Document:

THIS NOTE AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

 

8% FORM OF SENIOR SECURED CONVERTIBLE
NOTE

 

Elephant Talk Communications, Corp.

8% Senior Secured Convertible Note

 

Issuance Date: March
29, 2012

Original Principal Amount:
$8,800,000 

No.: [A-1]

 

FOR VALUE RECEIVED,
Elephant Talk Communications, Corp., a Delaware corporation (the “Company”), hereby promises to pay to the
order of [HOLDER] or its registered assigns (“Holder”) the amount set out above as the Original
Principal Amount (as reduced pursuant to the terms hereof pursuant to any Installment Payment (as defined below), redemption, conversion
or otherwise, the “Principal”) when due, whether upon any Installment Date, 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 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 any Installment Date, the Maturity
Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible
Note (including all Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one
of an issue of Convertible Notes issued pursuant to the Securities Purchase Agreement (as defined below) (collectively, the “Notes”
and such other Convertible Notes, the “Other Notes”). Certain capitalized terms used herein are defined in Section
25.

 

1.          PAYMENTS
OF PRINCIPAL AND INTEREST. The Company will pay the Principal of and Interest and premium, if any, on the Notes as set forth
herein. The amounts of principal and Interest corresponding to each Installment Date are set forth on Exhibit A attached
hereto, without giving effect to any Default Interest, Stock Replacement Payment, Late Charges or other adjustments as provided
in this Note. For the avoidance of doubt, no Installment Amount shall be reduced as a result of the Holder’s conversion of
any part of this Note (other than a Conversion effected in accordance with Section 2(g)); provided, however, if the entire outstanding
Principal, Interest, Late Charges and other amounts due hereunder is less than the applicable Installment Amount for any Installment
Date such lesser amount shall be due and payable on such Installment Date. Interest on the Notes will accrue at an annual rate
equal to eight percent (8%) (the “Interest Rate”); provided, however, that upon the occurrence
and during the continuance of an Event of Default, until such Event of Default is cured (if applicable), the Interest Rate shall
be equal to the lesser of (x) nineteen percent (19%) per annum and (y) the maximum applicable legal rate per annum. Interest shall
be paid on each Installment Date commencing on the Initial Installment Date. If an Installment Date is not a Trading Day, payment
shall instead be made on the next succeeding Trading Day, and no additional Interest shall accrue on the Notes for the intervening
period. Interest on the Notes will be computed on the basis of a 365-day year and the actual number of days elapsed.

 

    	 

    	 

    

 

2.          INSTALLMENT
PAYMENTS.

 

(a)          General.
On each applicable Installment Date, the Company shall pay to the Holder the Installment Amount due on such Installment Date, at
the Company’s option, in cash or shares of Common Stock or any combination of cash and shares of Common Stock subject to
the provisions of this Section 2; provided, however, that no portion of the Installment Amount may be paid in shares
of Common Stock unless (A) the Equity Conditions are satisfied, or waived by the Holder, as applicable, (B) the Holder’s
Exchange Cap Allocation (as defined below) and/or Authorized Share Allocation (as defined below) has not been exceeded and (C)
the portion of the Installment Amount to be paid in shares of Common Stock does not, unless waived by the Holder, exceed the Dollar
Volume Limitation.

 

(b)          Installment
Notice. On a date not less than twenty two (22) Trading Days, but in no event more than twenty-five (25) Trading Days, prior
to each Installment Date (the “Installment Notice Date”), the Company shall deliver a written notice by e-mail
or facsimile (an “Installment Notice”) to the Holder, which shall either: (i) confirm that the entire applicable
Installment Amount shall be paid in cash; or (ii) (A) state that the Company elects to pay all or a portion of the Installment
Amount in shares of Common Stock, (B) specify the portion which the Company elects to pay in cash (such amount, the “Cash
Payment Amount”) and the portion that the Company elects to pay in shares of Common Stock (such portion a “Stock
Payment Amount”), which amounts when added together must equal the applicable Installment Amount, (C) certify that the
Equity Conditions are then satisfied, (D) specify the applicable Dollar Volume Limitation (expressed in U.S. Dollars) and certify
that the Stock Payment Amount does not exceed such applicable Dollar Volume Limitation and (E) certify that the Holder’s
Exchange Cap Allocation and/or Authorized Share Allocation has not been exceeded. If (x) the Company does not timely deliver an
Installment Notice in accordance with this Section 2(b) or (y) the Equity Conditions are not satisfied, then, unless waived by
the Holder, the Company shall be deemed to have delivered an Installment Notice electing to pay the entire Installment Amount in
cash. Any Cash Payment Amount shall be paid in accordance with Section 2(c) and any Stock Payment Amount shall be paid in accordance
with Section 2(d). Each Installment Notice, whether actually given or deemed given, shall be irrevocable and may not be modified
or amended.

 

(c)          Mechanics
of Cash Payment. On each Installment Date, to the extent that the Company elects to pay all or any portion of the Installment
Amount in cash as provided above, the Company shall pay the applicable Cash Payment Amount for such Installment Date to the Holder
by wire transfer of immediately available funds.

 

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(e)          Mechanics
of Stock Payment. To the extent that the Company elects to pay all or any portion of the applicable Installment Amount in shares
of Common Stock, the applicable Stock Payment Amount shall be paid as follows:

 

(i)          twenty-one
(21) Trading Days prior to the applicable Installment Date (the “Advance Date”), the Company shall deliver to
the Holder a number of shares of Common Stock determined by dividing (x) the Stock Payment Amount for such Installment Date by
(y) ninety percent (90%) of the VWAP on the Trading Day immediately preceding such Advance Date (the “Advance Shares”),
as such number of Advance Shares may be reduced pursuant to clause (y) of Section 2(d)(ii); and

 

(ii)         not
later than two (2) Trading Days after the applicable Installment Date, the Company shall deliver an additional number of shares
of Common Stock (the “True-Up Shares”), if any, to the Holder equal to the positive difference between (a) the
Stock Payment Amount divided by the Stock Payment Price for such Installment Date and (b) the Advance Shares (without taking into
account any reduction in the number of Advance Shares delivered to the Holder as a result of clause (y) of this Section 2(d)(ii));
provided; however, that if clause (b) exceeds clause (a), then, at the Company’s option, the Holder shall (x)
return such excess number of shares Common Stock to the Company within five (5) Trading Days after the Installment Date, and such
excess shares shall be deemed cancelled for all purposes effective as of the applicable Installment Date or (y) the Holder shall
retain such excess number of shares of Common Stock and the number of Advance Shares that Company is required to deliver on the
next Advance Date shall be reduced by the amount of such excess number of shares of Common Stock. For the avoidance of doubt, the
Holder shall not have any liability to the Company to the extent that any Advance Shares that are returned to the Company pursuant
to the immediately preceding sentence decrease in value following the applicable Advance Date.

 

(f)          Busted
Stock Payments. Notwithstanding any other provision of this Section 2, to the extent that the Company elects to pay all or
any portion of an Installment Amount in shares of Common Stock:

 

(i)          to
the extent that the aggregate number of Advance Shares or True-Up Shares to be delivered to the Holder pursuant to Section 2(d)
in respect of any individual Stock Payment Amount would cause such Holder to exceed the Maximum Percentage (as defined below),
then, (I) the Holder shall provide written notice to the Company that such delivery of all or a portion of the Advance Shares or
True-Up Shares would cause such Holder to exceed the Maximum Percentage, and (II) in addition to delivery of the number of Advance
Shares or True-Up Shares that would not cause such Holder to exceed the Maximum Percentage, the Company shall pay to the Holder
in lieu of such number of Advance Shares or True-Up Shares that would cause such Holder to exceed the Maximum Percentage (such
excess number of shares, the “Excess Shares”), not more than the later of (x) three (3) Trading Days after such
Installment Date and (y) three (3) Trading Days after the date of the Holder’s written notice, an amount in cash equal to
the portion of the Stock Payment Amount that would otherwise be payable in respect of the Excess Shares;

 

 

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(ii)         to
the extent that such Stock Payment Amount, when aggregated with any shares of Common Stock already issued to the Holder in respect
of this Note, would cause the Holder’s Exchange Cap Allocation or Authorized Share Allocation, as the case may be, to be
exceeded, then that portion of such Stock Payment Amount that would not exceed the Holder’s Exchange Cap Allocation or Authorized
Share Allocation, as the case may be, shall be delivered to the Holder in shares of Common Stock as provided above and the Company
shall pay to the Holder, not more than three (3) Trading Days after the Installment Date, an amount in cash equal Stock Replacement
Payment in lieu of any the portion of the Stock Payment Amount that would cause the Holder’s Exchange Cap Allocation or Authorized
Share Allocation, as the case may be, to be exceeded;

 

(iii)        if
the Equity Conditions are neither (x) satisfied nor (y) waived in accordance with the terms hereof, as applicable, on the Trading
Day immediately preceding the Advance Date and/or on the Advance Date, or if the VWAP cannot be determined on the Trading Day immediately
preceding the Advance Date, or if the Company fails to deliver the Advance Shares to the Holder on the Advance Date, then the Holder
may, at its option, upon written notice to the Company, require the Company to pay to the Holder, not later than two (2) Trading
Days after the Installment Date, an amount of cash equal to the Stock Replacement Payment in lieu of any the portion of the Stock
Payment Amount; or

 

(iv)        if
subsequent to the delivery of the Advance Shares, (A) the Equity Conditions are neither satisfied nor waived in accordance with
the terms hereof, as applicable, on any day during the Stock Payment Pricing Period or (B) if the VWAP cannot be determined on
any day during the Stock Payment Pricing Period, then the Holder may, at its option, elect in a written notice to the Company to
redeliver all or any portion of the Advance Shares to the Company and the Company shall pay to the Holder, not later than two (2)
Trading Days after such Installment Date, an amount of cash equal to the Stock Replacement Payment in lieu of such portion of the
Stock Payment Amount for which such Holder has elected in writing to redeliver Advance Shares to the Company. For the avoidance
of doubt, to the extent this Section 2(e)(iv) applies, then by the second (2nd) Trading Day after such Installment Date, the Company
must pay to the Holder an amount of cash and Advance Shares equal in value to at least the applicable Cash Payment Amount plus
an amount equal to the product of (x) a fraction the numerator of which is the average VWAP of the Common Stock for the applicable
Stock Payment Pricing Period and the denominator of which is the Stock Payment Price for such Stock Payment Pricing Period and
(y) the entire Stock Payment Amount.

 

The “Stock Replacement
Payment” shall be determined according to the following formula:

 

SRP = (S/X) * Y

 

For the purposes of the foregoing
formula:

 

SRP = Stock Replacement Payment

 

S = the Stock Payment Amount
(or (A) in the case that either or both of the Holder’s Exchange Cap Allocation and/or Authorized Share Allocation is exceeded
as provided above, only that portion of such Stock Payment Amount that would exceed the Holder’s Exchange Cap Allocation
and/or Authorized Share Allocation, as applicable, and/or (B) in the case of Section 2(e)(iv) that portion of the Stock Payment
Amount for which the Holder has elected in its written notice to redeliver Advance Shares to the Company).

 

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X = the Stock Payment
Price for the applicable Installment Date.

 

Y = the highest VWAP
during the Stock Payment Pricing Period for the applicable Installment Date.

 

(g)          Delivery
of Shares. Any shares of Common Stock required to be delivered by the Company to the Holder under this Section 2 shall be credited
to the Holder’s or its designee’s balance account with Depository Trust Company (“DTC”) through
its Deposit/Withdrawal at Custodian system. In addition, the provisions of Section 3(c)(ii) shall apply to the delivery of shares
Common Stock under this Section 2 mutatis mutandis as if each date when shares of Common Stock are required to be delivered
under this Section 2 was a Share Delivery Date (as defined below).

