EXHIBIT 4.1


 


[FORM OF SENIOR CONVERTIBLE NOTE]


 


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


 


Skyline
Medical Inc.


 


Senior
Convertible Note


 


	Issuance Date:  July 23, 2014	Original Principal Amount: U.S. $[●]


 


FOR VALUE RECEIVED,
Skyline Medical Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of
[●] or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”)
when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal (as such interest
on any outstanding Principal may be reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise) at the
applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance
Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption
or otherwise (in each case in accordance with the terms hereof). This Senior Convertible Note (including all Senior Convertible
Notes issued in exchange, transfer or replacement hereof, collectively, this “Note”) is one of a series
of Senior Convertible Notes issued either pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date
(as defined below) or certain other securities purchase agreements entered into concurrently therewith (collectively, the “Notes”
and such other Senior Convertible Notes, the “Other Notes”). Certain capitalized terms
used herein are defined in Section 28.


 




    	 



    	 



    

 


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


 


2.         INTEREST;
INTEREST RATE.


 


(a)          Interest
on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day
months and shall be payable in cash on the Maturity Date or any applicable Redemption Date, subject to adjustment with respect
to any Note Reduction. Prior to the payment of Interest on the Maturity Date or any applicable Redemption Date in cash, Interest
on this Note shall also be payable by way of inclusion of the Interest in the Conversion Amount (as defined below) on each
Conversion Date (as defined below) in accordance with Section 3(b)(i).


 


(b)          From
and after the occurrence and during the continuance of any Event of Default (as defined below), the Interest Rate shall automatically
be increased to fifteen percent (15.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment
referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such
cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default
shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including
the date of such cure of such Event of Default.


 


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


 


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


 


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


 




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


 


(ii)         “Conversion
Price” means, the lower of (x) the Fixed Conversion Price and (y) the Variable Conversion Price.


 


(iii)        “Fixed
Conversion Price” means, $0.15 (as adjusted for stock splits, stock dividends, recapitalizations and similar events).


 


(iv)        “Variable
Conversion Price” means, for any date of determination, the product of (A) the Variable Percentage and (B) the quotient
of (x) the sum of the VWAP of the Common Stock for each of the three (3) lowest Trading Days during the ten (10) consecutive Trading
Day period ending and including the Trading Day immediately preceding the applicable Conversion Date, divided by (y) three (3).
All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction
during any such measuring period.


 


(v)         “Variable
Percentage” means (x) if no Event of Default has occurred or is continuing, 72.5% or (y) if an Event of Default has
occurred and is continuing, 70%.


 


(c)          Mechanics
of Conversion.


 


(i)          Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date,
a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), the Holder shall surrender this Note to a nationally recognized overnight delivery
service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft
or destruction as contemplated by Section 17(b)). On or before the second (2nd) Trading Day following the date of receipt
of a Conversion Notice, the Company shall transmit by facsimile an acknowledgment of confirmation, in the form attached hereto
as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer
Agent”) . On or before the third (3rd) Trading Day following the date of receipt of a Conversion Notice (or such
earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated
on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share
Delivery Deadline”), the Company shall (1) provide that the Transfer Agent is participating in The Depository Trust
Company’s (“DTC”) Fast Automated Securities Transfer Program and such shares of Common Stock may
be issued without restrictive legend in accordance with Section 4.4 of the Securities Purchase Agreement, credit such aggregate
number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account
with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program or such shares of Common Stock may not be issued without restrictive legend in accordance with Section
4.4 of the Securities Purchase Agreement, issue and deliver (via reputable overnight courier) to the address as specified in the
Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock
to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required by Section 3(c)(iii) and
the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the
Company shall as soon as practicable and in no event later than three (3) Trading Days after receipt of this Note and at its own
expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 17(d)) representing the outstanding
Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this
Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.


 




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(ii)         Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share
Delivery Deadline, to issue to the Holder a certificate for the number of shares of Common Stock to which the Holder is entitled
and register such shares of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s
balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion
of any Conversion Amount (as the case may be) (a “Delivery Failure”) then, in addition to all other remedies
available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the
issuance of such shares of Common Stock is not timely effected an amount equal to one percent (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 (as defined below) of the Common Stock on the Trading Day immediately preceding the last possible
date which the Company could have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the
Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the
case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date
of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery
Deadline, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the
Company’s share register or credit the Holder’s or its designee’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if
on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of
a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such conversion
that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the
Company shall, within three (3) Business Days after receipt of the Holder’s request and in the Holder’s discretion,
either: (I) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions
and other reasonable out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue
such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate
or certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares
of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause (II). For
the avoidance of doubt, with respect to any given Delivery Failure, the Investor shall be entitled, at the election of the Investor,
to recovery either pursuant to this Section 3(c)(ii) or Section 4.4 of the Securities Purchase Agreement, but not both.


