[FORM
OF SERIES C SENIOR SECURED CONVERTIBLE NOTE]


NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.


Worlds
Inc.


Series
C Senior Secured Convertible Note


	Issuance
    Date: March __, 2013	Original
    Principal Amount: U.S. $450,000


 


FOR
VALUE RECEIVED, Worlds Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order
of [BUYERS] or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”)
when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal (as defined below) at
the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in
each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible
Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Senior Secured
Convertible Notes issued pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date (as defined below)
(collectively, the “Notes” and such other Senior Secured Convertible Notes, the “Other Notes”).
Certain capitalized terms used herein are defined in Section 30.


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


2.              
INTEREST; INTEREST RATE. No Interest shall accrue on this Note prior to the occurrence of an Event of Default, in which
case Interest on this Note shall commence accruing daily at a rate of fourteen percent (14%) per annum on the outstanding Principal
amount, from time to time, shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall
compound each Quarter and shall be payable in arrears on the earlier of (x) the first (1st) Trading Day of each Quarter
(or, if cured, on the first (1st) Trading Day of the calendar month immediately following the date of such cure) and
(y) the Maturity Date. In the event that such Event of Default is subsequently cured, Interest shall cease accruing effective
as of the calendar day immediately following the date of such cure, provided that the Interest as calculated and unpaid during
the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such
Event of Default through and including the date of such cure of such Event of Default.


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


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


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


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


(ii)           
“Conversion Price” means, as of any Conversion Date or other date of determination, $0.28, subject to adjustment
as provided herein.


(c)            
Mechanics of Conversion.


(i)             
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date,
a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), within three (3) Trading Days following a conversion of this Note as aforesaid,
the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an
indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section
18(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of receipt of
such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before
the second (2nd) Trading Day following the date of receipt of a Conversion Notice, the Company shall (1) provided that
the Transfer Agent is participating in The Depository Trust Company’s (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent
is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier)
to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion
pursuant to Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after
receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with
Section 18(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common
Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on the Conversion Date.


(ii)           
Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to the
Holder within three (3) Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile or otherwise),
a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock
on the Company’s share register or to credit the Holder’s or its designee’s balance account with DTC for such
number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of any Conversion Amount (as
the case may be) (a “Conversion Failure”), and if on or after such third (3rd) Trading Day 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 shares of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company, then, in addition
to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which
point the Company’s obligation to deliver such certificate or credit the Holder’s balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may
be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver
to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account
with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder
(as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading
Day during the period commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment
under this clause (ii).


(iii)         
Registration; Book-Entry. The Company shall maintain a register (the “Register”) for the recordation
of the names and addresses of the holders of each Note and the principal amount of the Notes (the “Registered Notes”).
The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders
of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including,
without limitation, the right to receive payments of Principal and Interest hereunder, notwithstanding notice to the contrary.
A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on
the Register. Upon its receipt of a request to assign, transfer or sell all or part of any Registered Note by the holder thereof,
the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same
aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee
pursuant to Section 18, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of
all or part of any Registered Note within two (2) Business Days of its receipt of such a request, then the Register shall be automatically
updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth
in this Section 3, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required
to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted
(in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or
(B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting
reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal,
Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the
case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical
surrender of this Note upon conversion. If the Company does not update the Register to record such Principal, Interest and Late
Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within
two (2) Business Days of such occurrence, then the Register shall be automatically updated to reflect such occurrence.


(iv)         
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of
Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for
conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on
such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount
of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted
for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and
resolve such dispute in accordance with Section 23.


(d)           
Limitations on Conversions. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible
by the Holder hereof, and the Company shall not effect any conversion of this Note or otherwise issue any shares of Common Stock
pursuant hereto, to the extent (but only to the extent) that after giving effect to such conversion or other share issuance hereunder
the Holder (together with its affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”)
of the Common Stock. To the extent the above limitation applies, the determination of whether this Note shall be convertible
(vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) shall,
subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability to convert this Note, or to issue shares of Common Stock, pursuant
to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent
determination of convertibility. For purposes of this paragraph, beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section
13(d) of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules and regulations promulgated thereunder.
The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage
beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Note.
The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not waive this paragraph
without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities
into Common Stock, including, without limitation, pursuant to this Note or securities issued pursuant to the Securities Purchase
Agreement. At any time the Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in a written notice by the Holder to the Company (subject to the Company’s consent to any such increase, not
to be unreasonably withheld); provided that (i) any such increase will not be effective until the 61st day after such notice is
delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder sending such notice and not to
any other holder of Notes.


(e)            
Holder Alternate Redemption/Conversion.


(i)             
General. Notwithstanding anything herein to the contrary, on or after July 1, 2013, the Holder may require the Company
to, at such Holder’s option, either by (x) redeeming (each, a “Holder Alternate Redemption”) any part
of this Note up to the Eligible Redemption Allocation (as defined below) of the Notes of the Holder (such Conversion Amount being
redeemed, the “Holder Alternate Redemption Amount”) at a redemption price (the “Holder Alternate Redemption
Price”) equal to 100% of such Holder Alternate Redemption Amount, (y) converting (each, a “Holder Alternate
Conversion”) all, or any part of, this Note (such Conversion Amount being converted, the “Holder Alternate
Conversion Amount”) into Common Stock at the Alternate Conversion Price or (z) any combination of a Holder Alternate
Redemption or a Holder Alternate Conversion, as allocated at such Holder’s option.


