Document:

Exhibit

Exhibit 10.1

EXECUTIVE TRANSITION AGREEMENT

This EXECUTIVE TRANSITION AGREEMENT (hereinafter “Agreement”) is entered into by and between Trinity Industries, Inc., a Delaware corporation, on behalf of itself, its subsidiaries, and other corporate affiliates, and successors or assigns (collectively, “Company”), and James E. Perry (hereinafter “Perry”), effective January 1, 2019 (the “Effective Date”). Company and Perry may be referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, the Company is primarily engaged in the railcar manufacturing and railcar leasing business (the “Business”);

WHEREAS, on or before January 1, 2019, in compliance with the Company’s Transition Compensation Plan (“TCP”), Perry notified Company of his intent to transition out of his position as an officer of Company (the “Notice”);

WHEREAS, the TCP provides for payment of transition compensation benefits to officers of Company in amounts reflected and maintained on the books and records of the Company;

WHEREAS, Perry is a participant and beneficiary under the TCP;   

WHEREAS, Perry has certain knowledge and skills pertaining to the financial, operational, commercial, legal, and administrative affairs of the Company as well as the Company’s (collectively referred to herein as “Business Knowledge”) and Company desires to capitalize on Perry’s Business Knowledge during the term of this Agreement; 

WHEREAS, for the purpose of transferring and transitioning Perry’s Business Knowledge solely and exclusively to others at Company and/or its affiliated entities, Perry and the Company have determined that it is in their mutual best interest to phase out Perry’s employment pursuant to the transition periods set out herein; and

WHEREAS, the Parties now desire to settle fully and finally, in the manner set forth herein, all bona fide and other disputes, controversies, and differences between them, both as to liability and the amount of damages, if any, which have arisen, or which may arise prior to, or on, the Effective Date of this Agreement, including, but in no way limited to, any and all claims and controversies arising out of the employment relationship, including any employment transition period, between Perry and Company, 

NOW, THEREFORE, in consideration of the Recitals and the mutual promises, covenants, and agreements set forth in this Agreement, the Parties promise and agree as follows:

AGREEMENT

1.Employment Transition Periods. In consideration of Perry entering into this Agreement, Company agrees to maintain Perry as an employee of Company in accordance with the following Employment Transition Periods:  

(a)    “Phase One” of the Employment Transition Periods will commence on January 1, 2019, and end on June 30, 2019.  During Phase One, Perry will continue to receive his monthly base pay in effect as of the payroll period immediately preceding the Effective Date, as determined by the Company, payable semi-monthly, and 2018 short term incentive payable in March 2019, less 

applicable deductions and withholdings in accordance with Company’s usual payroll and short term incentive payment practices and procedures, plus accrual and crediting of applicable amounts and interest under the TCP.  During Phase One, Perry will:

(1) help transition his current role, responsibilities, and Business Knowledge in accordance with the TCP to his successor, reporting to the Company’s Chairman, Chief Executive Officer and President, Timothy R. Wallace (the “CEO”), or the CEO’s designee, and reporting to work as necessary for such purpose at the Company’s offices in Dallas, Texas, provided that the Company will provide Perry with an office at such location; and 

(2) consult with the CEO, or the CEO’s designee regarding, without limitation and consistent with his job duties and responsibilities at the time of Perry’s Notice, the commercial, legal (including public company reporting), operational, financial, and administrative business and activities of the Company and/or one or more of its subsidiaries or affiliates. 

At the conclusion of Phase One, it will be deemed that Perry has fulfilled and satisfied the six (6) month notice condition described in Section 4(c) of the TCP.   

(b)    “Phase Two” of the Employment Transition Periods will commence July 1, 2019 and end May 31, 2020. During Phase Two, Perry will be reasonably available or accessible up to thirty (30) hours per calendar month and shall: 

(1)    receive a base salary of TEN THOUSAND AND NO/100 DOLLARS (US$10,000.00) per month, payable semi-monthly, less applicable deductions and withholdings in accordance with Company’s usual payroll practices and procedures, plus accrual and crediting of applicable amounts under the TCP as compensation for continued consultation with the CEO or the CEO’s designee regarding, without limitation and consistent with his job duties and responsibilities at the time of Perry’s Notice, the commercial, legal (including public company reporting), operational, financial, and administrative business and activities of the Company and/or one or more of its subsidiaries or affiliates, and 

(2)    receive, in addition to the base salary payable in Phase Two, THREE HUNDRED AND NO/100 DOLLARS (US$300.00) per hour in excess of the hours set out in Section 1(b) above, prorated, for services performed by Perry on advisory work or special projects assigned to him by the CEO or his designee, based upon Perry’s monthly invoices submitted to the Company on or before the 10th day of each month during Phase Two.  The Parties intend that Perry’s level of services in Phase Two will be more than twenty percent (20%) of the level of services provided by Perry to the Company over the thirty six (36) month period preceding the Effective Date, such that he will not have incurred a separation from service within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”) for purposes of the TCP and any other Company nonqualified deferred compensation plan in which he participates. During Phase Two, the Company will not be obligated to, but may, provide Perry with an office, and Perry will not be required to regularly report to work at the Company’s offices. 

(c)    During the entirety of the Employment Transition Periods, Perry will be eligible to participate in the Company’s medical, dental, and vision plans that Perry participated in immediately preceding notification of his intent to transition out of employment, provided, however, that during Phase II of the Employment Transition Periods any payment for continued coverage under the Trinity health plan shall be made on an after-tax basis and that any portion of the premiums for such coverage 

that is paid or subsidized by Company shall also be provided on an after-tax basis or subject to imputed income treatment to the extent required by applicable law.  Perry’s eligibility to participate in the Company’s life insurance, disability insurance, critical illness insurance, or flexible spending account will end at the end of Phase 1. 

During the Employment Transition Periods, Perry will (1) remain a participant in the TCP for purposes of salary and interest accrual and credit, (2) continue to vest in outstanding long-term incentive plans in accordance with the applicable plan documents and agreements, and (3) receive his 2018 annual bonus when such bonuses are customarily paid (circa March 2019); provided, however, that other than as expressed herein above as to 2018, Perry will not be eligible for the Company’s short-term incentive award and long-term incentive grant from and after the Effective Date. Perry acknowledges and agrees that employee benefits may be added, discontinued, amended, or modified during the Employment Transition Periods at the sole discretion of Company.   

In each of calendar years 2019 and 2020, Perry shall be entitled to receive one executive physical examination consistent with the Company’s practice of providing non-cost physical examinations to executive personnel.  Perry shall be responsible for scheduling such physical examination in each such year and submitting to the Company the documentation he has submitted consistent with prior years.   

(d)    Perry acknowledges and agrees that on May 31, 2020, Perry’s employment with Company will terminate unless earlier terminated by reason of Perry’s death or terminated by the Company for cause due to material breach of this Agreement by Perry after providing Perry thirty (30) days written notice describing the specific acts or omissions which constitute a material breach of this Agreement and an opportunity to cure or otherwise cease such conduct. Perry acknowledges and agrees to (1) repay the Company for any outstanding loans, travel advances, or salary advances, if any, made during the Transition Periods; (2) repay any and all personal balances on credit cards issued through Company, if any; and (3) pay an amount equal to the value of any property not returned pursuant to the Return of Property and Records paragraph below. Perry further authorizes Company to deduct monies from any payment to be made under this Agreement to cover such debts or property value if Perry fails to make such payments or repayments, or return such property prior to the time any and all required payments have been made under this Agreement. At the end of the Employment Transition Periods, Perry will have incurred a separation from service within the meaning of Section 409A for purposes of the TCP and any other Company nonqualified deferred compensation plan in which he participates.  