 




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


 




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


 


(d)          Limitations
on Conversions. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible by the
Holder hereof, and the Company shall not effect any conversion of this Note or otherwise issue any shares of Common Stock pursuant
hereto, to the extent (but only to the extent) that after giving effect to such conversion or other share issuance hereunder the
Holder (together with its affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”)
of the Common Stock. To the extent the above limitation applies, the determination of whether this Note shall be convertible
(vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of
which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by the Holder and its
affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company
for conversion, exercise or exchange (as the case may be). No prior inability to convert this Note, or to issue shares of Common
Stock, pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to
any subsequent determination of convertibility. For purposes of this paragraph, beneficial ownership and all determinations and
calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance
with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. If this paragraph (or any portion hereof)
is deemed by any court, agency or other regulatory or governmental authority to be defective or inconsistent with the intended
Maximum Percentage beneficial ownership limitation above, the provisions of this paragraph shall be implemented, mutatis mutandis,
to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor
Holder of this Note. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not waive
this paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within two (2) Business Days 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 securities issued pursuant to the Securities
Purchase Agreement. By written notice to the Company, at any time the Holder may increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective
until the 61st day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the
Holder sending such notice and not to any other holder of Notes.


 


4.         RIGHTS
UPON EVENT OF DEFAULT.


 


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


 




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


 


(ii)         the
Company’s or any Subsidiary’s (as defined in the Securities Purchase Agreement) failure to pay to the Holder any amount
of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s
or any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined
in the Securities Purchase Agreement) (the “Other Amounts”) or any other agreement, document, certificate or
other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure
to pay Interest, Late Charges or Other Amounts when and as due, in which case only if such failure remains uncured for a period
of at least seven (7) Trading Days;


 


(iii)        the
occurrence of any Material Default (as defined below) under, redemption of or acceleration prior to maturity of an aggregate of
at least $100,000 of Indebtedness (as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries;


 


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


 


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


 




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


 


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


 


(viii)      the
Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $100,000 due to any third party (other than, with respect to
unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or
is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $100,000, which breach
or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer
to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely
to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition
(including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;


 




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(ix)        other
than as specifically set forth in another clause of this Section 4(a), the Company or any
Subsidiary breaches any representation or warranty in any material respect (other than representations or warranties subject to
material adverse effect or materiality, which may not be breached in any respect) or any covenant in any material respect or other
term or condition in any material respect of any Transaction Document, except, in the case of a breach of a covenant or other term
or condition that is curable, only if such breach remains uncured for a period of ten (10) consecutive Trading Days;


 


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


 


(xi)        any
Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs.


 


(b)          Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note, the Company
shall within two (2) Business Days deliver written notice thereof via facsimile and overnight courier (with next day delivery specified)
(an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s receipt
of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem,
at any time during the period commencing on the date the Holder first becomes aware of such Event of Default through and including
the twentieth Trading Day after the later of (x) the date the Holder receives the applicable Event of Default Notice with respect
thereto and (y) the date such Event of Default has been cured, all or any portion of this Note by delivering written notice thereof
(the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall
indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company
pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion
Amount to be redeemed multiplied by (B) the Redemption Premium (as defined below) and (ii) the product of (X) the Conversion Rate
with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied
by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading
Day during the period commencing on the date immediately preceding such Event of Default and ending on the date the Company makes
the entire payment required to be made under this Section 4(b) (the “Event of Default Redemption Price”).
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 9. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges thereon) is paid in
full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be converted,
in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note. In the event of the Company’s redemption
of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to estimate because
of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(b) is intended by the parties
to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a
penalty.


 




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5.         RIGHTS
UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.


