Exhibit 10.3(a)


 


NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS 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.
ANY TRANSFEREE OF THIS SECURITY SHOULD CAREFULLY REVIEW THE TERMS OF THIS SECURITY, INCLUDING SECTION 4(a) HEREOF. THE PRINCIPAL
AMOUNT REPRESENTED BY THIS SECURITY AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE LESS THAN
THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 4(a) OF THIS SECURITY.


 


	Principal Amount: $ 135,869.56	Original Issue Date: April
    4, 2014
	Purchase Price: $125,000.00	 


 


12% SENIOR SECURED CONVERTIBLE DEBENTURE


DUE 2015


 


THIS 12% SENIOR SECURED
CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 12% Senior Secured Convertible Debentures of World
Moto, Inc., a Nevada corporation, (the “Company”), having its principal place of business at 131 Thailand Science
Park INC-1 #214, Phahonyothin Road, Klongl, Klong Luang, Patumthani 12120 Thailand, designated as its 12% Senior Secured Convertible
Debenture due 2015 (this debenture, the “Debenture” and, collectively with the other debentures of such series,
the “Debentures”).


 


All obligations under
this Debenture are secured by assets of the Company, as more fully set forth in the security agreement between the Company and
the Holder, executed as of the Original Issuance Date.


 


FOR VALUE RECEIVED,
the Company promises to pay to Redwood Management LLC or its registered assigns (the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of $135,869.56 on the twelve month anniversary of the issue date hereof
(the “Maturity Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided
hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture
in accordance with the provisions hereof.  This Debenture shall have an original issue discount of eight percent (8%)
from the stated Principal Amount. This Debenture is subject to the following additional provisions:


 




    	1



    	 



    

 


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


 


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


 


“Amortization
Amount” means (i) with respect to any Amortization Date other than the Maturity Date (the “applicable Amortization
Date”), the product of (A) the quotient of one divided by the number of remaining Amortization Dates, including the applicable
Amortization Date and the Maturity Date, and (B) the outstanding principal amount of this Debenture on the applicable Amortization
Date, and (ii) with respect to the Amortization Date that is the Maturity Date, the principal amount of this Debenture outstanding
as of such Amortization Date (in each case, as any such Amortization Amount may be reduced pursuant to the terms of this Debenture,
whether upon conversion, redemption or otherwise) together with, in each case of clauses (i) and (ii) above, the sum of any accrued
and unpaid interest as of such Amortization Date under this Debenture.


 


“Amortization
Date” shall have the meaning set forth in Section 2(c).


 


“Amortization
Notice Date” shall have the meaning set forth in Section 2(c).


 


“Authorized
Failure Shares” shall have the meaning set forth in Section 4(c)(vi).


 


“Amortizing
Conversion Notice” shall have the meaning set forth in Section 2(c).


 


“Authorized
Share Failure” shall have the meaning set forth in Section 4(c)(vi).


 


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


 




    	2



    	 



    

 


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


 


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


 


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


 


“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 or exercise of the Debentures and
the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any
Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 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 and the stockholders
of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately
after the transaction, (d) a replacement at one time or within a one year period of more than one-half of the members of the Board
of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the
events set forth in clauses (a) through (d) above.


 


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


 


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


 




    	3



    	 



    

 


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


 


“Conversion
Share Ratio” means as to any applicable Amortization Date (as defined below), the quotient of (i) the number of Pre-Amortization
Conversion Shares delivered in connection with such Amortization Date divided by (ii) the number of Post-Amortization Conversion
Shares applicable to such Amortization Date.


 


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


 


“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).


 


“Equity Conditions”
means, during the period in question, (a) the Company shall have duly honored all previous conversions and redemptions pursuant
to this Debenture, if any, (b) the Company shall have paid all liquidated damages and other amounts owing to the Holder in respect
of this Debenture, (c) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction
Documents are listed or quoted for trading on such Trading Market (and the Company believes, in good faith, that trading of the
Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (d) there is a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares then issuable pursuant
to the Transaction Documents, (e) there is no existing Event of Default and no existing event which, with the passage of time
or the giving of notice, would constitute an Event of Default, (f) the issuance of the shares in question to the Holder would
not violate the limitations set forth in Section 4(d) herein, (g) there has been no public announcement of a pending or proposed
Fundamental Transaction or Change of Control Transaction that has not been has not been abandoned, terminated or consummated,
(h) the applicable Holder is not in possession of any information provided by the Company that constitutes, or may constitute,
material non-public information, and (i) the Company meets the current public information requirements under Rule 144 and the
Holder is able to sell its Registrable Securities (as defined in the Registration Rights Agreement) pursuant to Rule 144.


