Exhibit
4.1


 


EXHIBIT
A


 


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


 


Original
Issue Date: October 22, 2018 


Original
Conversion Price (subject to adjustment herein): $10.00


 


$_______________


 


Amended
and restated 





10%
SENIOR SECURED CONVERTIBLE DEBENTURE





DUE
October 21, 2020


 


THIS
AMENDED AND RESTATED 10% SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 10% Senior
Secured Debentures of Emmaus Life Sciences, Inc., a Delaware corporation (the “Company”), having its principal
place of business at 21250 Hawthorne Boulevard, Suite 800, Torrance, California 90503, designated as its Amended and Restated
10% Senior Secured Convertible Debenture due October 21, 2020 (this debenture, the “Debenture” and, collectively
with the other debentures of such series, the “Debentures”).


 


FOR
VALUE RECEIVED, the Company promises to pay to ________________________ or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $_______________ on October 21, 2020 (the “Maturity
Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay
interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with
the provisions hereof. This Debenture is subject to the following additional provisions:


 



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


 


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


 


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


 


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


 


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


 


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


 


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


 



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


 


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


 


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


 


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


 


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


 


“Effective
Date” means the earliest of the date that (a) an initial registration statement registering all of the Conversion Shares
for resale has been declared effective by the Commission, (b) all of the Conversion Shares have been sold pursuant to Rule 144
or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information
required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing
Date provided that a holder of the Conversion Shares is not an Affiliate of the Company, all of the Underlying Shares may be sold
pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions
and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such
holders of the Conversion Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable
to such holders.


 


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


 


“Fundamental
Transaction” means each of (i) the Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series
of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv)
the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares
of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination).


 






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“Going
Public Event” means (i) the Company’s, or any Successor Entity’s, offering of securities on a registration
statement pursuant to the Securities Act (ii) the Company’s, or any Successor Entity’s, merger, consolidation, transfer,
or share exchange transaction pursuant to which the Company becomes subject to the reporting requirements of the Exchange Act
or (iii) the Company or any Successor Entity becoming listed or quoted for trading on a Trading Market.


 


“Going
Public Event Date” means the date of the effectiveness of the Going Public Event.


 


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


 


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


 


“Mandatory
Default Amount” means the sum (a) 100% of the outstanding principal amount of this Debenture, plus 100% of accrued and
unpaid interest hereon, and (b) all other amounts, costs, expenses and due in respect of this Debenture.


 


“Monthly
Redemption” shall have the meaning set forth in Section 6(b) hereof.


 


“Monthly
Redemption Amount” means, as to a Monthly Redemption, $_______, plus accrued but unpaid interest and any other amounts
then owing to the Holder in respect of this Debenture.


 


“Monthly
Redemption Date” means the 1st of each month, commencing on November 1, 2019 and terminating upon the full
redemption of this Debenture.


 


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


 






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


 


“Optional
Redemption” shall have the meaning set forth in Section 6(a).


 


“Optional
Redemption Amount” means the sum of (a) 100% of the then outstanding principal amount of the Debenture, (b) accrued
but unpaid interest and (c) all other amounts due in respect of the Debenture.


 


“Optional
Redemption Date” shall have the meaning set forth in Section 6(a).


 


“Optional
Redemption Notice” shall have the meaning set forth in Section 6(a).


 


“Optional
Redemption Notice Date” shall have the meaning set forth in Section 6(a).


 


“Optional
Redemption Period” shall have the meaning set forth in Section 6(a).