 


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


 




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(b)          Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior
to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement
of such Change of Control, the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a
“Change of Control Notice”); provided however, that if the Company does not have knowledge of a Change
of Control at least thirteen (13) Trading Days prior to the Change of Control Date, the Company shall deliver a Change of Control
Notice no later than two (2) Trading Days after the Company has knowledge of such Change of Control. At any time during the period
beginning after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if
a Change of Control 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 Change of Control or (B) the date of receipt
of such Change of Control Notice, the Holder may require the Company to redeem all or any portion of this Note by delivering written
notice thereof (“Change of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice
shall indicate the Conversion Amount 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 the greatest of (i) the product of (w) 125% multiplied
by (y) the Conversion Amount being redeemed, (ii) the product of (x) 125% multiplied by (y) the product of (A) the Conversion Amount
being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common
Stock during the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable
Change of Control and (2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change
of Control Redemption Notice by (II) the Conversion Price then in effect and (iii)
the product of (y) the Redemption Premium multiplied by (z) the product of (A) the Conversion Amount being redeemed multiplied
by (B) the quotient of (I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share
of Common Stock to be paid to the holders of the shares of Common Stock upon consummation of such Change of Control (any such non-cash
consideration constituting publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities
as of the Trading Day immediately prior to the consummation of such Change of Control, the Closing Sale Price of such securities
on the Trading Day immediately following the public announcement of such proposed Change of Control and the Closing Sale Price
of such securities on the Trading Day immediately prior to the public announcement of such proposed Change of Control) divided
by (II) the Conversion Price then in effect (the “Change of Control Redemption Price”). Redemptions required
by this Section 5 shall be made in accordance with the provisions of Section 9 and shall have priority to payments to stockholders
in connection with such Change of Control. To the extent redemptions required by this Section 5(a) are deemed or determined by
a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control
Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under
this Section 5(a) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock
pursuant to Section 3. In the event of the Company’s redemption of any portion of this Note under this Section 5(a), the
Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest
rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any
redemption premium due under this Section 5(a) is intended by the parties to be, and shall be deemed, a reasonable estimate of
the Holder’s actual loss of its investment opportunity and not as a penalty.


 


(c)          Other
Corporate Events. In addition to and not in substitution for any other rights hereunder and subject to Section 5(e), prior
to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion
of this Note (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to
which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held
by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities
or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in
such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the
form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory
to the Holder.


 




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


 


(e)          For
the avoidance of doubt, the provisions of Sections 5(a) and 5(c) above shall not apply with respect to any Conversion Amount elected
to be redeemed by the Holder in a Change of Control Redemption pursuant to Section 5(b) above after the applicable Change of Control
Redemption Price is paid in full by the Company to the Holder.


 


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


 


7.         [Intentionally
Omitted]


 


8.         RESERVATION
OF AUTHORIZED SHARES.


 


(a)          Reservation.
The Company shall initially reserve 10 million shares of Common Stock out of its authorized and unissued Common Stock solely for
the purpose of effecting the conversion of the Notes. 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, 150% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion
of all of the Notes then outstanding (without regard to any limitations on conversions and assuming this Note remains outstanding
until the Maturity Date) (the “Required Reserve Amount”); provided that the Company’s obligation
to reserve the Required Reserve Amount shall be measured solely on the first Trading Day of each calendar week after the Issuance
Date (each, a “Required Reserve Amount Measurement Date”), and, if the number of shares of Common Stock
so reserved is less than the Required Reserve Amount as of such Requried Reserve Amount Measurement Date, the Company shall promptly
increase such reserve, as necessary, such that the number of shares of Common Stock so reserved shall not be less than the Required
Reserve Amount.


 




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(b)          Insufficient
Authorized Shares. If, notwithstanding Section 8(a), and not in limitation thereof, at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve
Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary
to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required
Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days (or one hundred and
twenty (120) days if the SEC reviews the proxy or information statement, as applicable) after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its stockholders or obtain written consent, as applicable, 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. In the event that the Company is prohibited from issuing shares of Common Stock upon any conversion due to the failure
by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering
such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the
Conversion Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number
of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date the Holder delivers the applicable Conversion Notice with respect to such Authorization Failure Shares to
the Company and ending on the date of such issuance and payment under this Section 8(b) and (ii) to the extent the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization
Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
Nothing contained in Section 8(a) or this Section 8(b) shall limit any obligations of the Company under any provision of the
Securities Purchase Agreement.


 




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9.         COMPANY
OPTIONAL REDEMPTION.