 


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


 


“Fixed Conversion
Price” means, as of any date of determination, $0.10, subject to adjustment as provided herein.


 


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


 


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


 


“Interest
Make-Whole Amount” means with respect to each $1,000 principal amount of Debentures, an amount equal to the amount of
any interest that, but for the Holder’s exercise of its conversion right pursuant to Section 4, an Optional Redemption by
the Company pursuant to Section 6, or acceleration pursuant to Section 8(b) would have accrued under the Debentures at the Interest
Rate for the period from the applicable Conversion Date, Optional Redemption Date or acceleration date through the one year anniversary
of the Original Issue Date, discounted to the present value of such interest using a discount rate equal to the interest rate
of U.S. Treasury Bonds with equivalent remaining terms from the applicable Conversion Date, Optional Redemption Date or acceleration
date through the one year anniversary of the Original Issue Date.


 




    	4



    	 



    

 


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


 


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


 


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


 


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


 


“Mandatory
Default Amount”  means the sum of (a) the greater of (i) the outstanding principal amount of this Debenture,
plus all accrued and unpaid interest hereon, plus the applicable Interest Make-Whole Amount, divided by the Conversion Price on
the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an Event of Default) or
otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default
Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 118% of the outstanding
principal amount of this Debenture, plus 100% of accrued and unpaid interest hereon, plus the applicable Interest Make-Whole Amount,
and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Post-Amortization
Conversion Shares” means that number of shares of Common Stock that would be required to be delivered pursuant to Section
2(c) on an applicable Amortization Date without taking into account the delivery of any Pre-Amortization Conversion Shares (as
defined below).


 




    	5



    	 



    

 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of , 2014 among the Company and the Holder and the other
persons signatory thereto, as amended, modified or supplemented from time to time in accordance with its terms.


  


“Purchase
Rights” shall have the meaning set forth in Section 5(c).


 


 “Redemption
Amount” means the sum of (a) 125% of the then outstanding principal amount of the Debenture, (b) accrued but unpaid
interest, (c) the applicable Interest Make-Whole Amount, and (d) all liquidated damages and other amounts due in respect of the
Debenture.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Company and the Holder, in the form of Exhibit B attached to the Purchase Agreement.


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Underlying Shares by each Holder as provided for in the Registration Rights Agreement.


 


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


 


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


 


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


 


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


 


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


 


“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 other than the OTC Bulletin Board, 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 4:00 p.m. (New York City time)), (b) 
if the Common Stock is then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on
a Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets,
Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share
of the Common Stock so reported, or (d) 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 in interest of the Debentures 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
and Amortization.


 


a)        
Interest. The Company shall pay guaranteed interest to the Holder on the aggregate principal amount of this Debenture at
the rate of 12%, regardless of when the principal amount is repaid. Interest hereunder will be paid to the Person in whose name
this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “Debenture
Register”).


 


