Exhibit 10.1


 





EXHIBIT A


 


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


 


Principal Amount: $[ $2,180,000,
less any Nasdaq hold back ]      


 


Original Issue Date: April [    ], 2018


 


 


PRECIPIO, INC.


 


8% SENIOR SECURED CONVERTIBLE


PROMISSORY NOTE


DUE APRIL [   
], 2019


 


THIS
8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued 8% Senior Secured Convertible
Promissory Notes of Precipio, Inc., a Delaware corporation, (the “Company”), having its principal place of business
at 4 Science Park, New Haven, CT 06511, designated as its 8% Senior Secured Convertible Promissory Notes due 2019 (this note, the
“Note” and, collectively with the other notes of such series, the “Notes”).


 


FOR  VALUE
RECEIVED, the Company promises to pay to [            ] or its registered
assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of [                  ]
Thousand dollars ($             ) on the earlier of (i) the one year
anniversary after the Original Issue Date hereof, or (ii) upon the closing of a Qualified Offering (the “Maturity Date”),
or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. Any payment
due as a result of a Qualified Offering shall be deemed to be an Optional Redemption and the Redemption Amount shall be paid in
accordance with the terms and conditions of Section 6(b) herein. This Note is subject to the following additional provisions:


 






    	 	1	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


“Beneficial Ownership Limitation”
shall have the meaning set forth in   Section


4(d).


 


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


 


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


 






    	 	2	 



     


    

 


“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities
issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to
such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c)
the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately
prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction,
(d) a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was
approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the
Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Floor Price”
means $.30 per share, unless otherwise mutually agreed among the Company and the Holders of 80% in interest of the Notes.


 


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


 


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


 






    	 	3	 



     


    

 


“Indebtedness”
shall have the meaning ascribed to such term in the Purchase Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Optional Redemption Notice Date”
shall have the meaning set forth in Section


6(a).


 


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


 


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


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of April 20, 2018, among the Company and the Purchasers
(as defined therein) and the other persons signatory thereto, as amended, modified or supplemented from time to time in accordance
with its terms.


 


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


 


“Qualified
Offering” means an offering of the Company’s securities, in one or a series of financings, in which the Company
receives gross proceeds of at least $7,000,000.


 


“Redemption
Amount” means the sum of 105%, if within 90 days of the Original Issue Date, 110% if within 180 days of the Original
Issue Date, or 115% if after 180 days from the Original Issue Date, of (a) the then outstanding principal amount of the Note, (b)
accrued but unpaid interest, and (c) all liquidated damages and other amounts due in respect of the Note.


 






    	 	4	 



     


    

 


“Registration
Statement” means a registration statement meeting the requirements of the Securities Act and covering the resale of the
Underlying Shares by each Holder.


 


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


 


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


 


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


 


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


 


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


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market other than the OTC Bulletin Board, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported
by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common
Stock is then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on a Trading Market
and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.


 


Section 2.      Interest.   The
Company shall pay interest to the Holder on the aggregate principal amount of this Note at the rate of 8% per annum, with one year
of interest guaranteed, which amount shall be payable in full regardless of how long the this Note remains outstanding.


 






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Section 3.      
Registration of Transfers and Exchanges; Registration Rights.


 


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


 


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


 


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


 


Section 4.      Conversion.


 


a)       Voluntary
Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note together with any accrued
interest shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from
time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount and accrued interest of this Note to be converted and the date on which such conversion
shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion,
the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder,
the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note,
plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain
records showing the principal amount(s) converted and the date of such conversion(s).


 


b)       Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to greater of (x) $0.50 or $.05 above the closing bid
price of the Common Stock on the date prior to the Original Issue Date (the “Conversion Price”). In the event this
Note is not paid in full prior to 180 days after the Original Issue Date, the Conversion Price shall be equal to 80% of the lowest
VWAP in the 10 trading days prior to the date of the notice of conversion, but in no event below the Floor Price.


 






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		c)	Mechanics of Conversion.



 


i.       Conversion
Shares Issuable. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained
by dividing (x) the outstanding principal amount of this Note, plus accrued interest by (y) the Conversion Price.


 


ii.       Delivery
of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the number of Conversion
Shares being acquired upon the conversion of this Note. On or after the Effective Date (as defined the Purchase Agreement), the
Company shall use its best efforts to deliver any certificate or certificates required to be delivered by the Company under this
Section 4(c) electronically through the Depository Trust Company or another established clearing corporation performing similar
functions.


 


iii.       Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or
as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the
Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to
the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Notice of Conversion.


 






    	 	7	 



     


    

 


iv.       Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not
operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this
Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based
on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all
or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in
the amount of 100% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to
the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or,
if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate
or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading
Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share
Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s
right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver
Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise
of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.