(ii)           
Holder Alternate Conversion. On or after July 1, 2013, the Holder may voluntarily convert any Holder Alternate Conversion
Amount pursuant to Section 3(c)(with “Alternate Conversion Price” replacing “Conversion Price” for all
purposes hereunder with respect to such Holder Alternate Conversion) by designating in the Conversion Notice delivered pursuant
to Section 3(c) that the Holder is electing to use the Alternate Conversion Price for such conversion. Notwithstanding anything
to the contrary in this Section 3(e)(ii), but subject to 3(d), until the Company delivers Common Stock representing the Holder
Alternate Conversion Amount to the Holder, such Holder Alternate Conversion Amount may be converted by the Holder into Common
Stock pursuant to Section 3(c)without regard to this Section 3(e)(ii).


(iii)         
Holder Alternate Redemption. On or after July 1, 2013, the Holder may require the Company to redeem any Holder Alternate
Redemption Amount by delivering (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on
such date, a copy of an executed redemption notice in the form attached hereto as Exhibit III (the “Holder Alternate
Redemption Notice”, and the date of such notice, the “Holder Alternate Redemption Notice Date”) to
the Company. Such Holder Alternate Redemption Amount set forth in such Holder Alternate Redemption Notice shall be redeemed by
the Company at the Holder Alternate Redemption Price on the third (3rd) Trading Day after the Holder Alternate Redemption
Notice Date (the “Holder Alternate Redemption Date”). Redemptions required by this Section 3(e) shall be made
in accordance with the provisions of Section 11. To the extent redemptions required by this Section 3(e)  are deemed or determined
by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this Section 3(e), but subject to Section (d), until the applicable Holder
Alternate Redemption Price (together with any Late Charges thereon) is paid in full, the Holder Alternate Redemption Amount submitted
for redemption under this Section 3(e)(together with any Late Charges thereon) may be converted, in whole or in part, by the Holder
into Common Stock pursuant to the terms of this Note. In the event of the Company’s redemption of any portion of this Note
under this Section 3(e), the Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 3(e)is intended by the parties to be, and shall be
deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.


(iv)         
Eligible Redemption Allocation. Notwithstanding the foregoing, the Holder shall not be entitled to redeem, in the aggregate,
in one or more Holder Alternate Redemptions under this Note or any Other Note, an aggregate Holder Alternate Redemption Amount
greater than the Holder Pro Rata Amount of $2 million (the “Eligible Redemption Allocation”) or, in any one
Holder Alternate Redemption, a Holder Alternate Redemption Amount less than $25,000. In the event that the Holder shall sell or
otherwise transfer any of the Holder’s Notes, the transferee shall be allocated a pro rata portion of the Holder’s
Eligible Redemption Allocation with respect to such portion of such Notes so transferred, and the restrictions of the prior sentence
shall apply to such transferee with respect to the portion of the Eligible Redemption Allocation so allocated to such transferee.


4.              
RIGHTS UPON EVENT OF DEFAULT.


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


(i)             
the failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC
on or prior to the date that is ten (10) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement)
or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is ten
(10) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);


(ii)           
while the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights
Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the
issuance of a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of
Registrable Securities (as defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities
in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of
five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period (excluding days during an Allowable
Grace Period (as defined in the Registration Rights Agreement));


(iii)         
the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for
a period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period;


(iv)         
the Company’s (A) failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of
the required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or exercise date
(as the case may be) or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by
way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request
for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other
than pursuant to Section 3(d), or a request for exercise of any Warrants for Warrant Shares in accordance with the provisions
of the Warrants;


(v)           
at any time following the tenth (10th) consecutive day that the Holder’s Authorized Share Allocation is less
than the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion
Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d);


(vi)         
the Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or
other amounts when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure
to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase
Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated
hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such
failure remains uncured for a period of at least five (5) days;


(vii)       
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon
conversion or exercise (as the case may be) of any Securities acquired by the Holder under the Securities Purchase Agreement (including
this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable
federal securities laws, and any such failure remains uncured for at least five (5) days;


(viii)     
the occurrence of any default under, redemption of or acceleration prior to maturity of an aggregate of $100,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other
Notes;


(ix)         
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted
by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not
be dismissed within thirty (30) days of their initiation;


(x)           
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due (excluding, for such purpose, any failure to pay defaulted debt, with an aggregate
principal amount of $100,000 (the “Excluded Indebtedness”)), the taking of corporate action by the Company
or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial
Code foreclosure sale or any other similar action under federal, state or foreign law;


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


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


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


(xiv)      
other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation,
warranty, covenant or other term or condition of any Transaction Document (including, without limitation, the Security Documents
(as defined in the Securities Purchase Agreement) and the Guaranties (as defined in the Securities Purchase Agreement)), except,
in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period
of three (3) consecutive Trading Days;


(xv)        
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions
are satisfied, that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred;


(xvi)      
any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 13 of this
Note;


(xvii)    
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;


(xviii)  
any provision of any Transaction Document (including, without limitation, the Security Documents and the Guaranties) shall at
any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against
the parties thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall
be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish
the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or
obligation purported to be created under any Transaction Document (including, without limitation, the Security Documents and the
Guaranties);


(xix)      
the Security Documents shall for any reason fail or cease to create a separate valid and perfected and, except to the extent permitted
by the terms hereof or thereof, first priority Lien on the Collateral (as defined in the Security Agreement) in favor of each
of the Secured Parties (as defined in the Security Agreement);


(xx)        
any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary,
if any such event or circumstance could have a Material Adverse Effect; or


(xxi)      
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.