 

(h)          Conversion
Rights Unaffected.  Notwithstanding any provision to the contrary, the Holder may deliver a Conversion Notice (as defined
below) on the 26th, 27th or 28th Trading day prior to any Installment Date with respect to all
or any portion of the specific Installment Amount to be paid on such Installment Date.  Accordingly, the Conversion Amount
for any such conversion shall reduce the applicable Installment Amount for such Installment Date dollar for dollar.

 

3.          CONVERSION
OF NOTES. This Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock, 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 (including, without
limitation, on the Maturity Date), the Holder shall be entitled to convert all or 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) and Section 2(h), at the Conversion Rate. 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
Prices; Conversion Rates. 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 sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to which
this determination is being made, (B) accrued and unpaid Interest with respect to such Principal, and (C) accrued and unpaid Late
Charges with respect to such Principal and Interest.

 

 

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(ii)         “Conversion
Price” means, as of any Conversion Date (as defined below) or other date of determination, $[___] [NTD: 115% OF THE
TRAILING 30 DAY CLOSING PRICE PRIOR TO CLOSING], subject to adjustment as provided herein. Notwithstanding the foregoing, following
a Launch Failure, the Conversion Price for any Conversion Date shall be the lowest of (a) the Conversion Price in effect on the
Trading Day immediately prior to such Launch Failure, (b) the amount equal to 90% of the average of the five lowest VWAPs for the
twenty (20) consecutive Trading Days prior to such Conversion Date, and (c) the amount equal to 90% of the lowest reported trade
price for the Common Stock as reported by Bloomberg on such Conversion Date (the “Reset Conversion Price”).
The Holder’s determination of the Reset Conversion Price shall be final and binding on the Company absent fraud or manifest
error.

 

(c)          Mechanics
of Conversion.

 

(i)          Conversion
Prior to Maturity Date. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile, e-mail or otherwise), for receipt on or prior to 11:59:59 p.m., New York time,
on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit B (the “Conversion
Notice”) to the Company. If and only if required by Section 3(c)(iii), within two (2) 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 15(b)). On or before the second (2nd) Trading Day following the date of receipt of a Conversion Notice, the
Company shall transmit by facsimile and e-mail an acknowledgment of confirmation, in the form attached hereto as Exhibit C,
of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”).
On or before the fifth (5th) Trading Day following the date of receipt of a Conversion Notice, the Company shall 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. 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
15(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.

 

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(ii)         Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, within five (5) Trading Days after the
Company’s receipt of a Conversion Notice (whether via facsimile, e-mail or otherwise) (the “Share Delivery Date”),
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 (a “Conversion Failure”),
then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day that
the issuance of such shares of Common Stock is not timely effected an amount equal to 1% of the product of (A) the sum of the number
of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (B) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could
have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice
to the Company, may, at its sole option, void its Conversion Notice with respect to, and retain or have returned (as the case may
be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion
Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice
pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if the Company shall fail to credit the Holder’s
or its designee’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 by the Share Delivery Date, and if on or after such Share Delivery Date the Holder (or
any other Person in respect, or on behalf, of 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 all or any portion of the number of shares of Common Stock,
or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon
such conversion that the Holder so 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,
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 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 shall terminate, or (ii) promptly honor its obligation to so 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 and pay cash to the
Holder in an amount equal to the Buy-In Price. Nothing herein shall limit the 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.

 

(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 of the Notes and the principal amount of the Notes held by such holders (the “Registered
Notes”). 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 15. 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 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.

 

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(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 18.

 

(v)         Cash
Settlement. Notwithstanding anything contained herein to the contrary, to the extent that the number of shares of Common
Stock to be issued in connection with any conversion hereunder would exceed the Holder’s Exchange Cap Allocation and/or Authorized
Share Allocation or, for purposes of a forced conversion under Section 8(b), the Maximum Percentage, such conversion shall
be “cash settled” and the Company shall pay to such Holder an amount in cash equal to the sum of (x) the Conversion
Amount being converted and (y) the Conversion Premium (as defined below). The “Conversion Premium” means the
product of (v) the difference between (A) the VWAP of the Common Stock on the Conversion Date and (B) the Conversion Price in effect
on such Conversion Date and (w) the number of shares of Common Stock to which the Holder is entitled in connection with such Conversion,
no later than two (2) Trading Days after the date of the applicable Conversion Notice. Notwithstanding the foregoing, the Company’s
aggregate liability under this Section 3(c)(v) shall not exceed $8,800,000 (to be divided pro rata per Note) less any amortization
payments. For the avoidance of doubt, the foregoing does not limit the Holder’s other rights and remedies hereunder at law,
in equity or otherwise.

 

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(d)          Limitations
on Conversions.

 

(i)          Beneficial
Ownership. Notwithstanding anything to the contrary set forth in this Note, at no time may the Company issue to the Holder
shares of Common Stock if the number of shares of Common Stock to be issued pursuant to such issuance would exceed, when aggregated
with all other shares of Common Stock beneficially owned by the Holder at such time (as determined in accordance with Section 13(d)
of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules thereunder, including without limitation, shares
of Common Stock that would be aggregated with the Holder’s beneficial ownership for purpose of determining a group under
Section 13(d) of the 1934 Act), the number of shares of Common Stock that would result in the Holder beneficially owning (as determined
in accordance with Section 13(d) of the 1934 Act and the rules thereunder, including without limitation, shares of Common Stock
that would be aggregated with the Holder’s beneficial ownership for purpose of determining a group under Section 13(d) of
the 1934 Act) more than 4.9% (the “Maximum Percentage”) of the then issued and outstanding shares of Common
Stock. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.9% specified in such notice; provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to
the Holder and not to any other holder of the Notes. 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. 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 other securities issued pursuant to the Securities
Purchase Agreement.

 

(ii)         Principal
Market Regulation. Subject to Sections 2(e)(ii) and 3(c)(v), the Company shall not issue any shares of Common Stock pursuant
to the terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common
Stock which the Company may issue pursuant to the terms of this Note without breaching the Company’s obligations under the
rules or regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations,
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 Principal Market for issuances of shares 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 such written opinion is obtained, no Purchaser
(as defined in the Securities Purchase Agreement) shall be issued in the aggregate, pursuant to the terms of this Notes, shares
of Common Stock in an amount greater than the product of (i) the Exchange Cap multiplied by (ii) the quotient of (1) the
original principal amount of Notes issued to such Purchaser pursuant to the Securities Purchase Agreement on the Closing Date (as
defined in the Securities Purchase Agreement) divided by (2) the aggregate original principal amount of all Notes issued to
all the Purchasers pursuant to the Securities Purchase Agreement on the Closing Date (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, 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 Purchaser’s Notes, the difference (if any) between such Purchaser’s Exchange Cap Allocation
and the number of shares of Common Stock actually issued to such Purchaser upon such Purchaser’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 aggregate principal amount of the Notes then held by each such holder.

 

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4.          RIGHTS
UPON EVENT OF DEFAULT.

 

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

 

(i)          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;

 

(ii)         the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within
three (3) Trading Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including,
without limitation, by way of public announcement or through any of its agents (which the Company fails to renounce the actions
of its agent within three (3) Trading Days after becoming aware of such action), 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);

 

(iii)        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) or otherwise);

 

(iv)        the
Company’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 failure to pay any redemption payments or amounts hereunder and/or
the Company’s failure to deliver Advance Shares or True-Up Shares when and as due as provided in Section 2) 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;

 

(v)         the
occurrence of any default under, redemption of or acceleration prior to maturity of any Indebtedness (as defined in the Securities
Purchase Agreement but excluding any Indebtedness arising out of the Notes) of the Company or any of its Subsidiaries;

 

(vi)        bankruptcy,
insolvency, reorganization, receivership, conservatorship or liquidation proceedings or other proceedings for the relief of debtors
shall be instituted by or against the Company or any Significant Subsidiary, and, if instituted against the Company or any such
Subsidiary by a third party, shall not be dismissed within ninety (90) days of their initiation;

 

 

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(vii)       the
commencement by the Company or any Significant 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 Significant 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 Significant 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, the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action or the commencement by any Person of a UCC foreclosure sale of a material
portion of the Company’s or any Significant Subsidiary’s assets or any other similar action under federal, state or
foreign law;

 

(viii)      the
entry by a court of (i) 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 (ii) 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;

 

(ix)         a
final judgment or judgments (excluding judgments relating to any actions set forth on Schedule 2.1(k) of the Securities Purchase
Agreement that are not in excess of $2,000,000) for the payment of money aggregating in excess of $500,000 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;

 

(x)          (a)
the Company shall default on any of its obligations under any other debenture or any mortgage, 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 agreement in an amount exceeding $150,000 and such default shall result
in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

(xi)         any
breach of the Company’s covenants set forth in Sections 3.9 (if such breach is not cured within 2 days of the date of breach),
3.10 (if such breach is not cured within 12 days of such breach), 3.11 (if such breach is not cured within 12 days of such breach),
3.12 (if such breach is not cured within 12 days of such breach), 3.13 (if such breach is not cured within 12 days of such breach),
3.15 (or if the Company fails to obtain the stockholder approval contemplated by such Section 3.15), if either such breach is not
cured within 5 days of such breach, 3.16 , 3.17 (if such breach is not cured within 12 days of such breach) and/or 3.21 (if such
breach is not cured within 12 days of such breach) of the Securities Purchase Agreement;

 

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(xii)        other
than as specifically set forth in another clause of this Section 4(a), the Company breaches
any material representation, warranty, covenant or other term or condition of any Transaction Document (including this Note), except,
in the case of a breach of a material covenant or other term or condition that is curable, only if such breach remains uncured
for a period of five (5) days after notice by Holder;

 

(xiii)       any
material provision of any Security Document or any other Transaction Document 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 Company or any Subsidiary intended to
be a party thereto, only if such breach remains uncured for a period of five (5) days after notice by Holder, 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
such Security Document or other such Transaction Document;

 

(xiv)      any
Security Document, after delivery thereof pursuant to the Securities Purchase Agreement, shall, other than pursuant to the express
terms thereof, for any reason fail or cease to create a valid, perfected first priority Lien (as defined in the Security Documents)
in favor of the Collateral Agent (as defined in the Security Documents) for the benefit of the holders of the Notes on any Collateral
(as defined in the Security Documents) purported to be covered thereby;

 

(xv)       any
bank at which any deposit account, blocked account, or lockbox account of the Company or any Subsidiary is maintained shall fail
to comply with any material term of any deposit account, blocked account, lockbox account or similar agreement to which such bank
is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control
or possession of any investment property of the Company or any Subsidiary shall fail to comply with any of the terms of any investment
property control agreement to which such Person is a party (it being understood that only accounts pursuant to which the Collateral
Agent has requested account control agreements should be subject to this clause (xv));  

 

(xvi)      until
the date that any Lien therein is released in accordance with the terms of the Security Documents, any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured;

 

(xvii)     a
material false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity
Conditions are satisfied, the Dollar Volume Limitation has not been exceeded or as to whether any Event of Default has occurred;

 

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(xviii)    the
failure of any Registration Statement required to be filed pursuant to the Registration Rights Agreement to be declared effective
by the SEC on or prior to the date that is ninety (90) days after the applicable Effectiveness Deadline (as defined in the Registration
Rights Agreement), or, 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 is unavailable to any holder of the Notes for sale of all of such holder's
Registrable Securities (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive trading days or for more than an aggregate
of thirty (30) trading days in any 365-day period (other than days during an Allowable Grace Period (as defined in the Registration
Rights Agreement)); provided, however, that notwithstanding anything to the contrary contained herein, the Company's failure to
meet one or more of the requirements of this Section 4(a)(xviii) shall not constitute an Event of Default if all of the Registrable
Securities then held by the holder of the Notes may be sold without the requirement to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursuant to Rule 144 (including any volume limitations or public information requirements);

 

(xix)       any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes; or

 

(xx)        the
occurrence of a Launch Failure.