 


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


 


“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(bb) attached to the Purchase Agreement and any amendment, substitute or replacement
of such Indebtedness, provided that any amendment, substitute or replacement of such Indebtedness that materially changes the
terms of such indebtedness is expressly subordinate to the Debentures pursuant to a written subordination agreement with the Purchasers
that is reasonably acceptable to the Holders of a majority in principal amount of Debentures outstanding, (c) lease obligations
and purchase money indebtedness as set forth on Schedule 3.1(bb), in the aggregate, incurred in connection with the acquisition
of capital assets and lease obligations with respect to newly acquired or leased assets, and (d) indebtedness that is expressly
subordinate to the Debentures pursuant to a written subordination agreement with the Purchasers that is acceptable to each Holder
in its sole and absolute discretion. For the avoidance of doubt, the Company will be permitted to make payments when due on the
Indebtedness described in clause (b) and to issue amended, substituted or replacement Indebtedness therefor provided that such
amended, substituted or replacement Indebtedness is on substantially similar terms.


 


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


 



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“Purchase
Agreement” means the Securities Purchase Agreement, dated as of September 7, 2018 among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.


 


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


 


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


 


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


 


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


 


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


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Holders in accordance with Section 2.2(a) of the Purchase
Agreement, which Warrants shall be exercisable immediately and have a term of exercise equal to five (5) years.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 


 Section
2.        Interest.


 


a)       Payment
of Interest in Cash. The Company shall pay interest to the Holder on the aggregate then outstanding principal amount of this
Debenture at the rate of 10% per annum, payable monthly on the first day of each calendar month, beginning on October 1, 2018,
on each Optional Redemption Date (as to that principal amount then being redeemed) and on the Maturity Date (each such date, an
“Interest Payment Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall
be due on the next succeeding Business Day), in cash.


 



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


 


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


 


d)       Prepayment.
The Company may prepay any portion of the Principal Amount of the Debentures after the Closing Date with twenty (20) days written
notice to the Holders.


 


Section
3.         Registration of Transfers and Exchanges.


 


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


 


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


 


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


 



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Section
4.         Conversion.


 


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


 


b)       Conversion
Price. The conversion price in effect on any Conversion Date shall be $10.00, subject to adjustment herein (the “Conversion
Price”).


 


c)       Mechanics
of Conversion.


 



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


 


  ii.     Delivery
of Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares which, on or after the Going Public
Event Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the
Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture and (B)
a bank check in the amount of accrued and unpaid interest. On or after the Effective Date, the Company shall deliver any Conversion
Shares required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or
another established clearing corporation performing similar functions. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with
respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.


 






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


 


iv.      Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In
the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company
may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety
bond for the benefit of the Holder in the amount of 100% of the outstanding principal amount of this Debenture, which is subject
to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute
and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction,
the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. Following the Going Public
Event Date, if the Company fails for any reason to deliver to the Holder such Conversion Shares pursuant to Section 4(c)(ii) by
the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading
Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such Conversion Shares
are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or
declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the
period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall
not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.


 






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


 



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


 


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


 


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


 



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


 



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Section
5.         Certain Adjustments.


 


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


 


b)       Subsequent
Equity Sales. From the Original Issue Date until the 60th day following the Going Public Event Date, if, at any
time while this Debenture is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase
or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase
or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at
an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price”
and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion
Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance),
then simultaneously with the consummation (or, if earlier, the announcement) of each Dilutive Issuance the Conversion Price shall
be reduced to equal the Base Conversion Price. Notwithstanding the foregoing, no adjustment will be made under this Section 5(b)
in respect of an Exempt Issuance. If the Company enters into a Variable Rate Transaction, despite the prohibition set forth in
the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion price at which such securities may be converted or exercised. The Company shall notify the Holder in writing, no later
than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating
therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such
notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides
a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance,
regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion. For purposes of further
clarification, the concurrent amendment and restatement of the Warrants in connection with the Debentures shall not constitute
a Dilutive Issuance hereunder.


 






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


 



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


 


e)       Fundamental
Transaction. If, at any time while this Debenture is outstanding, in the event of a Fundamental Transaction, then, upon any
subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have
been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any
limitation in Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of
this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture,
deliver to the Holder in exchange for this Debenture a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Debenture which is convertible for a corresponding number of shares of capital stock of
such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion
of this Debenture (without regard to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction,
and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value
of this Debenture immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Debenture
and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the obligations of the Company under this Debenture and
the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.