b)        
Amortization. Beginning on the sixth-month anniversary of the date of the Original Issue Date and on the monthly anniversary
of such day for each succeeding month thereafter through and including the Maturity Date (each, an “Amortization Date”),
the Company shall pay to the Holder an amount equal to the Amortization Amount for such Amortization Date.  At least
five Trading Days prior to each Amortization Date, the Company shall notify the Holder (the date of each such notification, or
if such notice is not timely provided, the date such notice should have been provided, an “Amortization Notice Date”,
and such notice, an “Amortization Notice”) whether the Amortization Amount will be paid in cash or pursuant
to an Amortizing Conversion (as defined below).  If such notice is not timely provided, the Amortization Amount shall
be paid pursuant to an Amortizing Conversion.  No later than two (2) Trading Days after delivery or deemed delivery
(as applicable) of the applicable Amortization Notice electing, in whole or in part, an Amortizing Conversion, the Company shall
deliver to the Holder’s account with DTC such number of shares of Common Stock (the “Pre-Amortization Conversion
Shares”) equal to the quotient of (x) such Amortization Amount divided by (y) the lesser of (i) the Conversion Price
calculated in accordance with 4(b), and (ii) 70% of the average of the VWAP for the five Trading Day period ending on, and including,
the Trading Day immediately preceding the Amortization Notice Date, and as to which the Holder shall be the owner thereof as of
such time of delivery or deemed delivery (as the case may be) of such Amortization Notice. On each Amortization Date on which
the Amortization Amount is to be paid in shares of Common Stock rather than cash, the Company shall pay to the Holder of this
Debenture the applicable Amortization Amount due on such date by converting (each an “Amortizing Conversion”)
such Amortization Amount in accordance with Section 4(c), except that (A) the Conversion Price shall be equal to the lesser of
(i) the Conversion Price calculated in accordance with 4(b), and (ii) 70% of the average of the VWAP for the five Trading Day
period ending on, and including, the Trading Day immediately preceding the Amortization Date and (B) such shares of Common Stock
shall be delivered to the Holder on the Amortization Date.  The number of shares of Common Stock to be delivered upon
such Amortizing Conversion shall be reduced by the number of any Pre-Amortization Conversion Shares delivered in connection with
such Amortization Date. Notwithstanding the foregoing, the Company shall not be entitled to effect an Amortizing Conversion
with respect to any portion of such Amortization Amount and shall be required to pay the entire amount of such Amortization Amount
in cash if the Equity Conditions are not true and correct from the Amortization Notice Date through the Amortization Date, except
that the Company may still issue shares on the applicable Amortization Date in accordance with Section 4(c) with the written consent
of the Holder.  If any of the Equity Conditions are not satisfied (or waived in writing by the Holder) on such Amortization
Date or on such date a Amortizing Conversion is not otherwise permitted under any other provision of this Note, then the Company
shall pay the applicable Amortization Amount to the Holder within three (3) days of such Amortization Date, by wire transfer of
immediately available funds.  In addition, if any of the Equity Conditions are not satisfied (or waived in writing by
the Holder) on such Amortization Date or on such date a Amortizing Conversion is not otherwise permitted under any other provision
of this Note, then, at the Holder’s option, either (I) the Holder shall return any Pre-Amortization Conversion Shares delivered
in connection with the applicable Amortization Date or (II) the applicable Amortization Amount shall be reduced by the product
of (X) the Amortization Amount applicable to such Amortization Date multiplied by (Y) the Conversion Share Ratio. If, with respect
to an Amortization Date, the number of Pre-Amortization Conversion Shares delivered to the Holder exceeds the number of Post-Amortization
Conversion Shares with respect to such Amortization Date, then the number of shares of Common Stock equal to such excess shall
constitute a credit against the number of shares of Common Stock to be issued to such Holder pursuant to this Section 2(c), at
the option of the Holder, either (x) against any conversion of this Note pursuant to Section 4 as selected by the Holder or (y)
on the Maturity Date, or, if earlier, the last Amortization Date, reducing the number of shares of Common Stock required to be
actually issued by the Company to the Holder on such date by the amount of such excess on a share-for-share basis. Delivery
of shares of Common Stock for an Amortizing Conversion shall be made in accordance with the provisions of Section 4(c) below.
The Company may elect to make a payment of the Amortization Amount in cash to the Holder upon notice to the Holder.  If
the Company elects or is required to pay the Amortization Amount in cash, in whole or in part, in accordance with this Section
2(c), then the amount shall be paid in cash on the applicable Amortization Date by wire transfer to the Holder of immediately
available funds in an amount equal to the applicable Amortization Amount. 


 




    	7



    	 



    

 


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

 


e)         Prepayment.  Except
as otherwise set forth in this Debenture in Section 6, the Company may not prepay any portion of the principal amount of this
Debenture without the prior written consent of the Holder.


 


Section 3.   Registration
of Transfers and Exchanges.


 


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


 


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


 




    	8



    	 



    

 


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


 


Section 4.          Conversion.


 


a)         Voluntary
Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall
be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(d) hereof).  The Holder shall effect conversions
by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice
of Conversion”), specifying therein the principal amount and accrued interest of this Debenture 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.  In the event of a partial conversion of this Debenture pursuant hereto, the Principal amount converted shall
be deducted from the Amortization Amount(s) relating to the Amortization Date(s) as set forth in the applicable Notice of Conversion.  No
ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to
physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, 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 Debenture in an amount equal to the applicable conversion.  The Holder and the Company shall maintain
records showing the principal amount(s) converted and the date of such conversion(s).  The Company may deliver an objection
to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion.  The Holder, and
any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the
amount stated on the face hereof.


 


b)        Conversion
Price.  The conversion price (the “Conversion Price”) in effect on any Conversion Date shall
be the lesser of (i) the Fixed Conversion Price and (ii) the price equal to 70% of the lowest traded price per share of the Common
Stock during the 25 Trading Days immediately preceding the date of conversion.


 




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c)        
Mechanics of Conversion.


 


i.            Conversion
Shares Issuable.  The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the
quotient obtained by dividing (x) the outstanding principal amount of this Debenture being converted, plus accrued interest, plus,
the applicable Interest Make-Whole by (y) the Conversion Price.