(b)            Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any
Other Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight
courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time
during the period commencing on the earlier of the Holder’s receipt of an Event of Default Notice and the Holder
becoming aware of an Event of Default and, solely to the extent the Company has delivered an Event of Default Notice with
respect to each such Event of Default then outstanding, ending on the sixtieth (60th) days after the later of (x) the date
all such Events of Default have been cured and (y) the date of the last Event of Default Notice delivered to the Holder, the
Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (the
“Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall
indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the
Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of
(A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion
Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption
Notice multiplied by (Y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date immediately preceding such Event of Default and ending on the date the Company makes the entire payment required
to be made under this Section 4(b)(the “Event of Default Redemption Price”). Redemptions required
by this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions required by
this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this
Section 4(b), but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges
thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b)(together with any Late
Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note.
In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s
damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates
and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any
redemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate
of the Holder’s actual loss of its investment opportunity and not as a penalty.


5.              
RIGHTS UPON FUNDAMENTAL TRANSACTION.


(a)             Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in
writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the
provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and
approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in
exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form
and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal
amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the
Notes and having similar ranking to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including
its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible
Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of a Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or
redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of the
Company’s Common Stock (or other securities, cash, assets or other property (except such items still issuable under
Sections 6 and 15, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of the Notes
prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of
such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard
to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note.
Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written notice to the Company to
waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note. The provisions of this
Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any
limitations on the conversion of this Note.


(b)            Notice
of a Fundamental Transaction; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading
Days prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such
Fundamental Transaction, the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder
(a “Fundamental Transaction Notice”). At any time during the period beginning after the
Holder’s receipt of a Fundamental Transaction Notice or the Holder becoming aware of a Fundamental Transaction if a
Fundamental Transaction Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as
applicable) and ending on the later of twenty (20) Trading Days after (A) consummation of such Fundamental Transaction or (B)
the date of receipt of such Fundamental Transaction Notice, the Holder may require the Company to redeem all or any portion
of this Note by delivering written notice thereof (“Fundamental Transaction Redemption Notice”) to the
Company, which Fundamental Transaction Redemption Notice shall indicate the Conversion Amount the Holder is electing to
redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company in cash at
a price equal to the greater of (i) the product of (w) the Fundamental Transaction Redemption Premium multiplied by (y) the
Conversion Amount being redeemed, (ii) the product of (x) the Equity Value Redemption Premium multiplied by (y) the product
of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing
Sale Price of the Common Stock during the period beginning on the date immediately preceding the earlier to occur of (1) the
consummation of the Fundamental Transaction and (2) the public announcement of such Fundamental Transaction and ending on the
date the Holder delivers the Fundamental Transaction Redemption Notice by (II) the
Conversion Price then in effect and (iii) the product of (y) the Equity Value Redemption Premium multiplied by (z) the
product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration
and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares
of Common Stock upon consummation of such Fundamental Transaction (any such non-cash consideration constituting
publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities as of the Trading Day
immediately prior to the consummation of such Fundamental Transaction, the Closing Sale Price of such securities on the
Trading Day immediately following the public announcement of such proposed Fundamental Transaction and the Closing Sale Price
of such securities on the Trading Day immediately prior to the public announcement of such proposed Fundamental Transaction)
divided by (II) the Conversion Price then in effect (the “Fundamental Transaction Redemption Price”).
Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 11 and shall have priority
to payments to stockholders in connection with such Fundamental Transaction. To the extent redemptions required by this
Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company,
such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but
subject to Section 3(d), until the Fundamental Transaction Redemption Price (together with any Late Charges thereon) is paid
in full, the Conversion Amount submitted for redemption under this Section 5(b)(together with any Late Charges thereon) may
be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of the
Company’s redemption of any portion of this Note under this Section 5(b), the Holder’s damages would be uncertain
and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under
this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual
loss of its investment opportunity and not as a penalty.


6.              
RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.


(a)             Purchase
Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to
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 Maximum Percentage, 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 Maximum Percentage).


(b)           
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in
addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this
Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts
as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions
of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any
limitations on the conversion or redemption of this Note.


7.              
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.


(a)            
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company
issues or sells, or in accordance with this Section 7(a) is deemed to have issued or sold, any shares
of Common Stock (including the issuance or sale of shares of Common Stock owned or held
by or for the account of the Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold)
for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in
effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to
herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately
after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.
For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Price and consideration
per share under this Section 7(a)), the following shall be applicable:


(i)             
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which
one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option
for such price per share. For purposes of this Section 7(a)(i), the “lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such
Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise
of such Option and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon
the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option, minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the
granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.


(ii)           
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than
the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise
or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received
or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and
upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all
amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible
Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible
Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon
the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion
Price has been or is to be made pursuant to other provisions of this Section 7(a), except as contemplated below, no further adjustment
of the Conversion Price shall be made by reason of such issue or sale.


(iii)          Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock
increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted
to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for
such increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case
may be) at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the Subscription Date are increased or decreased in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable
upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or
decrease. No adjustment pursuant to this Section 7(a) shall be made if such adjustment would result in an increase of the
Conversion Price then in effect.


(iv)         
Calculation of Consideration Received. If any Option or Convertible Security or Adjustment Right is issued or deemed issued
in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising
one integrated transaction, (x) such Option or Convertible Security (as applicable) or Adjustment Right (as applicable) will be
deemed to have been issued for consideration equal to the Black Scholes Consideration Value thereof and (y) the other securities
issued or sold or deemed to have been issued or sold in such integrated transaction shall be deemed to have been issued for consideration
equal to the difference of (I) the aggregate consideration received or receivable by the Company minus (II) the Black Scholes
Consideration Value of each such Option or Convertible Security (as applicable) or Adjustment Right (as applicable). If any shares
of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common
Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of
such security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options
or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities
(as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly
by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within
five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.


(v)           
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may
be).