 



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


 


g)       Notice
to the Holder.


 


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


 



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ii.       Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)
the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last
address as it shall appear upon the Debenture Register, at least ten (10) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect
the validity of the corporate action required to be specified in such notice. From and after the Going Public Event Date, to the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or
any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on
Form 8-K. The Holder shall remain entitled to convert this Debenture during the 10-day period commencing on the date of such notice
through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.


 


Section
6.         Redemption.


 


a)       Optional
Redemption at Election of Company. Subject to the provisions of this Section 6(a), at any time after the Original Issue Date,
the Company may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice is
deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some
or all of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption Amount
on the 20th Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption
Date,” such 20 Trading Day period, the “Optional Redemption Period” and such redemption, the “Optional
Redemption”). The Optional Redemption Amount is payable in full on the Optional Redemption Date. The Company’s
determination to pay an Optional Redemption in cash shall be applied ratably to all of the holders of the then outstanding Debentures
based on their (or their predecessor’s) initial purchases of Debentures pursuant to the Purchase Agreement.


 






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b)       Monthly
Redemption. On each Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount (the “Monthly
Redemption”). The Monthly Redemption Amount payable on each Monthly Redemption Date shall be paid in cash.


 


c)       Redemption
Procedure. The payment of cash pursuant to an Optional Redemption or Monthly Redemption shall be payable on the Optional Redemption
Date or the Monthly Redemption Date, as applicable. If any portion of the payment pursuant to an Optional Redemption or Monthly
Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal
to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding
anything herein contained to the contrary, if any portion of the Optional Redemption Amount or the Monthly Redemption Amount remains
unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate
such Optional Redemption or Monthly Redemption, as applicable, ab initio, and, with respect to the Company’s failure
to honor the Optional Redemption, the Company shall have no further right to exercise such Optional Redemption.


 


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


 


a)       other
than Permitted Indebtedness, except with the prior written consent of the Agent (as defined in the Security Agreement), enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not
limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;


 


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


 



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c)       amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder, other than to change the size of the Board of Directors as needed;


 


d)       repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock
or Common Stock Equivalents other than to repurchase Common Stock or Common Stock Equivalents of departing officers and directors
of the Company, provided that such repurchases shall not exceed an aggregate of $200,000 for all officers and directors during
the term of this Debenture and other than existing contractual obligations as of the Original Issue Date to repurchase shares
(see Schedule 4.9);


 


e)       repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures and Permitted Indebtedness
if on a pro-rata basis, other than regularly scheduled principal and interest payments as such terms are in effect as of the Original
Issue Date, provided that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event
of Default exist or occur;


 


f)
       pay cash dividends, except as permitted in Section 5(d), or distributions on any equity
securities of the Company; and




 


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




 


 Section
8.        Events of Default.


 


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


 


i.       any
default in the payment of (A) the principal amount of any Debenture or (B) interest and other amounts owing to a Holder on any
Debenture, as and when the same shall become due and payable (whether on a Maturity Date or by acceleration or otherwise) which
default, solely in the case of an interest payment or other default under clause (B) above, is not cured within 20 Business Days;


 


ii.       the
Company shall fail to observe or perform any other covenant or agreement contained in the Debentures and such failure is not cured
in 20 Business Days;


 


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


 






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iv.       any
representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made and such failure is not cured in 20 Business Days;


 


v.       the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event and such failure is not cured in 20 Business Days;


 


vi.       the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable and such failure
is not cured in 20 Business Days;


 


vii.       the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction (other than the proposed merger pursuant
to that certain Agreement and Plan of Merger, dated as of January 4, 2019, as amended from time to time, among the Company, MYnd
Analytics, Inc. and Athena Merger Subsidiary, Inc. filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed
on January 7, 2019 with the Commission) shall agree to sell or dispose of all or in excess of 33% of its assets in one transaction
or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);


 


viii.       any
Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement and such
failure is not cured in 20 Business Days;


 


ix.       any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $250,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days; or


 






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x.       after
the Going Public Event Date, the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and
shall not be eligible to resume listing or quotation for trading thereon within five Trading Days.


