THIS NOTE AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.


 


8% FORM OF SENIOR SECURED CONVERTIBLE
NOTE


 


Elephant Talk Communications, Corp.

8% Senior Secured Convertible Note


 


Issuance Date: March
29, 2012


Original Principal Amount:
$8,800,000 


No.: [A-1]


 


FOR VALUE RECEIVED,
Elephant Talk Communications, Corp., a Delaware corporation (the “Company”), hereby promises to pay to the
order of [HOLDER] or its registered assigns (“Holder”) the amount set out above as the Original
Principal Amount (as reduced pursuant to the terms hereof pursuant to any Installment Payment (as defined below), redemption, conversion
or otherwise, the “Principal”) when due, whether upon any Installment Date, the Maturity Date (as defined below),
acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”)
on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date
(the “Issuance Date”) until the same becomes due and payable, whether upon any Installment Date, the Maturity
Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible
Note (including all Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one
of an issue of Convertible Notes issued pursuant to the Securities Purchase Agreement (as defined below) (collectively, the “Notes”
and such other Convertible Notes, the “Other Notes”). Certain capitalized terms used herein are defined in Section
25.


 


1.          PAYMENTS
OF PRINCIPAL AND INTEREST. The Company will pay the Principal of and Interest and premium, if any, on the Notes as set forth
herein. The amounts of principal and Interest corresponding to each Installment Date are set forth on Exhibit A attached
hereto, without giving effect to any Default Interest, Stock Replacement Payment, Late Charges or other adjustments as provided
in this Note. For the avoidance of doubt, no Installment Amount shall be reduced as a result of the Holder’s conversion of
any part of this Note (other than a Conversion effected in accordance with Section 2(g)); provided, however, if the entire outstanding
Principal, Interest, Late Charges and other amounts due hereunder is less than the applicable Installment Amount for any Installment
Date such lesser amount shall be due and payable on such Installment Date. Interest on the Notes will accrue at an annual rate
equal to eight percent (8%) (the “Interest Rate”); provided, however, that upon the occurrence
and during the continuance of an Event of Default, until such Event of Default is cured (if applicable), the Interest Rate shall
be equal to the lesser of (x) nineteen percent (19%) per annum and (y) the maximum applicable legal rate per annum. Interest shall
be paid on each Installment Date commencing on the Initial Installment Date. If an Installment Date is not a Trading Day, payment
shall instead be made on the next succeeding Trading Day, and no additional Interest shall accrue on the Notes for the intervening
period. Interest on the Notes will be computed on the basis of a 365-day year and the actual number of days elapsed.


 



    	 



    	 



    

 


2.          INSTALLMENT
PAYMENTS.


 


(a)          General.
On each applicable Installment Date, the Company shall pay to the Holder the Installment Amount due on such Installment Date, at
the Company’s option, in cash or shares of Common Stock or any combination of cash and shares of Common Stock subject to
the provisions of this Section 2; provided, however, that no portion of the Installment Amount may be paid in shares
of Common Stock unless (A) the Equity Conditions are satisfied, or waived by the Holder, as applicable, (B) the Holder’s
Exchange Cap Allocation (as defined below) and/or Authorized Share Allocation (as defined below) has not been exceeded and (C)
the portion of the Installment Amount to be paid in shares of Common Stock does not, unless waived by the Holder, exceed the Dollar
Volume Limitation.


 


(b)          Installment
Notice. On a date not less than twenty two (22) Trading Days, but in no event more than twenty-five (25) Trading Days, prior
to each Installment Date (the “Installment Notice Date”), the Company shall deliver a written notice by e-mail
or facsimile (an “Installment Notice”) to the Holder, which shall either: (i) confirm that the entire applicable
Installment Amount shall be paid in cash; or (ii) (A) state that the Company elects to pay all or a portion of the Installment
Amount in shares of Common Stock, (B) specify the portion which the Company elects to pay in cash (such amount, the “Cash
Payment Amount”) and the portion that the Company elects to pay in shares of Common Stock (such portion a “Stock
Payment Amount”), which amounts when added together must equal the applicable Installment Amount, (C) certify that the
Equity Conditions are then satisfied, (D) specify the applicable Dollar Volume Limitation (expressed in U.S. Dollars) and certify
that the Stock Payment Amount does not exceed such applicable Dollar Volume Limitation and (E) certify that the Holder’s
Exchange Cap Allocation and/or Authorized Share Allocation has not been exceeded. If (x) the Company does not timely deliver an
Installment Notice in accordance with this Section 2(b) or (y) the Equity Conditions are not satisfied, then, unless waived by
the Holder, the Company shall be deemed to have delivered an Installment Notice electing to pay the entire Installment Amount in
cash. Any Cash Payment Amount shall be paid in accordance with Section 2(c) and any Stock Payment Amount shall be paid in accordance
with Section 2(d). Each Installment Notice, whether actually given or deemed given, shall be irrevocable and may not be modified
or amended.


 


(c)          Mechanics
of Cash Payment. On each Installment Date, to the extent that the Company elects to pay all or any portion of the Installment
Amount in cash as provided above, the Company shall pay the applicable Cash Payment Amount for such Installment Date to the Holder
by wire transfer of immediately available funds.


 



    	2



    	 



    

 


(e)          Mechanics
of Stock Payment. To the extent that the Company elects to pay all or any portion of the applicable Installment Amount in shares
of Common Stock, the applicable Stock Payment Amount shall be paid as follows:


 


(i)          twenty-one
(21) Trading Days prior to the applicable Installment Date (the “Advance Date”), the Company shall deliver to
the Holder a number of shares of Common Stock determined by dividing (x) the Stock Payment Amount for such Installment Date by
(y) ninety percent (90%) of the VWAP on the Trading Day immediately preceding such Advance Date (the “Advance Shares”),
as such number of Advance Shares may be reduced pursuant to clause (y) of Section 2(d)(ii); and


 


(ii)         not
later than two (2) Trading Days after the applicable Installment Date, the Company shall deliver an additional number of shares
of Common Stock (the “True-Up Shares”), if any, to the Holder equal to the positive difference between (a) the
Stock Payment Amount divided by the Stock Payment Price for such Installment Date and (b) the Advance Shares (without taking into
account any reduction in the number of Advance Shares delivered to the Holder as a result of clause (y) of this Section 2(d)(ii));
provided; however, that if clause (b) exceeds clause (a), then, at the Company’s option, the Holder shall (x)
return such excess number of shares Common Stock to the Company within five (5) Trading Days after the Installment Date, and such
excess shares shall be deemed cancelled for all purposes effective as of the applicable Installment Date or (y) the Holder shall
retain such excess number of shares of Common Stock and the number of Advance Shares that Company is required to deliver on the
next Advance Date shall be reduced by the amount of such excess number of shares of Common Stock. For the avoidance of doubt, the
Holder shall not have any liability to the Company to the extent that any Advance Shares that are returned to the Company pursuant
to the immediately preceding sentence decrease in value following the applicable Advance Date.