(b)            Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 5 or
Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number
of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without
limiting any provision of Section 5 or Section 7(a), if the Company at any time on or after the Subscription Date combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately
increased. Any adjustment pursuant to this Section 7(b) shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this Section 7(b) occurs during the period that a
Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to
reflect such event


(c)            
Holder's Right of Alternative Conversion Price Following Issuance of Certain Options or Convertible Securities. Subject
to Section 4(n) of the Securities Purchase Agreement, in addition to and not in limitation of the other provisions of this Section
7, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible
Securities (any such securities, “Variable Price Securities”) after the Subscription Date that are issuable
pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock pursuant to such Options
or Convertible Securities, as applicable, at a price which varies or may vary with the market price of the shares of Common Stock,
including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution
provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for
such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice
thereof via facsimile and overnight courier to the Holder on the date of such agreement and/or the issuance of such Convertible
Securities or Options, as applicable. Subject to Section 4(n) of the Securities Purchase Agreement, from and after the date the
Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the
obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of this Note by designating
in the Conversion Notice delivered upon any conversion of this Note that solely for purposes of such conversion the Holder is
relying on the Variable Price rather than the Conversion Price then in effect. The Holder’s election to rely on a Variable
Price for a particular conversion of this Note shall not obligate the Holder to rely on a Variable Price for any future conversion
of this Note.


(d)           
Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are
not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the
type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect
the rights of the Holder, provided that no such adjustment pursuant to this Section 7(d) will increase the Conversion Price as
otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be borne by the Company if the resulting determination
by such investment bank either (x) results in an adjustment that is at least 5% greater than the Company’s proposed adjustment
or (y) results in this Note being convertible into at least an additional $10,000 of shares of Common Stock (as determined valuing
each such share of Common Stock then issuable upon conversion of this Note at the greatest Closing Sale Price of a share of Common
Stock during the period commencing on the date of such Dilutive Issuance and ending on the close of business of the Trading Day
in which such investment bank has delivered such determination to the Company and the Holder).


(e)             Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of
Common Stock.


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


9.              
RESERVATION OF AUTHORIZED SHARES.


(a)            
Reservation. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of
Common Stock for each of the Notes equal to 135% of the entire Conversion Rate with respect to the entire Conversion Amount of
each such Note as of the Issuance Date. So long as any of the Notes are outstanding, the Company shall take all action
necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, 135% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion
of all of the Notes then outstanding, provided that at no time shall the number of shares of Common Stock so reserved be less
than the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions)
(the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions of the
Notes and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based on
the original principal amount of the Notes held by each holder on the Closing Date or increase in the number of reserved shares
(as the case may be) (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise
transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated
to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders.


(b)            Insufficient
Authorized Shares. If, notwithstanding Section 9(a), and not in limitation thereof, at any time while any of the Notes
remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock
equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately
take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow
the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days 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
“Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder,
the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount convertible into such
Authorization Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure
Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the
date the Holder delivers the applicable Conversion Notice with respect to such Authorization Failure Shares to the Company
and ending on the date of such issuance and payment under this Section 9(b) and (ii) to the extent the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of
Authorization Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith. Nothing contained in Section 9(a) or this Section 9(b) shall limit any obligations of the Company under
any provision of the Securities Purchase Agreement.


10.           
[INTENTIONALLY OMITTED] 


 


11.           
REDEMPTIONS.


(a)            
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five
(5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has
submitted a Fundamental Transaction Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable
Fundamental Transaction Redemption Price to the Holder in cash concurrently with the consummation of such Fundamental Transaction
if such notice is received prior to the consummation of such Fundamental Transaction and within five (5) Business Days after the
Company’s receipt of such notice otherwise. The Company shall deliver the applicable Holder Alternate Redemption Price to
the Holder in cash on the applicable Holder Alternate Redemption Date. In the event of a redemption of less than all of the Conversion
Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with
Section 18(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay
the applicable Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays
such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly
return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and
for which the applicable Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Company’s
receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y)
the Company shall immediately return this Note, or issue a new Note (in accordance with Section 18(d)), to the Holder, and in
each case the principal amount of this Note or such new Note (as the case may be) shall be increased by an amount equal to
the difference between (1) the applicable Event of Default Redemption Price or Fundamental Transaction Redemption Price (as the
case may be) minus (2) the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of
this Note or such new Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter
by the Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is
voided, (B) 85% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which
the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption
Notice is voided and (C) 85% of the VWAP of the Common Stock for the five (5) Trading Day period immediately preceding the Conversion
Date of the applicable conversion. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights
following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued
prior to the date of such notice with respect to the Conversion Amount subject to such notice.


(b)           
Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for
redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in
Section 4(b) or Section 5(b)(each, an “Other Redemption Notice”), the Company shall immediately, but no later
than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile a copy of such notice. If the Company receives
a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including
the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s applicable Redemption Notice
and ending on and including the date which is three (3) Business Days after the Company’s receipt of the Holder’s
applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such
Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall
redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted
for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven
(7) Business Day period.


12.           
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including,
without limitation, the Delaware General Corporation Law) and as expressly provided in this Note.


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


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


(b)           
Incurrence of Indebtedness. Until the Release Time (as defined in the Securities Purchase Agreement), the Company shall
not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer
to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) other Permitted
Indebtedness.


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


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


(e)            
Restriction on Redemption and Cash Dividends. Until the Release Time, the Company shall not, and the Company shall cause
each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution
on any of its capital stock.


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


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


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


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


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


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


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


(m)         
Controlled Accounts; Control Account Release.