 


b)       Remedies
Upon Event of Default. If any Event of Default occurs and is not cured, the outstanding principal amount of this Debenture,
plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become, at
the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days after the
occurrence of any Event of Default that is not cured that results in the eventual acceleration of this Debenture, the interest
rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under
applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to
or as directed by the Company. Such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder
and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment
pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.


 


 Section
9.        Miscellaneous.


 


a)       Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, shall be in writing and delivered
personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier service, addressed to the
Company, at the address set forth above, or such other facsimile number, email address, or address as the Company may specify
for such purposes by notice to the Holder delivered in accordance with this Section 7(a).  Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, by email attachment,
or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or
address of the Holder appearing on the books of the Company, or if no such facsimile number or email attachment or address appears
on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. 
Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the
email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next
Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
or email attachment to the email address set forth on the signature pages attached hereto on a day that is not a Business Day
or later than 5:30 p.m. (New York City time) on any Business Day, (iii) the second Business Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is
required to be given.


 



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


 


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


 


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


 






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


 


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


 


g)       Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative
and in addition to all other remedies available under this Debenture and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Debenture. 
The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to payments 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 material breach by it of its obligations
hereunder could cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company
shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm
the Company’s compliance with the terms and conditions of this Debenture.


 


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


 


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


 


j)  
     Secured Obligation. The obligations of the Company under this Debenture are secured by all
assets of the Company pursuant to the Security Agreement, dated as of September 7, 2018 between the Company, certain Subsidiaries
of the Company, and the Secured Parties (as defined therein).


 



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


 


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


 


(Signature
Page Follows)


 




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


 





	 	EMMAUS LIFE SCIENCES, INC.	 
	 	 	 
	 	 	 
	 	By:	 	 
	 		Name:	 
	 		Title:	 
	 	Facsimile No. for delivery of Notices:
    ________________	 
	 	 	 




 


 




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ANNEX
A


 


 NOTICE
OF CONVERSION


 


 


 


 The
undersigned hereby elects to convert principal under the Amended and Restated 10% Senior Secured Convertible Debenture due October
21, 2020 of Emmaus Life Sciences, Inc., a Delaware corporation (the “Company”), into shares of Common Stock
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged
to the holder for any conversion, except for such transfer taxes, if any.


 


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


 


Conversion
calculations: 





Date
to Effect Conversion:


 


Principal
Amount of Debenture to be Converted:


 


Number
of shares of Common Stock to be issued:





 


Signature:


 


Name:


  


Address
for Delivery of Common Stock Certificates:


 








	 	 	Or
	 	 	 
	 	 	DWAC
    Instructions:
	 	 	 
	 	 	Broker
    No:	 
	 	 	 
	 	 	Account
    No:	 
	 	 	 







 






     26


     


    

 





Schedule
1


 


 CONVERSION
SCHEDULE


 


The
Amended and Restated 10% Senior Secured Convertible Debentures due on October 21, 2020 in the aggregate principal amount of $_________________are
issued by Emmaus Life Sciences, Inc., a Delaware corporation. This Conversion Schedule reflects conversions made under Section
4 of the above referenced Debenture.


 


 Dated:


 




	Date
        of Conversion 

        (or
        for first entry, Original Issue Date) 
	Amount
        of Conversion 
	Aggregate
        Principal Amount Remaining Subsequent to Conversion 

        (or
        original Principal Amount) 
	Company
    Attest
	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 	 	 	 

                                                                                 

	 

                                                                                 
	 	 	 

                                                                                 




 


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