 


(f)          Busted
Stock Payments. Notwithstanding any other provision of this Section 2, to the extent that the Company elects to pay all or
any portion of an Installment Amount in shares of Common Stock:


 


(i)          to
the extent that the aggregate number of Advance Shares or True-Up Shares to be delivered to the Holder pursuant to Section 2(d)
in respect of any individual Stock Payment Amount would cause such Holder to exceed the Maximum Percentage (as defined below),
then, (I) the Holder shall provide written notice to the Company that such delivery of all or a portion of the Advance Shares or
True-Up Shares would cause such Holder to exceed the Maximum Percentage, and (II) in addition to delivery of the number of Advance
Shares or True-Up Shares that would not cause such Holder to exceed the Maximum Percentage, the Company shall pay to the Holder
in lieu of such number of Advance Shares or True-Up Shares that would cause such Holder to exceed the Maximum Percentage (such
excess number of shares, the “Excess Shares”), not more than the later of (x) three (3) Trading Days after such
Installment Date and (y) three (3) Trading Days after the date of the Holder’s written notice, an amount in cash equal to
the portion of the Stock Payment Amount that would otherwise be payable in respect of the Excess Shares;


 


 



    	3



    	 



    

  


(ii)         to
the extent that such Stock Payment Amount, when aggregated with any shares of Common Stock already issued to the Holder in respect
of this Note, would cause the Holder’s Exchange Cap Allocation or Authorized Share Allocation, as the case may be, to be
exceeded, then that portion of such Stock Payment Amount that would not exceed the Holder’s Exchange Cap Allocation or Authorized
Share Allocation, as the case may be, shall be delivered to the Holder in shares of Common Stock as provided above and the Company
shall pay to the Holder, not more than three (3) Trading Days after the Installment Date, an amount in cash equal Stock Replacement
Payment in lieu of any the portion of the Stock Payment Amount that would cause the Holder’s Exchange Cap Allocation or Authorized
Share Allocation, as the case may be, to be exceeded;


 


(iii)        if
the Equity Conditions are neither (x) satisfied nor (y) waived in accordance with the terms hereof, as applicable, on the Trading
Day immediately preceding the Advance Date and/or on the Advance Date, or if the VWAP cannot be determined on the Trading Day immediately
preceding the Advance Date, or if the Company fails to deliver the Advance Shares to the Holder on the Advance Date, then the Holder
may, at its option, upon written notice to the Company, require the Company to pay to the Holder, not later than two (2) Trading
Days after the Installment Date, an amount of cash equal to the Stock Replacement Payment in lieu of any the portion of the Stock
Payment Amount; or


 


(iv)        if
subsequent to the delivery of the Advance Shares, (A) the Equity Conditions are neither satisfied nor waived in accordance with
the terms hereof, as applicable, on any day during the Stock Payment Pricing Period or (B) if the VWAP cannot be determined on
any day during the Stock Payment Pricing Period, then the Holder may, at its option, elect in a written notice to the Company to
redeliver all or any portion of the Advance Shares to the Company and the Company shall pay to the Holder, not later than two (2)
Trading Days after such Installment Date, an amount of cash equal to the Stock Replacement Payment in lieu of such portion of the
Stock Payment Amount for which such Holder has elected in writing to redeliver Advance Shares to the Company. For the avoidance
of doubt, to the extent this Section 2(e)(iv) applies, then by the second (2nd) Trading Day after such Installment Date, the Company
must pay to the Holder an amount of cash and Advance Shares equal in value to at least the applicable Cash Payment Amount plus
an amount equal to the product of (x) a fraction the numerator of which is the average VWAP of the Common Stock for the applicable
Stock Payment Pricing Period and the denominator of which is the Stock Payment Price for such Stock Payment Pricing Period and
(y) the entire Stock Payment Amount.


 


The “Stock Replacement
Payment” shall be determined according to the following formula:


 


SRP = (S/X) * Y


 


For the purposes of the foregoing
formula:


 


SRP = Stock Replacement Payment


 


S = the Stock Payment Amount
(or (A) in the case that either or both of the Holder’s Exchange Cap Allocation and/or Authorized Share Allocation is exceeded
as provided above, only that portion of such Stock Payment Amount that would exceed the Holder’s Exchange Cap Allocation
and/or Authorized Share Allocation, as applicable, and/or (B) in the case of Section 2(e)(iv) that portion of the Stock Payment
Amount for which the Holder has elected in its written notice to redeliver Advance Shares to the Company).


 



    	4



    	 



    

 


X = the Stock Payment
Price for the applicable Installment Date.


 


Y = the highest VWAP
during the Stock Payment Pricing Period for the applicable Installment Date.


 


(g)          Delivery
of Shares. Any shares of Common Stock required to be delivered by the Company to the Holder under this Section 2 shall be credited
to the Holder’s or its designee’s balance account with Depository Trust Company (“DTC”) through
its Deposit/Withdrawal at Custodian system. In addition, the provisions of Section 3(c)(ii) shall apply to the delivery of shares
Common Stock under this Section 2 mutatis mutandis as if each date when shares of Common Stock are required to be delivered
under this Section 2 was a Share Delivery Date (as defined below).


 


(h)          Conversion
Rights Unaffected.  Notwithstanding any provision to the contrary, the Holder may deliver a Conversion Notice (as defined
below) on the 26th, 27th or 28th Trading day prior to any Installment Date with respect to all
or any portion of the specific Installment Amount to be paid on such Installment Date.  Accordingly, the Conversion Amount
for any such conversion shall reduce the applicable Installment Amount for such Installment Date dollar for dollar.


 


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


 


(a)          Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date (including, without
limitation, on the Maturity Date), the Holder shall be entitled to convert all or any portion of the outstanding and unpaid Conversion
Amount (as defined below) into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section
3(c) and Section 2(h), at the Conversion Rate. The Company shall not issue any fraction of a share of Common Stock upon any conversion.
If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of
a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar
taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.


