Exhibit 10.4


 





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: August 11, 2015


Original
Conversion Price (subject to adjustment herein): $2.00


 


$526,315.75


 


12%
SENIOR CONVERTIBLE NOTE


DUE
2017


 


THIS
12% SENIOR CONVERTIBLE NOTE is one of a series of duly authorized and validly issued 12% Senior Convertible Notes of InterCloud
Systems, Inc., a Delaware corporation, (the “Company”), having its principal place of business at 1030 Broad
Street, Suite 102, Shrewsbury, NJ 07702, designated as its 12% Senior Convertible Notes due 2017 (this note, the “Note”
and, collectively with the other notes of such series, the “Notes”).


 


FOR
VALUE RECEIVED, the Company promises to pay to Richard Smithline or his registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $526,315.75 on the eighteen month anniversary of the
issue date hereof (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,
in addition to the terms defined elsewhere in this Note, (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 Note on the applicable Amortization
Date, and (ii) with respect to the Amortization Date that is the Maturity Date, the principal amount of this Note outstanding
as of such Amortization Date (in each case, as any such Amortization Amount may be reduced pursuant to the terms of this Note,
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 Note.


 


“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).


 


“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.


 


“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).


 






    	2



    	 



    

 


“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 Notes and the
Securities 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 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.


 


“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.


 


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


 


“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 Note, if any, (b) the Company shall have paid all liquidated damages and other amounts owing to the
Holder in respect of this Note, (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 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,
(i) the Company meets the current public information requirements under Rule 144 and the Holder is able to sell its Conversion
Shares pursuant to Rule 144, (j) the Common Stock has traded for 10 consecutive Trading Days with an average daily trading volume
of no less than 100,000 shares per day, and (k) the closing price of the Common Stock has not been less than $1.00 per share for
10 consecutive Trading Days.


 






    	3



    	 



    

 


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


 


“Forced
Conversion Notice” shall have the meaning set forth in Section 6(e).


 


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


 


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


 


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


 


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


 


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


 


“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 Notes, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.


 






    	4



    	 



    

 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of August 11, 2015 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).


 


“Qualified
Asset Sale” means a sale of any capital assets of the Company or any subsidiary yielding gross proceeds of in excess
of $5,000,000.


 


“Qualified
Offering” means an underwritten public offering in the United States of at least $10,000,000 of the Company’s
equity securities. The price per share of the Common Stock in a Qualified Offering shall be determined by (i) adding all amounts
paid or payable by the investors in the Qualified Offering for shares of Common Stock acquired or that may be subsequently acquired
pursuant to exercisable or convertible securities (not taking into account any cashless exercise provisions), and dividing such
number by (ii) the sum of all the shares of Common Stock that are acquired or may be acquired pursuant to exercisable or convertible
securities (not taking into account any cashless exercise provisions) in such Qualified Offering.


 


“Qualified
Redemption Amount” means the sum of (a) 120% of the then outstanding principal amount of the Note, (b) accrued but unpaid
interest, (c) if such interest is not accrued, interest that would have been earned on the Note from the Qualified Transaction
Notice Date through the one year anniversary of the Original Issue Date, and (d) all liquidated damages and other amounts due
in respect of the Note.


 


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


 


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


 


“Qualified
Transaction Payment” shall have the meaning set forth in Section 6(a).


 


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


 


“Redemption
Amount” means the sum of (a) 115% of the then outstanding principal amount of the Note, (b) accrued but unpaid interest,
(c) if such interest is not accrued, interest that would have been earned on the Note from the Optional Redemption Date through
the one year anniversary of the Original Issue Date, and (d) all liquidated damages and other amounts due in respect of the Note.


 


“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).


 






    	5



    	 



    

 


“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 4:02 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 Notes then outstanding and
reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 


Section
2.             Interest and Amortization.


 


a)         
Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount
of this Note at the rate of 12% per annum. On the six (6) month anniversary of the date of this Note, the Company shall pay all
accrued and unpaid interest on this Note to such date. On each monthly anniversary of the date of this Note thereafter, the Company
shall pay accrued and unpaid interest thereon. The Company may make interest payments in cash or in shares of Common Stock; provided
the Equity Conditions are satisfied on such interest payment date. If the Company pays interest in shares of Common Stock, such
shares shall be valued at 75% of the average of the VWAP for the five (5) Trading Day period ending on, and including, the Trading
Day immediately preceding such interest payment date.


 


b)         
Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day
periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest
shall cease to accrue with respect to any principal amount converted, provided that, the Company actually delivers the Conversion
Shares within the time period required by Section 4(c)(ii) herein. Interest hereunder will be paid to the Person in whose name
this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”).


 






    	6



    	 



    

 


c)         
Amortization. Beginning on the six-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”) of 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. 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 Note 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) 75%
of the average of the VWAP for the five (5) 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. 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. 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 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.


 


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.


 






    	7



    	 



    

 


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


 


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 will be payable for such registration of transfer
or exchange.


 


b)         
Investment 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)         
Voluntary Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note 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 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. In the event of a partial
conversion of this Note 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 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 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 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.