 


ii.           Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
Conversion Shares which, on or after the Effective Date, shall be free of restrictive legends and trading restrictions (other
than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon
the conversion of this Debenture.  On or after the Effective Date, the Company shall deliver any certificate or certificates
required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions.


 


iii.          Failure
to Deliver Certificates.  If, in the case of any Notice of Conversion, such certificate or certificates 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 certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall
promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Notice of Conversion.


 


iv.          Obligation
Absolute.  The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Debenture
in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder
in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate
as a waiver by the Company of any such action the Company may have against the Holder.   


 




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


 


vi.          Reservation
of Shares Issuable Upon Conversion. So long as this Debenture is 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 Debenture, a number of shares of Common Stock, as of any date of determination, in accordance with the following formula:


 


Required Minimum
= (OA/CP) x 3


 


OA = the outstanding
principal amount of this Debenture, plus 100% of accrued and unpaid interest hereon, plus the applicable Interest Make-Whole Amount
on such date of determination;


 


CP = the applicable
Conversion Price on such date of determination. 


 


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, and, if the Registration Statement is then effective under the Securities Act shall be registered for public resale
in accordance with such Registration Statement (subject to such Holder’s compliance with its obligations under the Registration
Rights Agreement).


 




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vii.         Insufficient
Authorized Shares. If, notwithstanding Section 4(c)(v), and not in limitation thereof, at any time while any of the Debentures
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 Debentures at least a number of shares of Common Stock equal to
the Required Minimum specified in Section 4(c)(v) (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 applicable amount for the Debentures then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that
they approve such proposal.  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 “Authorized Failure Shares”),
in lieu of delivering such Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the portion of
the Debenture convertible into such Authorized Failure Shares at a price equal to the sum of the product of (x) such number of
Authorized 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 Authorized Failure Shares should have been issued pursuant to the terms of this Debenture and ending on the date
of such issuance of payment under this Section 4(c)(vi). 


 


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


 


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


 




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


 




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Section 5.            
Certain
Adjustments.


 


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





 


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


 




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c)         Subsequent
Rights Offerings.  If the Company, at any time while the Debenture is outstanding, shall issue rights, options or
warrants to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase warrants, securities
or other property pro rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this
Debenture) 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 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. If the Company, at any time while this Debenture is outstanding, shall distribute
to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends)
or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section
3(b)), then in each such case the Fixed Conversion Price shall be adjusted by multiplying the Fixed Conversion Price in effect
immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction
of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall
be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or
evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined
by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided
to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock.  Such adjustment shall be made whenever any such distribution is made.   


 




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


 




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


 


g)         Notice
to the Holder.


 


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


 


ii.           Notice
to Allow Conversion by Holder.  If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all Holder of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholder of the Company shall be
required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last
address as it shall appear upon the Debenture Register, at least fifteen (15) calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holder of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The
Holder shall remain entitled to convert this Debenture during the 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.            
Redemption and Forced Conversion.


 


a)         Optional
Redemption at Election of Company.  Subject to the provisions of this Section 6(a), the Company may deliver a notice
to the Holder (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the
“Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the then outstanding
principal amount of this Debenture for cash in an amount equal to the Redemption Amount on the 10th Trading Day following the
Optional Redemption Notice Date (such date, the “Optional Redemption Date”, such 10 Trading Day period, the
“Optional Redemption Period” and such redemption, the “Optional Redemption”); provided that
the Company may only provide notice of such redemption if the Equity Conditions are true and correct as of the date of the Notice.


 


b)        Optional
Redemption Procedure.  The payment of cash pursuant to an Optional Redemption shall be payable on the Optional Redemption
Date.  If any portion of the payment pursuant to an Optional Redemption shall not be paid by the Company by the applicable
due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted
by applicable law until such amount is paid in full.  Notwithstanding anything herein contained to the contrary, if
any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company
given at any time thereafter, to invalidate such Optional Redemption, ab initio. The Holder may elect
to convert the outstanding principal amount and accrued interest of the Debenture pursuant to Section 4 prior to actual payment
in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company. 


 


Section 7.        Negative
Covenants. As long as any portion of this Debenture remains outstanding, unless the Holders of at least 50% in principal amount
of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall not, and shall not permit
any of the Subsidiaries to, directly or indirectly:


 


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


 


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


 


c)        enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
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); or


 


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


 




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Section 8.            
Events of Default.