 


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


 


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


 


 



    	5



    	 



    

  


(ii)         “Conversion
Price” means, as of any Conversion Date (as defined below) or other date of determination, $[___] [NTD: 115% OF THE
TRAILING 30 DAY CLOSING PRICE PRIOR TO CLOSING], subject to adjustment as provided herein. Notwithstanding the foregoing, following
a Launch Failure, the Conversion Price for any Conversion Date shall be the lowest of (a) the Conversion Price in effect on the
Trading Day immediately prior to such Launch Failure, (b) the amount equal to 90% of the average of the five lowest VWAPs for the
twenty (20) consecutive Trading Days prior to such Conversion Date, and (c) the amount equal to 90% of the lowest reported trade
price for the Common Stock as reported by Bloomberg on such Conversion Date (the “Reset Conversion Price”).
The Holder’s determination of the Reset Conversion Price shall be final and binding on the Company absent fraud or manifest
error.


 


(c)          Mechanics
of Conversion.


 


(i)          Conversion
Prior to Maturity Date. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile, e-mail or otherwise), for receipt on or prior to 11:59:59 p.m., New York time,
on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit B (the “Conversion
Notice”) to the Company. If and only if required by Section 3(c)(iii), within two (2) Trading Days following a conversion
of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery
to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated
by Section 15(b)). On or before the second (2nd) Trading Day following the date of receipt of a Conversion Notice, the
Company shall transmit by facsimile and e-mail an acknowledgment of confirmation, in the form attached hereto as Exhibit C,
of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”).
On or before the fifth (5th) Trading Day following the date of receipt of a Conversion Notice, the Company shall credit
such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system. If this Note is physically surrendered for conversion
pursuant to Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after
receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section
15(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock
issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common
Stock on the Conversion Date.


 



    	6



    	 



    

  


(ii)         Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, within five (5) Trading Days after the
Company’s receipt of a Conversion Notice (whether via facsimile, e-mail or otherwise) (the “Share Delivery Date”),
to credit the Holder’s or its designee’s balance account with DTC for such number of shares of Common Stock to which
the Holder is entitled upon the Holder’s conversion of any Conversion Amount (a “Conversion Failure”),
then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day that
the issuance of such shares of Common Stock is not timely effected an amount equal to 1% of the product of (A) the sum of the number
of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (B) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could
have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice
to the Company, may, at its sole option, void its Conversion Notice with respect to, and retain or have returned (as the case may
be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion
Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice
pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if the Company shall fail to credit the Holder’s
or its designee’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon
the Holder’s conversion hereunder by the Share Delivery Date, and if on or after such Share Delivery Date the Holder (or
any other Person in respect, or on behalf, of the Holder) purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock,
or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon
such conversion that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to
the Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion,
either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf,
of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to credit the Holder’s
balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion
hereunder shall terminate, or (ii) promptly honor its obligation to so credit the Holder’s balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder and pay cash to the
Holder in an amount equal to the Buy-In Price. Nothing herein shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive
relief.


 


(iii)        Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and
addresses of the holders of each of the Notes and the principal amount of the Notes held by such holders (the “Registered
Notes”). A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment
or sale on the Register. Upon its receipt of a request to assign, transfer or sell all or part of any Registered Note by the holder
thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes
in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or
transferee pursuant to Section 15. Notwithstanding anything to the contrary set forth in this Section 3, upon conversion of any
portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to
the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be
delivered to the Company as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note.
The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the
case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.


 



    	7



    	 



    

  


(iv)        Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for
the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion,
the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro
rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted
for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on
such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion
of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute
in accordance with Section 18.


 


(v)         Cash
Settlement. Notwithstanding anything contained herein to the contrary, to the extent that the number of shares of Common
Stock to be issued in connection with any conversion hereunder would exceed the Holder’s Exchange Cap Allocation and/or Authorized
Share Allocation or, for purposes of a forced conversion under Section 8(b), the Maximum Percentage, such conversion shall
be “cash settled” and the Company shall pay to such Holder an amount in cash equal to the sum of (x) the Conversion
Amount being converted and (y) the Conversion Premium (as defined below). The “Conversion Premium” means the
product of (v) the difference between (A) the VWAP of the Common Stock on the Conversion Date and (B) the Conversion Price in effect
on such Conversion Date and (w) the number of shares of Common Stock to which the Holder is entitled in connection with such Conversion,
no later than two (2) Trading Days after the date of the applicable Conversion Notice. Notwithstanding the foregoing, the Company’s
aggregate liability under this Section 3(c)(v) shall not exceed $8,800,000 (to be divided pro rata per Note) less any amortization
payments. For the avoidance of doubt, the foregoing does not limit the Holder’s other rights and remedies hereunder at law,
in equity or otherwise.


 



    	8



    	 



    

  


(d)          Limitations
on Conversions.


 


(i)          Beneficial
Ownership. Notwithstanding anything to the contrary set forth in this Note, at no time may the Company issue to the Holder
shares of Common Stock if the number of shares of Common Stock to be issued pursuant to such issuance would exceed, when aggregated
with all other shares of Common Stock beneficially owned by the Holder at such time (as determined in accordance with Section 13(d)
of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules thereunder, including without limitation, shares
of Common Stock that would be aggregated with the Holder’s beneficial ownership for purpose of determining a group under
Section 13(d) of the 1934 Act), the number of shares of Common Stock that would result in the Holder beneficially owning (as determined
in accordance with Section 13(d) of the 1934 Act and the rules thereunder, including without limitation, shares of Common Stock
that would be aggregated with the Holder’s beneficial ownership for purpose of determining a group under Section 13(d) of
the 1934 Act) more than 4.9% (the “Maximum Percentage”) of the then issued and outstanding shares of Common
Stock. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.9% specified in such notice; provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to
the Holder and not to any other holder of the Notes. The provisions of this paragraph shall be implemented in a manner otherwise
than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Maximum Percentage limitation. For any reason at any time, upon the written
or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation, pursuant to this Note or other securities issued pursuant to the Securities
Purchase Agreement.


 


(ii)         Principal
Market Regulation. Subject to Sections 2(e)(ii) and 3(c)(v), the Company shall not issue any shares of Common Stock pursuant
to the terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common
Stock which the Company may issue pursuant to the terms of this Note without breaching the Company’s obligations under the
rules or regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations,
the “Exchange Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the
approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock
in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required,
which opinion shall be reasonably satisfactory to the Holder. Until such approval or such written opinion is obtained, no Purchaser
(as defined in the Securities Purchase Agreement) shall be issued in the aggregate, pursuant to the terms of this Notes, shares
of Common Stock in an amount greater than the product of (i) the Exchange Cap multiplied by (ii) the quotient of (1) the
original principal amount of Notes issued to such Purchaser pursuant to the Securities Purchase Agreement on the Closing Date (as
defined in the Securities Purchase Agreement) divided by (2) the aggregate original principal amount of all Notes issued to
all the Purchasers pursuant to the Securities Purchase Agreement on the Closing Date (with respect to each Purchaser, the “Exchange
Cap Allocation”). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the
transferee shall be allocated a pro rata portion of such Purchaser's Exchange Cap Allocation, and the restrictions of the prior
sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee.
Upon conversion in full of a Purchaser’s Notes, the difference (if any) between such Purchaser’s Exchange Cap Allocation
and the number of shares of Common Stock actually issued to such Purchaser upon such Purchaser’s conversion in full of such
Notes shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro rata basis in proportion
to the aggregate principal amount of the Notes then held by each such holder.