(i)             
The Company shall establish and maintain cash management services of a type and on terms reasonably satisfactory to Holder
at one or more of the banks set forth on Schedule IV to the Security Agreement (each a “Controlled Account
Bank”) and cause all cash and cash equivalents of the Company or any of its Subsidiaries to be held in accounts at
one or more Controlled Account Banks in accordance therewith; provided, that, except with respect to the Master Restricted
Account which shall be a Controlled Account so long as any Restricted Principal remains outstanding, no other account of the
Company shall be a Controlled Account until such time as such account is required to become a Controlled Account in
accordance with Sections 13(m)(iii) or (iv) below. Subject to the foregoing, the Company shall establish and maintain
Controlled Account Agreements with the Collateral Agent (as each such term is defined in the Security Agreement) and each
Controlled Account Bank, in form and substance reasonably acceptable to the Collateral Agent, with respect to each account
maintained at such bank on behalf of Company and/or its Subsidiaries (each such account a “Controlled
Account” and collectively, the “Controlled Accounts”), including, without limitation, the Master
Restricted Account and the Operating Accounts (as defined below). Each such Controlled Account Agreement shall provide, among
other things, that (A) the Controlled Account Bank will comply with any and all instructions originated by the Collateral
Agent directing the disposition of the funds in the Controlled Accounts without further consent by the Company or any such
Subsidiaries, (B) the Controlled Account Bank waives, subordinates or agrees not to exercise any rights of setoff or
recoupment or any other claim against the applicable Controlled Account other than for payment of its service fees and
other charges directly related to the administration of such Controlled Account and for returned checks or other items of
payment, (C) with respect to the Master Restricted Account, the Controlled Account Bank shall not comply with any
instructions, directions or orders of any form with respect to the Master Restricted Account other than instructions,
directions or orders originated by the Collateral Agent and (D) with respect to each Controlled Account (other than the
Master Restricted Account) (collectively, the “Operating Accounts”), upon the instruction of Collateral
Agent (an “Activation Instruction”), the Controlled Account Bank shall not comply with any instructions,
directions or orders of any form with respect to the Operating Accounts other than instructions, directions or orders
originated by Collateral Agent. The Collateral Agent shall not issue an Activation Instruction with respect to the Operating
Accounts unless an Event of Default has occurred and is continuing at the time such Activation Instruction is
issued.


(ii)           
On the Issuance Date, pursuant to the Flow of Funds Letter (as defined in the Securities Purchase Agreement), $1.950 million shall
be deposited into the Master Restricted Account.


(iii)         
If at any time on or after the Closing Date, the Collateral Agent requests that one or more accounts of the Company are to become
Controlled Accounts, the Company shall, within ten (10) Business Days following the date the Collateral Agent has delivered written
notice to the Company requesting that such accounts become Controlled Accounts (each, a “DACA Due Date”), deliver
to the Collateral Agent an account control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly
executed by the Company and the depositary bank in which such account is maintained.


(iv)         
If at any time on or after the Closing Date, the average daily balance of all accounts of the Company that are not Controlled
Accounts exceed $350,000 during any calendar month (including the calendar month in which the Closing Date occurs), the Company
shall, within ten (10) Business Days following the last day of such calendar month (or, if the Collateral Agent has previously
requested that such accounts become Controlled Accounts, if earlier, the applicable DACA Due Date), deliver to the Collateral
Agent an account control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly executed by the
Company and the depositary bank in which such account is maintained.


(v)           
[Intentionally Omitted].


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


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


(p)           
New Subsidiaries. Simultaneously with the acquisition or formation of each New Subsidiary, the Company shall cause such
New Subsidiary to execute, and deliver to each holder of Notes, all Security Documents (as defined in the Securities Purchase
Agreement) and Guaranties (as defined in the Securities Purchase Agreement) as requested by the Collateral Agent. The
Company shall also deliver to the Collateral Agent an opinion of counsel to such New Subsidiary that is reasonably satisfactory
to the Collateral Agent covering such legal matters with respect to such New Subsidiary becoming a guarantor of the Company’s
obligations, executing and delivering the Security Document and the Guaranties and any other matters that the Collateral Agent
may reasonably request. The Company shall deliver, or cause the applicable Subsidiary to deliver to the Collateral Agent, each
of the physical stock certificates of such New Subsidiary, along with undated stock powers for each such certificates, executed
in blank (or, if any such shares of capital stock are uncertificated, confirmation and evidence reasonably satisfactory to the
Collateral Agent that the security interest in such uncertificated securities has been transferred to and perfected by the Collateral
Agent, in accordance with Sections 8-313, 8-321 and 9-115 of the Code or any other similar or local or foreign law that may be
applicable).


(q)           
Change in Collateral; Collateral Records. The Company shall (i) give the Collateral Agent not less than thirty (30) days’
prior written notice of any change in the location of any Collateral (as defined in the Security Documents), other than to locations
set forth in the Perfection Certificate (as defined in the Securities Purchase Agreement) hereto and with respect to which the
Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral
Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral
or the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to
the Collateral Agent for the benefit of the Holder and holders of the Other Notes from time to time, solely for the Collateral
Agent’s convenience in maintaining a record of Collateral, such written statements and schedules as the Collateral Agent
may reasonably require, designating, identifying or describing the Collateral.


(r)             Independent
Investigation. At the request of the Required Holders (as defined in the Securities Purchase Agreement), which may be
requested no more than once in any twelve month period, the Company shall hire an independent, reputable investment
bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Section 13 has
occurred (the “Independent Investigator”). If the Independent Investigator determines that such breach of
this Section 13 has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall
deliver written notice to the Buyers of such breach. In connection with such investigation, the Independent Investigator may,
during normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties
of the Company and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to
obtain them, the records of its legal advisors and accountants (including the accountants’ work papers) and any books
of account, records, reports and other papers not contractually required of the Company to be confidential or secret, or
subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and
inspections thereof as the Independent Investigator may reasonably request. The Company shall furnish the Independent
Investigator with such financial and operating data and other information with respect to the business and properties of the
Company as the Independent Investigator may reasonably request. The Company shall permit the Independent Investigator to
discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto
to, the Company’s officers, directors, key employees and independent public accountants or any of them (and by this
provision the Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of
the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably
requested. The above notwithstanding, the Company shall only be responsible for the fees of the Independent Investigator if
an Event of Default has occurred.