 






    	 	8	 



     


    

 


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


 


vi.       Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note and payment of interest on this
Note, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than
the Holder (and the other Holder of the Notes), not less than such aggregate number of shares equal to two and one half times the
number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable
(taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount
of this Note and accrued interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly authorized, validly issued, fully paid and nonassessable, and, if the Registration Statement is then effective
under the Securities Act shall be registered for public resale in accordance with such Registration Statement.


 






    	 	9	 



     


    

 


vii.       Insufficient
Authorized Shares. If, notwithstanding Section 4(c)(v), 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 amount specified
in Section 4(c)(v) (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the applicable
amount for the 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 “Authorized Failure Shares”), in lieu of delivering such Authorized Failure Shares to the Holder, the Company
shall pay cash in exchange for the portion of the Note convertible into such Authorized Failure Shares at a price equal to the
sum of the product of (x) such number of Authorized Failure Shares and (y) the greatest closing sale price of the Common Stock
on any Trading Day during the period commencing on the date the Authorized Failure Shares should have been issued pursuant to the
terms of this Note and ending on the date of such issuance of payment under this Section 4(c)(vi).


 


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


 


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


 


d)       Holder’s
Conversion Limitations.


 






    	 	10	 



     


    

 


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


 






    	 	11	 



     


    

 


Section 5.      
Certain Adjustments.


 


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


 


b)       Subsequent
Rights Offerings. If the Company, at any time while the Note is outstanding, shall issue rights, options or warrants to all holders
of Common Stock (and not to the Holder) entitling them to subscribe for or purchase warrants, securities or other property pro
rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”), then the
Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this
Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided,
however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).


 






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c)       Pro
Rata Distributions. If the Company, at any time while this Note is outstanding, shall distribute to all Holders of Common Stock
(and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Conversion
Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination
of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of
the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair
market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed
applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned above.


 


d)       Fundamental
Transaction. If at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person and the Company is not the surviving entity, (ii)
the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of
all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which Holders of Common Stock
are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the Holders
of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other
Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other
Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or
share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon
such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section
4(d) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note).
For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given
the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction.
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents (as
defined in the Purchase Agreement) in accordance with the provisions of this Section 5(e) and shall, at the option of the holder
of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock
of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion
of this Note (without regard to any limitations on the conversion of this Note) at the closing of such Fundamental Transaction,
and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value
of this Note immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein.


 






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


 


		f)	Notice to the Holder.



 


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


 


ii.       Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all Holder of the Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholder of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear
upon the Note Register, at least 10 (10) calendar days prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the Holder of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is
expected that holder of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities,
cash or other   property deliverable upon such reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes,
or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously
file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this
Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.


 






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Section 6.      Redemption.


 


a)       Optional
Redemption at Election of Company. Subject to the provisions of this Section 6(a), the Company may deliver a notice to the Holder
(an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption
Notice Date”) of its irrevocable election to redeem some or all of the then outstanding principal amount of this Note for
cash in an amount equal to the Redemption Amount on the 5th Trading Day following the Optional Redemption Notice Date
(such date, the “Optional Redemption Date”, such five Trading Day period, the “Optional Redemption Period”
and such redemption, the “Optional Redemption”).


 


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


 


Section
7. Negative Covenants. As long as any portion of this Note remains outstanding, unless the Holder of at least 80% in
principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly:


 


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


 


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


 


c)       enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is expressly approved by a majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval);


 






    	 	15	 



     


    

 


d)       incur,
guarantee or assume or suffer to exist any Indebtedness, other than the Indebtedness evidenced by this Note and the other Notes,
except for debt incurred for working capital, which is expressly subordinate in a form acceptable to the Purchasers to the rights
of the Purchasers and for which no payments may be made at any time when Notes remain outstanding;


 


e)       redeem,
repurchase or declare or pay any cash dividend or distribution on any of its capital stock;


 


f)       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 consistent with its past practice for fair consideration, (ii) sales of inventory
and product in the ordinary course of business consistent with past practice for fair consideration, and (iii) a sale or disposition
of assets to a third party that has been approved by the independent members of the Board of Directors;


 


g)       fail
to take all action necessary or advisable to maintain all of the Intellectual Property Rights (as defined in the Purchase Agreement)
of the Company and/or any of its Subsidiaries that are necessary or material to the conduct of the business of the Company in full
force and effect except in connection with the sale or disposition of assets to a third party that has been approved by the independent
members of the Board of Directors; or


 


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



 


Section 8.      Events of Default.