 



    	9



    	 



    

  


4.          RIGHTS
UPON EVENT OF DEFAULT.


 


(a)          Event
of Default. Each of the following events shall constitute an “Event of Default”:


 


(i)          the
suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a
period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period;


 


(ii)         the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within
three (3) Trading Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including,
without limitation, by way of public announcement or through any of its agents (which the Company fails to renounce the actions
of its agent within three (3) Trading Days after becoming aware of such action), at any time, of its intention not to comply, as
required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions
of the Notes, other than pursuant to Section 3(d);


 


(iii)        at
any time following the tenth (10th) consecutive day that the Holder’s Authorized Share Allocation is less than
the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount
of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise);


 


(iv)        the
Company’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under
this Note (including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder and/or
the Company’s failure to deliver Advance Shares or True-Up Shares when and as due as provided in Section 2) or any other
Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated hereby and thereby;


 


(v)         the
occurrence of any default under, redemption of or acceleration prior to maturity of any Indebtedness (as defined in the Securities
Purchase Agreement but excluding any Indebtedness arising out of the Notes) of the Company or any of its Subsidiaries;


 


(vi)        bankruptcy,
insolvency, reorganization, receivership, conservatorship or liquidation proceedings or other proceedings for the relief of debtors
shall be instituted by or against the Company or any Significant Subsidiary, and, if instituted against the Company or any such
Subsidiary by a third party, shall not be dismissed within ninety (90) days of their initiation;


 


 



    	10



    	 



    

 


(vii)       the
commencement by the Company or any Significant Subsidiary of a voluntary case or proceeding under any applicable federal, state
or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt
or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Significant Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Significant Subsidiary or of any substantial
part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action or the commencement by any Person of a UCC foreclosure sale of a material
portion of the Company’s or any Significant Subsidiary’s assets or any other similar action under federal, state or
foreign law;


 


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


 


(ix)         a
final judgment or judgments (excluding judgments relating to any actions set forth on Schedule 2.1(k) of the Securities Purchase
Agreement that are not in excess of $2,000,000) for the payment of money aggregating in excess of $500,000 are rendered against
the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay;


 


(x)          (a)
the Company shall default on any of its obligations under any other debenture or any mortgage, 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 agreement in an amount exceeding $150,000 and such default shall result
in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;


 


(xi)         any
breach of the Company’s covenants set forth in Sections 3.9 (if such breach is not cured within 2 days of the date of breach),
3.10 (if such breach is not cured within 12 days of such breach), 3.11 (if such breach is not cured within 12 days of such breach),
3.12 (if such breach is not cured within 12 days of such breach), 3.13 (if such breach is not cured within 12 days of such breach),
3.15 (or if the Company fails to obtain the stockholder approval contemplated by such Section 3.15), if either such breach is not
cured within 5 days of such breach, 3.16 , 3.17 (if such breach is not cured within 12 days of such breach) and/or 3.21 (if such
breach is not cured within 12 days of such breach) of the Securities Purchase Agreement;


 



    	11



    	 



    

  


(xii)        other
than as specifically set forth in another clause of this Section 4(a), the Company breaches
any material representation, warranty, covenant or other term or condition of any Transaction Document (including this Note), except,
in the case of a breach of a material covenant or other term or condition that is curable, only if such breach remains uncured
for a period of five (5) days after notice by Holder;


 


(xiii)       any
material provision of any Security Document or any other Transaction Document shall at any time for any reason (other than pursuant
to the express terms thereof) cease to be valid and binding on or enforceable against the Company or any Subsidiary intended to
be a party thereto, only if such breach remains uncured for a period of five (5) days after notice by Holder, or the validity
or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary
or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof,
or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any
such Security Document or other such Transaction Document;


 


(xiv)      any
Security Document, after delivery thereof pursuant to the Securities Purchase Agreement, shall, other than pursuant to the express
terms thereof, for any reason fail or cease to create a valid, perfected first priority Lien (as defined in the Security Documents)
in favor of the Collateral Agent (as defined in the Security Documents) for the benefit of the holders of the Notes on any Collateral
(as defined in the Security Documents) purported to be covered thereby;


 


(xv)       any
bank at which any deposit account, blocked account, or lockbox account of the Company or any Subsidiary is maintained shall fail
to comply with any material term of any deposit account, blocked account, lockbox account or similar agreement to which such bank
is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control
or possession of any investment property of the Company or any Subsidiary shall fail to comply with any of the terms of any investment
property control agreement to which such Person is a party (it being understood that only accounts pursuant to which the Collateral
Agent has requested account control agreements should be subject to this clause (xv));  


 


(xvi)      until
the date that any Lien therein is released in accordance with the terms of the Security Documents, any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured;


 


(xvii)     a
material false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity
Conditions are satisfied, the Dollar Volume Limitation has not been exceeded or as to whether any Event of Default has occurred;


 



    	12



    	 



    

  


(xviii)    the
failure of any Registration Statement required to be filed pursuant to the Registration Rights Agreement to be declared effective
by the SEC on or prior to the date that is ninety (90) days after the applicable Effectiveness Deadline (as defined in the Registration
Rights Agreement), or, while the applicable Registration Statement is required to be maintained effective pursuant to the terms
of the Registration Rights Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to any holder of the Notes for sale of all of such holder's
Registrable Securities (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive trading days or for more than an aggregate
of thirty (30) trading days in any 365-day period (other than days during an Allowable Grace Period (as defined in the Registration
Rights Agreement)); provided, however, that notwithstanding anything to the contrary contained herein, the Company's failure to
meet one or more of the requirements of this Section 4(a)(xviii) shall not constitute an Event of Default if all of the Registrable
Securities then held by the holder of the Notes may be sold without the requirement to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursuant to Rule 144 (including any volume limitations or public information requirements);


 


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


 


(xx)        the
occurrence of a Launch Failure.