(e)    Any expenses incurred by Perry in performing his employment role hereunder shall be reimbursed by the Company subject to Perry’s submittal of expense reports in compliance with the Company’s expense reporting practices and procedures. Additionally, upon presentation by Perry to the Company’s Chief Legal Officer or his/her designee of invoices documenting fees incurred by Perry for legal services rendered on his behalf for review and advice on the terms and conditions set out herein, Company agrees to pay such invoices directly to Perry’s legal counsel up to a maximum aggregate payment of TEN THOUSAND AND NO/100 DOLLARS ($10,000.00). 

(f)    Upon Perry’s performance of all covenants, agreements, and obligations in the Agreement and his separation from service on May 31, 2020, Company agrees to make a lump sum payment to Perry in an amount equal to twelve (12) months of medical COBRA premiums (the “COBRA Continuation Payment”). Such amount shall be calculated based upon the effective COBRA rates for Perry’s medical coverage at the time of his separation from service and shall be paid within fifteen (15) days of Perry’s separation from service. The COBRA Continuation Payment will be subject to Federal Income Tax withholding, Medicare and Social Security tax withholdings 

(subject to the federal social security maximum), and any other deductions as may be required by law.  Further, Company shall permit Perry to extend his eligibility for continued coverage under Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for a period of six (6) additional months from June 1, 2021 through November 30, 2021. Perry acknowledges and agrees he must make a written COBRA election for medical continuation coverage and timely submit the required COBRA payments for continued coverage eligibility for such coverage(s) to become effective. 

(g)    From and after action by the Company’s Board of Directors to appoint a Chief Financial Officer to replace Perry in such role, Perry shall not hold himself out to be an authorized representative of the Company absent prior written authorization and approval of the CEO or his designee.

2.Supplemental Release Agreement. Company agrees to pay Perry TEN THOUSAND DOLLARS AND NO CENTS (US$10,000.00)  within ten (10) business days of the date Perry executes the Supplemental Release Agreement attached as Appendix A to this Agreement (“Supplemental Release Payment”), which execution shall occur on or within twenty one (21) days following the end of the Employment Transition Periods. Perry understands that his receipt of the Supplemental Release Payment is contingent upon his timely execution of the Supplemental Release Agreement no later than the date noted above. 

3.Restricted Stock Awards (“RSAs”) and Change in Control Agreement. 

(a)For purposes of this section 3, RSAs are deemed to include performance and time based (1) restricted stock awards, (2) restricted stock unit awards-time and performance based, (3) career share awards, and (4) career step share awards listed on Appendix B attached hereto. The Parties acknowledge and agree the RSAs awarded to Perry, reflected in Appendix B will be governed by the express language, terms, and conditions of the Plans and agreements under which the RSAs were awarded. The Parties agree nothing contained in this Agreement is intended to modify or supplement in any way whatsoever or otherwise change such Plans or agreements.  The Parties acknowledge and agree there is no intention by or obligation of the Company to award or grant any additional RSAs to Perry from and after the Effective Date.  

(b)The Parties agree that as of June 30, 2019, Perry’s Change in Control Agreement with the Company is terminated and is null, void, and of no further force or effect. 

4.Non-Disparagement. 

(a)    Subject to the qualifications in subsection (d) of the General Release section below and the qualifications in subsections (b) and (c) of the Confidentiality section below, Perry agrees that he will not, directly or indirectly, disclose, communicate, or publish any disparaging information concerning Company, its Board of Directors, officers, executives, management, employees, affiliates, its customers or clients, operations, technology, proprietary or technical information, terms of Perry’s employment with Company, any other circumstance that arose from Perry’s employment with Company or separation from employment, or any action or event that occurred during Perry’s employment with Company, or cause others to disclose, communicate, or publish any disparaging information concerning the same.

(b)    The Company agrees to instruct its senior executives and officers, and business unit leaders not to, directly or indirectly, disclose, communicate, or publish any disparaging information concerning Perry, the terms of Perry’s employment with Company, any other circumstance that arose 

from Perry’s employment with Company or separation from employment, or any action or event that occurred during Perry’s employment with Company, or cause others to disclose, communicate, or publish any disparaging information concerning the same.

5.Confidentiality.  

(a)     Subject to the qualifications set forth in subsections (b) and (c) of this section, Perry agrees that during his employment with Company he has occupied a position of trust and confidence and that as such, he has created and been provided copies of or access to Confidential Information which is the exclusive property of Company. Perry further acknowledges and agrees that by virtue of this Agreement he will continue to occupy a position of trust and confidence and that he will continue to create and have access to Confidential Information during the Employment Transition Period. Perry hereby agrees that he will not use, divulge, distribute, furnish, or make accessible such information to anyone outside of the Company or its subsidiaries or affiliates. 

For purposes of this Agreement, the term “Confidential Information” shall mean information of any nature and in any form which is not generally disclosed to or known by persons who are not employed by or associated with Company or any of its affiliates, that gives Company a competitive business advantage or which relates to any one or more of the aspects of the present or past business of Company or its predecessors, including, but not limited to, any spin-off, split, merger, divestiture, or similar transaction; customer specifications; pricing strategies; customer lists; vendor information; financial information; trade secrets; trade practices; or facts, strategies, or plans relating in any manner to the businesses of Company.  

In the event Perry is requested by subpoena, civil investigative demand, or similar process in any proceeding to disclose any Confidential Information, and subject to the qualifications in the fourth and final sections of the General Release of Claims below as well as subsections (b) and (c) of this Confidentiality paragraph, Perry will give Company prompt and timely written notice of such request so Company may seek an appropriate protective order or waive Perry’s compliance with one or more provisions of this Agreement.

(b)    The federal Defend Trade Secrets Act of 2016 (the “Act”) provides immunity from liability in certain circumstances to Company employees, contractors, and consultants for limited disclosures of Company “trade secrets,” as defined by the Act.  Specifically, Company employees, contractors, and consultants may disclose trade secrets (1) in confidence, either directly or indirectly, to a federal, state, or local government official, or to an attorney, “solely for the purpose of reporting or investigating a suspected violation of law,” or (2) “in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.”  Additionally, Company employees, contractors, and consultants who file lawsuits for retaliation by an employer for reporting a suspected violation of law may use and disclose related trade secrets in the following manner (i) the individual may disclose the trade secret to his attorney, and (ii) the individual may use the information in the court proceeding, as long as the individual files any document containing the trade secret under seal and does not otherwise disclose the trade secret “except pursuant to court order.”

(c)    Nothing in this Agreement prohibits Perry from reporting possible violations of federal, state, or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency, Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law, regulation, or other applicable law.  Perry does not need the prior authorization of Company to make any reports or disclosures, and he is not required to notify Company that he has made any such reports or disclosures.

6.General Release. 

(a)     In consideration of the payments and other benefits described above, together with other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Perry, together with Perry’s agents, representatives, attorneys, assigns, and designees, hereby knowingly, voluntarily, fully, finally, and completely WAIVES, RELEASES, AND FOREVER DISCHARGES Company, as well as its employees, attorneys, partners, agents, representatives, assigns, designees, insurers, plan administrators, parents, subsidiaries, affiliates, and other related persons or entities, including their predecessors, successors, and equity and asset purchasers, together with their respective officers, directors, members, managers, shareholders, partners (general and limited), agents, owners, legal representatives, servants, and employees, and the assigns, heirs, privies, predecessors, successors, and insurers of each such person or entity in their individual, corporate, or official capacities, (collectively, the “Released Parties”) from each and every grievance, administrative claim or proceeding, dispute, claim, demand, arbitration, controversy, action, or cause of action, of whatever kind, character, or nature, known or unknown, arising from, relating to, or connected with acts or omissions occurring at any time prior to and including the date Perry executes this Agreement.  This general release includes without limitation all claims that in any way arise from, relate to, or are in any way connected with Perry’s employment with and/or separation from Company, regardless of whether or not same (1) are presently known or unknown, (2) have been specifically referenced, claimed, asserted, or made by either of the Parties, or (3) are statutory, contractual, or common law in nature or basis.  Notwithstanding the foregoing, this general release does not apply to any obligation of the Company to Perry pursuant to any of the following: (i) subject to section 3 of this Agreement, any rights under applicable plans related to equity-based awards previously granted to Perry by the Company, (ii) any right to indemnification and/or defense that Perry may have or be entitled to receive as an officer of the Company; (iii) any right to applicable medical coverage or benefits, subject to Perry’s elections on file at Company, (iv) any rights arising under this Agreement or the TCP; (v) any rights arising after the Effective Date; or (vi) any rights to payments or benefits that Perry may be eligible to receive under any Company sponsored retirement plan.

