AN EXECUTED AND COMPLETED NOTICE OF CONVERSION ("NOTICE
OF CONVERSION") TO THE BORROWER, AND SUCH NOTICE OF CONVERSION SHALL PROVIDE A
BREAKDOWN IN REASONABLE DETAIL OF THE AMOUNT OF PRINCIPAL AMOUNT, ACCRUED
INTEREST AND FEES THAT ARE BEING CONVERTED.
ON EACH CONVERSION DATE (AS
HEREINAFTER DEFINED), AND IN ACCORDANCE WITH ITS NOTICE OF CONVERSION, THE
HOLDER SHALL MAKE THE APPROPRIATE REDUCTION TO THE PRINCIPAL AMOUNT, ACCRUED
INTEREST AND FEES AS ENTERED IN ITS RECORDS AND SHALL PROVIDE WRITTEN NOTICE
THEREOF TO THE BORROWER WITHIN TWO (2) BUSINESS DAYS AFTER THE CONVERSION DATE.
EACH DATE ON WHICH A NOTICE OF CONVERSION IS DELIVERED OR TELECOPIED TO THE
BORROWER IN ACCORDANCE WITH THE PROVISIONS HEREOF SHALL BE DEEMED A CONVERSION
DATE (THE "CONVERSION DATE").
A FORM OF NOTICE OF CONVERSION THAT MAY BE
EMPLOYED BY THE HOLDER IS ANNEXED HERETO AS EXHIBIT A.
THE BORROWER WILL CAUSE
THE TRANSFER AGENT TO TRANSMIT THE CERTIFICATES REPRESENTING THE CONVERSION
SHARES TO THE HOLDER BY CREDITING THE ACCOUNT OF THE HOLDER'S DESIGNATED BROKER
WITH THE DEPOSITORY TRUST CORPORATION ("DTC") THROUGH ITS DEPOSIT WITHDRAWAL
AGENT COMMISSION ("DWAC") SYSTEM WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT BY
THE BORROWER OF THE NOTICE OF CONVERSION (THE "DELIVERY DATE").
In the case of the exercise of the conversion rights set forth herein, the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued upon
the date of receipt by the Borrower of the Notice of Conversion.
The Holder
shall be treated for all purposes as the record holder of such Common Stock,
unless the Holder provides the Borrower written instructions to the contrary.
3.5.
LATE PAYMENTS. THE BORROWER UNDERSTANDS THAT A DELAY IN THE
DELIVERY OF THE SHARES OF COMMON STOCK IN THE FORM REQUIRED PURSUANT TO THIS
ARTICLE BEYOND THE DELIVERY DATE COULD RESULT IN ECONOMIC LOSS TO THE HOLDER.
AS COMPENSATION TO THE HOLDER FOR SUCH LOSS, THE BORROWER AGREES TO PAY LATE
PAYMENTS TO THE HOLDER FOR LATE ISSUANCE OF SUCH SHARES IN THE FORM REQUIRED
PURSUANT TO THIS ARTICLE III UPON CONVERSION OF THE NOTE IN THE AMOUNT EQUAL TO
THE GREATER OF (I) $500 PER BUSINESS DAY AFTER THE DELIVERY DATE AND (II) THE
HOLDER'S ACTUAL DAMAGES FROM SUCH DELAYED DELIVERY.
THE BORROWER SHALL PAY ANY
PAYMENTS INCURRED UNDER THIS SECTION IN IMMEDIATELY AVAILABLE FUNDS UPON DEMAND
AND, IN THE CASE OF ACTUAL DAMAGES, ACCOMPANIED BY REASONABLE DOCUMENTATION OF
THE AMOUNT OF SUCH DAMAGES.
3.6.
ADJUSTMENT PROVISIONS. THE FIXED CONVERSION PRICE AND NUMBER AND
KIND OF SHARES OR OTHER SECURITIES TO BE ISSUED UPON CONVERSION DETERMINED
PURSUANT TO SECTIONS 3.1 AND 3.2 SHALL BE SUBJECT TO ADJUSTMENT FROM TIME TO
TIME UPON THE HAPPENING OF CERTAIN EVENTS WHILE THIS CONVERSION RIGHT REMAINS
OUTSTANDING, AS FOLLOWS:
A.
RECLASSIFICATION, ETC.
IF THE BORROWER AT ANY TIME SHALL, BY
RECLASSIFICATION OR OTHERWISE, CHANGE THE COMMON STOCK INTO THE SAME OR A
DIFFERENT NUMBER OF SECURITIES OF ANY CLASS OR CLASSES, THIS NOTE, AS