 


(b)          Remedies.
If an Event of Default occurs and is continuing with respect to any of the Notes, the Holder may declare all of the then outstanding
Principal of this Note and all other Notes held by the Holder, including any Interest and unpaid Late Charges, to be due and payable
immediately, except that in the case of an Event of Default arising from events described in clauses (vi), (vii) and/or (viii)
of Section 4(a), this Note shall become due and payable automatically without further action or notice. In the event of such acceleration,
the amount due and owing to the Holder shall be 110% of the outstanding Principal of the Notes held by the Holder (plus all accrued
and unpaid Interest and Late Charges, if any). The Holder’s remedies under this Note shall be cumulative.


 


5.          RIGHTS
UPON FUNDAMENTAL TRANSACTION.


 


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


 



    	13



    	 



    

  


(b)          Notice
of a Fundamental Transaction; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading
Days prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction,
the Company shall deliver written notice thereof via facsimile, e-mail and overnight courier to the Holder (a “Fundamental
Transaction Notice”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction
Notice or the Holder becoming aware of a Fundamental Transaction if a Fundamental Transaction Notice is not delivered to the Holder
in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after
(A) consummation of such Fundamental Transaction or (B) the date of receipt of such Fundamental Transaction Notice, the Holder
may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Fundamental Transaction
Redemption Notice”) to the Company, which Fundamental Transaction Redemption Notice shall indicate the Principal amount
of this Note that the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5
shall be redeemed by the Company in cash at a price equal to 115% of the Principal amount being redeemed plus all accrued and unpaid
Interests and Late Charges (the “Fundamental Transaction Redemption Price”) and such Fundamental Transaction
Redemption Price shall be due and payable in cash not later then two (2) Trading Days after the consummation of such Fundamental
Transaction. Redemptions required by this Section 5 shall have priority to payments to stockholders in connection with such
Fundamental Transaction. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the
Fundamental Transaction Redemption Price (together with any Late Charges thereon) is paid in full, the Principal amount of this
Note submitted for redemption under this Section 5(b) (together with any accrued and unpaid Interest and Late Charges thereon)
may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3.


 



    	14



    	 



    

  


6.          RIGHTS
UPON OTHER CORPORATE EVENTS. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in
addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this
Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as
the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. The provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions
of this Section 6(b) shall apply similarly and equally to successive Corporate Events and shall be applied without regard
to any limitations on the conversion or redemption of this Note.


 


7.          RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.


 


(a)          Adjustment
of Conversion Price upon Issuance of Common Stock. So long as all or any portion of the Note remains outstanding, if and whenever
on or after the Issuance Date the Company issues or sells, or in accordance with this Section 7(a) is deemed to have issued or
sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account
of the Company) for a consideration per share less than a price equal to the Conversion Price in effect immediately prior to such
issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the
Applicable Price shall be reduced to an amount equal to an amount obtained by dividing the Applicable Price by a fraction, the
numerator of which shall be the product of (i) the total number of shares of Common Stock outstanding immediately after such Dilutive
Issuance multiplied by (ii) the Applicable Price, and the denominator of which shall be an amount equal to the sum of (a) the number
of shares of Common Stock outstanding immediately prior to such Dilutive Issuance multiplied by the Applicable Price plus (b) the
aggregate consideration received by the Company (determined as provided below) for such Dilutive Issuance. Notwithstanding the
foregoing, no adjustments shall be made under this Section 7 with respect to any Exempt Issuance. “Exempt Issuance”
shall mean the issuance of (i) shares of Common Stock or securities convertible or exchangeable into Common Stock to officers,
directors, employees and consultants to the Company and (ii) up to fifteen (15) million shares of Common Stock or securities convertible
or exchangeable into fifteen (15) million shares of Common Stock as all or part of the consideration for the acquisition (whether
by merger or otherwise) by the Company for stock or assets of any other entity in a transaction approved by the Board of Directors
of the Company. For purposes of determining the adjusted Conversion Price under this Section 7(a), the following shall be
applicable:


 



    	15



    	 



    

  


(i)          Exercise
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to
be outstanding and to have been issued and sold by the Company at the time of the exercise of such Option. For purposes of this
Section 7(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any
such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option”
shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon exercise of such Option and upon conversion, exercise or exchange
of any Convertible Security issuable upon exercise of such Option and (y) the lowest exercise price set forth in such Option
for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option minus (2) the sum of all amounts paid or payable to
the holder of such Option (or any other Person) upon the exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by,
or benefit conferred on, the holder of such Option (or any other Person).


 


(ii)         Exercise
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the
time of the conversion, exercise or exchange of such Convertible Securities for such price per share. For the purposes of this
Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise
or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one share of Common Stock upon the conversion, exercise or exchange
of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for which one share
of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable
to the holder of such Convertible Security (or any other Person) upon the exercise of such Convertible Security plus the value
of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any
other Person).


 


(iii)        Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the
Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price,
additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or
sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of
the Issuance Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if such
adjustment would result in an increase of the Conversion Price then in effect.


 



    	16



    	 



    

  


(iv)        Calculation
of Consideration Received. If any Option or Convertible Security is issued or deemed issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, (x) such
Option or Convertible Security (as applicable) will be deemed to have been issued for consideration equal to the Black Scholes
Consideration Value thereof and (y) the other securities issued or sold or deemed to have been issued or sold in such integrated
transaction shall be deemed to have been issued for consideration equal to the difference of (I) the aggregate consideration
received by the Company minus (II) the Black Scholes Consideration Value of each such Option or Convertible Security (as applicable).
If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common
Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such
security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options
or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as
the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly
by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of
an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all
parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.


 


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


 


(b)          Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 5 or Section 7(a),
and so long as all or any portion of the Note remains outstanding, if the Company at any time on or after the Issuance Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
Without limiting any provision of Section 5, 6 or Section 7(a), if the Company at any time on or after the Issuance Date
combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.
Any adjustment pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated
hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.


 



    	17



    	 



    

  


(c)          Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly
applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated
by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board
of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the
rights of the Holder, provided that no such adjustment pursuant to this Section 7(c) will increase the Conversion Price as otherwise
determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be borne by the Company.


 


(d)          No
Modification of Company’s Covenants. For the avoidance of doubt, nothing contained in this Section 7 shall be deemed
to modify or limit the Company’s covenants contained in the Securities Purchase Agreement.


 


8.          COMPANY’S
RIGHT OF OPTIONAL REDEMPTION AND FORCED CONVERSION.


 


(a)          Company’s
Right of Optional Redemption.