(b)    Without limiting the generality or comprehensiveness of the above paragraph, Perry knowingly, voluntarily, fully, finally, and completely WAIVES, RELEASES, AND FOREVER DISCHARGES the Released Parties from all claims, actions, causes of action, or demands existing as of the Effective Date, including without limitation any and all claims for injunctive relief; attorneys’ fees; expenses; costs; actual, compensatory, exemplary, or punitive damages; physical injuries; personal injuries; emotional injuries; mental anguish; physical pain and suffering; wrongful discharge; any claims Perry may have under, without limitation, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967 (“ADEA”), Texas Commission on Human Rights Act, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, the Uniformed Services Employment and Reemployment Rights Act, or any other civil rights statutes; harassment and/or discrimination because of sex, race, color, national origin, religion, age, disability, sexual orientation, veteran’s status, the filing of a workers’ compensation claim, or other protected classification; retaliation; incapacity; failure to pay proper wage, minimum wage, and/or overtime wages; unpaid wages; loss of wages; loss of earning capacity; loss of job security; humiliation; physical impairment and/or disfigurement; loss of consortium; harm to reputation; libel, slander, or defamation; medical expenses; personal property damage, loss or diminution in value; negligence; gross negligence; strict liability; malice; invasion of privacy; intentional infliction of emotional distress; negligent infliction 

of emotional distress; loss or diminution of career advancement; loss of dignity; any and all claims arising under any other federal, state, or local statute, law, ordinance, rule, regulation, or order prohibiting employment discrimination or retaliation; any claim under tort, wrongful discharge, breach of contract, or breach of agreement; and any other theory, claim, or cause of action whatsoever, whether known or unknown.  

(c)    By signing this Agreement it is Perry’s intent to waive and release all claims and potential claims against the Released Parties, save and except those claims described in Section 6(a) above and any claim that cannot be released by law including for unemployment benefits or compensation for a workers’ compensation injury.  Perry agrees to release and discharge the Released Parties not only from any and all claims that Perry could make on his own behalf, but Perry also specifically waives any right to become, and promises not to become, a member of any class in any proceeding or case in which a claim or claims against the Released Parties may arise, in whole or in part, from any event that occurred prior to the date of this Agreement.  If Perry is not permitted to opt-out of a future class, then Perry agrees to waive any recovery for which he would be eligible as a member of such class.

(d)    Trinity, for and on behalf of itself and its subsidiary group, hereby knowingly, voluntarily, fully, finally, and completely SETTLES, RELEASES, AND FOREVER DISCHARGES Perry from each and every grievance, administrative claim or proceeding, dispute, claim, demand, arbitration, controversy, action, or cause of action, of whatever kind, character, or nature, known or unknown, arising from, relating to, or connected with Perry’s acts, errors or omissions occurring at any time prior to and including the date Perry executes this Agreement. This general release includes without limitation all claims that in any way arise from, relate to, or are in any way connected with Perry’s employment with and/or separation from Company, regardless of whether or not same (i) are presently known or unknown, (ii) have been specifically referenced, claimed, asserted, or made by either of the Parties, or (iii) are statutory, contractual, or common law in nature or basis.

(e)     Except as may be necessary to enforce this Agreement, or to seek a judicial determination of the validity of the waiver of ADEA or other claims, and to the fullest extent permitted by law, Perry agrees not to join or continue any lawsuit, arbitration, administrative charge or complaint, or other proceeding (collectively, “Proceedings”) against any of the Released Parties that is based in whole or in part on any claim or cause of action Perry has released in this Agreement.  Perry represents that he is not a party to any pending Proceedings, whether internal or external, related to such matters.  Notwithstanding the foregoing, nothing in this Agreement or the release contained herein is intended to limit or impair Perry’s right to file a charge with, or participate in an investigation or proceeding conducted by, the Equal Employment Opportunity Commission (“EEOC”), National Labor Relations Board (“NLRB”), Securities and Exchange Commission (“SEC”), or any other state, federal, or local administrative agency.  This Agreement does not prohibit or restrict Perry from initiating communications directly with, or responding to any inquiry from, or providing testimony before, any state or federal regulatory authority.  Perry is not required to notify Company if he has made such reports or disclosures, or to secure Company’s permission to do so.  This agreement does not limit Perry’s right to receive an award for information provided to any government agencies.

7.ADEA Release and Revocation Period.  

(a)    Pursuant to the Older Workers Benefit Protection Act (“OWBPA”), Perry hereby knowingly and voluntarily agrees to waive and release any right or claim under the ADEA against the Released Parties.  In this regard, Perry agrees and warrants that he has carefully read and fully understands the provisions of this Agreement, and that he is receiving consideration from Company 

over and above anything of value to which he is otherwise entitled. Perry is not waiving or releasing any right or claim that may arise under the ADEA after he signs this Agreement. Perry has the right to, and should, consult with an attorney before signing this Agreement. 

(b)    Perry has twenty-one (21) days from the date he received this Agreement to consider it and sign it.  If Perry chooses to sign this document, Perry has seven (7) days after signing the document to change his mind and revoke the Agreement (the “Revocation Period”).  If Perry chooses to revoke the Agreement, he must deliver a written notice of revocation to S. Theis Rice, Sr. Vice President and Chief Legal Officer, Trinity Industries, Inc., or his successor, at 2525 N. Stemmons Freeway, Dallas, Texas 75207.  Any such revocation must be actually received by Company within the Revocation Period or it will be null and void.  Company and Perry agree that this Agreement shall not become enforceable until the Revocation Period has expired with no revocation taking place.

8.No Pending or Assigned Claims.  Except for any actions necessary to enforce this Agreement and subject to the qualifications in subsection (d) of the General Release section and the qualifications in subsections (b) and (c) of the Confidentiality section herein, Perry hereby warrants and promises neither he nor any agent or legal representative of his has filed a lawsuit or claim against Company or the Released Parties in any federal, state or local forum as to any claim or dispute released under this Agreement. Perry agrees any breach or other violation by him of the provisions of this Agreement, other than a claim under the OWBPA, will result in the forfeiture of any payments under this Agreement and the obligation of Perry to repay any payments previously made hereunder. Perry understands that nothing in this Agreement is intended to interfere with or deter his right to challenge the waiver of an Age Discrimination in Employment Act (“ADEA”) claim or state law age discrimination claim or the filing of an ADEA charge or ADEA complaint or state law age discrimination complaint or charge with the Equal Employment Opportunity Commission or any state discrimination agency or commission or to participate in any investigation or proceeding conducted by those agencies. Further, Perry understands that nothing in this Agreement would require Perry to tender back the money received under this Agreement if Perry seeks to challenge the validity of the ADEA or state law age discrimination waiver, nor does Perry agree to ratify any ADEA or state law age discrimination waiver that fails to comply with the OWBPA by retaining the money received under the Agreement. Further, nothing in this Agreement is intended to require the payment of damages, attorneys’ fees or costs to Company should Perry challenge the waiver of an ADEA or state law age discrimination claim or file an ADEA or state law age discrimination suit except as authorized by federal or state law.