 


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


 


i.       any
default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing to the
Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by
acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is
not cured within 3 Trading Days after receipt of written notice of such default;


 






    	 	16	 



     


    

 


ii.       the
Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the Company
of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (xi) below)
which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure
sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become aware of such failure;


 


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


 


iv.       any
representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect as of the
date when made or deemed made except where such untrue or incorrect statement could not reasonably be expected to have a Material
Adverse Effect (as defined in the Securities Purchase Agreement);


 


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


 


vi.       the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;


 


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


 


viii.       the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all
or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute
a Change of Control Transaction);


 






    	 	17	 



     


    

 


ix.       the
Company does not meet the current public information requirements under Rule 144 in respect of the Registrable Securities, subject
to a cure period of 10 days;


 


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


 


xi.       any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.


 


b)       Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid interest,
plus all interest that would have been earned through the Maturity Date if such interest has not yet accrued, liquidated damages
and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash at the Redemption Amount. Commencing five days after the occurrence of any Event of Default that results
in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser
of 18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Redemption Amount, the Holder
shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder
may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other
remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment
pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.


 


Section 9.      Registration
Rights. On and after August 22, 2018, if this Note shall then be outstanding, the Holder shall have a right to demand registration
of the Conversion Shares under the Securities Act.


 






    	 	18	 



     


    

 


a.       Resale
Registration Statement. Upon written demand by the Holder (“Demand Notice”), the Company will file a registration
statement (the “Registration Statement”), within thirty (30) days after written demand by the Holder (the “Filing
Date”), covering the resale of all or such portion of the Conversion Shares as permitted by SEC Guidance, for an offering
to be made on a continuous basis pursuant to Rule 415. The Company shall provide written notice to each other Holder of Notes within
five days of receipt of the Demand Notice, providing such other Holders the opportunity to include their Conversion Shares on the
Registration Statement. The Registration Statement filed shall be on Form S-3 or Form S-1, at the option of the Company. If the
Company does not file a Registration Statement in accordance herewith by the Filing Date, then, in addition to any other rights
the Holder may have hereunder or under applicable law, on the business day following the Filing Date and on each monthly anniversary
of the business day following the Filing Date (if no registration statement shall have been filed by the Company in accordance
herewith by such date), the Company shall pay to the Holder an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1% per month (pro-rata for partial months) based upon such Holder’s gross purchase price of Notes (calculated on
a daily basis) paid under this Agreement until the Registration Statement is filed. The Company shall use its best efforts to cause
the Registration Statement to be declared effective within 90 days of filing.


 


b.       Registration
Procedures. Whenever required under this Section 9 to include Conversion Shares in a Company registration statement, the Company
shall, as expeditiously as reasonably possible:


 


(A)       Use
its commercially best efforts to (i) cause such registration statement to become effective, and (ii) cause such registration statement
to remain effective until such date as the sellers of Conversion Shares (the “Selling Holders”) have completed the
distribution described in the registration statement. The Company will also use its commercially best efforts to, during the period
that such registration statement is required to be maintained hereunder, file such post-effective amendments and supplements thereto
as may be required by the Securities Act and the rules and regulations thereunder or otherwise to ensure that the registration
statement does not contain any untrue statement of material fact or omit to state a fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under which they are made, not misleading; provided, however,
that if applicable rules under the Securities Act governing the obligation to file a post-effective amendment permits, in lieu
of filing a post-effective amendment that (i) includes any prospectus required by Section 10(a)(3) of the Securities Act or (ii)
reflects facts or events representing a material or fundamental change in the information set forth in the registration statement,
the Company may incorporate by reference information required to be included in (i) and (ii) above to the extent such information
is contained in periodic reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) in the registration statement.


 


(B)       Prepare
and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with
such registration statement, as may be necessary to comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.


 






    	 	19	 



     


    

 


(C)       Furnish
to the Selling Holders such numbers of copies of a prospectus, including a preliminary prospectus as amended or supplemented from
time to time, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Conversion Shares owned by them.


 


(D)       Use
commercially best efforts to register and qualify the securities covered by such registration statement under such other federal
or state securities laws of such jurisdictions as shall be reasonably requested by the Selling Holders; provided, however, that
the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act.


 


(E)       Notify
each Holder of Conversion Shares covered by such registration statement, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, (i) when the registration statement or any post-effective amendment and supplement thereto
has become effective; (ii) of the issuance by the SEC of any stop order or the initiation of proceedings for that purpose (in which
event the Company shall make every effort to obtain the withdrawal of any order suspending effectiveness of the registration statement
at the earliest possible time or prevent the entry thereof); (iii) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Conversion Shares for sale in any jurisdiction or the initiation of any proceeding
for such purpose; and (iv) of the happening of any event as a result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the circumstances then existing.


 


(F)       Cause
all such Conversion Shares registered hereunder to be listed on each securities exchange or quotation service on which similar
securities issued by the Company are then listed or quoted.


 


c.       Furnish
Information. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Section
9 with respect to the Conversion Shares of any Selling Holder that such Holder shall furnish to the Company such information regarding
the Holder, the Conversion Shares held by the Holder, and the intended method of disposition of such securities as shall be reasonably
required by the Company to effect the registration of such Holder’s Conversion Shares.


 


d.       Registration
Expenses. The Company shall bear and pay all registration expenses incurred in connection with any registration, filing or
qualification of Conversion Shares with respect to registration herewith for each Holder, but excluding (i) legal expenses of the
Holders and (ii) any underwriting discounts and commissions relating to Conversion Shares.


 






    	 	20	 



     


    

 


Section 10.      Miscellaneous.


 


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


 






    	 	21	 



     


    

 


b)       Nasdaq.
The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note, and the Holder of this Note
shall not have the right to receive upon conversion of this Note any shares of Common Stock, if the issuance of such shares of
Common Stock (taken together with any prior issuance of such shares upon the conversion of the Notes or otherwise pursuant to the
terms of the Notes and the Shares issued pursuant to common stock purchase warrants issued in connection with the Securities Purchase
Agreement) would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Notes
without breaching the Company’s obligations under the rules or regulations of the Nasdaq Capital Market (the “Exchange
Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders
as required by the applicable rules of the Nasdaq Capital Market for issuances of Common Stock in excess of such amount or (B)
obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably
satisfactory to the Holder. Until such approval or written opinion is obtained, no purchaser of the Notes pursuant to the Purchase
Agreement (the “Purchasers”) shall be issued in the aggregate, upon conversion of Notes, shares of Common Stock in
an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the principal amount
of Notes issued to such Purchaser pursuant to the Purchase Agreement and the denominator of which is the aggregate principal amount
of all Notes issued to the Purchasers as of the last Closing pursuant to the Purchase Agreement (with respect to each Purchaser,
the “Exchange Cap Allocation”). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's
Notes, the transferee shall be allocated a pro rata portion of such Purchaser's Exchange Cap Allocation with respect to the portion
of this Note so transferred, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion
of the Exchange Cap Allocation allocated to such transferee. Upon conversion in full of a holder’s Notes, the difference
(if any) between such holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder
upon such holder's conversion in full of such Notes shall be allocated to the respective Exchange Cap Allocations of the remaining
holders of Notes on a pro rata basis in proportion to the shares of Common Stock underlying the Notes then held by each such holder.
In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this Section 10(b) (the “Exchange
Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the
Holder in exchange for the cancellation of such conversion amount of this Note convertible into such Exchange Cap Shares at a price
equal to the sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest closing price of the Common
Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect
to such Exchange Cap Shares to the Company and ending on the date immediately preceding the date of such payment under this Section
9(b) and (y) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses, if
any, of the Holder incurred in connection therewith.


 


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


 


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


 






    	 	22	 



     


    

 


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


 


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


 


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


 






    	 	23	 



     


    

 


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


 


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


 


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


 


 


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


 


(Signature Pages Follow)




    	 	24	 



     


    

 


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


 


 


	 	PRECIPIO, INC.
	 	 	 
	 	 	 
	 	By:	                                                          
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Facsimile No. for delivery of Notices:                                 


 


 


 


 


 


 


 




    	 	25	 



     


    

 


ANNEX A


 


NOTICE
OF CONVERSION


 


The
undersigned hereby elects to convert principal under the 8% Senior Secured Convertible Promissory Note due [xx] 2019 of Precipio,
Inc., a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”),
of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in
the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will
be charged to the holder for any conversion, except for such transfer taxes, if any.


 


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


 


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





 


Conversion calculations:


 


Date to Effect


Conversion:_____________________________


 


Principal Amount of Note to be Converted:


_______________________________________


 


Number of shares of Common Stock to be issued:


__________________________________________


 


 


Signature:_______________________________


 


Name:_________________________________


 


Address for Delivery of Common Stock Certificates:



 


Or


 


DWAC Instructions:


 


Broker No: ________


 


Account No: _________


 




    	 	26	 



     


    

 







 


Schedule 1


 


CONVERSION
SCHEDULE


 


The 8% Senior Secured Convertible
Promissory Notes due 2019 in the aggregate principal amount of $[ ] is issued by Precipio, Inc., a Delaware corporation. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced Note.


 


Dated:


 





	 	 	Aggregate	 
	 	 	Principal	 
	 	 	Amount	 
	Date of Conversion (or for first entry, Original Issue Date)	Amount of

                                                                  Conversion
	Remaining Subsequent

                                                                  to Conversion
	
         

        Company Attest

	 	 	(or original	 
	 	 	Principal	 
	 	 	Amount)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


 








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