 


(i)          At
any time after the one (1) year anniversary of the Issuance Date, the Company shall have the right to redeem a portion or the entire
outstanding amount of this Note (including all Principal, Interest, Late Charges and any other amounts payable hereunder) (a “Company
Optional Redemption”) at a redemption price equal to 115% thereof (together, the “Company Redemption
Price”) subject to the provisions of this Section 8(a). The Company shall deliver written notice of a Company Optional
Redemption (a “Company Optional Redemption Notice”) to the Holder thirty (30) Trading Days prior to the date
set by the Company for such Company Optional Redemption (the “Company Redemption Date”). Once delivered, a Company
Optional Redemption Notice shall be irrevocable. The Company Redemption Price shall be due and payable by the Company in cash.
If the Company elects to cause a Company Optional Redemption pursuant to this Section 8(a), then it must simultaneously take the
same action with respect to the Other Notes and if such redemption is for a portion of this Note such redemption shall be pro rata
among the Holders.


 



    	18



    	 



    

  


(ii)         At
any time after a Launch Failure, the Company shall have the right to redeem a portion or the entire outstanding amount of this
Note (including all Principal, Interest, Late Charges and any other amounts payable hereunder) (a “LF Company Optional
Redemption”) at a redemption price equal to 100% thereof (together, the “LF Company Redemption
Price”) subject to the provisions of this Section 8(a). The Company shall deliver written notice of an LF Company Optional
Redemption (a “LF Company Optional Redemption Notice”) to the Holder one (1) Trading Day prior to the date set
by the Company for such LF Company Optional Redemption (the “LF Company Redemption Date”). Once delivered,
an LF Company Optional Redemption Notice shall be irrevocable. The LF Company Redemption Price shall be due and payable by the
Company in cash. If the Company elects to cause an LF Company Optional Redemption pursuant to this Section 8(b), then it must simultaneously
take the same action with respect to the Other Notes and if such redemption is for a portion of this Note such redemption shall
be pro rata among the Holders.


 


(iii)        For
the avoidance of doubt, the Holder may convert all or any portion this Note at any time prior to the Company Redemption Date or
LF Company Redemption Date, as applicable, notwithstanding the Company’s delivery of a Company Optional Redemption Notice
or LF Company Optional Redemption Notice, as applicable. To the extent, that the Holder converts all or any portion of the Note
prior to the Company Redemption Date or LF Company Redemption Date, as applicable, the Holder shall not be entitled to receive
the Company Redemption Price or the LF Company Redemption Price, as applicable, for the Conversion Amount so converted.


 


(b)          Forced
Conversion.


 


(i)          If
the VWAP of the Common Stock equals or exceeds 150% of the Conversion Price then in effect on each of thirty (30) consecutive Trading
Days (the “Conversion Occurrence”), then the Company may state its intention to cause the conversion of one
hundred (100) percent of this Note at the Conversion Price in effect as of the Forced Conversion Date (as defined below) by providing
an irrevocable written notice (the “Conversion Occurrence Notice”) to the Holder; provided that such Conversion
Occurrence Notice shall be sent within one (1) Trading Day after a Conversion Occurrence and must be sent concurrently to the holders
of all Notes. The Conversion Occurrence Notice shall indicate that the Company seeks to cause conversion of one hundred (100) percent
of this Note and shall set forth the date for such conversion of the Note (the “Forced Conversion Date”), which
date shall be thirty (30) Trading Days after the date the Conversion Occurrence Notice is delivered (the “Conversion Notice
Period”). The Company’s right to force conversion of this Note pursuant to this Section 8(b)(i) is a one-time right
to force conversion.


 


(ii)         Notwithstanding
the foregoing, the Company may not effect a forced conversion of this Note pursuant to this Section 8(b) unless:


 


a.           the
Equity Conditions are satisfied, or waived by the Holder, during each day of the Conversion Notice Period;


 


b.           the
number of shares of Common Stock to be issued in connection with any such forced conversion would not cause the Holder to exceed
the Maximum Percentage, the Holder’s Exchange Cap Allocation and/or Authorized Share Allocation. However, at the option of
the Holder, conversion of the portion of this Note that may not be converted because such conversion would cause the Holder to
exceed the Maximum Percentage, the Holder’s Exchange Cap Allocation and/or Authorized Share Allocation shall be deferred
until such time as the conversion hereof shall not exceed such limits.


 



    	19



    	 



    

  


c.           The
conversion shall occur on the Forced Conversion Date, and the Company shall deliver the required number of shares to the Holder
in accordance with Section 3(c)(i) mutatis mutandis. For the avoidance of doubt, if the Company fails to deliver the required
number of shares of Common Stock on the Forced Conversion Date in accordance with Section 3(c)(i) mutatis mutandis the Holder
shall have the remedies set forth in Section 3(c)(ii).


 


d.           Nothing
in this Note shall limit the Holder’s right to convert after the Conversion Occurrence Notice has been received but before
actual forced conversion. Without limiting the foregoing, the Holder may submit a Conversion Notice for the specific portion of
the Note subject to a forced conversion at any time prior to the Forced Conversion Date notwithstanding the delivery of a Conversion
Occurrence Notice.


 


9.          NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined
in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith
carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this
Note. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of
Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall take all such actions
as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares
of Common Stock upon the conversion of this Note, and (iii) shall, so long as any of the Notes are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting
the conversion of the Notes, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the
conversion of the Notes then outstanding (without regard to any limitations on conversion).


 



    	20



    	 



    

  


10.         RESERVATION
OF AUTHORIZED SHARES.


 


(a)          Reservation.
The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each
of the Notes equal to 225% of the entire Conversion Rate with respect to the entire Conversion Amount of each such Note as of the
Issuance Date. So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes and other issuances
hereunder, including Section 2, 225% of the number of shares of Common Stock as shall from time to time be necessary to effect
the conversion of all of the Notes then outstanding, provided that at no time shall the number of shares of Common Stock so reserved
be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions)
(the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for issuance hereunder
and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based on the original
principal amount of the Notes held by each holder on the Issuance Date or the date of the increase in the number of reserved shares
(as the case may be) (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise
transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated
to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders. Following a Launch
Failure, the Company may not issue any shares of Common Stock except pursuant to this Note and the Other Notes.


 


(b)          Insufficient
Authorized Shares. If, notwithstanding Section 10(a), and not in limitation thereof, at any time while any of the Notes
remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy
its obligation to reserve for issuance upon conversion of the Notes or other issuances of shares of Common Stock hereunder, including
Section 2, at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting
the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with
such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders
that they approve such proposal.