 


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


 


i.           
any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts
owing to the Holder on any Debenture, 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 an interest payment or other default under clause (B)
above, is not cured within 3 Trading Days;


 


ii.           the
Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (other than a breach by the
Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause
(xi) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of
such failure sent by the Holder or by any other Holder to the Company and (B) 5 Trading Days after the Company has become aware
of such failure;


 


iii.          a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall have been declared under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument
to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below) which solely with respect to Section
8(a)(iii)(B), such 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, or financial condition of the Company or any of its Subsidiaries, individually
or in the aggregate; 


 


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


 


v.          the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X)  shall be subject
to a Bankruptcy Event;


 


vi.         the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $50,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;


 




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vii.        the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within ten Trading Days;


 


viii.       the
Company shall be a party to any Change of Control Transaction or Fundamental 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);


 


ix.          the
Company does not meet the current public information requirements under Rule 144 in respect of the Registrable Securities (as
defined under the Registration Rights Agreement);


 


x.           if,
during the Effectiveness Period (as defined in the Registration Rights Agreement), the Holder shall not be permitted to resell
Registrable Securities (as defined in the Registration Rights Agreement) under the Registration Statement for a period of more
than 20 consecutive Trading Days or 30 non-consecutive Trading Days during any 12 month period unless it is pursuant to an Allowable
Grace Period (as defined in the Registration Rights Agreement); 


 


xi.          the
Company shall fail for any reason to deliver certificates to a Holder prior to the fifth 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 Debentures in accordance with the terms hereof;


 


xii.         on or before
the earlier of the (x) the Effective Date, or (y) the date which is six months from the First Closing Date, the Common Stock shall
not be eligible for electronic transfer through the Depository Trust Company (“DTC”) or DTC otherwise places a chill
on new deposits of Common Stock; or


 


xii.         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 such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days; provided, however, that 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.


 




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b)        Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but
unpaid interest, plus the applicable Interest Make-Whole Amount, 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 and shall become convertible into shares of Common Stock at the lesser of (i) the Conversion Price, and (ii) 60%
of the average VWAP for the five Trading Days in the preceding twenty Trading Days that have the lowest VWAP during such period.  
Commencing 5 days after the occurrence of any Event of Default that results in the acceleration of this Debenture, the interest
rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under
applicable law.   Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company.  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 Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b).  No such
rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.


 


Section 9.            
Miscellaneous.


 


a)         Notices.  Any
and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any
Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company
may specify for such purposes by notice to the Holder delivered in accordance with this Section 9(a).  Any and all notices
or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number or address
of the Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company,
at the principal place of business of the Holder, as set forth in the Purchase Agreement.  Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is
required to be given.


 


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


 




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


 


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


 


f)         Amendments;
Waiver.  No provision of this Debenture may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by each of the Company and the Holder or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought.  Any waiver by the Company or the Holder of a breach of any provision
of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of
any other provision of this Debenture.  The failure of the Company or the Holder to insist upon strict adherence to
any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Debenture on any other occasion.


 




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g)        Severability.  If
any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and
if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law. 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 Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants
or the performance of this Debenture, 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. 


 


h)        Successors
and Assigns.  The terms and conditions of this Debenture shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. The Company may not assign this note or delegate any of its obligations hereunder without
the written consent of the Holder. The Holder may assign this Debenture and its rights hereunder at any time without consent of
Company.


 


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


 


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


 


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


 


(Signature Pages Follow)


 




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


 


	 	WORLD MOTO, INC.
	 	 	 
	 	By:	/s/ Paul Giles
	 	 	Paul Giles

        Chief Executive Officer



 




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ANNEX A


 


NOTICE OF CONVERSION


 


The undersigned hereby
elects to convert principal under the 12% Senior Secured Convertible Debenture due 2015 of World Moto, Inc., a Nevada corporation
(the “Company”), into shares of common stock (the “Common Stock”), of the Company according
to the conditions hereof, as of the date written below.  If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.  No fee will
be charged to the holder for any conversion, except for such transfer taxes, if any.


 


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


 


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.


 


In the event of a partial Conversion,
Amortization Dates from which Amortization Amount is to be deducted:


 


Conversion calculations:


 


	 	Date to Effect Conversion:
	 	 
	 	Principal Amount of Debenture to be Converted:
	 	 
	 	Number of shares of Common Stock to be issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Address for Delivery of Common Stock Certificates:
	 	 
	 	Or
	 	 
	 	DWAC Instructions:
	 	 
	 	Broker 
	 	No:	 
	 	Account 
	 	No:	 


 




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Schedule 1


 


CONVERSION SCHEDULE


 


The 12% Senior Secured Convertible Debentures
due 2015 in the aggregate principal amount of $____________ are issued by World Moto, Inc., a Nevada corporation. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced Debenture.


 


Dated:


 


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



 




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