 






    	8



    	 



    

 


b)         
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $2.00 (the “Conversion
Price”).


 


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 Note, plus accrued interest, plus, if such interest has not
yet accrued, interest that would have been earned from the date of the conversion through the one year anniversary of the Original
Issue Date 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 Note. On or after the Effective Date, the Company shall use its best efforts to 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 Note 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.


 






    	9



    	 



    

 


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; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder
of this 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 the amount of 100% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable
to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares
or, if applicable, cash, upon a properly noticed conversion.


 


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 Note 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 Note 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 Note as required pursuant to the terms hereof.


 






    	10



    	 



    

 


vi.             Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note and payment of interest
on this Note, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other
than the Holder (and the other Holder of the Notes), not less than the aggregate number of shares of the Common Stock as shall
(subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 4) upon the conversion of the then outstanding principal amount of this Note and accrued interest hereunder.
The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable.


 


vii.            Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this 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 certificates for shares of the Common Stock 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, 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
Note 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.


 






    	11



    	 



    

 


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)
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 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 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 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 Note.


 






    	12



    	 



    

 


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 (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 Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholder 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.


 






    	13



    	 



    

 


b)         
Subsequent Equity Sales. If, at any time while this Note is outstanding, the Company or any Subsidiary, as applicable,
sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces
any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price,
the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if
the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced by multiplying the Conversion Price by
a fraction of which the denominator shall be the number of shares of the Common Stock outstanding on the date of Dilutive Issuance
plus the number of additional shares of Common Stock issued in the Dilutive Issuance, and of which the numerator shall be the
number of shares of the Common Stock outstanding on the date of Dilutive Issuance plus the number of shares which the aggregate
offering price of the total number of shares so offered (assuming delivery to the Company in full of all consideration payable
upon exercise of any such Common Stock Equivalents) would purchase at the VWAP on such date of Dilutive Issuance. 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 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.


c)         
Subsequent Rights Offerings. If the Company, at any time while the Note 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 Note (without taking into account any limitations or restrictions on the convertibility of this Note)
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).


 






    	14



    	 



    

 


d)          
Pro Rata Distributions. If the Company, at any time while this Note is outstanding, shall distribute to all Holder 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 Conversion Price shall be adjusted by multiplying the 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 and shall become effective immediately after the record date mentioned above.


 


e)         
Fundamental Transaction. 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 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 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 in Section
4(d) 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 in Section 4(d) 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 (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 Note 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 Note 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 Note, 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) 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 Note 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 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.


 






    	15



    	 



    

 


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.


 






    	16



    	 



    

 


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 Note, and shall cause to be delivered to the Holder at its last address
as it shall appear upon the Note 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 Holder 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 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.


 






    	17



    	 



    

 


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 Note 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 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 Note 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.


 


c)         
Redemption on Qualified Offering or Qualified Asset Sale. In the event the Company completes a Qualified Offering or Qualified
Asset Sale or a Change of Control Transaction occurs while this Note remains outstanding, the Company shall deliver a notice to
the Holder (a “Qualified Transaction Notice” and the date such notice is deemed delivered hereunder, the “Qualified
Transaction Notice Date”) of the completion of such Qualified Offering or Qualified Asset Sale, as applicable. Within
ten days of the Qualified Transaction Notice Date, the Holder may provide notice to the Company (the date such notice is delivered
hereunder, the “Holder Notice Date”) of its intention to receive the Qualified Transaction Payment (as defined
below) in exchange for the redemption of an amount of this Note equal to or less than the Qualified Transaction Payment (a “Qualified
Transaction Redemption”). The “Qualified Transaction Payment” is equal to (x) the Qualified Redemption
Amount of this Note, divided by (y) the Qualified Redemption Amount of all Notes issued pursuant to the Purchase Agreement.


 


d)        
Qualified Transaction Redemption Procedure. The payment of cash pursuant to a Qualified Transaction Redemption shall be
payable on a date specified in the notice, but not less than ten days after the Holder Notice Date nor more than 30 days after
the Holder Notice Date. If any portion of the payment pursuant to an Qualified Transaction Redemption shall not be paid by the
Company by the applicable payment 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. The Holder may elect to convert the outstanding
principal amount and accrued interest of the Note 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.


 






    	18



    	 



    

 


e)         
Forced Conversion. Subject to the provisions of this Section 6(e), beginning on the six month anniversary of the Original
Issue Date, the Company may deliver a notice to the Holder (a “Forced Conversion Notice) of its irrevocable election
to force the Holder to convert all, but not less than all, of the amounts outstanding under this Note into shares of the Company’s
Common Stock at the applicable Conversion Price; provided that the Holder shall not be forced to convert any amounts outstanding
under this Note in excess of the Beneficial Ownership Limitation. The Company may only elect to provide a Forced Conversion Notice
to the Holder in the event that the (i) the Equity Conditions are true and correct from the date of the Forced Conversion Notice
through the closing date of the forced conversion, and (ii) the Common Stock is trading at 150% of the Conversion Price for 30
consecutive Trading Days with an average daily trading volume of no less than $1,000,000 of share per day. The Holder shall convert
this Note pursuant to the provisions of Section 4 of this Note within five Trading Days after receiving the Forced Conversion
Notice.