 


11.         VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided
in this Note.


 


12.         PARTICIPATION.
In addition to any adjustments pursuant to Section 7, the Holder, as the holder of this Note, shall be entitled to receive such
dividends paid and distributions made to the holders of Common Stock to the same extent as if the Holder had converted this Note
into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of Common Stock
on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently with
the dividend or distribution to the holders of Common Stock (provided, however, to the extent that the Holder’s right to
participate in any such dividend or distribution would result in the Holder exceeding the Maximum Percentage, then the Holder shall
not be entitled to participate in such dividend or distribution to such extent (or the beneficial ownership of any such shares
of Common Stock as a result of such dividend or distribution to such extent) and such dividend or distribution to such extent 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 Maximum Percentage).


 



    	21



    	 



    

  


13.         AMENDING
THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment to this Note.
No consideration shall be offered or paid to the Holder to amend or consent to a waiver or modification of any provision of this
Note unless the same consideration is also offered to all of the holders of the Other Notes. The Holder shall be entitled, at its
option, to the benefit of any amendment to any of the Other Notes.


 


14.         TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company.


 


15.         REISSUANCE
OF THIS NOTE.


 


(a)          Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 15(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being
transferred, a new Note (in accordance with Section 15(d)) to the Holder representing the outstanding Principal not being
transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of
Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note.


 


(b)          Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal.


 


(c)          Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 15(d) and in principal amounts of at least $1,000) representing
in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.


 



    	22



    	 



    

  


(d)          Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining
outstanding (or in the case of a new Note being issued pursuant to Section 15(a) or Section 15(c), the Principal designated by
the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall
have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall
have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on
the Principal and Interest of this Note, from the Issuance Date.


 


16.         REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this
Note (including, without limitation, compliance with Sections 2, 3 and 7).


 


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


 


18.         CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note.


 



    	23



    	 



    

  


19.         FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.


 


20.         DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, the Closing Bid Price, the Closing Sale
Price, the VWAP, the Stock Replacement Payment, the Dollar Volume Limitation, the Exchange Cap Allocation, the Authorized Share
Allocation, or fair market value (as the case may be) or the arithmetic calculation of the Conversion Rate (as the case may be),
the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case
may be) via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute to the
Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder learned
of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or
calculation within two (2) Business Days of such disputed determination or arithmetic calculation (as the case may be) being
submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days, submit via facsimile
(a) the disputed determination of the Conversion Price, the Closing Bid Price, the Closing Sale Price, the VWAP, the Stock Replacement
Payment, the Dollar Volume Limitation, the Exchange Cap Allocation, the Authorized Share Allocation, or fair market value (as the
case may be) to an independent, reputable U.S. investment bank selected by the Holder or (b) the disputed arithmetic calculation
of the Conversion Rate (as the case may be) to the Company’s independent, outside accountant. The Company shall cause at
its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case
may be) and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives such
disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination
or calculation (as the case may be) shall be binding upon all parties absent demonstrable error or fraud.


 


21.         NOTICES;
PAYMENTS.


 


(a)          Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 7.4 of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of
all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon
any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property to all holders of shares of Common Stock
or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to
the Holder.


 



    	24



    	 



    

  


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


 


(c)          Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth
herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of
the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction
Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal
to interest on such amount at the rate of nineteen (19%) per annum from the date such amount was due until the same is paid in
full (“Late Charge”).


 


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


 


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


 



    	25



    	 



    

  


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


 


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


 


(a)          “Black
Scholes Consideration Value” means the value of the applicable Option or Convertible Security (as the case may be) as
of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function
on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such
Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the remaining term of such Option or Convertible Security (as the case may be) as of the date of issuance
of such Option or Convertible Security (as the case may be) and (iii) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such Option or Convertible Security (as the case
may be).


 


(b)          “Bloomberg”
means Bloomberg, L.P.


 


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


 



    	26



    	 



    

  


(d)          “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such
security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing
bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the “pink sheets” by Pink OTC Markets Inc.(formerly Pinks Sheets LLC). If the Closing Bid Price or the Closing Sale
Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing
Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during such period.


 


(e)          “Closing
Date” has the meaning given in the Securities Purchase Agreement.


 


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


 


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


 


(h)          “Current
Subsidiary” means any Person in which the Company on the Issuance Date, directly or indirectly, (i) owns any of
the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any
part of the business, operations or administration of such Person.


 


(i)          “Dollar
Volume Limitation” means fifteen percent (15%) of the aggregate dollar trading volume of the Common Stock on the Principal
Market (or other applicable Eligible Market) over the thirty (30) consecutive Trading Day period ending on the Trading Day immediately
preceding the date of any Installment Notice. For the purposes of this definition the term “dollar trading volume”
for any Trading Day shall be determined by multiplying the VWAP by the volume as reported on Bloomberg for such Trading Day.


 


(j)          “Eligible
Market” means the Principal Market, The New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Select
Market or the Nasdaq Global Market.


 



    	27



    	 



    

  


(k)          “Equity
Conditions” means each of the following: (i) on each day during the Equity Conditions Measuring Period, each Registration
Statement required to be filed under the Registration Rights Agreement shall be effective and all shares of Common Stock to be
issued on the applicable Installment Date shall be eligible for resale by the Holder without restriction and without need for additional
registration under any applicable federal or state securities laws, and the Company shall have no knowledge of any fact that would
cause any shares of Common Stock not to be so eligible for resale by the Holder without restriction and without need for additional
registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period,
the shares of Common Stock are designated for listing on an Eligible Market and shall not have been suspended from trading on such
Eligible Market nor shall delisting or suspension by such Eligible Market have been threatened or pending in writing by such exchange
nor shall there be any SEC or judicial stop trade order or trading suspension stop order; (iii) any shares of Common Stock to be
issued in connection with the applicable Installment Date may be issued in full without violating the rules or regulations of the
Principal Market or any applicable laws; (v) on each day during the Equity Conditions Measuring Period, the Company has not provided
any Holder with any material, non-public information; (vi) on each day during the Equity Conditions Measuring Period, neither the
Registration Statement nor any prospectus included therein contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made,
not misleading and such Registration Statement and any prospectus included therein shall comply with all applicable securities
laws as to form and substance; (vii) the Transfer Agent is participating in DTC’s Fast Automated Securities Transfer Program;
(ix) all shares of Common Stock to be issued in connection with the applicable Installment Date are duly authorized and will be
validly issued, fully paid and non-assessable upon issuance, free and clear of all liens, claims or encumbrances, and the issuance
thereof will not require any further approvals of the Company’s Board of Directors or stockholders; (x) on each day during
the Equity Conditions Measuring Period, there shall not have occurred or be continuing, unless waiver by the Holder, either (A)
an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and
(xi) on each day during the Equity Conditions Measuring Period, unless waived by the Holder, the Closing Price of the Common Stock
is at least $1.00 per share (appropriately adjusted for any stock split, stock dividend, stock combination, stock buy-back or other
similar transaction). All references to “Registration Statement” shall include any prospectus included therein and
any amendments or supplements to such Registration Statement or any such prospectus, as filed from time to time, including without
limitation, any 1934 Act filings incorporated by reference therein.