 


(a)          Company
Optional Redemption. At any time the Company shall have the right to redeem, in whole or in part, the Conversion Amount then
remaining under this Note (each, a “Company Optional Redemption Amount”) on a Company Optional Redemption Date
(each as defined below) (each, a “Company Optional Redemption”). The portion of this Note subject to redemption
pursuant to this Section 9(a) shall be redeemed by the Company in cash at a price (the “Company Optional Redemption Price”)
equal to the greater of (x) 125% of the Conversion Amount being redeemed as of the Company Optional Redemption Date and (y) the
product of (X) the Conversion Rate with respect to the Conversion Amount as of the Company Optional Redemption Notice Date multiplied
by (Y) the product of (1) 135% multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during
the period commencing on the Company Optional Redemption Notice Date and ending, and including, the Trading Day immediately prior
to the Company Optional Redemption Date. The Company may exercise its right to require redemption under this Section 9(a) by delivering
a written notice thereof by facsimile and overnight courier to all, but not less than all, of the holders of Notes (each, a “Company
Optional Redemption Notice” and the date all of the holders of Notes received such notice is referred to as the “Company
Optional Redemption Notice Date”). The Company may deliver only one Company Optional Redemption Notice hereunder in any
twenty (20) Trading Day period and such Company Optional Redemption Notice shall be irrevocable. The Company Optional Redemption
Notice shall (x) state the date on which the Company Optional Redemption shall occur (the “Company Optional Redemption
Date”) which date shall not be less than five (5) Trading Days (or, with respect to any Company Optional Redemption Notice
delivered to the Holder within five (5) Trading Days following the later of (x) the consummation of a bona fide registered public
offering of the Common Stock by the Company and (y) the listing of the Common Stock (including, without limitation, the shares
of Common Stock issued and issuable upon conversion of this Note and exercise of the Warrant) on a Major Market, one (1) Trading
Day) nor more than one hundred and eighty (180) Trading Days following the Company Optional Redemption Notice Date, and (y) state
the aggregate Conversion Amount of the Notes which is being redeemed in such Company Optional Redemption from the Holder and all
of the other holders of the Notes pursuant to this Section 9(a) (and analogous provisions under the Other Notes) on the Company
Optional Redemption Date. On the Trading Day immediately prior to the Company Optional Redemption Date, the Company shall deliver
an additional notice to the Holder setting forth the Company Optional Redemption Price (including reasonable calculations with
respect thereto). All Conversion Amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce
the Company Optional Redemption Amount of this Note required to be redeemed on the Company Optional Redemption Date. Redemptions
made pursuant to this Section 9(a) shall be made in accordance with Section 10. In the event of the Company’s redemption
of any portion of this Note under this Section 9(a), the Holder’s damages would be uncertain and difficult to estimate because
of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 9(a) is intended by the parties
to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a
penalty.


 


(b)          Pro
Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section
9(a), then it must simultaneously take the same action with respect to all of the Other Notes.


 




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10.       REDEMPTIONS.


 


(a)          Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within seven (7) Business Days
after the Company’s receipt of the Holder’s Event of Default Redemption Notice (the “Event of Default Redemption
Date”). If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(a), the Company
shall deliver the applicable Change of Control Redemption Price to the Holder in cash within one (1) Business Day after the consummation
of such Change of Control if such notice is received prior to the consummation of such Change of Control and within seven (7) Business
Days after the Company’s receipt of such notice otherwise (the “Change of Control Redemption Date”).
The Company shall deliver the applicable Company Optional Redemption Price to the Holder in cash on the applicable Company Optional
Date. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to
be issued and delivered to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal which
has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the Holder within the time
period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have
the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing
the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges
thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null
and void with respect to such Conversion Amount, and (y) the Company shall immediately return this Note, or issue a new Note (in
accordance with Section 17(d)), to the Holder, and in each case the principal amount of this Note or such new Note (as the
case may be) shall be increased by an amount equal to the difference between (1) the Redemption Price minus (2) the Principal portion
of the Conversion Amount submitted for redemption. The Holder’s delivery of a notice voiding a Redemption Notice and exercise
of its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges which
have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice.


 


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


 


12.       NOTE
REDUCTION. If the Company has filed a registration statement with the SEC that has been declared effective by the SEC on or
prior to the one hundred and twentieth (120th) calendar day after the Closing Date (such date, the “Initial
Effective Date”) and the prospectus contained therein is available for use by the Holder for the resale by the Holder
of all of the shares of Common Stock issued or issuable upon conversion of this Note or otherwise pursuant to the terms of this
Note as of the Initial Effective Date and (ii) no Event of Default or an event that with the passage of time or giving of notice
would constitute an Event of Default has occurred on or prior to the Initial Effective Date, then on the Initial Effective Date
$[●]of the outstanding Principal hereunder (together with any accrued and unpaid Interest with respect to such portion of
the Principal amount and accrued and unpaid Late Charges with respect to such portion of such Principal and such Interest) (the
“Discount Amount”) shall be automatically extinguished and shall no longer remain outstanding hereunder
without any payment thereof by the Company. Notwithstanding the foregoing, the portion of the Note constituting the Discount Amount
shall not be subject to conversion until the Effectiveness Deadline (as defined in the Registration Rights Agreement) has passed
without the automatic extinguishment of the Discount Amount pursuant to the preceding sentence.