 


Section
7.             Negative Covenants. As long as any
portion of this Note remains outstanding, unless the Holder of at least 50% 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)         
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.


 


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 Note or (B) interest, liquidated damages and other amounts owing to
the 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 an interest payment or other default under clause (B) above,
is not cured within 3 Trading Days;


 






    	19



    	 



    

 


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 shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) 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) 10 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;


 


iv.         any
representation or warranty made in this Note, 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
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days;


 


vii.        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);


 


viii.       the
Company does not meet the current public information requirements under Rule 144 in respect of the Conversion Shares;


 


ix.          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 Notes in accordance with the terms hereof; and


 






    	20



    	 



    

 


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


 


b)         
Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued
but unpaid interest, plus all interest that would have been earned through the one year anniversary of the Original Issue Date
if such interest has not yet accrued, 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 and shall become convertible into shares of
Common Stock at the lesser of (i) the Conversion Price, and (ii) 70% of the average VWAP for the five Trading Days in the preceding
twenty Trading Days that have the lowest VWAP during such period. Commencing five (5) days after the occurrence of any Event of
Default that results in the eventual acceleration of this Note, the interest rate on this Note 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 amount
set forth above, 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 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.


 






    	21



    	 



    

 


b)         
Nasdaq. The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note, and the Holder
of this Note shall not have the right to receive upon conversion of this Note any shares of Common Stock, if the issuance of such
shares of Common Stock (taken together with any prior issuance of such shares upon the conversion of the Notes or otherwise pursuant
to the terms of the Notes and the Shares issued pursuant to the Securities Purchase Agreement) would exceed the aggregate number
of shares of Common Stock which the Company may issue upon conversion of the Notes without breaching the Company’s obligations
under the rules or regulations of the Nasdaq Capital Market (the “Exchange Cap”), except that such limitation
shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules
of the Nasdaq Capital Market for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder. Until
such approval or written opinion is obtained, no purchaser of the Notes pursuant to the Purchase Agreement (the “Purchasers”)
shall be issued in the aggregate, upon conversion of Notes, shares of Common Stock in an amount greater than the product of the
Exchange Cap multiplied by a fraction, the numerator of which is the principal amount of Notes issued to such Purchaser pursuant
to the Purchase Agreement and the denominator of which is the aggregate principal amount of all Notes issued to the Purchasers
as of the last Closing pursuant to the Purchase Agreement (with respect to each Purchaser, the “Exchange Cap Allocation”).
In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the transferee shall be allocated
a pro rata portion of such Purchaser's Exchange Cap Allocation with respect to the portion of this Note so transferred, and the
restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated
to such transferee. Upon conversion in full of a holder’s Notes, the difference (if any) between such holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder's conversion
in full of such Notes shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro
rata basis in proportion to the shares of Common Stock underlying the Notes then held by each such holder. In the event that the
Company is prohibited from issuing any shares of Common Stock pursuant to this Section 9(b) (the “Exchange Cap Shares”),
in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the Holder in exchange
for the cancellation of such conversion amount of this Note convertible into such Exchange Cap Shares at a price equal to the
sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest closing price of the Common Stock on any
Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect to such
Exchange Cap Shares to the Company and ending on the date immediately preceding the date of such payment under this Section 9(b)
and (y) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Holder of Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder
incurred in connection therewith.


 






    	22



    	 



    

 


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, 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. This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth
herein. 


 


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)         
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note 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 Note 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
Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of
this Note, 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.


 






    	23



    	 



    

 


f)          
Amendments; Waiver. No provision of this Note 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
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.


 


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.


 


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 may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition
to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Note.


 






    	24



    	 



    

 


i)           
Successors and Assigns. The terms and conditions of this Note 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 Note and its rights hereunder at any time without consent of Company.


 


j)           
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.


 


k)         
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)




    	25



    	 



    

 


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.


 





	 	INTERCLOUD
                                         SYSTEMS, INC.



	 		
	 	By:	/s/
        Daniel Sullivan

	 	 	Name:
        Daniel Sullivan

        Title:
          Chief Accounting Officer

	 	 	 
	 	Facsimile
    No. for delivery of Notices:







 




    	26



    	 



    

 


ANNEX
A


 


NOTICE
OF CONVERSION


 


The
undersigned hereby elects to convert principal under the 12% Senior Convertible Note due 2017 of InterCloud Systems, 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. 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 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.


 


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 Note 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:                            


 




    	 



    	 



    

 


Schedule
1


 


CONVERSION
SCHEDULE


 


The
12% Senior Convertible Notes due 2017 in the aggregate principal amount of $526,315.75 are issued by InterCloud Systems, Inc.,
a Delaware corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.


 


Dated:


 


	 

        Date
        of Conversion

        (or
        for first entry, Original Issue Date)
	 

        Amount
        of Conversion
	 

        Aggregate
        Principal Amount Remaining Subsequent to Conversion

        (or
        original Principal Amount)
	 

        Company
        Attest