 


(l)          “Equity
Conditions Measuring Period” means the period beginning twenty-one (21) Trading Days prior to the applicable Installment
Date (or such other date of determination) and ending on and including such Installment Date (or such other date of determination).
For the avoidance of doubt, the Equity Conditions Measuring Period for each Installment Date shall include the Advance Date, the
Stock Payment Pricing Period and such Installment Date.


 



    	28



    	 



    

  


(m)          “Fundamental
Transaction” means that (i) (1) the Company or any of its Subsidiaries shall, directly or indirectly, in one or
more related transactions, consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving
corporation) any other Person, or (2) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more
related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective
properties or assets to any other Person, or (3) the Company or any of its Subsidiaries shall, directly or indirectly, in
one or more related transactions, allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders
of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company
held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (4) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of
the outstanding shares of Voting Stock of the Company, or (5) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock, or (ii) any Person or Persons
acting jointly or in concert is or shall become the beneficial owner, directly or indirectly, of 50% of the aggregate ordinary
voting power represented by issued and outstanding Voting Stock of the Company.


 


(n)          “Initial
Installment Date” means May 1, 2012.


 


(o)          “Installment
Amount” means (a) with respect to each Installment Date other than the Maturity Date, the amount set forth on Exhibit
A as the Installment Amount for such Installment date and (b) with respect to the Maturity Date, the amount set forth on Exhibit
A as the Installment Amount for the Maturity Date plus all other outstanding Principal, Interest, Late Charges and other amounts
due and payable under this Note.


 


(p)          “Installment
Date” means the Initial Installment Date and each date listed on Exhibit A as an Installment Date.


 


(q)          “Launch
Failure” shall mean the failure of the Company and/or one of its Subsidiaries (in partnership with Adeptra), within sixty
(60) days from the Closing Date, to enter into a contract with one of the ten largest international financial institutions to provide
SIM swapping fraud detection and prevention services to such financial institution in which the Company and/or one of its Subsidiaries
receives net compensation of at least $1,000,000.


 


(r)          “Maturity
Date” shall mean May 1, 2014.


 


(s)          “New
Subsidiary” means, as of any date of determination, any Person in which the Company after the Issuance Date, directly
or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest of such Person
or (ii) controls or operates all or any part of the business, operations or administration of such Person.


 


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


 


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


 



    	29



    	 



    

  


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


 


(w)          “Principal
Market” means the NYSE Amex or such other Eligible Market where the Common Stock is then listed.


 


(x)          “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Issuance Date, by and among the Company
and the initial holders of Notes, as may be amended from time to time


 


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


 


(z)          “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Issuance Date, by and among the
Company and the initial holders of Notes pursuant to which the Company issued Notes, as may be amended from time to time.


 


(aa)         “Significant
Subsidiaries” means, as of any date of determination, collectively, all Subsidiaries that would constitute a “significant
subsidiary” under Rule 1-02 of Regulation S-X promulgated by the SEC, and each of the foregoing, individually,
a “Significant Subsidiary.”


 


(bb)         “Stock
Payment Price” means, with respect to any Installment Date, ninety (90%) of the average of the five (5) lowest VWAPs
of the Common Stock during the Stock Payment Pricing Period.


 


(cc)         “Stock
Payment Pricing Period” means, with respect to any Installment Date, the twenty (20) Trading Days immediately prior to
such Installment Date. For the avoidance of doubt, the Stock Payment Pricing Period does not include the Installment Date.


 


(dd)         “Subsidiaries”
means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing,
individually, a “Subsidiary.”


 


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


 


(ff)         “Trading
Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder.


 



    	30



    	 



    

 


 


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


 


(hh)         “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m.,
New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply,
the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such
security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average
of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
the “pink sheets” by Pink OTC Markets Inc.(formerly Pinks Sheets LLC). If the VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.


 


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


 


[signature page follows]


 



    	31



    	 



    

 


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


 


Elephant Talk Communications,
Corp.


 


	By:	 
	 	Name:
	 	Title:


 



    	32



    	 



    

 


EXHIBIT A


 


Installment
Dates


 


	Installment	 	Installment
	Date	 	Amount
	5/1/12	 	 
	6/1/12	 	 
	7/1/12	 	 
	8/1/12	 	 
	9/1/12	 	 
	10/1/12	 	 
	11/1/12	 	 
	12/1/12	 	 
	1/1/13	 	 
	2/1/13	 	 
	3/1/13	 	 
	4/1/13	 	 
	5/1/13	 	 
	6/1/13	 	 
	7/1/13	 	 
	8/1/13	 	 
	9/1/13	 	 
	10/1/13	 	 
	11/1/13	 	 
	12/1/13	 	 
	1/1/14	 	 
	2/1/14	 	 
	3/1/14	 	 
	4/1/14	 	 
	5/1/14	 	 



 



    	33



    	 



    

 


EXHIBIT B


 


ELEPHANT TALK COMMUNICATIONS, CORP.


CONVERSION NOTICE


 


Reference is made to
the Convertible Note (the “Note”) issued to the undersigned by Elephant Talk Communications, Corp. (the “Company”).
In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the
Note) of the Note indicated below into shares of common stock, [$0.0001 par value per share] (the “Common Stock”),
of the Company, as of the date specified below.


 


	Date of Conversion: 	












 





	Aggregate Conversion Amount to be converted:	 






 


	Conversion Price:	






 


	Number of shares of Common Stock to be issued:	 






 


	Facsimile Number:	 






 


	Dated:	 






 


	DWAC Instructions:	 






 


	Name of Holder:	 


  


	By:	 
	 	Print Name:
	 	Print Title:


 



    	34



    	 



    

 


EXHIBIT C


ACKNOWLEDGMENT


 


The Company hereby
acknowledges this Conversion Notice and hereby directs [TRANSFER AGENT] to issue the above indicated number of shares of
Common Stock.


 


Elephant Talk Communications,
Corp.


 


	By:	/s/ Steven van der Velden
	 	Name: Steven van der Velden
	 	Title: President and CEO


 



    	35