 




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


 


(a)          Rank.
All payments due under this Note (i) shall rank pari passu with all Other Notes and (ii) shall be senior to all other Indebtedness
of the Company and its Subsidiaries.


 


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


 


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


 


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


 


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


 


(f)          Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock other than dividends
on the Company’s Series A Convertible Preferred Stock pursuant to the certificate of designations with respect to such Series
A Convertible Preferred Stock as in effect as of the Issuance Date.


 




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


 


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


 


(i)          Change
in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company
and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The Company shall
not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure
or purpose.


 


(j)          Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.


 


(k)          Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases
to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.


 


(l)          Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable
to maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any
of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.


 


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


 




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


 


14.       PARTICIPATION.
Upon any conversion of this Note, the Holder shall be entitled to receive such dividends paid and distributions made to the holders
of Common Stock from and after the initial Issuance Date to the same extent as if the Holder had effected such conversion and had
held such shares of Common Stock (issued or to be issued in such conversion) on the record date for such dividends and distributions.
Payments under the preceding sentence shall be made on or prior to the applicable Share Delivery Deadline with respect to such
conversion.


 


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


 


16.       TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company, subject only to the provisions of Section 4.4 of the Securities Purchase Agreement.


 


17.       REISSUANCE
OF THIS NOTE.


 


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


 


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


 




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


 


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


 


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


 


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


 




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20.       CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings
ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the
Holder.


 


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


 


22.       DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, any Event of Default Redemption Price,
the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) or the arithmetic calculation of the Conversion
Rate, any Note Reduction or the applicable Event of Default Redemption Price (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, any Event of Default Redemption Price, the Closing Bid Price, the Closing Sale Price or fair market value
(as the case may be) to an independent, reputable investment bank selected by the Company from a list of three independent, reputable
investment banks selected by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate, any Note Reduction or
any Event of Default Redemption Price (as the case may be) to an independent, outside accountant or accounting firms selected by
the Company from a list of three independent, outside accountants or accounting firms selected by the Holder. 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.


 




    	20



    	 



    

 


23.       NOTICES;
CURRENCY; PAYMENTS.


 


(a)          Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 12.4 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 therefor. 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, or (B) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such
notice being provided to the Holder.


 


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


 


(c)          Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set
forth herein, such payment shall be made in lawful money of the United States of America via wire transfer of immediately available
funds in accordance with the Holder’s wire transfer instructions, provided that, with prior written notice setting out such
request, the Holder may elect to receive a payment 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. Whenever any amount expressed
to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding
day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when
due (solely to the extent such amount is not then accruing interest at the Default Rate) shall result in a late charge being incurred
and payable by the Company in an amount equal to interest on such amount at the rate of fifteen percent (15%) per annum from the
date such amount was due until the same is paid in full (“Late Charge”). 


 


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


 


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


 




    	21



    	 



    

 


26.       GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of Illinois, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of Illinois. The Company hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in Chicago, Illinois, 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.


 


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


 


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


 


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


 


(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 are
authorized or required by law to remain closed.


 




    	22



    	 



    

 


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


 


(e)         
“Closing Bid Price” and “Closing Sale Price” means, for any security as of
any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).


 


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


 


(g)          “Common
Stock” means (i) the Company’s common stock, $0.01 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.


 


(h)          “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.


 


(i)           “Eligible
Market” means the OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital
Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB Marketplace operated by OTC Markets
Group Inc. (or any successor to any of the foregoing).


 




    	23



    	 



    

 


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


 


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


 


(l)           “Interest
Rate” means twelve percent (12%) per annum, as may be adjusted from time to time in accordance with Section 2.


 


(m)         “Major
Market” means The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York
Stock Exchange, the NYSE MKT (or any successor to any of the foregoing).