 

(b)          Remedies.
If an Event of Default occurs and is continuing with respect to any of the Notes, the Holder may declare all of the then outstanding
Principal of this Note and all other Notes held by the Holder, including any Interest and unpaid Late Charges, to be due and payable
immediately, except that in the case of an Event of Default arising from events described in clauses (vi), (vii) and/or (viii)
of Section 4(a), this Note shall become due and payable automatically without further action or notice. In the event of such acceleration,
the amount due and owing to the Holder shall be 110% of the outstanding Principal of the Notes held by the Holder (plus all accrued
and unpaid Interest and Late Charges, if any). The Holder’s remedies under this Note shall be cumulative.

 

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, having similar rights as set forth in Section
2 of the Notes and having similar ranking to the Notes, and satisfactory to the Holder and (ii) the Successor 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), 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), as adjusted in accordance with
the provisions 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 or other issuances of shares of Common Stock
hereunder.

 

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(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, e-mail 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 Principal amount
of this Note that 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 115% of the Principal amount being redeemed plus all accrued and unpaid
Interests and Late Charges (the “Fundamental Transaction Redemption Price”) and such Fundamental Transaction
Redemption Price shall be due and payable in cash not later then two (2) Trading Days after the consummation of such Fundamental
Transaction. Redemptions required by this Section 5 shall have priority to payments to stockholders in connection with such
Fundamental Transaction. 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 Principal amount of this
Note submitted for redemption under this Section 5(b) (together with any accrued and unpaid Interest and Late Charges thereon)
may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3.

 

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6.          RIGHTS
UPON 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. The provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions
of this Section 6(b) 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. So long as all or any portion of the Note remains outstanding, if and whenever
on or after the Issuance 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) for a consideration per share 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
Applicable Price shall be reduced to an amount equal to an amount obtained by dividing the Applicable Price by a fraction, the
numerator of which shall be the product of (i) the total number of shares of Common Stock outstanding immediately after such Dilutive
Issuance multiplied by (ii) the Applicable Price, and the denominator of which shall be an amount equal to the sum of (a) the number
of shares of Common Stock outstanding immediately prior to such Dilutive Issuance multiplied by the Applicable Price plus (b) the
aggregate consideration received by the Company (determined as provided below) for such Dilutive Issuance. Notwithstanding the
foregoing, no adjustments shall be made under this Section 7 with respect to any Exempt Issuance. “Exempt Issuance”
shall mean the issuance of (i) shares of Common Stock or securities convertible or exchangeable into Common Stock to officers,
directors, employees and consultants to the Company and (ii) up to fifteen (15) million shares of Common Stock or securities convertible
or exchangeable into fifteen (15) million shares of Common Stock as all or part of the consideration for the acquisition (whether
by merger or otherwise) by the Company for stock or assets of any other entity in a transaction approved by the Board of Directors
of the Company. For purposes of determining the adjusted Conversion Price under this Section 7(a), the following shall be
applicable:

 

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(i)          Exercise
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 exercise of such Option. 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 Options 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 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 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).

 

(ii)         Exercise
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 conversion, exercise or exchange 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 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 exercise 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).

 

(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 Issuance 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.

 

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(iv)        Calculation
of Consideration Received. If any Option or Convertible Security 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) 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 by the Company minus (II) the Black Scholes Consideration Value of each such Option or Convertible Security (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 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 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),
and so long as all or any portion of the Note remains outstanding, if the Company at any time on or after the Issuance 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, 6 or Section 7(a), if the Company at any time on or after the Issuance 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.

 

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(c)          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(c) 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.

 

(d)          No
Modification of Company’s Covenants. For the avoidance of doubt, nothing contained in this Section 7 shall be deemed
to modify or limit the Company’s covenants contained in the Securities Purchase Agreement.

 

8.          COMPANY’S
RIGHT OF OPTIONAL REDEMPTION AND FORCED CONVERSION.

 

(a)          Company’s
Right of Optional Redemption.

 

(i)          At
any time after the one (1) year anniversary of the Issuance Date, the Company shall have the right to redeem a portion or the entire
outstanding amount of this Note (including all Principal, Interest, Late Charges and any other amounts payable hereunder) (a “Company
Optional Redemption”) at a redemption price equal to 115% thereof (together, the “Company Redemption
Price”) subject to the provisions of this Section 8(a). The Company shall deliver written notice of a Company Optional
Redemption (a “Company Optional Redemption Notice”) to the Holder thirty (30) Trading Days prior to the date
set by the Company for such Company Optional Redemption (the “Company Redemption Date”). Once delivered, a Company
Optional Redemption Notice shall be irrevocable. The Company Redemption Price shall be due and payable by the Company in cash.
If the Company elects to cause a Company Optional Redemption pursuant to this Section 8(a), then it must simultaneously take the
same action with respect to the Other Notes and if such redemption is for a portion of this Note such redemption shall be pro rata
among the Holders.

 

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(ii)         At
any time after a Launch Failure, the Company shall have the right to redeem a portion or the entire outstanding amount of this
Note (including all Principal, Interest, Late Charges and any other amounts payable hereunder) (a “LF Company Optional
Redemption”) at a redemption price equal to 100% thereof (together, the “LF Company Redemption
Price”) subject to the provisions of this Section 8(a). The Company shall deliver written notice of an LF Company Optional
Redemption (a “LF Company Optional Redemption Notice”) to the Holder one (1) Trading Day prior to the date set
by the Company for such LF Company Optional Redemption (the “LF Company Redemption Date”). Once delivered,
an LF Company Optional Redemption Notice shall be irrevocable. The LF Company Redemption Price shall be due and payable by the
Company in cash. If the Company elects to cause an LF Company Optional Redemption pursuant to this Section 8(b), then it must simultaneously
take the same action with respect to the Other Notes and if such redemption is for a portion of this Note such redemption shall
be pro rata among the Holders.

 

(iii)        For
the avoidance of doubt, the Holder may convert all or any portion this Note at any time prior to the Company Redemption Date or
LF Company Redemption Date, as applicable, notwithstanding the Company’s delivery of a Company Optional Redemption Notice
or LF Company Optional Redemption Notice, as applicable. To the extent, that the Holder converts all or any portion of the Note
prior to the Company Redemption Date or LF Company Redemption Date, as applicable, the Holder shall not be entitled to receive
the Company Redemption Price or the LF Company Redemption Price, as applicable, for the Conversion Amount so converted.

 

(b)          Forced
Conversion.

 

(i)          If
the VWAP of the Common Stock equals or exceeds 150% of the Conversion Price then in effect on each of thirty (30) consecutive Trading
Days (the “Conversion Occurrence”), then the Company may state its intention to cause the conversion of one
hundred (100) percent of this Note at the Conversion Price in effect as of the Forced Conversion Date (as defined below) by providing
an irrevocable written notice (the “Conversion Occurrence Notice”) to the Holder; provided that such Conversion
Occurrence Notice shall be sent within one (1) Trading Day after a Conversion Occurrence and must be sent concurrently to the holders
of all Notes. The Conversion Occurrence Notice shall indicate that the Company seeks to cause conversion of one hundred (100) percent
of this Note and shall set forth the date for such conversion of the Note (the “Forced Conversion Date”), which
date shall be thirty (30) Trading Days after the date the Conversion Occurrence Notice is delivered (the “Conversion Notice
Period”). The Company’s right to force conversion of this Note pursuant to this Section 8(b)(i) is a one-time right
to force conversion.

 

(ii)         Notwithstanding
the foregoing, the Company may not effect a forced conversion of this Note pursuant to this Section 8(b) unless:

 

a.           the
Equity Conditions are satisfied, or waived by the Holder, during each day of the Conversion Notice Period;

 

b.           the
number of shares of Common Stock to be issued in connection with any such forced conversion would not cause the Holder to exceed
the Maximum Percentage, the Holder’s Exchange Cap Allocation and/or Authorized Share Allocation. However, at the option of
the Holder, conversion of the portion of this Note that may not be converted because such conversion would cause the Holder to
exceed the Maximum Percentage, the Holder’s Exchange Cap Allocation and/or Authorized Share Allocation shall be deferred
until such time as the conversion hereof shall not exceed such limits.

 

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c.           The
conversion shall occur on the Forced Conversion Date, and the Company shall deliver the required number of shares to the Holder
in accordance with Section 3(c)(i) mutatis mutandis. For the avoidance of doubt, if the Company fails to deliver the required
number of shares of Common Stock on the Forced Conversion Date in accordance with Section 3(c)(i) mutatis mutandis the Holder
shall have the remedies set forth in Section 3(c)(ii).

 

d.           Nothing
in this Note shall limit the Holder’s right to convert after the Conversion Occurrence Notice has been received but before
actual forced conversion. Without limiting the foregoing, the Holder may submit a Conversion Notice for the specific portion of
the Note subject to a forced conversion at any time prior to the Forced Conversion Date notwithstanding the delivery of a Conversion
Occurrence Notice.

 

9.          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 non-assessable 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).

 

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10.         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 225% 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 and other issuances
hereunder, including Section 2, 225% 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 issuance hereunder
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 Issuance Date or the date of the 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. Following a Launch
Failure, the Company may not issue any shares of Common Stock except pursuant to this Note and the Other Notes.

 

(b)          Insufficient
Authorized Shares. If, notwithstanding Section 10(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 or other issuances of shares of Common Stock hereunder, including
Section 2, 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.

 

11.         VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided
in this Note.

 

12.         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).

 

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13.         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.

 

14.         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.

 

15.         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 15(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 15(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 15(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 15(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.

 

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(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 15(a) or Section 15(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.

 

16.         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 Sections 2, 3 and 7).

 

17.         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
(as defined in the Securities Purchase Agreement) paid for this Note may have been less than the original Principal amount hereof.

 

18.         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.

 

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19.         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.

 

20.         DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, the Closing Bid Price, the Closing Sale
Price, the VWAP, the Stock Replacement Payment, the Dollar Volume Limitation, the Exchange Cap Allocation, the Authorized Share
Allocation, or fair market value (as the case may be) or the arithmetic calculation of the Conversion Rate (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. 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, the VWAP, the Stock Replacement
Payment, the Dollar Volume Limitation, the Exchange Cap Allocation, the Authorized Share Allocation, or fair market value (as the
case may be) to an independent, reputable U.S. investment bank selected by the Holder or (b) the disputed arithmetic calculation
of the Conversion Rate (as the case may be) to the Company’s independent, outside accountant. The Company shall cause at
its expense 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 or fraud.

 

21.         NOTICES;
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 7.4 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 all 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.

 

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(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 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 nineteen (19%) per annum from the date such amount was due until the same is paid in
full (“Late Charge”).

 

22.         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.

 

23.         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.

 

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24.         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 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.

 

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

 

(a)          “Black
Scholes Consideration Value” means the value of the applicable Option or Convertible Security (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 or Convertible Security (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 or Convertible Security (as the case may be) as of the date of issuance
of such Option or Convertible Security (as the case may be) and (iii) 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 or Convertible Security (as the case
may be).

 

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

 

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

 

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(d)          “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 Pink OTC Markets Inc.(formerly Pinks 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 20. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(e)          “Closing
Date” has the meaning given in the Securities Purchase Agreement.

 

(f)          “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.

 

(g)          “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.

 

(h)          “Current
Subsidiary” means any Person in which the Company on the Issuance Date, directly or indirectly, (i) owns 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.

 

(i)          “Dollar
Volume Limitation” means fifteen percent (15%) of the aggregate dollar trading volume of the Common Stock on the Principal
Market (or other applicable Eligible Market) over the thirty (30) consecutive Trading Day period ending on the Trading Day immediately
preceding the date of any Installment Notice. For the purposes of this definition the term “dollar trading volume”
for any Trading Day shall be determined by multiplying the VWAP by the volume as reported on Bloomberg for such Trading Day.

 

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

 

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(k)          “Equity
Conditions” means each of the following: (i) on each day during the Equity Conditions Measuring Period, each Registration
Statement required to be filed under the Registration Rights Agreement shall be effective and all shares of Common Stock to be
issued on the applicable Installment Date shall be eligible for resale by the Holder without restriction and without need for additional
registration under any applicable federal or state securities laws, and the Company shall have no knowledge of any fact that would
cause any shares of Common Stock not to be so eligible for resale by the Holder without restriction and without need for additional
registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period,
the shares of Common Stock are designated for listing on an Eligible Market and shall not have been suspended from trading on such
Eligible Market nor shall delisting or suspension by such Eligible Market have been threatened or pending in writing by such exchange
nor shall there be any SEC or judicial stop trade order or trading suspension stop order; (iii) any shares of Common Stock to be
issued in connection with the applicable Installment Date may be issued in full without violating the rules or regulations of the
Principal Market or any applicable laws; (v) on each day during the Equity Conditions Measuring Period, the Company has not provided
any Holder with any material, non-public information; (vi) on each day during the Equity Conditions Measuring Period, neither the
Registration Statement nor any prospectus included therein contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made,
not misleading and such Registration Statement and any prospectus included therein shall comply with all applicable securities
laws as to form and substance; (vii) the Transfer Agent is participating in DTC’s Fast Automated Securities Transfer Program;
(ix) all shares of Common Stock to be issued in connection with the applicable Installment Date are duly authorized and will be
validly issued, fully paid and non-assessable upon issuance, free and clear of all liens, claims or encumbrances, and the issuance
thereof will not require any further approvals of the Company’s Board of Directors or stockholders; (x) on each day during
the Equity Conditions Measuring Period, there shall not have occurred or be continuing, unless waiver by the Holder, either (A)
an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and
(xi) on each day during the Equity Conditions Measuring Period, unless waived by the Holder, the Closing Price of the Common Stock
is at least $1.00 per share (appropriately adjusted for any stock split, stock dividend, stock combination, stock buy-back or other
similar transaction). All references to “Registration Statement” shall include any prospectus included therein and
any amendments or supplements to such Registration Statement or any such prospectus, as filed from time to time, including without
limitation, any 1934 Act filings incorporated by reference therein.

 

(l)          “Equity
Conditions Measuring Period” means the period beginning twenty-one (21) Trading Days prior to the applicable Installment
Date (or such other date of determination) and ending on and including such Installment Date (or such other date of determination).
For the avoidance of doubt, the Equity Conditions Measuring Period for each Installment Date shall include the Advance Date, the
Stock Payment Pricing Period and such Installment Date.

 

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(m)          “Fundamental
Transaction” means that (i) (1) the Company or any of its Subsidiaries shall, directly or indirectly, in one or
more related transactions, 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) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more
related transactions, 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) the Company or any of its Subsidiaries shall, directly or indirectly, in
one or more related transactions, 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) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, 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, or (5) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock, or (ii) any Person or Persons
acting jointly or in concert is or shall become the beneficial owner, directly or indirectly, of 50% of the aggregate ordinary
voting power represented by issued and outstanding Voting Stock of the Company.

 

(n)          “Initial
Installment Date” means May 1, 2012.

 

(o)          “Installment
Amount” means (a) with respect to each Installment Date other than the Maturity Date, the amount set forth on Exhibit
A as the Installment Amount for such Installment date and (b) with respect to the Maturity Date, the amount set forth on Exhibit
A as the Installment Amount for the Maturity Date plus all other outstanding Principal, Interest, Late Charges and other amounts
due and payable under this Note.

 

(p)          “Installment
Date” means the Initial Installment Date and each date listed on Exhibit A as an Installment Date.

 

(q)          “Launch
Failure” shall mean the failure of the Company and/or one of its Subsidiaries (in partnership with Adeptra), within sixty
(60) days from the Closing Date, to enter into a contract with one of the ten largest international financial institutions to provide
SIM swapping fraud detection and prevention services to such financial institution in which the Company and/or one of its Subsidiaries
receives net compensation of at least $1,000,000.

 

(r)          “Maturity
Date” shall mean May 1, 2014.

 

(s)          “New
Subsidiary” means, as of any date of determination, any Person in which the Company after the Issuance 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.

 

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

 

(u)          “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.

 

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(v)         “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.

 

(w)          “Principal
Market” means the NYSE Amex or such other Eligible Market where the Common Stock is then listed.

 

(x)          “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Issuance Date, by and among the Company
and the initial holders of Notes, as may be amended from time to time

 

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

 

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

 

(aa)         “Significant
Subsidiaries” means, as of any date of determination, collectively, all Subsidiaries that would constitute a “significant
subsidiary” under Rule 1-02 of Regulation S-X promulgated by the SEC, and each of the foregoing, individually,
a “Significant Subsidiary.”

 

(bb)         “Stock
Payment Price” means, with respect to any Installment Date, ninety (90%) of the average of the five (5) lowest VWAPs
of the Common Stock during the Stock Payment Pricing Period.

 

(cc)         “Stock
Payment Pricing Period” means, with respect to any Installment Date, the twenty (20) Trading Days immediately prior to
such Installment Date. For the avoidance of doubt, the Stock Payment Pricing Period does not include the Installment Date.

 

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

 

(ee)         “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.

 

(ff)         “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.

 

    	30

    	 

    

 

 

(gg)         “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).

 

(hh)         “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 Pink OTC Markets Inc.(formerly Pinks 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 20. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

26.         MAXIMUM
PAYMENTS. Nothing contained in this Note shall, or 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 under this Note exceeds 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.

 

[signature page follows]

 

    	31

    	 

    

 

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

 

Elephant Talk Communications,
Corp.

 

	By:	 
	 	Name:
	 	Title:

 

    	32

    	 

    

 

EXHIBIT A

 

Installment
Dates

 

	Installment	 	Installment
	Date	 	Amount
	5/1/12	 	 
	6/1/12	 	 
	7/1/12	 	 
	8/1/12	 	 
	9/1/12	 	 
	10/1/12	 	 
	11/1/12	 	 
	12/1/12	 	 
	1/1/13	 	 
	2/1/13	 	 
	3/1/13	 	 
	4/1/13	 	 
	5/1/13	 	 
	6/1/13	 	 
	7/1/13	 	 
	8/1/13	 	 
	9/1/13	 	 
	10/1/13	 	 
	11/1/13	 	 
	12/1/13	 	 
	1/1/14	 	 
	2/1/14	 	 
	3/1/14	 	 
	4/1/14	 	 
	5/1/14	 	 

 

    	33

    	 

    

 

EXHIBIT B

 

ELEPHANT TALK COMMUNICATIONS, CORP.

CONVERSION NOTICE

 

Reference is made to
the Convertible Note (the “Note”) issued to the undersigned by Elephant Talk Communications, Corp. (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, [$0.0001 par value per share] (the “Common Stock”),
of the Company, as of the date specified below.

 

	Date of Conversion: 	

 

	Aggregate Conversion Amount to be converted:	 

 

	Conversion Price:	

 

	Number of shares of Common Stock to be issued:	 

 

	Facsimile Number:	 

 

	Dated:	 

 

	DWAC Instructions:	 

 

	Name of Holder:	 

  

	By:	 
	 	Print Name:
	 	Print Title:

 

    	34

    	 

    

 

EXHIBIT C

ACKNOWLEDGMENT

 

The Company hereby
acknowledges this Conversion Notice and hereby directs [TRANSFER AGENT] to issue the above indicated number of shares of
Common Stock.

 

Elephant Talk Communications,
Corp.

 

	By:	/s/ Steven van der Velden
	 	Name: Steven van der Velden
	 	Title: President and CEO

 

    	35SECURITY AGREEMENT

 

This SECURITY AGREEMENT
(this “Agreement”), dated as of March 30, 2012, is made by and among the Grantors listed on the signature pages
hereof (collectively, jointly and severally, the “Grantors” and each, individually, a “Grantor”),
and JGB Collateral LLC, a Delaware limited liability company, as collateral agent for the Secured Parties (as defined herein) (the
“Agent”).

 

WHEREAS, pursuant
to that certain Securities Purchase Agreement dated as of March 29, 2012 (as amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, the “Purchase Agreement”) by and between Elephant Talk Communications,
Corp., a Delaware corporation (the “Company”), the Agent and the Secured Parties, the Company has agreed to
sell, and the Secured Parties have agreed to purchase the Notes; and

 

WHEREAS, in
order to induce the Secured Parties and the Agent, on behalf of and at the direction of the Secured Parties, to enter into the
Purchase Agreement and for the Secured Parties to purchase the Notes as provided for in the Purchase Agreement, the Grantors have
agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance
and performance of the Secured Obligations.

 

NOW, THEREFORE,
in consideration of the foregoing premises and in reliance on the representations, warranties, covenants
and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

1.          Defined
Terms. All capitalized terms used herein (including in the preamble and recitals hereof) without definition shall have the
meanings ascribed thereto in the Purchase Agreement. Any terms used in this Agreement that are defined in the Code shall be construed
and defined as set forth in the Code unless otherwise defined herein or in the Purchase Agreement; provided, however,
that if the Code is used to define any term used herein and if such term is defined differently in different Articles of the Code,
the definition of such term contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the following meanings:

 

(a)          “Account”
means an Account (as that term is defined in the Code).

 

(b)          “Account
Debtor” means an Account debtor (as that term is defined in the Code).

 

(c)          “Agency
Letter” means that certain letter dated as of March 30, 2012 from the Agent to the Secured Parties establishing the agency
relationship between Agent and such Secured Parties.

 

(d)          “Bankruptcy
Code” means title 11 of the United States Code, as in effect from time to time.

 

    	 

    	 

    

 

(e)          “Books”
means books and records (including each Grantor’s Records indicating, summarizing, or evidencing such Grantor’s assets
(including the Collateral) or liabilities, each Grantor’s Records relating to such Grantor’s business operations or
financial condition, and each Grantor’s goods or General Intangibles related to such information).

 

(f)          “Business
Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are
authorized or required by law or executive order to remain closed.

 

(g)          “Chattel
Paper” means Chattel paper (as that term is defined in the Code) and includes tangible chattel paper and electronic chattel
paper.

 

(h)          “Code”
means the New York Uniform Commercial Code, as in effect from time to time; provided, however, that in the event
that, by reason of mandatory provisions of Law, any or all of the attachment, perfection, priority, or remedies with respect to
the Secured Party and the Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection,
priority, or remedies.

 

(i)          “Collateral”
has the meaning specified therefor in Section 2.

 

(j)          “Commercial
Tort Claims” means Commercial tort claims (as that term is defined in the Code), and includes those commercial tort claims
listed on Schedule 9 attached hereto.

 

(k)          “Control
Agreement” means a control agreement, in form and substance satisfactory to the Agent and the Grantors, executed and
delivered by a Grantor, the Agent and the applicable securities intermediary (with respect to a Securities Account) or bank (with
respect to a Deposit Account).

 

(l)          “Copyrights”
means copyrights and copyright registrations, and also includes (i) the copyright registrations and recordings thereof and all
applications in connection therewith listed on Schedule 3 attached hereto and made a part hereof, (ii) all reissues, continuations,
extensions or renewals thereof, (iii) all income, royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or
future infringements or dilutions thereof, (iv) the right to sue for past, present and future infringements and dilutions thereof,
(v) the goodwill of each Grantor’s business symbolized by the foregoing or connected therewith, and (vi) all of each Grantor’s
rights corresponding thereto throughout the world.

 

(m)          “Copyright
Security Agreement” means each Copyright Security Agreement among Grantors, or any of them, and the Agent in substantially
the form of Exhibit A attached hereto, pursuant to which Grantors have granted to the Agent on behalf of the Secured Parties
a security interest in all their respective Copyrights.

 

    	2

    	 

    

 

(n)          “Deposit
Account” means a Deposit account (as that term is defined in the Code).

 

(o)          “Equipment”
means Equipment (as that term is defined in the Code).

 

(p)          “Event
of Default” means any of the following events:

 

(i)         The
occurrence of an “Event of Default” (as defined in the Notes) under any of the Notes;

 

(ii)       Any
representation or warranty of any Grantor in this Agreement shall prove to have been incorrect in any material respect when made;

 

(iii)      The
failure by any Grantor to observe or perform any of its obligations hereunder for 5 Business Days after delivery to such Grantor
of notice of such failure by or on behalf of the Agent unless such default is capable of cure but cannot be cured within such time
frame and such Grantor is using best efforts to cure same in a timely fashion; or

 

(iv)      If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Grantor, or a proceeding shall be commenced by any Grantor, or by any Governmental Authority
having jurisdiction over any Grantor, seeking to establish the invalidity or unenforceability thereof, or any Grantor shall deny
that any Grantor has any liability or obligation purported to be created under this Agreement.

 

(q)          “General
Intangibles” means General intangibles (as that term is defined in the Code) and, in any event, includes payment intangibles,
contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill
(including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights, URLs and domain
names, industrial designs, other industrial or Intellectual Property or rights therein or applications therefor, whether under
license or otherwise, programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Intellectual
Property Licenses, infringement claims, computer programs, information contained on computer disks or tapes, software, literature,
reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims,
interests in a partnership or limited liability company which do not constitute a security under Article 8 of the Code, and any
other personal property other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment
Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction.

 

(q)          “Governmental
Authority” means any domestic or foreign federal, state, local, or other governmental or administrative body, instrumentality,
board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.

 

    	3

    	 

    

 

(r)          “Grantor”
and “Grantors” have the meanings specified therefor in the recitals to this Agreement.

 

(s)          “Guaranties”
means the Guaranty dated of even date herewith executed by Guarantors in favor of the Secured Parties, together with any other
guaranty or similar agreement now or hereafter executed by a Guarantor in favor of any Secured Party in connection with the Notes
or any of the other Transaction Document.

 

(t)          “Guarantor”
means each Grantor and each other Person that now or hereafter executes a Guaranty.

 

(u)          “Holders”
mean the holders of the Notes from time to time, their endorsees, transferees and assigns.

 

(v)         “Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under
any other state or federal bankruptcy or insolvency Law or any equivalent Laws in any other jurisdiction, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

 

(w)          “Intellectual
Property” means Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer
lists, and Intellectual Property Licenses.

 

(x)          “Intellectual
Property Licenses” means rights under or interests in any patent, trademark, copyright or other intellectual property,
including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor under any
such license agreement, including the license agreements listed on Schedule 4 attached hereto and made a part hereof.

 

(y)          “Inventory”
means Inventory (as that term is defined in the Code).

 

(z)          “Investment
Related Property” means (i) investment property (as that term is defined in the Code), and (ii) all of the following
(regardless of whether classified as investment property under the Code): all Pledged Interests, Pledged Operating Agreements,
and Pledged Partnership Agreements.

 

(aa)         “Lien”
means any security interest, pledge, hypothecation, mortgage, assignment, lien (statutory or other, and including environmental
and tax liens), deposit arrangement, violation, charge, lease, license, encumbrance, servient easement, adverse claim, reversion,
reverter, preference, priority, other security agreement or preferential arrangement of any kind or nature whatsoever (including
any conditional sale or other title retention agreement and any capital lease or any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing), restrictive covenant, condition or restriction of any kind, including
any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

    	4

    	 

    

 

(bb)         “Negotiable
Collateral” means letters of credit, letter-of-credit rights, instruments, promissory notes, drafts, and documents.

 

(cc)         “Note”
has the meaning specified therefor in the Purchase Agreement.

 

(dd)         “Patents”
means patents and patent applications, and also includes (i) the patents and patent applications listed on Schedule 5 attached
hereto and made a part hereof, (ii) all renewals thereof, (iii) all income, royalties, damages and payments now and hereafter due
or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages
and payments for past or future infringements or dilutions thereof, (iv) the right to sue for past, present and future infringements
and dilutions thereof, and (v) all of each Grantor’s rights corresponding thereto throughout the world.

 

(ee)         “Patent
Security Agreement” means each Patent Security Agreement among the Grantors and the Agent in substantially the form of
Exhibit B attached hereto, pursuant to which the Grantors have granted to the Agent on behalf of the Secured Parties a security
interest in all their respective Patents.

 

(ff)         “Permitted
Liens” means (i) liens imposed by law for taxes, assessments or charges or levies of any governmental authority for claims
not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP; (ii) liens of landlords and liens of carriers, warehousemen,
suppliers, mechanics, materialmen and other liens in existence on the date hereof or thereafter imposed by law and created in the
ordinary course of business; (iii) liens incurred or deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases, contracts, statutory obligations and other similar obligations,
(iv) easements (including, without limitations, reciprocal easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and zoning and other restrictions, charges or encumbrances (whether or not recorded)
and interest of ground lessors, which do not interfere materially with the ordinary conduct of the business of the Company; (v)
letters of credit or deposits in the ordinary course to secure leases, (vi) liens permitted in the Purchase Agreement and the Note,
and (vii) liens consisting of customary transfer restrictions in joint venture agreements, stockholder agreements or other similar
agreements, in each case, except to the extent any of the foregoing would reasonably be expected to result in or results in a Material
Adverse Effect.

 

(gg)         “Permitted
Protest” means the right of any Grantor to protest any Lien (other than any Lien that secures the Secured Obligations),
taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided
that (a) a reserve with respect to such obligation is established on such Grantor’s books and records in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by such Grantor in good faith, and (c)
while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of the Agent’s
Liens.

 

    	5

    	 

    

 

(hh)         “Person”
means any individual, corporation, partnership, trust, limited liability company, governmental entity, regulatory or self-regulatory
authority, association or other entity.

 

(ii)         “Pledged
Companies” means, each Person listed on Schedule 8 hereto as a “Pledged Company”, together with each
other Person all or a portion of whose Stock is acquired or otherwise owned by a Grantor after the date hereof.

 

(jj)         “Pledged
Interests” means all of each Grantor’s right, title and interest in and to all of the Stock now or hereafter owned
by such Grantor, regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds
thereof and all rights relating thereto, also including any certificates representing the Stock, the right to receive any certificates
representing any of the Stock, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in
respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any
or all of the foregoing.

 

(kk)         “Pledged
Operating Agreements” means all of each Grantor’s rights, powers, and remedies under the limited liability company
operating agreements of each of the Pledged Companies that are limited liability companies.

 

(ll)         “Pledged
Partnership Agreements” means all of each Grantor’s rights, powers, and remedies under the partnership agreements
of each of the Pledged Companies that are partnerships.

 

(mm)         “Proceeds”
has the meaning specified therefor in Section 2.

 

(nn)         “Purchase
Agreement” has the meaning specified therefor in the recitals to this Agreement.

 

(oo)         “Real
Property” means any estates or interests in real property now owned or hereafter acquired by any Grantor and the improvements
thereto.

 

(pp)         “Records”
means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable
in perceivable form.

 

(qq)         “Secured
Obligations” mean all of the present and future payment and performance obligations of Grantors arising under the Transaction
Documents, including, without duplication, reasonable attorneys’ fees and expenses and any interest, fees, or expenses that
accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim
in any Insolvency Proceeding.

 

(rr)         “Secured
Parties” means the Holders of the Notes.

 

(ss)         “Securities
Account” means a Securities account (as that term is defined in the Code).

 

    	6

    	 

    

 

(tt)         “Security
Documents” means, collectively, this Agreement, each Copyright Security Agreement, each Patent Security Agreement, each
Trademark Security Agreement, each Control Agreement, and each other security agreement, pledge agreement, assignment, mortgage,
security deed, deed of trust, and other agreement or document executed and delivered by a Grantor as security for any of the Secured
Obligations.

 

(uu)         “Security
Interest” and “Security Interests” have the meanings specified therefor in Section 2.

 

(vv)         “Stock”
means all shares, options, warrants, interests (including membership and partnership interests), participations, or other equivalents
(regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any
other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the United States Securities and Exchange Commission and any successor thereto under the Securities Exchange Act of 1934, as in
effect from time to time).

 

(ww)         “Supporting
Obligations” means Supporting obligations (as such term is defined in the Code).

 

(xx)        “Trademarks”
means trademarks, trade names, trademark applications, service marks, service mark applications, and also includes (i) the trade
names, trademarks, trademark applications, service marks, and service mark applications listed on Schedule 6 attached hereto
and made a part hereof, and (ii) all renewals thereof, (iii) all income, royalties, damages and payments now and hereafter due
or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages
and payments for past or future infringements or dilutions thereof, (iv) the right to sue for past, present and future infringements
and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the foregoing or connected therewith, and
(vi) all of each Grantor’s rights corresponding thereto throughout the world.

 

(yy)         “Trademark
Security Agreement” means each Trademark Security Agreement among the Grantors and the Agent in substantially the form
of Exhibit C attached hereto, pursuant to which Grantors have granted to the Agent on behalf of the Secured Parties a security
interest in all their respective Trademarks.

 

(zz)         “URL”
means “uniform resource locator,” an internet web address.

 

2.          Grant
of Security. Each Grantor hereby unconditionally grants, assigns, and pledges to the Agent, for the benefit of the Secured
Parties, a separate, continuing first priority security interest (each, a “Security Interest” and, collectively,
the “Security Interests”) in all assets of such Grantor whether now owned or hereafter acquired or arising and
wherever located, including such Grantor’s right, title, and interest in and to the following, whether now owned or hereafter
acquired or arising and wherever located (collectively, the “Collateral”):

 

(a)          all
of such Grantor’s Accounts;

 

(b)          all
of such Grantor’s Books;

 

    	7

    	 

    

 

(c)          all
of such Grantor’s Chattel Paper;

 

(d)          all
of such Grantor’s Deposit Accounts;

 

(e)          all
of such Grantor’s Equipment and fixtures;

 

(f)          all
of such Grantor’s General Intangibles;

 

(g)          all
of such Grantor’s Inventory;

 

(h)          all
of such Grantor’s Investment Related Property;

 

(i)          all
of such Grantor’s Negotiable Collateral;

 

(j)          all
of such Grantor’s rights in respect of Supporting Obligations;

 

(k)          all
of such Grantor’s Commercial Tort Claims;

 

(l)          all
of such Grantor’s money, cash, cash equivalents, or other assets of each such Grantor that now or hereafter come into the
possession, custody, or control of the Agent or any Secured Party;

 

(m)          all
of the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or Commercial
Tort Claims covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, money, or
other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any
of the foregoing, the proceeds of any award in condemnation with respect to any of the foregoing, any rebates or refunds, whether
for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof,
and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not
otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect to any
of the foregoing (the “Proceeds”). Without limiting the generality of the foregoing, the term “Proceeds”
includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable to
any Grantor or the Agent from time to time with respect to any of the Investment Related Property.

 

3.          Security
for Obligations. This Agreement and the Security Interests created hereby secure the payment and performance of the Secured
Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures
the payment of all amounts that constitute part of the Secured Obligations and would be owed by Grantors, or any of them, to the
Secured Parties, or any of them, or the Agent but for the fact that they are unenforceable or not allowable due to the existence
of an Insolvency Proceeding involving any Grantor.

 

    	8

    	 

    

 

4.          Grantors
Remain Liable. Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts
and agreements included in the Collateral, including the Pledged Operating Agreements and the Pledged Partnership Agreements, to
perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise
by the Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts
and agreements included in the Collateral, and (c) the Secured Parties or the Agent shall not have any obligation or liability
under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Secured Parties or the
Agent be obligated to perform any of the obligations or duties of any Grantors thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided
in this Agreement or any other Transaction Document, the Grantors shall have the right to possession and enjoyment of the Collateral
for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and the
other Transaction Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that record
and beneficial ownership of the Pledged Interests, including all voting, consensual, and dividend rights, shall remain in the applicable
Grantor until the occurrence of an Event of Default and until the Agent shall notify the applicable Grantor of the Agent’s
exercise of voting, consensual, or dividend rights with respect to the Pledged Interests pursuant to Section 16 hereof.

 

5.        Agent’s
Duties.

 

(a)     Other
than as specified in this Agreement and any amendment hereto, the Agent shall not be required to take or refrain from taking any
actions, to exercise or refrain from exercising any rights, or to make or refrain from making any requests unless it shall first
receive proper written instructions from Secured Parties (or their respective successors or assigns) holding at representing at
least two-thirds of the aggregate principal amount of the Notes then outstanding.

 

(b)     The
Agent shall hold all Collateral received by it, and shall make disposition thereof, only in accordance with this Agreement or any
amendment thereto.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Interests, whether or not the Agent
or any of the Secured Parties has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any Collateral.

 

(c)     The
Agent shall not be under any duty or obligation to inspect, review or examine any document, instrument, certificate, agreement
or other papers to determine that they are enforceable or that they are other than what they purport to be on their face.  The
Agent shall hold any Collateral delivered to the Agent as the agent of and for the benefit of each Secured Party, without preference
as to any Secured Party.

 

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(d)     The
duties and obligations of the Agent shall be determined solely by the express provisions of this Agreement and the Purchase Agreement,
or any amendments or any instructions permitted hereby.  The Agent shall have no obligation with respect to any other
matters covered in any other document other than as expressly provided herein, or any amendment hereto.  The Agent shall
not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement or as set
forth in a written amendment to this Agreement executed by the parties hereto or their successors or assigns.  No representations,
warranties, covenants or obligations of the Agent or any Secured Party shall be implied with respect to this Agreement or the Agent’s
services hereunder.  Without limiting the generality of the foregoing, the Agent:

 

(i)      shall
use the same degree of care and skill as a reasonable person would use in similar circumstances (without limiting the generality
of the foregoing, the Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal to that which the Agent accords its own property
of like tenor);

 

(ii)      shall
not be obligated to take any legal action hereunder that might in its reasonable judgment involve any risk of expense or liability
unless it has been furnished with indemnity or security satisfactory to it from the Secured Parties;

 

(iii)      may
conclusively rely on and shall be protected in acting in good faith upon any certificate, instrument, opinion, notice, letter,
or other document, or any security, delivered to it and in good faith believed by it to be genuine and to have been signed by the
proper party or parties;

 

(iv)      may
conclusively rely on and shall be protected in acting in good faith upon the written instructions of Secured Parties holding at
least two-thirds of the aggregate principal amount of the Notes then outstanding;

 

(v)      may
consult its own independent counsel satisfactory to it and the opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered, or omitted by it hereunder in good faith and in furtherance of its duties
hereunder, in accordance with the opinion of such counsel;

 

(vi)      may
execute any of the powers hereunder or perform any duties hereunder either directly or through agents or attorneys and shall not
be liable for the acts or omissions of any such agent or attorney appointed with due care hereunder; and

 

(vii)      will
be regarded as making no representation and having no responsibilities (except as expressly set forth herein) as to the validity,
sufficiency, value, genuineness, ownership or transferability of any portion of the Collateral, and will not be required to and
will not make any representations as to the validity, value or genuineness of any portion of the Collateral.

 

    	10

    	 

    

 

(e)      Neither
the Agent nor any of its partners, agents or employees, shall be liable for any error in judgment, for any mistake of fact or for
any action taken or omitted to be taken by it or them hereunder or in connection herewith in good faith and believed by it or them
to be within the purview of this Agreement, except for fraud, gross negligence or willful misconduct.  In no event shall
the Agent or its partners, officers, agents and employees be held liable for any special, indirect, punitive or consequential damages
resulting from any action taken or omitted to be taken by it or them hereunder in connection herewith even if advised of the possibility
of such damages.

 

(f)      Whenever,
in the administration of this Agreement, the Agent reasonably shall deem it necessary that a matter be proved or established prior
to taking, suffering or omitting any action under this Agreement, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a certificate of the Secured Parties, and such
certificate shall be full warranty to the Agent for any action taken, suffered or omitted under the provisions of this Agreement,
upon the faith thereof.

 

6.          Representations
and Warranties. Each Grantor hereby represents and warrants as follows:

 

(a)          The
exact legal name of each of the Grantors is set forth on the signature pages of this Agreement.

 

(b)          Schedule
1 attached hereto sets forth all Real Property owned or leased by the Grantors as of the date hereof.

 

(c)          Schedule
2 attached hereto sets forth all Deposit Accounts owned by the Grantors as of the date hereof.

 

(d)          As
of the date hereof and except in the ordinary course of business, no Grantor has any interest in, or title to, any material Copyrights,
Intellectual Property Licenses, Patents, or Trademarks except as set forth on Schedules 3, 4, 5 and 6,
respectively, attached hereto. This Agreement is effective to create a valid and continuing Lien on such Copyrights, Intellectual
Property Licenses, Patents and Trademarks and, upon filing of the Copyright Security Agreement with the United States Copyright
Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the United State Patent and Trademark
Office, and the filing of appropriate financing statements (the “UCC Statements”) in the jurisdictions listed
on Schedule 7 hereto, all action necessary or desirable to protect and perfect the Security Interests in and to each Grantor’s
Patents, Trademarks, or Copyrights has been taken and such perfected Security Interests are enforceable as such as against any
and all creditors of and purchasers from any Grantor. No Grantor has any interest in any Copyright that is necessary in connection
with the operation of such Grantor’s business, except for those Copyrights identified on Schedule 3 attached hereto
which have been registered with the United States Copyright Office.

 

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(e)          This
Agreement creates a valid security interest in the Collateral of each of Grantors, to the extent a security interest therein can
be created under the Code, securing the payment of the Secured Obligations. Except to the extent a security interest in the Collateral
cannot be perfected by the filing of a financing statement under the Code, all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly taken or will have been taken upon the filing of the UCC Statements
listing each applicable Grantor, as a debtor, and the Agent, as secured party, in the jurisdictions listed next to such Grantor’s
name on Schedule 7 attached hereto. Upon the making of such filings, the Agent, on behalf of the Secured Parties, shall
have a first priority perfected security interest in the Collateral of each Grantor to the extent such security interest can be
perfected by the filing of a financing statement. All action by any Grantor necessary to protect and perfect such security interest
on each item of Collateral has been duly taken.

 

(f)          (i)
Except for the Security Interests created hereby, such Grantor is and will at all times be the sole holder of record and the legal
and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule
8 as being owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the date hereof;
(ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and nonassessable and the Pledged Interests constitute
or will constitute the percentage of the issued and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule
8 hereto; (iii) such Grantor has the right and requisite authority to pledge the Investment Related Property pledged by such
Grantor to the Agent as provided herein; (iv) all actions necessary or desirable to perfect, establish the first priority of, or
otherwise protect, the Agent’s Liens in the Investment Related Collateral, and the proceeds thereof, have been duly taken,
(A) upon the execution and delivery of this Agreement; (B) upon the taking of possession by the Agent of any certificates constituting
the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed
in blank by the applicable Grantor; (C) upon the filing of UCC Statements in the applicable jurisdiction set forth on Schedule
7 attached hereto for such Grantor with respect to the Pledged Interests of such Grantor that are not represented by certificates,
and (D) with respect to any Securities Accounts, upon the delivery of Control Agreements with respect thereto; and (v) each Grantor
has delivered to and deposited with the Agent (or, with respect to any Pledged Interests created or obtained after the date hereof,
will deliver and deposit in accordance with Sections 7(a) and 9 hereof) all certificates representing the Pledged
Interests owned by such Grantor to the extent such Pledged Interests are represented by certificates, and undated powers endorsed
in blank with respect to such certificates. None of the Pledged Interests owned or held by such Grantor has been issued or transferred
in violation of any securities registration, securities disclosure, or similar Laws of any jurisdiction to which such issuance
or transfer may be subject.

 

(g)          No
consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority
or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by the Agent
of the voting or other rights provided in this Agreement with respect to Investment Related Property or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related
Property by Laws affecting the offering and sale of securities generally.

 

7.          Covenants.
Each Grantor, jointly and severally, covenants and agrees with the Agent (for the benefit of the Secured Parties) that from and
after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 20 hereof
(but only to the extent the particular assets described in this Section 7 constitute Collateral hereunder):

 

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(a)          Possession
of Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral,
Investment Related Property, or Chattel Paper, and if and to the extent that perfection or priority of the Secured Party and Agent’s
Security Interests is dependent on or enhanced by possession, the applicable Grantor shall execute such other documents and instruments
as are necessary or, if applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property,
or Chattel Paper to the Agent, together with such undated powers endorsed in blank as shall be requested by the Agent.

 

(b)          Chattel
Paper.

 

(i)          Each
Grantor shall take all steps reasonably necessary to grant the Agent control of and a first priority security interest in all Chattel
Paper in accordance with the Code, the New York Electronic Signatures and Records Act and Section 201 of the federal Electronic
Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction; and

 

(ii)         If
any Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent
permitted hereby and by the Purchase Agreement), such Chattel Paper and instruments shall be promptly marked with the following
legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interests of JGB Collateral
LLC for the benefit of the Secured Parties named in that certain Security Agreement dated March 30, 2012.”

 

(c)          Control
Agreements.

 

(i)          Each
Grantor shall obtain an authenticated Control Agreement from each bank maintaining a Deposit Account for such Grantor; and

 

(ii)         Each
Grantor shall obtain authenticated Control Agreements from each issuer of uncertificated securities, securities intermediary, or
commodities intermediary issuing or holding any financial assets or commodities to or for any Grantor.

 

(d)          Letter-of-Credit
Rights. Each Grantor that is or becomes the beneficiary of a letter of credit shall promptly (and in any event within 2 Business
Days after becoming a beneficiary), notify the Agent thereof in writing, and enter into a multi-party agreement with the Agent
and the issuing or confirming bank with respect to letter-of-credit rights assigning such letter-of-credit rights to the Agent
and directing all payments thereunder to the Agent, all in form and substance satisfactory to the Agent.

 

(e)          Commercial
Tort Claims. Each Grantor shall promptly (and in any event within 2 Business Days of receipt thereof), notify the Secured Parties
and the Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof and promptly amend
Schedule 9 to this Agreement to describe such after-acquired Commercial Tort Claim in a manner that reasonably identifies
such Commercial Tort Claim, and hereby authorizes the filing of additional financing statements or amendments to existing financing
statements describing such Commercial Tort Claims, and agrees to do such other acts or things deemed necessary or desirable to
give the Agent and Secured Party a first priority, perfected security interest in any such Commercial Tort Claim.

 

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(f)          Government
Contracts. If any Account or Chattel Paper arises out of a contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, the Grantors shall promptly (and in any event within 2 Business Days of the creation thereof)
notify the Agent thereof in writing and execute any instruments or take any steps necessary in order that all moneys due or to
become due under such contract or contracts shall be assigned to the Agent (for the benefit of the Secured Parties), and shall
provide written notice thereof under the Assignment of Claims Act or other applicable Law.

 

(g)          Intellectual
Property.

 

(i)          In
order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office or any other
applicable Governmental Authority, each Grantor shall execute and deliver to the Agent one or more Copyright Security Agreements,
Trademark Security Agreements, or Patent Security Agreements to further evidence the Agent’s Liens on such Grantor’s
Patents, Trademarks, or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;

 

(ii)         Each
Grantor shall have the duty, to the extent necessary or economically desirable in the operation of such Grantor’s business,
(A) to promptly sue for infringement, misappropriation, or dilution and to recover any and all damages for such infringement, misappropriation,
or dilution, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending
as of the date hereof or hereafter until the termination of this Agreement, (C) to prosecute diligently any patent application
that is part of the Patents pending as of the date hereof or hereafter until the termination of this Agreement, and (D) to take
all reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents, Copyrights, Intellectual
Property Licenses, and its rights therein, including the filing of applications for renewal, affidavits of use, affidavits of noncontestability
and opposition and interference and cancellation proceedings. Each Grantor shall promptly file an application with the United States
Copyright Office for any Copyright that has not been registered with the United States Copyright Office if such Copyright is necessary
in connection with the operation of such Grantor’s business. Any expenses incurred in connection with the foregoing shall
be borne by the appropriate Grantor. Each Grantor further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual
Property License that is necessary or economically desirable in the operation of such Grantor’s business;

 

(iii)        The
Grantors acknowledge and agree that the Agent shall have no duties with respect to the Trademarks, Patents, Copyrights, or Intellectual
Property Licenses. Without limiting the generality of this Section 7(g), the Grantors acknowledge and agree that the Agent
and each Secured Party shall not be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents,
Copyrights, or Intellectual Property Licenses against any other Person, but the Agent may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable
fees and expenses of attorneys and other professionals) shall be for the sole account of the Grantors and shall be deemed to be
Secured Obligations; and

 

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(iv)        In
no event shall any Grantor, either itself or through any agent, employee, licensee, or designee, file an application for the registration
of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency without giving the Agent prior written notice thereof. Promptly upon any such filing, each Grantor
shall comply with Section 7(g)(i) hereof.

 

(h)          Investment
Related Property.

 

(i)          If
any Grantor shall receive or become entitled to receive any Pledged Interests after the date hereof, it shall promptly (and in
any event within 2 Business Days of receipt thereof) identify such Pledged Interests in a written notice to the Agent;

 

(ii)         All
sums of money and property paid or distributed in respect of the Investment Related Property that are received by any Grantor shall
be held by such Grantor in trust for the benefit of the Agent segregated from such Grantor’s other property, and such Grantor
shall deliver it forthwith to the Agent in the exact form received;

 

(iii)        Each
Grantor shall promptly deliver to the Agent a copy of each notice or other communication received by it in respect of any Pledged
Interests;

 

(iv)        No
Grantor shall make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, Pledged Operating
Agreement, or Pledged Partnership Agreement, or enter into any agreement or permit to exist any restriction with respect to any
Pledged Interests other than pursuant to the Purchase Agreement;

 

(v)         Each
Grantor agrees that it will obtain all necessary approvals and make all necessary filings under federal, state, local, or foreign
Law in connection with the Security Interests on the Investment Related Property or any sale or transfer thereof; and

 

(vi)        As
to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement,
each Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) are not
and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment
company securities, and (C) are not and will not be held by such Grantor in a securities account. In addition, none of the
Pledged Operating Agreements, the Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests
issued under any Pledged Operating Agreement or Pledged Partnership Agreement provides or shall provide that such Pledged Interests
are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.

 

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(i)          Transfers
and Other Liens. Grantors shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral, except as expressly permitted by this Agreement and the other Transaction Documents,
or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral of any of Grantors, except for Permitted
Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute consent by the Agent to any sale or other
disposition of any of the Collateral except as expressly permitted in this Agreement or the Purchase Agreement.

 

(j)          Other
Actions as to Any and All Collateral. Each Grantor shall promptly (and in any event within 2 Business Days of acquiring or
obtaining such Collateral) notify the Agent in writing upon (i) acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment Related Property, Chattel Paper
(electronic, tangible or otherwise), Documents (as defined in Article 9 of the Code), Promissory notes (as defined in the Code),
or Instruments (as defined in the Code) or (ii) any amount payable under or in connection with any of the Collateral being or becoming
evidenced after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in each such case, promptly
execute such other documents, or if applicable, deliver such Chattel Paper, other documents or certificates evidencing any Investment
Related Property and do such other acts or things necessary or desirable to protect the Agent and Secured Parties’ Security
Interests therein.

 

(k)          Future
Subsidiaries. If any person becomes a Subsidiary of the Company after the date hereof, the Company shall cause such Person,
within 2 days after it becomes a Subsidiary, (i) to execute and deliver a joinder to this Agreement and the other Security Documents
in which such new Subsidiary agrees to be bound by the terms hereof and thereof as if it where an original Grantor party hereto
and thereto, such joinder agreements to be in form and substance reasonably satisfactory to the Agent, and (ii) to take any other
necessary action so that such new Subsidiary is bound by the provisions hereof in the same manner and to the same extent as each
other Grantor.

 

8.          Relation
to Other Transaction Documents. The provisions of this Agreement shall be read and construed with the Transaction Documents
referred to below in the manner so indicated.

 

(a)          Purchase
Agreement and Notes. In the event of any conflict between any provision in this Agreement and a provision in the Purchase Agreement,
the Notes or the Warrant, such provision of the Purchase Agreement, the Notes or the Warrant shall control.

 

(b)          Patent,
Trademark, Copyright Security Agreements. The provisions of the Copyright Security Agreements, Trademark Security Agreements,
and Patent Security Agreements are supplemental to the provisions of this Agreement, and nothing contained in the Copyright Security
Agreements, Trademark Security Agreements or the Patent Security Agreements shall limit any of the rights or remedies of the Agent
hereunder.

 

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9.          Further
Assurances.

 

(a)          Each
Grantor agrees that from time to time, at its own expense, such Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary and that the Agent may reasonably request, in order to perfect
and protect the Security Interests granted or purported to be granted hereby or to enable the Agent and the Secured Parties to
exercise and enforce their rights and remedies hereunder with respect to any of the Collateral.

 

(b)          Each
Grantor authorizes the filing by the Agent of financing or continuation statements, or amendments thereto, and such Grantor will
execute and deliver to the Agent such other instruments or notices, as may be necessary and as the Agent may reasonably request,
in order to perfect and preserve the Security Interests granted or purported to be granted hereby.

 

(c)          Each
Grantor authorizes the Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements
and amendments (i) describing the Collateral as “all personal property of debtor” or “all assets of debtor”
or words of similar effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that
contain any information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance. Each Grantor
also hereby ratifies any and all financing statements or amendments previously filed by the Agent in any jurisdiction.

 

(d)          Each
Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect
to any financing statement filed in connection with this Agreement without first notifying the Agent of such filing and then having
received the prior written consent of the Agent, subject to such Grantor's rights under Section 9-509(d)(2) of the Code.

 

10.         Agent’s
Right to Perform Contracts, Exercise Rights, etc. Upon the occurrence and during the continuance of an Event of Default, the
Agent (a) may, but shall not be required to, proceed to perform any and all of the obligations of any Grantor contained in any
contract, lease, or other agreement and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right, but not the obligation, to use any Grantor’s rights under Intellectual Property Licenses
in connection with the enforcement of the Secured Party and the Agent’s rights hereunder, including the right to prepare
for sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor and now or hereafter covered by such
licenses, and (c) shall have the right, but not the obligation, to request that any Stock that is pledged hereunder be registered
in the name of the Agent or any of its nominees.

 

11.         Agent
Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Agent its attorney-in-fact at the time of the execution
of this Agreement. The Agent shall have full authority in the place and stead of such Grantor and in the name of such Grantor or
otherwise, at such time as an Event of Default has occurred and is continuing, to take any action and to execute any instrument
that the Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including:

 

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(a)          to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due
under or in connection with any Collateral of such Grantor;

 

(b)          to
receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of
mail to such Grantor to that of the Agent;

 

(c)          to
receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper;

 

(d)          to
file any claims or take any action or institute any proceedings which the Agent may deem necessary or desirable for the collection
of any of the Collateral of such Grantor or otherwise to enforce the rights of the Agent and the Secured Parties with respect to
any of the Collateral;

 

(e)          to
repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to
such Grantor in respect of any Account of such Grantor;

 

(f)          to
use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, advertising matter or other
industrial or intellectual property rights, in advertising for sale and selling Inventory and other Collateral and to collect any
amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and

 

(g)          The
Agent shall have the right, but shall not be obligated, to bring suit in its own name but for the benefit of the Secured Parties
to enforce the Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if the Agent shall commence any such suit,
the appropriate Grantor shall, at the request of the Agent, do any and all lawful acts and execute any and all proper documents
reasonably required by the Agent in aid of such enforcement.

 

To the extent permitted
by Law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.

 

12.         Agent
May Perform. If any of Grantors fails to perform any agreement contained herein, the Agent may itself, but shall not be required
to, perform, or cause performance of, such agreement, and the reasonable expenses of the Agent incurred in connection therewith
(including attorneys’ fees and expenses) shall be payable, jointly and severally, by Grantors.

 

13.         Agent’s
Duties; Bailee for Perfection. The powers conferred on the Agent hereunder are solely to protect the Agent’s interests
in the Collateral and shall not impose any duty upon the Agent in favor of any Grantor to exercise any such powers. Except for
the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, the
Agent shall not have any duty to any Grantor as to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in actual possession if such Collateral is accorded treatment substantially
equal to that which the Agent accords its own property. The Grantors hereby agree that if the Agent is in possession of any Collateral
at such time as the Secured Obligations owing to the Agent and the Secured Parties have been paid in full, the Agent may re-deliver
such Collateral to the applicable Grantor without recourse to or representation or warranty by the Agent.

 

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14.         Collection
of Accounts, General Intangibles and Negotiable Collateral. At any time upon the occurrence and during the continuation of
an Event of Default, the Agent may, but shall not be required to, (a) notify Account Debtors of any Grantor that the Accounts,
General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to the Agent or that the Agent has a security interest
therein, and (b) collect the Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and expenses
shall constitute part of such Grantor's Secured Obligations under the Purchase Agreement.

 

15.         Disposition
of Pledged Interests by the Agent. The Pledged Interests may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of the Pledged Interests other than pursuant to an effective registration statement or an
exemption from the Securities Act, each Grantor understands that in connection with such disposition, the Agent may approach only
a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price
for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal, state and other securities
Laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if the Agent shall, pursuant to the terms of this Agreement,
sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, the Agent shall have the right to conclusively
rely upon and shall be fully protected in relying upon the advice and opinion of any nationally recognized brokerage or investment
firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial
reasonableness of such action) as to the best manner in which to offer the Pledged Interest or any portion thereof for sale and
as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that
the Agent has handled the disposition in a commercially reasonable manner.

 

16.         Voting
Rights.

 

(a)          Upon
the occurrence and during the continuation of an Event of Default, (i) the Agent may, at its option, and with 2 Business Days prior
notice to any Grantor, and in addition to all rights and remedies available to the Agent under any other agreement, at law, in
equity, or otherwise, exercise all voting rights and all other ownership or consensual rights in respect of the Pledged Interests
owned by such Grantor, but under no circumstances is the Agent obligated by the terms of this Agreement to exercise such rights,
and (ii) if the Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints the Agent, such
Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner that the Agent
deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members,
as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

 

    	19

    	 

    

 

(b)          For
so long as any Grantor shall have the right to vote the Pledged Interests owned by it, such Grantor covenants and agrees that it
will not, without the prior written consent of the Agent, vote or take any consensual action with respect to such Pledged Interests
that would materially adversely affect the rights of the Agent or the value of the Pledged Interests.

 

17.         Remedies.
Upon the occurrence and during the continuance of an Event of Default:

 

(a)          The
Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Transaction
Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the Code or any other
applicable Law. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event, the Agent,
without any demand, advertisement, or notice of any kind (except a notice specified below of time and place of public or private
sale) to or upon any of Grantors or any other Person (all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code or by any other applicable Law), may take immediate possession of all or any
portion of the Collateral and (i) require Grantors to, and each Grantor hereby agrees that it will at its own expense and upon
request of the Agent, assemble all or part of the Collateral as directed by the Agent and make it available to the Secured Parties
at one or more locations where such Grantor regularly maintains Inventory, and (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent’s offices or elsewhere,
for cash, on credit, and upon such other terms as the Agent may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by Law, at least 10 days’ notice to any of Grantors of the time and place of any
public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such
notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9-611
of the Code. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so adjourned.

 

(b)          The
Agent is hereby granted a license or other right to use, without liability for royalties or any other charge, each Grantor’s
labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks and advertising matter,
URLs, domain names, industrial designs, other industrial or intellectual property or any property of a similar nature, whether
owned by any of Grantors or with respect to which any of Grantors have rights under license, sublicense, or other agreements (but
only to the extent (i) such license, sublicense or agreement does not prohibit such use by the Agent and (ii) such Grantor will
not be in default under such license, sublicense, or other agreement as a result of such use by the Agent), as it pertains to the
Collateral, in preparing for sale, advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses
and all franchise agreements shall inure to the benefit of the Agent.

 

(c)          Any
cash held by the Agent as Collateral and all proceeds received by the Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in Section
17 hereof. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, each
Grantor shall remain jointly and severally liable for any such deficiency.

 

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(d)          Each
Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of
Default shall occur and be continuing the Agent shall have the right to an immediate writ of possession without notice of a hearing.
The Agent shall have the right to the appointment of a receiver for the properties and assets of each of Grantors, and each Grantor
hereby consents to such rights and such appointment and hereby waives any objection such Grantors may have thereto or the right
to have a bond or other security posted by the Agent.

 

18.         Application
of Proceeds of Collateral. All proceeds of Collateral received by the Agent shall be applied as follows:

 

(a)          first,
ratably to pay any expenses due to the Agent and Secured Parties (including the reasonable costs and expenses of Agent’s
counsel and those paid or incurred by the Agent and Secured Parties to correct any default under or enforce any provision of the
Transaction Documents, or after the occurrence of any Default or Event of Default in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective
of whether a sale is consummated) or indemnities then due to the Agent or the Secured Parties under the Transaction Documents,
until paid in full;

 

(b)          second,
ratably to pay any fees or premiums then due to the Secured Parties under the Transaction Documents, until paid in full;

 

(c)          third,
ratably to pay interest due in respect of the Secured Obligations then due to the Secured Parties, until paid in full;

 

(d)          fourth,
ratably to pay the principal amount of all Secured Obligations then due to the Secured Parties, until paid in full;

 

(e)          fifth,
ratably to pay any other Secured Obligations then due to the Secured Parties; and

 

(f)          sixth,
to Grantors or such other Person entitled thereto under applicable Law.

 

19.         Marshaling.
The Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral)
for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising.
To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any Law relating to the marshaling of collateral
which might cause delay in or impede the enforcement of the Agent or any Secured Party’s rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations
is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent
that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such Laws.

 

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20.         Indemnity
and Expenses.

 

(a)          Each
Grantor agrees to indemnify the Agent and each Secured Party from and against all claims, lawsuits, losses, damages and liabilities
(including reasonable attorneys’ fees and expenses) growing out of or resulting from this Agreement (including enforcement
of this Agreement), except claims, losses or liabilities resulting from the fraud, gross negligence or willful misconduct of the
party seeking indemnification as determined by a final non-appealable order of a court of competent jurisdiction. This provision
shall survive the termination of this Agreement and the Transaction Documents and the repayment of the Secured Obligations.

 

(b)          The
Grantors, jointly and severally, shall, upon demand, pay to the Agent all of the costs and expenses (including those of its agents
and counsel) that the Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral
in accordance with this Agreement and the Transaction Documents, (iii) the exercise or enforcement of any of the rights of the
Agent hereunder or (iv) the failure by any Grantor to perform or observe any of the provisions hereof. This provision shall survive
the termination of this Agreement and the Transaction Documents and the repayment of the Secured Obligations.

 

21.         Addresses
for Notices. All notices and other communications provided for hereunder (a) shall be given in the form and manner set forth
in the Purchase Agreement and (b) shall be delivered, (i) in the case of notice to any Grantor, by delivery of such notice to the
Company at the Company’s address specified in the Purchase Agreement or at such other address as shall be designated by the
Company in a written notice to the Agent, and (ii) in the case of notice to the Agent, by delivery of such notice to the Secured
Parties, or the Agent, as applicable at its address specified in the Purchase Agreement or at such other address as shall be designated
by the Agent in a written notice to the Company.

 

22.         Separate,
Continuing Security Interests. This Agreement shall create a separate, continuing security interest in the Collateral in favor
of the Agent (for the benefit of the Secured Parties) and shall (a) remain in full force and effect until the Secured Obligations
have been paid in full in cash or by conversion to equity, in either case, in accordance with the provisions of the Transaction
Documents, (b) be binding upon each of Grantors, and their respective successors and assigns, and (c) inure to the benefit of,
and be enforceable by, the Secured Parties and the Agent and its successors, transferees and assigns. Upon payment in full in cash
of the Secured Obligations or by conversion to equity, in either case, in accordance with the provisions of the Transaction Documents,
the Security Interests granted hereby shall terminate and all rights to the Collateral shall revert to Grantors or any other Person
entitled thereto. At such time, the Agent will authorize the filing of appropriate termination statements to terminate such Security
Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Purchase Agreement, any other
Transaction Document, or any other instrument or document executed and delivered by any Grantor to the Agent nor any additional
loans made by the Secured Parties to any Grantor, nor the taking of further security, nor the retaking or re-delivery of the Collateral
to Grantors, or any of them, by any Secured Party or the Agent, nor any other act of any Secured Party or the Agent shall release
any of Grantors from any obligation, except a release or discharge executed in writing by the Secured Parties and the Agent.

 

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23.         Agent.
Each reference herein to any right granted to, benefit conferred upon or power exercisable by the “Agent” shall be
a reference to the Agent, for the benefit of the Secured Parties. The Agent may resign or be removed as the Agent in accordance
with, and subject to, Agency Letter. Any successor Agent (or any Secured Party, as the case may be) shall succeed to all the rights,
powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent (or the Secured Party,
as the case may be) and the retiring Agent’s appointment, powers, and duties as the Agent shall be terminated. After any
retiring Agent’s resignation hereunder as the Agent, the provisions of Agency Letter shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was the Agent under this Agreement.

 

24.         Governing
Law; Jurisdiction; Jury Trial. This Agreement and any controversy arising out of or relating to this Agreement shall be governed
by and construed in accordance with the internal Laws of the State of New York, without regard to conflict of law principles that
would result in the application of any Law other than the Laws of the State of New York. This Agreement shall not be interpreted
or construed with any presumption against the party causing this Agreement to be drafted. Each party 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. Each Grantor irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in the Purchase
Agreement 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 manner permitted by Law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

25.         Counterparts;
Facsimile. This Agreement may be executed and delivered by facsimile signature or by an e-mail that contains a portable document
format (.pdf) file of an executed signature page in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages
by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as to the parties hereto and
may be used in lieu of the original Agreement for all purposes.

 

26.         Headings.
The section headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting
this Agreement.

 

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27.         Amendments
and Waivers. No waiver of any provision of this Agreement, and no consent to any departure by any of Grantors herefrom, shall
in any event be effective unless the same shall be in writing and signed by the Agent (acting upon written instructions from the
Holders holding at least 66 2/3% of the outstanding principal amount of the Notes), and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by the Agent (acting upon written instructions from the Holders holding
at least 66 2/3% of the outstanding principal amount of the Notes) and each of Grantors to which such amendment applies.

 

28.         Severability.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.

 

29.         Delays
or Omissions. No delay or omission to exercise any right, power or remedy accruing to a Secured Party or the Agent under this
Agreement upon any breach or default of any Grantor shall impair any such right, power or remedy of the Secured Party or the Agent
nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.

 

30.         Remedies.
The Agent shall have all rights and remedies set forth in this Agreement and in the Transaction Documents and all rights and remedies
that the Agent has been granted at any time under any other agreement or contract and all of the rights that the Agent has under
applicable Law. All remedies shall be cumulative and not alternative. Each Grantor acknowledges that in the event that it fails
to perform, observe or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Agent. Each Grantor therefore agrees that the Agent shall be entitled to seek specific performance and/or temporary,
preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without
the necessity of proving actual damages and without posting a bond or other security.

 

31.         Entire
Agreement. This Agreement and the Transaction Documents, including the exhibits attached hereto and thereto, do and will constitute
the full and entire understanding and agreement between the parties hereto with respect to the subject matter hereof and thereof.

 

32.         Construction.
The terms “including,” “includes,” “include” and words of like import shall be construed broadly
as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof”
and words of like import refer to this entire Agreement instead of just the provision in which they are found. The language used
in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

 

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33.         U.S.A.
Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Agent, like
all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify,
and record information that identifies each person or legal entity that establishes a relationship or opens an account with the
Agent. The parties to this Agreement agree that they will provide the Agent with such information as it may request in order for
the Agent to satisfy the requirements of the U.S.A. Patriot Act.

 

34.         Force
Majeure. In no event shall the Agent be responsible or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes,
work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of
God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being
understood that the Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to
resume performance as soon as practicable under the circumstances.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered as of the date first written above.

 

	GRANTORS:	Elephant Talk Communications Corp., a Delaware
	 	corporation
	 	 
	 	By:	/s/Steven van der Velden
	 	 	 
	 	Name:	Steven van der Velden
	 	 	 
	 	Title:	President and Chief Executive Officer
	 	 
	 	Elephant Talk Europe Holding B.V.
	 	 
	 	By:	/s/ Alex Vermeulen
	 	 
	 	Elephant Talk Communication Holding AG
	 	 
	 	By:	/s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communications S.L.U.
	 	 
	 	By:	/s/ Mark Nije
	 	 
	 	Elephant Talk Mobile Services B.V.
	 	 
	 	By:	/s/ Mark Nije
	 	 
	 	Elephant Talk Communication Austria GmbH
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Telekom GmbH
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communications S.R.L.
	 	 
	 	By:	/s/ Mark Nije

 

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	 	ET-Stream GmbH
	 	 
	 	By:	/s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communication Carrier Services GmbH
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communication Europe GmbH
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communication Schweiz GmbH
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communications France S.A.S.
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communications Premium Rate Services Netherlands B.V.
	 	 
	 	By:	 /s/ Alex Vermeulen 
	 	 
	 	Elephant Talk Communications PRS U.K. Ltd.
	 	 
	 	By:	/s/ Mark Nije
	 	 
	 	Elephant Talk Communications Luxembourg SA
	 	 
	 	By:	 /s/ Alex Vermeulen 

 

    	27

    	 

    

 

	 	Elephant Talk Business Services W.L.L. 
	 	 	 
	 	By:	/s/ Mark Nije
	 	 
	 	Guangzhou Elephant Talk Information Technology Ltd
	 	 
	 	By:	/s/ Alex Vermeulen 
	 	 
	 	ET-UTS N.V.
	 	 
	 	By:	Martin Zuurbier
	 	 
	 	Elephant Talk Limited
	 	 
	 	By:	/s/ Steven van der Velden
	 	 
	 	Elephant Talk Middle East & Africa (Holding) W.L.L.
	 	 
	 	By:	/S/ Steven van der Velden
	 	 
	 	Elephant Talk Middle East & Africa (Holding) Jordan L.L.C.
	 	 
	 	By:	Martin Zuurbier
	 	 
	 	Elephant Talk Middle East & Africa Bahrain W.L.L.
	 	 
	 	By:	Martin Zuurbier
	 	 
	 	Elephant Talk Middle East & Africa FZ-LLC
	 	 
	 	By:	/S/ Steven van der Velden
	 	 
	 	Validsoft Ltd.
	 	 
	 	By:	/S/ Steven van der Velden

 

    	28

    	 

    

 

	 	Validsoft (UK) Ltd 
	 	 	 
	 	By:	/S/ Patrick Carrol
	 	 
	 	Validsoft (Australia) Pty Limited
	 	 
	 	By:	/S/ Patrick Carrol

 

    	29

    	 

    

 

	AGENT:	JGB Collateral LLC, not in its individual capacity but solely as Agent
	 	By: JGB Management, Inc., its sole member
	 	 
	 	By:	/s/ JGB Management, Inc.
	 	 	Name
	 	 	Title:

 

    	30

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