14.           
SECURITY. This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents
(including, without limitation, the Security Agreement, the other Security Documents and the Guaranties).


15.           
PARTICIPATION. In addition to any adjustments pursuant to Section 7, the Holder, as the holder of this Note, shall be entitled
to receive such dividends paid and distributions made to the holders of Common Stock to the same extent as if the Holder had converted
this Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of
Common Stock on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock (provided, however, to the extent that the Holder’s right
to participate in any such dividend or distribution would result in the Holder exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such dividend or distribution to such extent (or the beneficial ownership of any such
shares of Common Stock as a result of such dividend or distribution to such extent) and such dividend or distribution to such
extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Maximum Percentage).


16.           
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment
to this Note. No consideration shall be offered or paid to the Holder to amend or consent to a waiver
or modification of any provision of this Note unless the same consideration is also offered to all of the holders of the Other
Notes. The Holder shall be entitled, at its option, to the benefit of any amendment to any of the Other Notes.


17.           
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities
Purchase Agreement.


18.             
REISSUANCE OF THIS NOTE.


(a)             Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d)), registered as the Holder may
request, representing the outstanding Principal being transferred by the Holder and, if less than the entire
outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the
outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the
outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.


(b)           
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below
shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding
Principal.


(c)             Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at
the principal office of the Company, for a new Note or Notes (in accordance with Section 18(d) and in principal amounts of at
least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent
such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.


(d)           
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new
Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated
by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal
and Interest of this Note, from the Issuance Date.


19.           
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 (including, without limitation, compliance with Section 7).


20.           
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the
Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The
Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that
the purchase price paid for this Note was less than the original Principal amount hereof.


21.           
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form
part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall
have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to
in writing by the Holder.


22.           
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.


23.           
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, the Closing Bid Price, the
Closing Sale Price or fair market value (as the case may be) or the arithmetic calculation of the Conversion Rate or the applicable
Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations
or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable
notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute,
at any time after the Holder learned of the circumstances giving rise to such dispute (including, without limitation, as to whether
any issuance or sale or deemed issuance or sale was an issuance or sale or deemed issuance or sale of Excluded Securities). If
the Holder and the Company are unable to agree upon such determination or calculation within two (2) Business Days of such disputed
determination or arithmetic calculation (as the case may be) being submitted to the Company or the Holder (as the case may be),
then the Company shall, within two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price,
the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) to an independent, reputable investment
bank selected by the Holder that is reasonably acceptable to the Company or (b) the disputed arithmetic calculation of the Conversion
Rate or any Redemption Price (as the case may be) to an independent, outside accountant selected by the Holder that is reasonably
acceptable to the Company. The Company shall cause the investment bank or the accountant (as the case may be) to perform the determinations
or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days
from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s
determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error and shall be at
the expense of the Company if the resulting determination by such investment bank or accountant, as applicable, either (x) results
in an adjustment that is at least 5% greater than the Company’s proposed adjustment or (y) results in this Note being convertible
into at least an additional $10,000 of shares of Common Stock (as determined valuing each such share of Common Stock then issuable
upon conversion of this Note at the greatest Closing Sale Price of a share of Common Stock during the period commencing on the
date of such Dilutive Issuance and ending on the close of business of the Trading Day in which such investment bank or accountant,
as applicable, has delivered such determination to the Company and the Holder).


24.           
NOTICES; CURRENCY; PAYMENTS.


(a)            
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.


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


(c)            
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn
on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to
the Company in writing (which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers
attached to the Securities Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer
of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s
wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a
Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other
amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable
by the Company in an amount equal to interest on such amount at the rate of fourteen percent (14%) per annum from the date such
amount was due until the same is paid in full (“Late Charge”).


25.           
CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have
been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and
shall not be reissued.


26.           
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.


27.           
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.


28.           
JUDGMENT CURRENCY.


(a)            
If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary
to convert into any other currency (such other currency being hereinafter in this Section 28 referred to as the “Judgment
Currency”) an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing
on the Trading Day immediately preceding: 


(i)             
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date: or


(ii)           
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the
date as of which such conversion is made pursuant to this Section 28(a)(ii) being hereinafter referred to as the
“Judgment Conversion Date”).


(b)           
If in the case of any proceeding in the court of any jurisdiction referred to in Section 28(a)(ii) above, there is a change
in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the
applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency,
when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have
been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate
prevailing on the Judgment Conversion Date.


(c)            
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Note.


29.           
MAXIMUM PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be
deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such
law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded
to the Company.


30.           
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:


(a)            
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or
with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock
(other than rights of the type described in Sections 6 or 15 hereof) that could result in a decrease in the net consideration
received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash
settlement rights, cash adjustment or other similar rights).


(b)           
“Alternate Conversion Price” means, with respect to any Conversion Date with respect to a Holder Alternate
Conversion, the lower of (i) the Conversion Price then in effect and (ii) 85% of the quotient of (x) the sum of the daily VWAP
of each Trading Day during the twenty (20) consecutive Trading Day period ending on the Trading Day immediately prior to the Conversion
Date with respect to such Holder Alternate Conversion, divided by (y) twenty (20) (such period, the “Alternate Conversion
Price Measuring Period”). All such determinations to be appropriately adjusted for any stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions during such Alternate Conversion Price Measuring Period.