 


(n)          “Material
Default” means a default or event of default of any Indebtedness, which either alone or together with any other defaults
and/or events of default, as applicable, then outstanding (with or without the passage of time or the giving of notice) results
or could reasonably be expected to result in the holder or holders of such Indebtedness, as applicable, having the right to accelerate
or redeem all, or any part, of such Indebtedness.


 


(o)          “Maturity
Date” shall mean July 23, 2015; provided, however, the Maturity Date may be extended at the option of the Holder
(i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred
and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the
date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction
is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity Date, provided further that if a Holder
elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to
Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not limit the
conversion of this Note.


 




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


 


(q)          “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.


 


(r)           “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.


 


(s)          “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) up to $500,000 of aggregate
principal amount of Indebtedness incurred by the Company that is either (I) made expressly subordinate in right of payment to the
Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Holder, and which Indebtedness does
not provide at any time for (A) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal
or premium, if any, thereon until at least ninety-one (91) days after the Maturity Date and (B) total interest and fees at a rate
in excess of twelve percent (12%) per annum or (II) incurred by the Company in connection with the settlement of payments or claims
in existence as of the date hereof and (iii) Indebtedness secured by Permitted Liens described in clauses (iv) and (v) of the definition
of Permitted Liens, in an aggregate amount not to exceed $100,000.


 


(t)           “Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings,
(iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price
of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B)
existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal or refinancing
of the indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase, (vi) Liens securing the Company’s obligations under the Notes and (vii) Liens that,
individually or in the aggregate, are not material to the Company or its Subsidiaries, taken as a whole, and such indebtedness
with respect to such Liens, in the aggregate, does not exceed $1 million.


 


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


 




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(v)          “Redemption
Dates” means, collectively, Event of Default Redemption Dates, the Change of Control Redemption Dates and the Company
Optional Redemption Dates and each of the foregoing, individually, a “Redemption Date.”


 


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


 


(x)          “Redemption
Premium” means (i) in the case of the Events of Default described in Section 4(a) (other than Sections 4(a)(iv) through
4(a)(vi)), 125% or (ii) in the case of the Events of Default described in Sections 4(a)(iv) through 4(a)(vi), 100%.


 


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


 


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


 


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


 


(bb)       “Securities
Purchase Agreement” means that certain Securities Purchase Agreement, dated as of July 23, 2014, by and between the
Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.


 


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


 


(dd)       “Successor
Entity” means either (x) the Person formed by, resulting from or surviving any Fundamental Transaction or the Person
with which such Fundamental Transaction shall have been entered into (the “Surviving Entity”), (y) if
the Parent Company is a public company and the Surviving Entity is not a public company, the Parent Company or (z) if both the
Parent Company and the Surviving Entity are public companies, if so elected by the Holder, the Parent Entity.


 


(ee)        “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.


 




    	26



    	 



    

 


(ff)          “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).


 


(gg)        “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its “AQR” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest
closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.


 


29.       DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose
such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate
to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be
allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the
Company or its Subsidiaries. Nothing contained in this Section 29 shall limit any obligations of the Company, or any rights of
the Holder, under Section 4.3 of the Securities Purchase Agreement. 


 


[signature page follows]


  




    	27



    	 



    

 


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


 


	 	Skyline Medical Inc.
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:





 


Senior Convertible Note - Signature Page


 









    	 



    	 



    

 


EXHIBIT I


 


SKYLINE MEDICAL INC.

CONVERSION NOTICE


 


Reference is made to
the Senior Convertible Note (the “Note”) issued to the undersigned by Skyline Medical Inc., a Delaware
corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects
to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.01 par value
per share (the “Common Stock”), of the Company, as of the date specified below Capitalized terms not
defined herein shall have the meaning as set forth in the Note.


 





	Date of Conversion:	 







 





	Aggregate Principal to be converted:	 
	 	 
	Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted:	 
	 	 
	AGGREGATE CONVERSION AMOUNT

 TO BE CONVERTED:	 




 








	Please confirm the following information:




 





	Conversion Price:	 




 








	Number of shares of Common Stock to be issued:	 




 





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




 





	Facsimile Number:	 




 





	Holder:	 




 





	By:	 




 





	Title:	 




 





	Dated:	 




 





	Account Number:	 










	  (if electronic book entry transfer)	 




 





	Transaction Code Number:	 










	
        (if electronic
        book entry transfer)

         
	 







 















    	 



    	 



    

 


EXHIBIT II


 


ACKNOWLEDGMENT


 


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


 





	 	SKYLINE MEDICAL INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title: