Exhibit
4.1 





 


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


 


Original
Issue Date: February 5, 2020


 


$______
Principal


$______
Purchase Price


 


original
issue discount


Convertible
PROMISSORY NOTE


 


THIS
ORIGINAL ISSUE DISCOUNT CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued Original Issue Discount
Convertible Promissory Notes issued at a 10% original issue discount by Adhera Therapeutics, Inc., a Delaware corporation (the
“Company”) (this note, the “Note” and, collectively with the other notes of such series, the “Notes”).


 


FOR
VALUE RECEIVED, the Company promises to pay to __________, or its permitted assigns (the “Holder”), the principal
sum of $______ on the date that is the six month anniversary of the Original Issue Date, or August 5, 2020 (the “Maturity
Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest
to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions
hereof. This Note is subject to the following additional provisions:


 


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


 


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


 


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


 




    	 



    	 



    

 


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


 


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


 


“Black
Scholes Value” means the value of the outstanding principal amount of this Note, plus all accrued and unpaid interest hereon
based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Maturity Date, (B) an expected volatility equal to the greater of 100% and the
100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement
of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the
price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental
Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental
Transaction and the Maturity Date.


 


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


 


“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by
an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 50% of the voting securities of the Company (other than by means of conversion, exercise or exchange of the Notes
or the Warrants issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Company and, after giving effect to such transaction, the shareholders of the Company immediately
prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction,
(c) the Company sells or transfers all or substantially all of its assets to another Person, (d) a replacement at one time or
within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority
of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving
as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date hereof), (e) Nancy Phelan shall both no longer be employed by the
Company on a full-time basis and no longer serve as a member of the Board of Directors of the Company (provided, that if Ms. Phelan’s
employment with the Company is terminated by the Company for “Cause” (as defined that certain Employment Agreement
dated April 4, 2019 by and between the Company and Ms. Phelan (the “Phelan Agreement”)) or if the Board of Directors
of the Company determines not to nominate Ms. Phelan to serve as a member of the Board of Directors at any annual or special meeting
of the stockholders of the Company at which directors will be elected that is held while the Notes are outstanding in the exercise
of their fiduciary duties under Delaware law, including, without limitation, as a result of the occurrence of any event that would
constitute “Cause” under the Phelan Agreement, then the occurrence of the event set forth in this clause (e) shall
not be deemed a Change of Control Transaction), or (f) the execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set forth in clauses (a) through (e) above.


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“DWAC”
means the Deposit or Withdrawal at Custodian system at The Depository Trust Company.


 


“Event
of Default” shall have the meaning set forth in Section 7(a).


 


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


 


“Exempt
Exchange” means the issuance of shares of Common Stock or Common Stock Equivalents by the Company to the holders of its
preferred stock and/or debt securities in exchange for such preferred stock and/or debt securities in an exchange offer that is
effected pursuant to one or more Tender Offer Statements on Schedule TO that are filed with the SEC.


 


“Exempt
Issuance” shall have the meaning set forth in the Purchase Agreement.


 


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


 




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“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $125,000 due under leases required to
be capitalized in accordance with GAAP.


 


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


 


“Mandatory
Default Amount” means the sum of (a) (i) 140% of the aggregate of outstanding principal amount of this Note and the accrued
and unpaid interest thereon, including default interest, and (b) all other amounts, costs, expenses and liquidated damages due
in respect of this Note.


 


“Note
Register” shall have the meaning set forth in Section 3(c).


 


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


 


“Option
Value” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the “OV”
function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable
Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately
following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly
announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of (A) the Trading
Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock
Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent
if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation
shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive
documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately
following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B)
the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock
Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.


 


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


 


“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) capital lease obligations and purchase money indebtedness
incurred in connection with the acquisition of machinery and equipment and (c) the Indebtedness set forth on Schedule 3.1(aa)
to the Purchase Agreement).


 




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


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of February 5, 2020 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.


 


“SEC”
means the Securities and Exchange Commission.


 


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


 


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


 


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


 


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


 


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


 


“Transaction
Documents” means the Note, the Purchase Agreement and the Warrant which the Company and the Holder are parties.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) (or a similar organization or agency succeeding
to its functions of reporting prices), (b) if no volume weighted average price of the Common Stock is reported for the Trading
Market, the most recent bid price per share of the Common Stock so reported, or (c) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority of the
outstanding principal amount of the Notes then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.


 




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Section
2. Interest.


 


(a)
Interest. Interest shall accrue to the Holder on the aggregate unconverted and then outstanding principal amount of this
Note at the rate of 10% per annum, calculated on the basis of a 360-day year and shall accrue daily commencing on the Original
Issue Date until payment in full of the outstanding principal (or conversion to the extent applicable), together with all accrued
and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. During the existence
of an Event of Default, interest shall accrue at the lesser of (i) the rate of 18% per annum, or (ii) the maximum amount permitted
by law (the lesser of clause (i) or (ii), the “Default Interest Rate”).


 


(b)
Prepayment. The Note may be prepaid: (i) from the Original Issue Date until and through the day that falls on the third
month anniversary of the Original Issue Date (the “3 Month Anniversary Date”) at an amount equal to 115% of the aggregate
of the outstanding principal balance of the Note and accrued and unpaid interest, and (ii) after the 3 Month Anniversary Date
at an amount equal to 125% of the aggregate of the outstanding principal balance of the Note and accrued and unpaid interest.
In order to prepay the Note, the Company shall provide at least 20 days’ prior written notice to the Holder, during which
time the Holder may convert the Note in whole or in part


 


Section
3. Registration of Transfers and Exchanges.


 


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


 


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


 


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


 


Section
4. Conversion.


 


(a)
Conversion. On or after the 3 Month Anniversary Date until this Note is no longer outstanding, this Note shall be convertible,
in whole or in part, at any time, and from time to time, into Conversion Shares at the option of the Holder. The Holder shall
effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A
(each, a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and the date
on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified
in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder.
No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon,
has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in
an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s)
converted in each conversion, the date of each conversion, and the Conversion Price in effect at the time of each conversion.
The Company may deliver an objection to any Notice of Conversion within two Trading Days of delivery of such Notice of Conversion.
In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may
be less than the amount stated on the face hereof. 


 




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(b)
Conversion Price.


 


(i)
Initial Conversion Price. The “Conversion Price” shall be the lower of: (i) $0.50 per share and (ii) 70% of
the VWAP for the prior 10 Trading Days (as adjusted for stock splits, stock combinations and similar events).


 


(ii)
Event of Default Conversion Price. If an Event of Default has occurred, regardless of whether such Event of Default has
been cured or remains ongoing: 


 


(A)
prior to the 3 Month Anniversary Date, but in no event prior to February 29, 2020, this Note shall be convertible at 60% of the
second lowest closing price of the Common Stock as reported on the Trading Market during the 20 consecutive Trading Day period
ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Notice of Conversion
(the “60% Conversion Price”)(as adjusted for stock splits, stock combinations and similar events); and


 


(B)
after the 3 Month Anniversary Date, this Note shall be convertible as provided under subsection 4(b)(iii) below.


 


(iii)
Non-Prepayment Conversion Price. If the Note is not prepaid in accordance with Section 2(b) on or before the 3 Month Anniversary
Date, the Conversion Price shall be the lower of (1) the 60% Conversion Price or (2) $0.05 per share (as adjusted for stock splits,
stock combinations and similar events).


 


All
such Conversion Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transactions or events that proportionately decreases or increases the Common Stock. Additionally,
the Conversion Price shall be adjusted as provided for herein.


 


(c)
Mechanics of Conversion or Prepayment.


 


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


 




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(ii)
Delivery of Certificate Upon Conversion. Not later than two Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder any certificate or certificates required to be
delivered by the Company under this Section 4(c) which shall be free of restrictive legends and trading restrictions except as
provided by the Securities Act (other than those which may then be required by the Purchase Agreement) and such shares shall be
delivered electronically through the Depository Trust Company or another established clearing corporation performing similar functions.


 


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


 


(iv)
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Note in accordance with the terms hereof, are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with the issuance of such Conversion Shares. In the event the Holder of this Note shall
elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim
that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for
any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part
of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in accordance
with Section 4.1(e) of the Purchase Agreement. The exercise of any such rights shall not prohibit the Holder from seeking to collect
damages under this Note, the Purchase Agreement or under applicable law.


 


(v)
Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights
available to the Holder, if the Company fails for any reason to deliver to the Holder such Conversion Shares by the Share Delivery
Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall have the remedies provided for
in accordance with Section 4.1 of the Purchase Agreement. Nothing herein or therein shall limit a Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver Conversion Shares upon conversion of this
Note as required pursuant to the terms hereof.


 


(vi)
Reservation of Conversion Shares. The Company covenants that it will reserve and keep available out of its authorized and
unissued shares of Common Stock for the purpose of issuances upon conversion of this Note (and other purposes further detailed
in the Purchase Agreement), free from preemptive rights or any other actual contingent purchase rights of Persons other than the
Holder (and the other holders of the Notes), not less than the amount of shares designated in Section 4.9 of the Purchase Agreement.
The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable.


 




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


 


(viii)
Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge
to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
certificates. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all
fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.


 


(ix)
Attorneys’ Fees etc. The Company shall (A) pay the reasonable fees of the law firm of the Holder’s choice (in
an amount not to exceed $500 per opinion) in connection with the conversion of the Note, (B) cause its attorneys to promptly provide
any reliance opinion to the Transfer Agent, and (C) pay the Holder the sums required under Section 2(c)(iv).


 


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


 




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Section
5. Certain Adjustments.


 


(a)
Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of
the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to this Section 5(a) shall become effective immediately
after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or re-classification.


 


(b)
Subsequent Equity Sales. (i) At any time, for so long as the Note or any amounts accrued and payable thereunder remain
outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right
to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition),
any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per
share that is lower than the Conversion Price then in effect (such lower price, the “Base Conversion Price” and each
such issuance or announcement a “Dilutive Issuance”), then the Conversion Price shall be immediately reduced to equal
the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding
the preceding, the Company may close a registered public offering of securities for its own account at a Base Conversion Price
lower than the Conversion Price without triggering a Dilutive Issuance under this Note provided that the Company prepays the then
outstanding principal and interest under this Note.


 




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(ii)
If any Common Stock Equivalent is amended or adjusted, and such price as so amended shall be less than the Conversion Price in
effect at the time of such amendment or adjustment, then the Conversion Price shall be adjusted upon each such issuance or amendment
as provided in this Section 5(b). In case any Common Stock Equivalent is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to
have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated
transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the
Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less
(II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued
or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the
Company therefor. If any shares of Common Stock or Common Stock Equivalents are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be
the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.


 


(iii)
If the holder of Common Stock or Common Stock Equivalents outstanding on the Original Issue Date or issued after the Original
Issuance Date shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price then in
effect, such issuance shall be deemed to have occurred for less than the Conversion Price on such date and such issuance shall
be deemed to be a Dilutive Issuance.


 


(iv)
If the Company enters into a Variable Rate Transaction despite the prohibition set forth in the Purchase Agreement, the Company
shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such
securities may be converted or exercised under the terms of such Variable Rate Transaction.


 


(v)
The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive
Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice
of Conversion.


 




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(vi)
The provisions of this Section 5(b) shall apply each time a Dilutive Issuance occurs after the Original Issue Date for so long
as the Note or any amounts accrued and payable thereunder remain outstanding, but any adjustment of the Conversion Price pursuant
to this Section 5(b) shall be downward only. Notwithstanding the foregoing, no adjustment will be made under this Section 5(b)
in respect of an Exempt Issuance.


 


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


 


(d)
Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets or rights or warrants to acquire its assets, or subscribe for or purchase any security other
than Common Stock, to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance
of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that
the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution
(provided, however, to the extent that the Holder’s right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation
subject to Section 13(d) of the Exchange Act, then the Holder shall not be entitled to participate in such Distribution to such
extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the
portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded
corporation subject to Section 13(d) of the Exchange Act).


 




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(e)
Fundamental Transaction. (1) If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion
of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the conversion of this
Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation on the conversion of this Note). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Note following such Fundamental Transaction. The Company shall not effect a Fundamental Transaction unless
it gives the Holder at least 10 Trading Days prior notice together with sufficient details so the Holder can make an informed
decision as to whether it elects to accept the Alternative Consideration. If a public announcement of the Fundamental Transaction
has not been made, the notice to the Holder may not be given until the Company files a Form 8-K or other report disclosing the
Fundamental Transaction. (2) Notwithstanding anything to the contrary, in the event of a Fundamental Transaction the proceeds
of which are not used to repay the principal and interest on the Notes in full and that is (x) an all cash transaction, (y) a
“Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (z) a Fundamental Transaction involving
a person or entity not traded on a national securities exchange or trading market (with such exchange or market including, without
limitation, the Nasdaq Global Select Trading Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the New York Stock
Exchange, Inc., the NYSE American or any market operated by the OTC Markets, Inc.), the Company or any Successor Entity (as defined
below) shall, at the Holder’s option, concurrently with the consummation of the Fundamental Transaction, purchase this Note
from the Holder by paying to the Holder the higher of (i) an amount of cash equal to the Black Scholes Value of the outstanding
principal of this Note on the date of the consummation of such Fundamental Transaction, or (ii) the product of (a) the number
of Conversion Shares issuable upon full conversion of this Note (without regard to any limitation on conversion of this Note)
and (b) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Conversion
Price; (3) If Section 5(e)(1) and (2) are not applicable, the Company shall cause any successor entity in a Fundamental Transaction
in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the
Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to
written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this
Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this
Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations
on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the Conversion
Price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such
conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of
such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of
any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date
of such Fundamental Transaction, the provisions of this 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. Notwithstanding anything in this Section 5(e), an Exempt Issuance (as defined in the Purchase
Agreement) shall not be deemed a Fundamental Transaction.


 




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


 


(g)
Notice to the Holder.


 


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


 


(ii)
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on its Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common
Stock, (C) the Company shall authorize the granting to all holders of its Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall
be required in connection with any reclassification of its Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
its Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed
at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder
at its last address as it shall appear upon the Note Register, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of its Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of its Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect
the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in
good faith by the Company), the Company or its successor shall simultaneously file such notice with the SEC pursuant to a Current
Report on Form 8-K. If the Company does not simultaneously file the required Form 8-K, the Holder shall be entitled penalties
in accordance with Section 4.6 of the Purchase Agreement The Holder shall remain entitled to convert this Note during the 20-day
period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise
be expressly set forth herein.


 




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Section
6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of at least 50%
(which must include the Lead Investor’s consent) in principal amount of the then outstanding Notes shall have otherwise
given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:


 


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


 


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


 


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


 


(d)
other than in connection with an Exempt Issuance or an Exempt Exchange, or in connection with the fulfillment by the Company of
its obligations to repurchase shares of the Series F Convertible Preferred Stock and related warrants to purchase shares of Common
Stock from an affiliate of Robert C. Moscato, Jr., the former Chief Executive Officer of the Company, pursuant to the settlement
agreement between the Company and Mr. Moscato, purchase or otherwise acquire more than a de minimis number of shares of
its Common Stock or Common Stock Equivalents;


 




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(e)
repay, or offer to repay, any Indebtedness other than the Note as provided in Section 2(c) or regularly scheduled principal payments
of Permitted Indebtedness set forth under clauses (a) and (b) of the definition thereof and the interest on indebtedness owed
pursuant to clause (c) thereof, as such terms Indebtedness and Permitted Indebtedness are in effect as of the Original Issue Date,
provided that such payments other than on the Notes shall not be permitted if, at such time, or after giving effect to such payment,
any Event of Default exists or occurs or the Company is not be able to satisfy obligations owing to the Noteholders;


 


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


 


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


 


(h)
issue any equity securities of the Company other than pursuant to the provisions of the Purchase Agreement, an Exempt Issuance,
an Exempt Exchange or an issuance of which the proceeds are used to repay the principal and interest on the Notes in full; or


 


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


 


Section
7. Events of Default.


 


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


 


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


 


(ii)
the Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the
Company of its obligations to deliver Conversion Shares, which breach is addressed in clause (x) below) or any Transaction Document
which failure is not cured, if possible to cure, within the earlier to occur of 10 Trading Days after notice of such failure is
sent by the Holder or by any other Holder to the Company and (B) five Trading Days after the Company has become aware of such
failure;


 


(iii)
except for payment defaults covered under Section 7(a)(i), and defaults as of the Original Issue Date relating to the repayment
of interest on the secured promissory notes of the Company that were issued between June 28, 2019 and August 5, 2019, the Company
shall breach, or a default or Event of Default (subject to any grace or cure period provided in the applicable agreement, document
or instrument) shall occur or be declared, as applicable, under, (A) any of the Transaction Documents or (B) any other material
agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by any other clause
of this Section 7) (and, with respect to individual items under this item (B), relate to the payment by the Company of not less
than $250,000), which default or Event of Default is not cured, if possible to cure, within the earlier to occur of (i) 10 Trading
Days after notice of such default sent by Holder or by any other holder to the Company and (ii) five Trading Days after the Company
has become aware of such default;


 




    	16



    	 



    

 


(iv)
any representation or warranty made in this Note, any other Transaction Document, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made, which failure is not cured, if possible to cure, within
the earlier to occur of 10 Trading Days after notice of such failure is sent by the Holder or by any other Holder to the Company;


 


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


 


(vi)
the Company or any Subsidiary shall: (A) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator
of it or any of its properties; (B) admit in writing its inability to pay its debts as they mature; (C) make a general assignment
for the benefit of creditors; (D) be adjudicated as bankrupt or insolvent or be the subject of an order for relief under Title
11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute of any other jurisdiction or foreign country; or (E) file a voluntary petition in bankruptcy, or a petition or an answer
seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against
it in any proceeding under any such law, or (F) take or permit to be taken any action in furtherance of or for the purpose of
effecting any of the foregoing;


 


(vii)
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Subsidiary,
by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary,
or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part
of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of 30 days;


 


(viii)
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company
or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in
the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within 45 days after the
date thereof;


 


(ix)
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their
respective property or other assets for more than $100,000 and not relating to any claims asserted by current or former officers
arising from employment or settlement agreements with the Company which shall not be more than $150,000 in the aggregate, and
such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 10 days;


 




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(x)
any Material Adverse Effect occurs;


 


(xi)
any provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof)
cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be
contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority
having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary
shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document;


 


(xii)
the Company’s Common Stock is not listed or quoted for trading on a Trading Market which failure is not cured, if possible
to cure, within the earlier to occur of five Trading Days after notice of such failure is sent by the Holder;


 


(xiii)
the Company’s Common Stock is subject to a “chill” by the Depository Trust Company or any successor;


 


(xiv)
except for an Exempt Issuance or the sale of all or a material portion of the assets of the Company relating to its prestalia
business, the Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess
of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change
of Control Transaction);


 


(xv)
from and after 120 days after the Original Issue Date, the Company fails to have authorized and reserved the amount of shares
designated in Section 4.9 of the Purchase Agreement (without regard to any limitations on conversion hereof, including without
limitation, the Beneficial Ownership Limitation);


 


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


 


(xvii)
the Company fails to file with the SEC any required reports under Section 13 or 15(d) of the Exchange Act within the time required
(including any applicable extension period) by the rules and regulations thereunder.


 


(b)
Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus liquidated
damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election,
immediately due and payable in cash at the Mandatory Default Amount. Upon the payment in full of the Mandatory Default Amount,
the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described
herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind,
and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder
receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon.


 




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(c)
Interest Rate Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default
is cured, this Note shall accrue interest at an interest rate equal to the Default Interest Rate.


 


(d)
Conversion Price Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default
is cured, this Note shall be convertible at the Default Conversion Price.


 


Section
8. Miscellaneous.


 


(a)
No Rights as Stockholder Until Conversion. This Note does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the conversion hereof other than as explicitly set forth in Section 5.


 


(b)
Notices. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing,
and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted next day delivery, as
follows:


 





	 	If
    to the Company:	Adhera
    Therapeutics, Inc. 
	 	 	4815
    Emperor Boulevard, Suite 100
	 	 	Durham,
    North Carolina 27703
	 	 	Attention:
    Nancy R. Phelan, Chief Executive Officer


 


	 	with
    a copy to:	 
	 	(which
    shall not constitute	Pryor
    Cashman LLP
	 	notice)	7
    Times Square
	 	 	New
    York, NY 10036
	 	 	Attention:
    Lawrence Remmel, Esq.


 


	 	If
    to Holder:	 


 


or
to such other address as any of them, by notice to the other may designate from time to time. Time shall be counted to, or from,
as the case may be, the date of delivery.


 


(c)
Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest and late
fees, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a
direct debt obligation of the Company.


 




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


 


(e)
Exclusive Jurisdiction; Governing Law; Prevailing Party Attorneys’ Fees. All questions concerning the construction,
validity, enforcement and interpretation of this Note and venue shall be governed by and construed and enforced in accordance
with Section 5.9 of the Purchase Agreement. If any party shall commence an action or proceeding to enforce or otherwise relating
to this Note, then, in addition to the other obligations of the Company elsewhere in this Note, the prevailing party in such action
or proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or proceeding.


 


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


 


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


 




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(h)
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 would 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.



 


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


 


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


 


(Signature
Pages Follow)


 




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


 


	 	ADHERA THERAPEUTICS, INC.
	 	 	 
	 	By:	
	 	Name:	 Nancy R. Phelan
	 	Title:	 Chief Executive Officer


 




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ANNEX
A


NOTICE
OF CONVERSION


 


The
undersigned hereby elects to convert principal under the Original Issue Discount Convertible Note due August 5, 2020 of ADHERA
THERAPEUTICS, INC., a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”),
of the Company according to the conditions hereof, as of the date written below.


 


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


 


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


 


	Conversion
    calculations:	 
	 	 
	 	Date
    to Effect Conversion:
	 	 
	 	Principal
    Amount of Note to be Converted:
	 	 
	 	Number
    of shares of Common Stock to be issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	DWAC
    Instructions:
	 	 
	 	Broker
    No:___________________
	 	Account
    No:_________________


 




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