9.Non-Competition and Non-Solicitation. 
 
(a)    Acknowledgement. Perry understands that the nature of his position throughout the Employment Transition Period gives him access to and knowledge of Confidential Information and places him in a position of trust and confidence with Company. Perry understands and acknowledges that Perry’s Business Knowledge and the intellectual and/or strategic services Perry provides to Company are unique, special, or extraordinary and which are vitally important to Company in conducting commerce in the ordinary course of business and completing future transactions.  Perry further understands and acknowledges that Company’s ability to reserve these for the exclusive knowledge and use of Company is of great competitive importance and commercial value to Company, and that improper use or disclosure by Perry is likely to result in unfair or unlawful competitive activity and damage to the Company.

(b)    Non-Competition.    Perry acknowledges and agrees that he will not engage in Prohibited Activity (as defined below) during his employment with the Company or during the Transition Periods absent prior written authorization and approval of the CEO and the Company’s Board of Directors.  Furthermore, Perry agrees and acknowledges that the Company’s legitimate business interests described herein, including without limitation, protecting its Confidential Information and business goodwill, and the good and valuable consideration to be paid Perry under the provisions of this Agreement, including any and all RSA award distributions, the receipt and sufficiency of which are acknowledged, Perry agrees and covenants not to engage in any Prohibited Activity within North America absent prior written authorization and approval of the CEO and the Company’s Board of Directors through May 31, 2023. Perry stipulates that he is aware of and understands the import of his agreement to not engage in Prohibited Activity during such periods and stipulates that the duration of such restriction on engaging in Prohibited Activity is not arbitrary but is fair and reasonable under the circumstances of his access to Confidential Information and other proprietary data and information. Perry agrees and acknowledges that the goodwill and business interests of the Company would suffer loss, cost, expense, and other damages if Perry were to engage in any Prohibited Activity prior to May 31, 2023. For purposes of this non-competition section, “Prohibited Activity” shall mean an activity in which Perry contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, investor, operator, manager, advisor, consultant, contractor, agent, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity in or to an entity that is engaged in the Business and operates within the same regions as the Company.     

Nothing in this subsection shall prohibit Perry from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that Perry is not a controlling person of or a member of a group that controls such corporation.

This subsection does not, in any way, restrict or impede Perry from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. Perry shall promptly provide written notice of any such order to the Company’s Chief Legal Officer, Trinity Industries, Inc., 2525 N. Stemmons Freeway, Dallas, Texas 75207.

(c)    Non-Solicitation of Employees.  Through May 31, 2023, Perry agrees and covenants not to directly or indirectly solicit, recruit, or attempt to solicit or recruit, any person who is then employed by Company and was an employee of Company with whom Perry communicated and had a working relationship during his employment with the Company (collectively, “Covered Employee”), or induce the termination of employment of any Covered Employee.

(d)    Non-Solicitation of Customers. Perry agrees and acknowledges that during his employment with the Company he has gained substantial knowledge of and experience with Company customers and that he has had and will continue to have access to Customer Information, as defined below, and that such continuing access will include obtaining knowledge and experience with respect to Customer Information.  For purposes of this section, “Customer Information” shall be deemed to include, without limitation, names, phone numbers, addresses, email addresses, order history, order preferences, chain of command, marketing data and information, pricing information, information identifying facts and circumstances specific to the customer and customer’s commercial and business activities, and all data and information relevant to sales and/or services by and between customer and Company.

Perry understands and acknowledges that loss of or compromise to any such Customer Information and, in turn, the Company’s relationship and goodwill with such customer will cause significant and irreparable harm to Company.

Perry agrees and covenants that through May 31, 2023, he will not directly or indirectly solicit or contact, or attempt to solicit or contact a current, former, or prospective customer with whom Perry had material contact during the thirty six (36) month period preceding the Effective Date (collectively, “Covered Customer”) for purposes of offering or accepting goods or services that compete with those over which Perry had managerial or executive leadership responsibility during his employment with the Company. However, it will not be deemed a violation of this Agreement if Perry merely updates his LinkedIn profile, or connects with a Covered Customer on Facebook or LinkedIn, without engaging in any other substantive communication, by social media or otherwise, that is prohibited by this section. 

10.Legal Proceedings. 

(a)    During the term of this Agreement, Perry agrees, without the necessity of a subpoena, to make himself available, upon reasonable notice and at reasonable times, if deemed needed by Company, for any and all legal proceedings or threatened legal proceedings involving Company and agrees to cooperate fully with Company in any such legal proceeding or threatened proceeding for which Company may call him as a witness. Perry will also cooperate reasonably with Company by providing any truthful information requested by the Company and reasonably assisting in the preparation for any discovery or legal proceedings. Further, subject to subsection (d) of the General Release paragraph and the qualifications in subsections (b) and (c) of the Confidentiality section herein, Perry will immediately notify Company upon being contacted by any person or entity not specifically authorized by Company requesting information about internal Company operations or matters, and Perry will refrain from providing any information until after notification to and consultation with Company. Perry shall be reimbursed reasonable expenses incurred while serving as a witness for Company in any such proceedings. Perry agrees to provide Company with proper documentation for expenses prior to reimbursement.  Company agrees to reimburse Perry for any legal fees or costs he may reasonably incur in connection with him providing such cooperation or assistance as described above. 

(b)    Perry acknowledges that prior to the Effective Date he has received written notices pertaining to business records hold in certain litigation and that during the Employment Transition Period he may receive additional business records hold notices. Perry acknowledges and confirms that he is currently in compliance with all such notices and that any and all relevant and responsive business records under his care, custody, or control, whether located in his Dallas, Texas or elsewhere will remain on hold and not destroyed until otherwise notified in writing by the Company. During the Employment Transition Period Perry agrees to respond to any inquiry from time to time tendered to him from the Company’s Information Governance department pertaining to notices received prior to the Effective date and any notices he receives during the Employment Transition Period.

11.Return of Property and Records. Within five (5) days of an end to the Employment Transition Period, Perry agrees to return to Company any and all Company property, equipment, business records and proprietary information in his possession, agrees not to retain copies or summaries of such records and proprietary information, and further agrees not to disclose to others any confidential or other proprietary information concerning the business affairs of Company. Specifically, without limitation, Perry agrees to immediately return to Company all business records, including but not limited to files, forms, work 

papers, documents, memoranda, correspondence, records, diaries, e-mails, notes, notebooks, computer files, discs, CDs and printouts; all business property, including, but not limited to, Company issued credit cards, phone cards, security access card, electronic equipment, computer programs, estimates, logs, invoices and computer equipment.

12.No Admission of Liability. Perry does hereby acknowledge and promise that, although there is included in the foregoing the full, complete, and final settlement and satisfaction of all claims, demands, and charges of every nature growing out of those matters involved in each and every aspect of Perry’s employment relationship with Company, these facts shall in no manner be deemed an admission, finding, or indication - for any purpose whatsoever - that Company has, at any time (including the present) or in any respect, contrary to law or to the rights of any person, violated Perry’s rights.

13.Governing Law and Severability. Perry acknowledges and agrees the terms and conditions of this Agreement are contractual and not a mere recital. Perry further agrees and acknowledges that the validity and/or enforceability of this Agreement will be governed by the laws of the State of Texas, unless preempted by federal law, and that if any provision contained herein should be determined by any court of competent jurisdiction or administrative agency to be illegal, invalid, unenforceable, or otherwise contrary to public policy, the validity and enforceability of the remaining parts, terms, or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement.

14.Entire Agreement. Except for existing written agreements between Perry and Company, including but not limited to, the TCP, the Confidentiality Agreement, the RSAs, prior non-disclosure, non-solicitation, and non-competition agreements which are hereby incorporated by reference, and any other restrictive covenants in effect on or before the date hereof, this Agreement contains the entire understanding between the Parties hereto with respect to Perry’s employment, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, except as herein contained, which shall be deemed terminated effective immediately. The Parties agree that changes to this Agreement, whether material or immaterial, will not re-start the running of “the Consideration Period” as defined in this Agreement.
  
15.Compliance with Law. Perry acknowledges that the terms of this Agreement fully comply with applicable law including but not limited to the OWBPA, as amended, and implementing regulations, and that said terms therefore are final and binding. Specifically, Perry acknowledges that this Agreement specifically refers to his rights and claims under the federal and state statutes prohibiting age discrimination, and he understands that he is irrevocably waiving such rights and claims. Perry acknowledges that Perry compensation and benefits recited in this Agreement are good and valuable. 

16.Consideration of Medicare’s Interests.  Perry affirms, covenants, and warrants Perry is not a Medicare beneficiary and is not currently receiving, has not received in the past, will not have received at the time payments are made under this Agreement, is not entitled to, is not eligible for, and has not applied for or sought Social Security Disability or Medicare benefits.  In the event any statement in the preceding sentence is incorrect (for example, but not limited to, if Perry is a Medicare beneficiary, etc.), the following sentences of this section apply. Perry affirms, covenants, and warrants Perry has made no claim for illness or injury against, nor is Perry aware of any facts supporting any claim against, the Released Parties under which the Released Parties could be liable for medical expenses incurred by Perry before or after the execution of this Agreement.  Furthermore, Perry is aware of no medical expenses that Medicare has paid and for which the Released Parties are or could be liable now or in the future.  Perry agrees and affirms that, to the best of his knowledge, no liens of any governmental entities, including those for Medicare conditional payments, exist. Perry will indemnify, defend, and hold the Released Parties harmless from Medicare claims, liens, 

damages, conditional payments, and rights to payment, if any, including attorneys’ fees, and Perry further agrees to waive any and all future private causes of action for damages pursuant to 42 U.S.C. § 1395y(b)(3)(A) et seq.

17.Voluntary Consent. By signing this Agreement, Perry acknowledges (a) he has read this Agreement and fully understands its terms and their import; (b) any and all questions regarding the terms of this Agreement have been asked and answered to his complete satisfaction; (c) he has had at least 21 days to consider the terms and effects of this Agreement (the “Consideration Period”) and has either considered it for that period of time or has knowingly and voluntarily waived his right to do so; (d) he may revoke the Agreement up to 7 days after his signing of the Agreement, (e) revocation of the Agreement is effective by sending written notice to S. Theis Rice, Sr. Vice President and Chief Compliance Officer, Trinity Industries, Inc., 2525 N. Stemmons Freeway, Dallas, Texas 75207, so as to be received no later than seven (7) days following Perry’s signing of this Agreement (“Revocation Period”); (f) the receipt of the compensation described in this Agreement is expressly conditioned on his signing of this Agreement and the expiration of the mandatory Revocation Period without revocation by Perry; (g) Company advises Perry  to consult with an attorney of his own choosing regarding the terms of this Agreement; (h) Perry must sign this Agreement and return it to S. Theis Rice, Sr. Vice President and Chief Legal Officer, Trinity Industries, Inc., 2525 N. Stemmons Freeway, Dallas, Texas 75207 within three (3) days of the expiration of the Consideration Period, otherwise this offer will expire and this Agreement will be null, void and of no force or effect; (i) that this Agreement was not requested nor provided in connection with an exit incentive or other employment termination program offered to a group or class of employees; (j) the compensation provided for herein is good and valuable, and it is accepted by Perry in full satisfaction of all claims Perry’s has or may have against the Released Parties, and as adequate consideration for Perry’s agreements, covenants, and commitments made herein; and, (k) Perry is entering into this Agreement voluntarily, of his own free will, and without any coercion, undue influence, threat, or intimidation of any kind or type whatsoever.

Signature Page Follows

NOW, THEREFORE, intending to be legally bound hereby, Perry and Trinity Industries, Inc. sign this Agreement on the __3rd___ day of January, 2019. 
ACCEPTED AND AGREED AS TO FORM AND SUBSTANCE:

	
				
	James E. Perry
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	/s/ James E. Perry
	 
	 

	Signature
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	Trinity Industries, Inc.

	(on behalf of itself, its subsidiaries, and other corporate affiliates, and successors or assigns)

	 
	 
	 
	 

	 
	 
	 
	 

	By:
	/s/ Sarah Teachout
	 
	 

	 
	     Sarah Teachout
	 
	 

	 
	     Sr. Vice President
	 
	 

	 
	     and Chief Legal Officer
	 
	 

APPENDIX A - Supplemental Release Agreement

You, James E. Perry, entered into an Executive Transition Agreement with Trinity Industries, Inc. (“Company”) with an Effective Date of January 1, 2019 (“Transition Agreement”).  This Supplemental Release Agreement (“Supplemental Release”) constitutes the Supplemental Release Agreement defined in section 2 of the Transition Agreement.  The Transition Agreement is hereby incorporated into this Supplemental Release Agreement as set forth fully herein.

In consideration of having received the items contemplated in Section 1 of the Transition Agreement, your fulfillment of the terms and conditions set forth in the Transition Agreement, including execution of this Supplemental Release Agreement, and payment of the Supplemental Release Payment in accordance with the procedure set out in the Transition Agreement, you hereby agree as follows:

Payment of Wages.    You acknowledge that you have received all wages, vacation, and all other compensation and benefits owed to you by the Company, in your capacity as an employee of the Company, pursuant to the Transition Agreement.

Last Date of Employment.  Your last date of active employment with Company was May 31, 2020.

Supplemental Release.  In exchange for the promises described in the Transition Agreement, and in addition to the Release you have provided to Company in the Transition Agreement, you irrevocably and unconditionally release all known and unknown claims, promises, causes of action, or similar rights of any type that you presently may have against the Released Parties, except that you are not releasing any claim that relates to: (a) your right to enforce this Supplemental Release Agreement, (b) any rights or claims under the Age Discrimination in Employment Act or any other law that may arise after you sign this Supplemental Release Agreement, (c) subject to section 3 of the Transition Agreement, any rights under applicable plans to equity-based awards previously granted to Perry by the Company, (d) any right to indemnification and/or defense that Perry may have or be entitled to receive as an officer of the Company; (e) any right to COBRA medical coverage or benefits, (f) any rights arising under the Transition Agreement or the TCP and full payment thereunder when due, or (g) any right to payments or benefits that Perry may be eligible to receive any under Company sponsored retirement plan.

Continuing Obligations.  You acknowledge and affirm that Company provided you with Confidential Information, as defined in the Transition Agreement, during the Employment Transition Period of the Transition Agreement.  You further acknowledge, affirm, and ratify your continuing obligations under the Confidentiality and Non-Competition and Non-Solicitation paragraphs set forth in the Transition Agreement, and specifically waive and release any claim or defense that the Confidentiality and/or Non-Competition and Non-Solicitation paragraphs are unreasonable and/or unenforceable for any reason whatsoever.

Entire Agreement. Except for existing written agreements between you and the Company, including but not limited to, the TCP, the Confidentiality Agreement, the RSAs, prior non-disclosure, non-solicitation, and non-competition agreements which are hereby incorporated by reference, and any other restrictive covenants in effect on or before the date hereof, the Supplemental Release Agreement and Transition Agreement contain the entire understanding between the Parties hereto with respect to your employment, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, except as herein contained, which shall be deemed terminated effective immediately.  This Supplemental Release Agreement and the Transition Agreement may not be modified or canceled in any manner except by a writing signed by both you and an authorized Company official.

Voluntary Agreement. YOU UNDERSTAND AND AGREE THAT YOU MAY BE WAIVING SIGNIFICANT LEGAL RIGHTS BY SIGNING THIS SUPPLEMENTAL RELEASE, AND REPRESENT THAT YOU HAVE ENTERED INTO THIS SUPPLEMENTAL RELEASE VOLUNTARILY, AFTER HAVING THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF YOUR OWN CHOOSING, WITH A FULL UNDERSTANDING OF AND IN AGREEMENT WITH ALL OF ITS TERMS.  

IN WITNESS WHEREOF, I have executed this Supplemental Release Agreement on the date provided below.

	
				
	Signature:
	 
	 
	 

	 
	James E. Perry
	 
	 

	 
	 
	 
	 

	Date:Exhibit 4.1

 

NEITHER THIS SECURITY
NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL IN A FORM
ACCEPTABLE TO THE COMPANY.

 

	Original Issue Date: January 4,  2019	Principal Amount: $620,000

 

CONVERTIBLE
PROMISSORY NOTE

DUE
January 30, 2020

 

THIS CONVERTIBLE PROMISSORY
NOTE is the duly authorized and validly issued convertible promissory note of Spectrum Global Solutions, Inc., a Nevada corporation,
(the “Company”), having its principal place of business at c/o AW Solutions, Inc., 300 Crown Oak Centre Drive,
Longwood, Florida 32750, designated as its Convertible Promissory Note due January 30, 2020 (the “Note”).

 

FOR VALUE RECEIVED,
the Company promises to pay to InterCloud Systems, Inc. or its registered assigns (the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of $620,000 on January 30, 2020 (the “Maturity Date”)
or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. In the
event any amounts due under this Note remain outstanding on the Maturity Date, such amounts shall automatically be converted into
Common Stock as of 4:00 p.m. on the Maturity Date, irrespective of any limitations on conversion set forth in this Note. This Note
is subject to the following additional provisions:

 

Section 1. Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, the following terms shall have the following
meanings:

 

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

 

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

 

     

     

    

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“Board
of Directors” means the board of directors of the Company.

 

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

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of one-third (1/3rd) of the aggregate votes of the then-issued and outstanding voting securities of the Company on such
basis as is then required by the Company’s charter documents (other than by means of conversion of the Note), (b) the Company
merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving
effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than two-thirds (2/3rds)
of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all
or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction
own less than two-thirds (2/3rds) of the aggregate voting power of the acquiring entity immediately after the transaction, (d)
a replacement at one time or within a three year period of more than one-half (1/2) of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was
approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the
Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.

 

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

 

“Conversion
Limitation” shall have the meaning set forth in Section 5(f).

  

    2

     

    

 

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

 

“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.

 

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

 

“DTC”
means the Depository Trust Company.

 

“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.

 

“DWAC
Eligible” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements,
including, without limitation, transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation)
by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion
Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting
delivery of the Conversion Shares via DWAC.

 

“Equity
Conditions” means each of the following conditions: (a) the Company shall have duly honored all conversions and redemptions
scheduled to occur or occurring, including conversions pursuant to one or more Notices of Conversion of the Holder, if any, (b)
the Company shall have paid all liquidated damages and other amounts owing to the Holder in respect of this Note, (c) on each day
during the Equity Conditions Measuring Period, either (i) there is an effective Registration Statement pursuant to which the Holder
is permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Documents
(and the Company believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii)
all of the Conversion Shares issuable pursuant to the Documents (and shares issuable in lieu of cash payments of interest) may
be resold pursuant to Rule 144 without volume or manner-of-sale restrictions as determined by the counsel to the Company as set
forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the Holder, (d) on each day
during the Equity Conditions Measuring Period, the Common Stock is trading on a Trading Market and all of the shares of Common
Stock issuable pursuant to the Documents are listed or quoted for trading on such Trading Market (and the Company believes, in
good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there
is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the
shares of Common Stock then issuable pursuant to the Documents, (f) on each day during the Equity Conditions Measuring Period,
there is no existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute
an Event of Default, (g) the issuance of the shares of Common Stock in question to the Holder would not violate the limitations
set forth in Section 4(d) herein, (h) on each day during the Equity Conditions Measuring Period, there has been no public announcement
of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable
Holder is not in possession of any information provided by the Company that constitutes, or may constitute, material non-public
information, (j) the Company has timely filed (or obtained extensions in respect thereof and filed within the applicable grace
period) all reports other than Current Reports on Form 8-K required to be filed by the Company after the date hereof pursuant to
the Exchange Act, (k) on each day during the Equity Conditions Measuring Period, the Company’s shares of Common Stock have
a closing price equal to or in excess of $0.01, subject to adjustment for splits, dividends, etc. as set forth herein, and (l)
on each day during the Equity Conditions Measuring Period, the Company’s shares of Common Stock are DWAC Eligible and not
subject to a “DTC chill”.

 

    3

     

    

 

“Equity
Conditions Measuring Period” means each day during the period beginning twenty (20) Trading Days prior to the applicable
date of determination and ending on and including the applicable date of determination or, if applicable, such shorter period beginning
on the Original Issue Date and ending on and including the applicable date of determination.

 

“Event
of Default” shall have the meaning set forth in Section 6(a).

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or other equity awards (including, without limitation,
restricted awards) to employees, consultants, officers or directors of the Company pursuant to any stock or option plan duly adopted
for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee
of non-employee directors established for such purpose and subsequently ratified by the stockholders of the Company, (b) securities
directly or indirectly exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the
Original Issue Date, provided that such securities have not been amended since the Original Issue Date to increase the number of
such securities or to decrease the exercise price, exchange price or conversion price of such securities, or (c) securities issued
pursuant to mergers, consolidations, acquisitions, similar business combinations or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders
of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities.

 

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

 

“GAAP”
means generally accepted accounting principles in the United States of America as in effect from time to time.

 

    4

     

    

 

“Indebtedness”
means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables and
accrued expenses incurred in the ordinary course of business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or the
Purchasers under such agreement in the event of default are limited to repossession or sale of such property), (e) the capitalized
amount of all capital lease obligations of such Person that would appear on a balance sheet in accordance with GAAP, (f) all
obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock
of such Person, (g) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance,
letter of credit, surety bond or similar facilities in respect of obligations of the kind referred to in clauses (a) through (f)
above, (h) all guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (a) through
(g) above, (i) all obligations of the kind referred to in clauses (a) through (g) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the
payment of such obligation; provided that, if such Person has not assumed or become liable for the payment of such obligation,
the amount of such Indebtedness shall be limited to the lesser of (A) the principal amount of the obligation being secured and
(B) the fair market value of the encumbered property; and (j) all contingent obligations in respect to indebtedness or obligations
of any Person of the kind referred to in clauses (a)-(i) above. The Indebtedness of any Person shall include, without duplication,
the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the
extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

 

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

 

“New
York Courts” shall have the meaning set forth in Section 8(d).

 

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

 

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

 

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

 

“Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise including, without
limitation, any instrumentality, division, agency, body or department thereof).

 

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

 

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

 

    5

     

    

 

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

 

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

 

“Variable
Rate Transaction” means a transaction in which the Company issues or sells any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion
price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations
for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity
security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company
or the market for the Common Stock.

 

“VWAP”
means, for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading
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 “HP” function (set to weighted average) or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average
of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.

 

Section 2. Interest.

 

a) Payment
of Interest in Cash or Kind. The Company shall pay interest to the Holder on the principal amount of this Note at the rate
of 6% per annum (which interest rate may be increased as provided elsewhere herein). All interest provided for in this Section
(2)(a) shall accrue Monthly; provided, however, notwithstanding anything to the contrary provided herein or elsewhere, interest
accrued but not yet paid will be due and payable upon any conversion, prepayment, and/or acceleration whether as a result of an
Event of Default or otherwise with respect to the principal amount being so converted, prepaid and/or accelerated. All interest
payments hereunder will maybe payable in cash or, at the Company’s discretion, subject to the 144 eligibility or an effective
registration statement, being satisfied on the date of such payment, in Common Stock at the Conversion Price.

 

    6

     

    

 

b) Interest
Make Whole. In the event that this Note is converted, prepaid and/or accelerated whether as a result of an Event of Default
or otherwise prior to the Maturity Date, the Company shall pay to the Holder, in addition to any other amounts then owed, upon
such conversion, prepayment, and/or acceleration, an amount in interest equal to the amount of interest on the principal amount
so converted, prepaid and/or accelerated that would otherwise have been payable if such principal amount had remained outstanding
until the Maturity Date.

 

c) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30-calendar day periods, and
shall accrue commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued
and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will
be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers
of this Note (the “Note Register”).

 

Section 3. Registration of Transfers
and Exchanges.

 

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

 

b) Restrictions
on Transfer. This Note may be transferred or exchanged only in compliance with applicable federal and state securities laws
and regulations.

 

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

 

Section 4. Conversion.

 

a) Voluntary
Conversion. At any time and from time to time, commencing on the Original Issue Date until this Note is no longer outstanding,
this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from
time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions
by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice
of Conversion”), specifying therein the principal amount of this Note and/or any other amounts due under this Note to
be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If
no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, all accrued and
unpaid interest thereon and all other amounts due under this Note have been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion amount. The Holder
and the Company shall maintain a Conversion Schedule showing the principal amount(s) and/or any other amounts due under this Note
converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business
Day of delivery of such Notice of Conversion. The Holder, and any assignee by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note may be less than the amount stated on the face hereof.

 

    7

     

    

 

b) Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to the greater of 75% of the lowest VWAP during
the ten (10) Trading Days immediately prior to the Conversion Date; or $0.10 (the “Conversion Price”).
All such foregoing determinations will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction that proportionately decreases or increases the Common Stock during such measuring period.

 

c) Mechanics
of Conversion.

 

i. Conversion
Shares Issuable Upon a Conversion. The number of Conversion Shares issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the sum of (i) the outstanding principal to be converted as provided in the applicable
Notice of Conversion, (ii) accrued and unpaid interest thereon (if the Company has elected to pay interest in shares of Common
Stock) and (iii) any other amount due under this Note by (y) the Conversion Price.

 

ii. Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing
the Conversion Shares, which, on or after the date on which the resale of such Conversion Shares are covered by and are being sold
pursuant to an effective Registration Statement or such Conversion Shares are eligible to be sold under Rule 144 without the need
for current public information and the Company has received an opinion of counsel to such effect acceptable to the Company (which
opinion the Company will be responsible for obtaining at its own cost) shall be free of restrictive legends and trading restrictions
(other than those which may then be required by federal securities laws) representing the number of Conversion Shares being acquired
or being sold, as the case may be, upon the conversion of this Note, and (B) payment in the amount of accrued and unpaid interest
(if the Company has elected to pay accrued interest in cash). All certificate or certificates required to be delivered by the Company
under this Section 4(c) shall be delivered electronically through DTC or another established clearing corporation performing similar
functions, unless the Company or its Transfer Agent does not have an account with DTC and/or is not participating in the DTC/FAST
System, in which case the Company shall issue and deliver to the address as specified in such Notice of Conversion a certificate
(or certificates), registered in the name of the Holder or its designee, for the number of Conversion Shares to which the Holder
shall be entitled. If the Conversion Shares are not being sold pursuant to an effective Registration Statement or if the Conversion
Date is prior to the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current public
information, the Conversion Shares shall bear a restrictive legend in the following form, as appropriate:

 

“THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. ”

 

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

 

iv. Obligation
Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance
with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same,
any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or
any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person,
and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver
by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to
convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the
Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other
reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this
Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 100%
of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the
completion of arbitration/litigation of the underlying dispute. In the absence of such injunction, the Company shall issue Conversion
Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder
such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, $500 per Trading Day for each Trading Day after such Share Delivery Date until
such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue
actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion
Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.

  

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

 

vi. Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock a number of shares of Common Stock at least equal to the number of shares issuable upon conversion
in full of this Note for the sole purpose of issuance upon conversion of this Note and payment of interest on this Note, each as
herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder. The
Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.

 

vii. Insufficient
Authorized Shares. If, notwithstanding Section 4(c)(vi), and not in limitation thereof, at any time while any of the Notes
remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy
its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the amount
specified in Section 4(c)(vi) (an “Authorized Share Failure”), then the Company shall immediately take all action necessary
to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the applicable
amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement
and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock
and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company
is prohibited from issuing shares of Common Stock upon any conversion due to the failure by the Company to have sufficient shares
of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common
Stock, the “Authorized Failure Shares”), in lieu of delivering such Authorized Failure Shares to the Holder, the Company
shall pay cash in exchange for the portion of the Note convertible into such Authorized Failure Shares at a price equal to the
sum of the product of (x) such number of Authorized Failure Shares and (y) the greatest closing sale price of the Common Stock
on any Trading Day during the period commencing on the date the Authorized Failure Shares should have been issued pursuant to the
terms of this Note and ending on the date of such issuance of payment under this Section 4(c)(vii).

  

    10

     

    

 

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

 

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

 

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d) Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to
convert any portion of this Note, to the extent that, after giving effect to the conversion set forth on the applicable Notice
of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder
or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). 
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock that are issuable upon (i) conversion of the remaining, unconverted
principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous
to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the
preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section
4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together
with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and
the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted
(in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible,
in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed
to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions
set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number
of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the
most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Commission, as the case
may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request
of a Holder, the Company shall within two (2) Trading Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not less than 61 days’ prior written
notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial
Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any such increase or decrease will not be effective
until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this paragraph shall apply to a successor holder of this Note.

 

Section 5. Certain
Adjustments.

 

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

 

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b) Except
as hereinafter provided, in case the Company shall at any time after the date hereof issue or sell any shares of Common Stock other
than an Exempt Issuance, for a consideration per share less than the Exercise Price in effect immediately prior to the issuance
or sale of such shares, or without consideration, then forthwith upon such issuance or sale, the Exercise Price shall (until another
such issuance or sale) be reduced to the price (calculated to the nearest full cent) determined by dividing (A) an amount equal
to the sum of (X) the product (a) the total number of shares of Common Stock outstanding immediately prior to such issuance or
sale, multiplied by (b) the Exercise Price in effect immediately prior to such issuance or sale, plus (Y) the aggregate of the
amount of all consideration, if any, received by the Company upon such issuance or sale, by (B) the total number of shares of Common
Stock outstanding immediately after such issuance or sale; provided, however, that in no event shall the Exercise
Price be adjusted pursuant to this computation to an amount in excess of the then current Exercise Price.

 

For the purposes of any computation to
be made in accordance with this Section 5(b) the following provisions shall be applicable:

 

(i) In case of the issuance or
sale of shares of Common Stock for a consideration part or all of which shall be cash, the amount of the cash consideration therefor
shall be deemed to be the amount of cash received by the Company for such shares (or, if shares of Common Stock are offered by
the Company for subscription, the subscription price, or, if such securities shall be sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price) before deducting therefor any compensation paid or
discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services,
or any expenses incurred in connection therewith. If the Company enters into a Variable Rate Transaction, the Company shall be
deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities
may be converted or exercised.

 

(ii) In case of the issuance or
sale (otherwise than as a dividend or other distribution on any stock of the Company) of shares of Common Stock for a consideration
part or all of which shall be other than cash, the amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of Directors of the Company.

 

(iii) Shares of Common Stock issuable
by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the
opening of business on the day following the record date for the determination of shareholders entitled to receive such dividend
or other distribution and shall be deemed to have been issued without consideration.

 

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c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that the Holder could have acquired if
the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any
limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation and the Conversion Limitation)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation or the Conversion Limitation, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation or the Conversion Limitation, as applicable).

 

d) Pro
Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Note (without regard to any limitations on conversion hereof, including without limitation,
the Beneficial Ownership Limitation and the Conversion Limitation) immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate
in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation or the Conversion Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution 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 Beneficial
Ownership Limitation or the Conversion Limitation, as applicable).

 

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

 

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

 

g) Notice
to the Holder.

 

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

 

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

 

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Section 6. Events of Default.

 

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

 

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

 

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

 

iii. a default
or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur
under any of the Documents;

 

iv. any representation
or warranty made in this Note, any other Documents, any written statement pursuant hereto or thereto or any other report, financial
statement or certificate made or delivered to the Holder shall be untrue or incorrect in any material respect as of the date when
made or deemed made;

 

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

 

    17

     

    

 

vi. the Common
Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing
or quotation for trading thereon within five (5) Trading Days or the transfer of shares of Common Stock through the DTC is no longer
available, “frozen” or “chilled”;

 

vii. the Company
shall fail for any reason to deliver Conversion Shares to a Holder prior to the fifth (5th) Trading Day after a Share
Delivery Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public
announcement, of the Company’s intention to not honor requests for conversions of the Note in accordance with the terms hereof;

 

viii. the Company
fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance
with Rule 144(c)(1) (or Rule 144(i)(2), if applicable); and

 

ix. the Company
shall fail to maintain sufficient reserved shares pursuant to Section 4(c)(vi) herein.

 

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

 

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

 

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

 

b) Remedies
Upon Event of Default. If any Event of Default occurs, then at the Holder’s election, this Note shall become immediately
due and payable in an amount equal to 125% of (i) the outstanding principal amount of this Note, and (ii) accrued but unpaid interest,
liquidated damages and other amounts owing in respect thereof through the date of acceleration. After the occurrence of any Event
of Default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate
equal to the lesser of 2% per month (24% per annum) or the maximum rate permitted under applicable law (with a credit for any “unused”
guaranteed interest). Upon the payment in full of the outstanding principal amount of this Note, plus accrued but unpaid interest,
liquidated damages and other amount owing in respects thereof, the Holder shall promptly surrender this Note to or as directed
by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives,
any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such
acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights
as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission
or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

    18

     

    

 

Section 7. Prepayment. At any time
and from time to time, the Company may by delivering written notice of its election to the Holder prepay all or any portion of
this Note in cash by paying the applicable Prepayment Amount (as defined below) pursuant to this Section 7. The written notice
shall, among other items, state the date the Prepayment Amount is to be paid to the Holder, which shall not in any event be earlier
than ten (10) calendar days from the date of mailing of the prepayment notice to the Holder (the “Prepayment Date”).
If the Company exercises its right to prepay all or any portion of the Note in accordance with this Section 7, and no Event of
Default then exists which has not been waived by the Holder, the Company shall make payment to the Holder of an amount in cash
equal to the product of (x) the sum of (A) the then-outstanding principal amount of this Note and (B) all accrued but unpaid interest
thereon, multiplied by (y) 115% if the Prepayment Date is on or prior to the 90th day following the Original Issue Date,
120% if the Prepayment Date is on or between the 91st day following the Original Issue Date and 179th day
following the Original Issue Date and 125% if the Prepayment Date is on or after the 180th day following the Original
Issue Date and prior to the Maturity Date, to which calculated amount the Company shall add all other amounts owed pursuant to
this Note, including, but not limited to, all Late Fees and liquidated damages (the “Prepayment Amount”). The
Holder may continue to convert the Note from the date notice of the prepayment is given until the date the Holder receives in full
the Prepayment Amount.

 

Section
8. Negative Covenants. As long as any portion of this Note remains outstanding, unless the Holders of at least 50% in
principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly:

 

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

 

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

 

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

 

    19

     

    

 

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

 

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

 

f)
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the
AW Solutions, Inc. Subsidiary, whether in a single transaction or a series of related transactions, other than (i) sales, leases,
licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by AW Solutions, Inc. in the ordinary
course of business consistent with its past practice for fair consideration, (ii) sales of inventory and product in the ordinary
course of business consistent with past practice for fair consideration, and (iii) a sale or disposition of assets to a third party
that has been approved by the Board of Directors; or

 

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

 

Section 9. Miscellaneous.

 

a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above or such other address as the Company may specify for
such purposes by notice to the Holder delivered in accordance with this Section 8(a). Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a
nationally recognized overnight courier service addressed to the Holder at the facsimile number or address of the Holder appearing
on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at the principal place
of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto prior to 5:00 p.m. (New York City time) on any date, (ii) the next Trading Day after
the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 5:00 p.m. (New York City time) on any Trading Day, (iii)
the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon
actual receipt by the party to whom such notice is required to be given.

 

    20

     

    

 

b) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note
at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.

 

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

 

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

 

e) Amendment;
Waiver. Any provision of this Note may be amended by a written instrument executed by the Company and the Holder, which amendment
shall be binding on all successors and assigns. Any provision of this Note may be waived by the Holder, which waiver shall be binding
on all successors and assigns. Any waiver by the Company or the Holder must be in writing. Any waiver by the Company or the Holder
of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence
to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Note on any other occasion.

 

    21

     

    

 

f) Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

 

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

 

h) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, 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.

 

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

 

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

 

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

 

(Signature Pages Follow)

 

    22

     

    

 

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

 

 

	 	SPECTRUM GLOBAL SOLUTIONS, INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Facsimile No. for delivery of Notices: ___________

 

    23

     

    

 

ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert
the Convertible Promissory Note due January 30, 2020 of Spectrum Global Solutions, Inc., a Nevada corporation (the “Company”),
into shares of common stock of the Company (the “Common Stock”), according to the conditions hereof, as of the
date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer
taxes, if any.

 

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

 

The undersigned agrees to comply with the
prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of
Common Stock, if the resale of any such shares of Common Stock are covered by and are being sold pursuant to an effective Registration
Statement.

 

Conversion calculations:

 

	 	Date to Effect Conversion: _________________
	 	 
	 	Principal Amount of Note to be Converted: _____
	 	 
	 	Number
    of Shares of Common Stock to be Issued: _________
	 	 
	 	Signature: ___________________________
	 	 
	 	Name: _______________________________
	 	 
	 	Delivery Instructions:

 

    A-1

     

    

 

Schedule 1

 

CONVERSION SCHEDULE

 

This Convertible Promissory Note due on
[     ], 2020 in the principal amount of $620,000 is issued by Spectrum Global Solutions, Inc., a Nevada corporation. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced Note.

 

Dated:

 

	
        Date of Conversion

        (or for first entry, 

Original Issue Date)
	 	Amount of

 Conversion	 	
        Aggregate Principal Amount 

Remaining Subsequent to 

Conversion (or original 

Principal Amount)
	 	Company

 Attest
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

  

    Sch. 1-1

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