(c)            
“Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of
the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase
Common Stock may be issued to any employee, officer or director for services provided to the Company in their capacity as such.


(d)           
“Bankruptcy Proceeding” means, with respect to any Person, (i) the occurrence of a voluntary case or proceeding
under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other
similar document in respect of such Person in an involuntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal,
state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the
occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay
its debts generally as they become due, the taking of corporate action by such Person in furtherance of any such action or the
taking of any action by any Person to commence a UCC foreclosure sale or any other similar action under federal, state or foreign
law or (ii) the entry by a court of (A) a decree, order, judgment or other similar document in respect of such Person of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other
similar law or (B) a decree, order, judgment or other similar document adjudging such Person as bankrupt or insolvent, or approving
as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of such
Person under any applicable federal, state or foreign law or (C) a decree, order, judgment or other similar document appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order,
judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect
for a period of thirty (30) consecutive days.


(e)            
“Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment
Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with
respect to the issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (ii) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or
Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).


(f)            
“Bloomberg” means Bloomberg, L.P.


(g)           
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.


(h)           
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg,
or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid
Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing
Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 23. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.


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


(j)             
“Code” means the Uniform Commercial Code as in effect from time to time in the State of New York.


(k)           
“Common Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii)
any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.


(l)             
“Controlled Account” has the meaning set forth in Section 13(m)(i).


(m)         
“Control Account Release” has the meaning set forth in Section 13(m)(iii) 


(n)           
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under
any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the
holder thereof to acquire, any shares of Common Stock.


(o)           
 “Current Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly,
(i) owns 25% or more of the outstanding capital stock or equity or similar interest of such Person or (ii) controls or operates
all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Current
Subsidiaries.”


(p)           
“Effective Date” means such date the applicable Registration Statement filed pursuant
to the Registration Rights Agreement shall be effective and the prospectus contained therein shall be available for the resale
by the Holder of all of the Registrable Securities (which, solely for clarification purposes, includes at least 100% of all shares
of Common Stock issuable upon conversion of the Notes and upon exercise of the Warrants (without regard for any limitations on
conversion, issuance or exercise set forth therein) in accordance with the terms of the Registration
Rights Agreement).


(q)           
“Eligible Market” means The New York Stock Exchange, The New York Stock Exchange, the NYSE MKT, the Nasdaq
Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.


(r)            
 “Equity Value Redemption Premium” means 120%.


(s)            
“Excluded Securities” means any (i) shares of Common Stock or standard options to purchase Common Stock issued
to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below),
provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after
the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the Common Stock issued and outstanding
immediately prior to the date hereof and (B) the exercise price of any such options is not lowered, none of such options are amended
to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially
changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise
of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) issued prior to the date hereof, provided that the conversion price of any such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) is not lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder
and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely
affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Notes, (iv) the shares of Common Stock
issuable upon exercise of the Warrants and (v) in connection with strategic alliances, acquisitions, mergers, and strategic partnerships,
provided, that (A) the primary purpose of such issuance is not to raise capital as determined in good faith by the Company’s
board of directors, (B) the purchaser or acquirer of the securities in such issuance solely consists of either (x) the actual
participants in such strategic alliance or strategic partnership, (y) the actual owners of such assets or securities acquired
in such acquisition or merger or (z) the stockholders, partners or members of the foregoing Persons and (C) number or amount of
securities issued to such Person by the Company shall not be disproportionate to either (x) the fair market value of such Person’s
actual contribution to such strategic alliance or strategic partnership or (y) the proportional ownership of such assets or securities
to be acquired by the Company, as applicable..


(t)             
“Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries
is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of
all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase,
tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination),
or (5) (I) reorganize, recapitalize or reclassify the Common Stock, (II) effect or consummate a stock combination, reverse stock
split or other similar transaction involving the Common Stock or (III) make any public announcement or disclosure with respect
to any stock combination, reverse stock split or other similar transaction involving the Common Stock (including, without limitation,
any public announcement or disclosure of (x) any potential, possible or actual stock combination, reverse stock split or other
similar transaction involving the Common Stock or (y) board or stockholder approval thereof, or the intention of the Company to
seek board or stockholder approval of any stock combination, reverse stock split or other similar transaction involving the Common
Stock), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d)
of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by
issued and outstanding Voting Stock of the Company.


(u)           
“Fundamental Transaction Redemption Premium” means 120%.


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


(w)          
“Holder Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this
Note on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the
initial purchasers pursuant to the Securities Purchase Agreement on the Closing Date.


(x)           
“Interest Rate” means four percent (4%) per annum, subject to adjustment as set forth in Section 2


.


(y)           
“Lockbox Balance” means, as of any given time, the cash balance then held in the Master Restricted Account.


(z)            
“Master Restricted Account” means account number [ ] at [ ], or such other account as may be directed by the
Collateral Agent, from time to time.


(aa)         
“Maturity Date” shall mean March __, 2016; provided, however, the Maturity Date may be extended at
the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing
or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an
Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental
Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is
delivered prior to the Maturity Date, provided further that if a Holder elects to convert some or all of this Note pursuant
to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall
automatically be extended until such time as such provision shall not limit the conversion of this Note.


(bb)        
“New Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription
Date, directly or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest
of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “New Subsidiaries.”


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


(dd)        
 “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.


(ee)         
“Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness
described on Schedule 30(ee) attached hereto and (iii) Indebtedness secured by Permitted Liens described in clauses (iv)
and (v) of the definition of Permitted Liens, in an aggregate amount not to exceed $100,000.


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


(gg)        
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.


(hh)        
 “Principal Market” means the OTC Bulletin Board.


(ii)           
 “Quarter” means each of: (i) the period beginning on and including January 1 and ending on and including March
31; (ii) the period beginning on and including April 1 and ending on and including June 30; (iii) the period beginning on and
including July 1 and ending on and including September 30; and (iv) the period beginning on and including October 1 and ending
on and including December 31.


(jj)           
“Redemption Notices” means, collectively, Event of Default Redemption Notices, the Holder Alternate Redemption
Notices and the Fundamental Transaction Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”


(kk)        
“Redemption Premium” means (i) in the case of the Events of Default described in Section 4(a)(other than
Sections 4(a)(ix) through 4(a)(xi)), 120% or (ii) in the case of the Events of Default described in Sections 4(a)(ix) through
4(a)(xi), 100%.


(ll)           
“Redemption Prices” means, collectively, Event of Default Redemption Prices, the Fundamental Transaction
Redemption Prices, and the Holder Optional Redemption Prices and each of the foregoing, individually, a “Redemption
Price.” 


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


(nn)        
[INTENTIONALLY OMITTED]


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


(pp)        
“Securities Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription
Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes and Warrants,
as may be amended from time to time.


(qq)        
“Security Agreement” means that certain security agreement, dated as of the Closing Date, by and among the
Company, the Subsidiaries and the initial holders of the Notes, as may be amended from time to time.


(rr)          
“Subscription Date” means March __, 2013.


(ss)         
“Subsidiaries” means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries,
and each of the foregoing, individually, a “Subsidiary.”


(tt)           
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.


(uu)        
“Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market
on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common
Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from
trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder.


(vv)        
 “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the
holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors,
managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of
any other class or classes shall have or might have voting power by reason of the happening of any contingency).


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


(xx)        
“Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all
warrants issued in exchange therefor or replacement thereof.


31.            DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in
good faith determined that the matters relating to such notice do not constitute material, non-public information relating to
the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or
delivery publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event
that the Company believes that a notice contains material, non-public information relating to the Company or any of its
Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence
of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its Subsidiaries. Nothing contained in this Section 31 shall
limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase
Agreement.


[signature
page follows]




    	(1)



    	 



    

 


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


 


	Worlds
                                                                       Inc.

         

	By:_________________________________
	Name:
    Thom Kidrin
	Title:
    CEO


 




    	(2)



    	 



    

 


EXHIBIT
I



Worlds Inc.

CONVERSION NOTICE


Reference
is made to the Series C Senior Secured Convertible Note (the “Note”) issued to the undersigned by Worlds Inc.,
a Delaware corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby
elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.001
par value per share (the “Common Stock”), of the Company, as of the date specified below. Capitalized terms
not defined herein shall have the meaning as set forth in the Note.


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

    TO BE CONVERTED:	 
	Please
                                                                       confirm the following information:

        If
        after July 1, 2013, check here if Holder is electing to use the Alternate Conversion Price: [_]

	Conversion
    Price
 (or Alternate Conversion Price, if applicable):	 
	Number
    of shares of Common Stock to be issued:	 
	Notwithstanding
                                                                       anything to the contrary contained herein, this Conversion
                                                                       Notice shall constitute a representation by the Holder
                                                                       of the Note submitting this Conversion Notice that, after
                                                                       giving effect to the conversion provided for in this Conversion
                                                                       Notice, such Holder (together with its affiliates) will
                                                                       not have beneficial ownership (together with the beneficial
                                                                       ownership of such Person’s affiliates) of a number
                                                                       of shares of Common Stock which exceeds the Maximum Percentage
                                                                       (as defined in the Note) of the total outstanding shares
                                                                       of Common Stock of the Company as determined pursuant to
                                                                       the provisions of Section 3(d) of the Note.

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

	Issue
    to:	 
	 	 
	 	 
	Facsimile
    Number:	 
	Holder:	 
	By:	 
	Title:	 
	Dated:	 
	Account
    Number:	 
	  (if
    electronic book entry transfer)	 
	Transaction
    Code Number:	 
	  (if
    electronic book entry transfer)	 
	 	 	 	 	 	 	 	 	 	 	 	 	 




    	(3)



    	 



    

 


EXHIBIT
II


 


ACKNOWLEDGMENT


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


 


	Worlds
    Inc.
	By:_________________________________
	Name:
    Thom Kidrin
	Title:
    CEO


 




    	(4)



    	 



    

 


EXHIBIT
III



Worlds Inc.


HOLDER
ALTERNATE REDEMPTION NOTICE


Reference
is made to the Series C Senior Secured Convertible Note (the “Note”) issued to the undersigned by Worlds Inc.,
a Delaware corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby
elects to redeem the Conversion Amount (as defined in the Note) of the Note indicated below in a Holder Alternate Redemption (as
defined in the Note) as specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.


	Holder
    Alternate Redemption Date:	 
	Aggregate
    Principal to be redeemed**:	 
	Aggregate
    accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of
    the Aggregate Principal and such Aggregate Interest to be redeemed:	 
	AGGREGATE
    CONVERSION AMOUNT

    TO BE REDEEMED:	 
	**May
                                                                      not exceed, together with any prior Holder Alternate Redemptions
                                                                      by the Holder, an aggregate amount equal to the Holder’s
                                                                      Eligible Redemption Allocation or be less than $25,000.

        Please
        wire a cash amount, in U.S. dollars and immediately available funds to the undersigned in accordance with the following
        wire instructions on or prior to the Holder Alternate Redemption Date:

	 	 
	 	 
	 	 
	Holder:	 
	By:	 
	Title:	 
	Dated: