Original Conversion Price (subject to adjustment
herein): $0.035


 


$____________________


 


PHOTOTRON HOLDINGS, INC.


6% SENIOR SECURED CONVERTIBLE NOTE


 


THIS NOTE is one of a series
of duly authorized and validly issued 6% Senior Secured Convertible Notes of Phototron Holdings, Inc., a Delaware corporation (the
“Company”), having its principal place of business at 717 E. Gardena Blvd., Gardena, California 90248, designated
as its 6% Senior Secured Convertible Notes (this Note, the “Note” and, collectively with the other Notes of
such series, the “Notes”).


 


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 April 15, 2015 (the “Maturity
Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, or such later date
as may be permitted by the Holder as set forth in Section 2 hereof, and to pay interest to the Holder on the aggregate unconverted
and then outstanding principal amount of this Note in accordance with the provisions hereof.


 


The Company’s obligations
under this Note and the other Transaction Documents are secured by the Collateral (as defined in the Security Agreement) pursuant
to the terms of the Security Documents.


 


This Note is subject to
the following additional provisions:


 


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


 


“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 sixty (60) 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 sixty (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 calls a
meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) the Company or
any 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.


 


“Business Day”
means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on
which banking institutions in the State of California are authorized or required by law or other governmental action to close.


 


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


 


“Conversion Shares”
means, collectively, the shares of Common Stock issued or issuable upon conversion of this Note in accordance with the terms hereof,
including, without limitation, shares of Common Stock issued or issuable as interest hereunder or as damages under the Transaction
Documents.


 


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


 


“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any
stock or option plan duly adopted for such purpose by the Company’s board of directors or a committee of the Company’s
board of directors established for such purpose and (b) securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the Original Issue Date, provided that such securities have not been amended since the Original
Issue Date to directly or indirectly effectively increase the number of such securities or to decrease the exercise, exchange or
conversion price of such securities.


 


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


 


“Purchase Agreement”
means the Securities Purchase and Exchange Agreement, dated as of March 16, 2012, among the Company and the original Holders, as
amended, modified or supplemented from time to time in accordance with its terms.


 


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


 


“Transaction Documents”
shall have the meaning set forth in the Purchase Agreement.


 


2.                 
Interest; Prepayment.


 


(a)               
Interest Rate. Interest shall accrue daily on the outstanding principal amount of this
Note at a rate per annum equal to six percent (6%), subject to Section 2(d) hereof.


(b)              
Payment of Interest. On the Maturity Date, the Company shall pay to the Holder any
accrued but unpaid and unconverted interest hereunder on the aggregate unconverted and then outstanding principal amount of this
Note, and on each Conversion Date (as defined herein), the Company shall pay to the Holder any accrued but unpaid and unconverted
interest hereunder on that portion of the principal amount then being converted. The amount of interest payable on each Conversion
Date and the Maturity Date (the “Interest Amount”) may be added to, and included with, the principal amount
being so converted on such date. 


(c)               
Interest Calculations. Interest shall be calculated on the basis of a three hundred
sixty (360)-day year, consisting of twelve (12) thirty (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 hereunder will be paid to the Person in whose name this
Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”).
Except as otherwise provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common
Stock to the holders of the Notes, then such payment of cash shall be distributed ratably among the holders of the then-outstanding
Notes based on their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.


(d)              
Default Interest. After the occurrence and during the continuance of any Event of Default,
the interest rate on this Note shall accrue at an interest rate equal to the lesser of twelve percent (12%) per annum, compounded
daily, or the maximum rate permitted under applicable law. 


(e)               
Prepayment. The Company may prepay this Note in cash at any time prior to the Maturity
Date without penalty upon ten (10) days’ prior written notice to the Holder. 


3.                 
Registration of Transfers and Exchanges.


 


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


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


(c)               
Transfer Restrictions. Any transfer
of this Note shall also be subject to the applicable restrictions and requirements of Sections 3.2 and 4.1 of the Purchase Agreement
and other provisions of the Transaction Documents.


4.                 
Conversion.


 


(a)               
Voluntary Conversion. At any time after the Original Issue Date until this Note is
no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder,
at any time and from time to time (subject to the conversion limitations set forth in Section 4(c) 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
(a “Notice of Conversion”), specifying therein the principal amount of this Note and any accrued but unpaid
interest thereon to be converted and the future date (which may be the same date as the date such notice is deemed effective pursuant
to Section 7(a) hereof) 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. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note
to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted.
Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the
applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date
of such conversion(s). In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative
in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason
of the provisions of this Section 4(a), following conversion of a portion of this Note, the unpaid and unconverted principal
amount of this Note may be less than the amount stated on the face hereof.


(b)              
Conversion Price. The conversion price shall be equal to $0.035, subject to
adjustment herein (the “Conversion Price”).


 


 


(c)               
Conversion Limitations. 


(i)          
Holder’s Restriction on Conversion. The Company shall not effect any conversion
of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect
to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and
any other person or entity acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of
shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of
shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted principal amount of this Note beneficially
owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including,
without limitation, any other Notes) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 4(c), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, in the event that the
Holder (together with the Holder’s Affiliates, and any other person or entity acting as a group together with the Holder
or any of the Holder’s Affiliates) owns, immediately prior to giving effect to the conversion set forth on the applicable
Notice of Conversion, more than 9.9% of the outstanding shares of Common Stock, then the limitation contained in this Section
4(c) shall not apply to such conversion. To the extent that the limitation contained in this Section 4(c) applies,
the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates)
and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of
a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation
to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible,
in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed
to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions
set forth in this Section 4(c) 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 contemlated 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(c), 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: (A) the Company’s most recent
periodic or annual report, as the case may be; (B) a more recent public announcement by the Company; or (C) a more recent notice
by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.9% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. By written notice to the Company, the Holder may at any time and from time to time increase or
decrease the Beneficial Ownership Limitation to any other percentage specified in such notice (or specify that the Beneficial
Ownership Limitation shall no longer be applicable), provided, however, that (A) any such increase (or inapplicability) shall
not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (B) any such increase or
decrease shall apply only to the Holder and not to any other holder of Notes. The provisions of this Section 4(c) shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section
4(c) to correct this Section 4(c) (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such limitation. The limitations contained in this Section
4(c) shall apply to a successor holder of this Note.


(ii)        
Unless otherwise approved in writing by the Company, any individual conversion under Section
4(a) hereof must be for at least an amount equal to the greater of (A) Thirty-Five Thousand Dollars ($35,000) of the principal
amount of this Note and any accrued but unpaid interest thereon and (B) one hundred thousand (100,000) Conversion Shares (such
number to be appropriately adjusted for any stock splits, stock dividends and similar events).


(d)              
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 (A) the outstanding principal
amount of this Note to be converted plus any accrued but unpaid interest thereon, by (B) the Conversion Price.


(ii)        
Delivery of Certificate Upon Conversion. Not later than five (5) Business Days after
each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the
Holder a certificate or certificates representing the Conversion Shares representing the number of Conversion Shares being acquired
upon the conversion of this Note. 


(iii)      
Failure to Deliver Certificates. If in the case of any Notice of Conversion such certificate(s)
or shares are not delivered to or as directed by the applicable Holder by the fifth (5th) Business Day after the Conversion
Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate
or certificates, to rescind such conversion, in which event the Company shall promptly return to the Holder any original Note delivered
to the Company and the Holder shall promptly return to the Company the Common Stock certificates representing the principal amount
of the Note unsuccessfully tendered for conversion to the Company.


(iv)      
Partial Liquidated Damages. If the Company fails for any reason to deliver to the Holder
such certificate(s) or shares pursuant to Section 4(d)(ii) hereof by the fifth (5th) Business Day after the Share
Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000.00 of
principal amount being converted, $7.00 per Business Day (increasing to $12.50 per Business Day on the fifth (5th) Business
Day after such liquidated damages begin to accrue) for each Business Day after the Share Delivery Date until such certificates
are delivered. Nothing herein shall limit the Holder’s right to pursue actual damages or declare an Event of Default pursuant
to Section 6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and
the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking
to enforce damages pursuant to any other section hereof or under applicable law. Notwithstanding any portion of the foregoing to
the contrary, if the Company fails to deliver to the Holder such certificate(s) or shares by the Share Delivery Date pursuant to
Section 4(d)(ii) hereof because (A) the conversion by the Holder is delivered in connection with a proposed sale by the
Holder of the Conversion Shares under Rule 144 promulgated under the Securities Act, and (B) in connection with such sale, the
Holder has failed to deliver customary representation letters, as prepared by the brokerage firm of Holder in the ordinary course
of its business, appropriate to evidence compliance with such rule, then the liquidated damages provisions herein shall not begin
to accrue until the Business Day immediately following the date that the Holder has delivered such representation letters.


(v)        
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion.
In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate(s)
or shares by the Share Delivery Date pursuant to Section 4(d)(ii) hereof, 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
by which (1) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds
(2) the product of (a) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion
at issue multiplied by (b) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including
any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount
equal to the principal amount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would
have been issued if the Company had timely complied with its delivery requirements under Section 4(d)(ii) hereof. For example,
if the Holder purchases Common Stock having a total purchase price of $11,000.00 to cover a Buy-In with respect to an attempted
conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions)
giving rise to such purchase obligation was a total of $10,000.00 under clause (A) of the immediately preceding sentence, the Company
shall be required to pay the Holder $1,000.00. The Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.


(vi)      
Reservation of Shares Issuable Upon Conversion. The Company covenants that it will
at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance
upon conversion of this Note and payment of interest on this Note, each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not less than such
aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement)
be issuable (taking into account the adjustments of Section 5 hereof) upon the conversion of the outstanding principal amount
of this Note and payment of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.


(vii)    
Fractional Shares. No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of this Note. As to any fraction of a share which 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. The issuance of certificates for shares of the Common Stock on conversion
of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates, provided that the Company shall not be required to pay any tax that may
be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other
than that of the Holder of this Note and the Company shall not be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.


5.                 
Certain Adjustments.


 


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


(b)              
Subsequent Equity Sales. If, at any time while this Note is outstanding, the Company
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 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 and in such event, the
Conversion Price shall be reduced, concurrently with such issue, to the lowest price per share for which any one (1) such share
of Common Stock or Common Stock Equivalent has been issued. For purposes of this paragraph, the “lowest price per share for
which any one such share of Common Stock or Common Stock Equivalent has been issued” shall be equal to the sum of the lowest
amount of consideration (but not less than $.01) received or receivable by the Company with respect to any such share (the “Base
Conversion Price”). Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect
of an Exempt Issuance. The Company shall notify the Holder in writing, no later than five (5) Business Days following the
issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive
Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant
to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion
Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately
refers to the Base Conversion Price in the Notice of Conversion.


(c)               
Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company
effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially
all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (iv) the Company effects any reclassification 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 (each,
a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right
to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder
of one (1) share of Common Stock (the “Alternate Consideration”). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions,
any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note consistent
with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this Section 5(c) and insuring that this Note (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. Notice of any such proposed
Fundamental Transaction and of such election shall be given to the Holder at least fifteen (15) calendar days before such closing.
In connection with such purchase, the Holder shall assign this Note to the Company or its assignee, free and clear of any liens,
claims or encumbrances other than transfer restrictions under applicable securities laws.


(d)              
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
treasury shares, if any) issued and outstanding.


(e)               
Notice to the Holder.


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


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


6.                 
Events of Default.


 


(a)               
“Event of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental
body), provided that an event specified in clauses (i), (ii), or (iii) below will not become an Event of Default unless and until
it is not cured, if possible to cure, within the earlier to occur of (y) five (5) Business Days after
notice of such failure sent by the Holder or by any other Holder and (z) ten (10) Business Days after the Company has become or
should have become aware of such failure:


(i)                
any default in the payment of (A) the principal amount of any Note or (B) interest, liquidated
damages and other amounts owing to a Holder on any Note, as and when the same
shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise);


(ii)              
the Company shall fail to observe or perform any other covenant or agreement contained in
the Notes;


(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 any of the Transaction Documents;


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


(v)              
the Company or any Significant Subsidiary shall be subject to a Bankruptcy Event;
or


(vi)            
the Company shall provide at any time notice to the Holder, including by way of public announcement,
of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof.


(b)              
Acceleration Upon Event of Default. If any Event of Default occurs, the outstanding
principal amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof
through the date of acceleration, shall become, at the Holder’s election (which the Holder shall not make more than the later
of thirty (30) calendar days after the date (i) such Event of Default is cured or otherwise resolved and (ii) the Holder is aware
of such cure or resolution), immediately due and payable in cash. After the occurrence and during the continuance of any Event
of Default, the interest rate on this Note shall accrue as set forth in Section 2(d) hereof. If there is such an acceleration,
then upon the payment in full of the outstanding principal amount of this Note, plus accrued but unpaid interest and other amounts
owing in respect thereof, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such
acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its
rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such
time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon. 


7.                 
Miscellaneous.


 


(a)               
Notices. Any and all notices or other communications or deliveries to be provided by
the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above,
or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance
with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed
to each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile
number or address appears, at the principal place of business of the Holder. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a)
the date of transmission or delivery, if such notice or communication is delivered via facsimile at the facsimile number, or delivered
by a U.S. nationally recognized overnight courier service to the address, set forth on the signature pages attached hereto prior
to 5:30p.m. (Los Angeles time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number, or delivered by such courier service to the address, set forth on the signature
pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (Los Angeles time) on any Business Day, or (c)
upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall
be as set forth on the signature pages attached hereto.


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


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


(d)              
Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of
California, 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 County of Los Angeles (the “Los Angeles Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the Los Angeles 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 Los Angeles Courts, or such Los Angeles Courts are improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Note or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce
any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorneys’ fees and other costs and expenses reasonably 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
Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision
of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more
occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that
term or any other term of this Note. Any waiver by the Company or the Holder must be in writing.


(f)               
Severability. If any provision of this Note is invalid, illegal or unenforceable, the
balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under applicable law. 


(g)              
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.


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


(i)                
Assumption. Any successor to the Company or any surviving entity in a Fundamental Transaction
shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Note and the other Transaction
Documents pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably
withheld or delayed) and (ii) issue to the Holder a new Note of such successor entity evidenced by a written instrument substantially
similar in form and substance to this Note, including, without limitation, having a principal amount and interest rate equal to
the principal amount and the interest rate of this Note and having similar ranking to this Note, which shall be satisfactory to
the Holder (any such approval not to be unreasonably withheld or delayed).  The provisions of this Section 7(i) shall
apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations of this
Note.


(j)                
Usury. This Note shall be subject to the anti-usury limitations contained in the Purchase
Agreement.


 


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



     

     

    

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


 


 


	
        PHOTOTRON HOLDINGS, INC.

         

         

	
        By:__________________________________________

        Name:

        Title:

         

        Address for Notice:

         

        717 E. Gardena Blvd.

        Gardena, CA 90248

        Fax: (818) 992-0202

	 
	
        With a copy to (which shall not constitute notice):

         

        Stubbs Alderton & Markiles, LLP

        15260 Ventura Boulevard, 20th Floor

        Sherman Oaks, California 91403

        Attention: Greg Akselrud, Esq.

        Fax: (818) 444-6303



 



     

     

    

ANNEX
A


 


NOTICE OF CONVERSION





The undersigned hereby
elects to convert principal under the 6% Senior Secured Convertible Note (the “Note”) due April 15, 2015 of
Phototron Holdings, Inc., a Delaware corporation (the Company”), into shares of common stock (the “Common
Stock”) of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are
to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.
No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.


 


By the delivery
of this Notice of Conversion, the undersigned represents and warrants to the Company that (check one):


 


________its ownership of the
Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section
13(d) of the Exchange Act.


 


________immediately prior to
giving effect to this Notice of Conversion, it owns more than 9.9% of the outstanding shares of Common Stock, as determined in
accordance with Section 4 of the Note.


 


The undersigned
agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer
of the aforesaid shares of Common Stock pursuant to any prospectus.


 


Conversion calculations:Date to
Effect Conversion: 


 


Principal Amount of Note
to be Converted: 


 


Interest Accrued
on Account


of Conversion at Issue: 





Number of shares of Common
Stock to be issued (not less than an amount equal to the greater of (A) $35,000 of the Principal Amount the Note and
any accrued but unpaid interest thereon and (B) 100,000 shares): 





Signature: 





Name: 





Address for Delivery
of Common Stock Certificates: 








 


Or


 


DWAC Instructions:


 


Broker No:


Account No: