Document:

Exhibit 4.42

 

DEBT SETTLEMENT AGREEMENT AND RELEASE

 

THIS DEBT SETTLEMENT
AGREEMENT AND RELEASE (this “Agreement”) is made and entered into as of August 16, 2016 (the “Effective Date”),
by and between M. DALAKOS – I. FASSOLIS – N. THEOFANOPOULOS & PARTNERS LAW FIRM, a corporation formed under the
laws of Greece (the “Creditor”) and FreeSeas Inc., a corporation formed under the laws of the Republic of the Marshall
Islands (the "Company").

 

RECITALS:

 

WHEREAS, the
Creditor has provided to the Company (and/or one or more of its subsidiaries) services and/or goods, for which an aggregate amount
equal to US$($107, 601.01) remains unpaid pursuant to the invoices listed on Schedule A hereto (the “Invoices”);

 

WHEREAS, the
Creditor has agreed to accept, and the Company has agreed to issue to the Creditor, a convertible debenture in the principal face
amount of $($107,601.01) in the form attached hereto as Exhibit A (the “Note”) in full satisfaction of the Invoice,
which Note shall be convertible into shares of the Company’s common stock (the “Common Stock”); and

 

WHEREAS, the
Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), that the Note will
be issued on the basis of the statutory exemption provided by Rule 903 of Regulation S promulgated under the Securities Act and
the provisions of Regulation S, relating to transactions by an issuer not involving any public offering, and that such Note shall
be considered a restricted security.

 

NOW, THEREFORE,
in consideration of the foregoing and of the agreements contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. 
Payment in Full of Invoices by Issuance of the Note. The Creditor hereby agrees to accept the Note as payment in full of
the Invoices and, upon issuance and delivery to the Creditor of the Note, the Creditor agrees that any and all obligations that
the Company may have pursuant to the Invoices shall be satisfied in full and the Company shall have no further obligations to the
Creditor thereunder.

 

2. 
Representations and Warranties of the Company. The Company hereby represents and warrants to the Creditor as of the Effective
Date as follows: (i) that the execution, delivery and performance of this Agreement by it will not violate, or result in a breach
of, or constitute a default under, any agreement, instrument, judgment, order or decree to which it is a party or to which it is
subject; (ii) that it has the legal capacity and power and authority to execute and deliver this Agreement and any other related
agreements and instruments delivered in connection herewith; (iii) that no further proceedings or actions are necessary to authorize
the execution and delivery of this Agreement or the performance by the Company of its obligations hereunder; and (iv) that this
Agreement constitutes the legal and binding obligation of the Company, enforceable against it in accordance with these terms.

 

3. 
Representations and Warranties of the Creditor and the Company. The Creditor hereby represents and warrants to the Company
as of the Effective Date as follows: (i) that the execution, delivery and performance of this Agreement by it will not violate,
or result in a breach of, or constitute a default under, any agreement, instrument, judgment, order or decree to which it is a
party or to which it is subject; (ii) that it has the legal capacity and power and authority to execute and deliver this Agreement
and any other related agreements and instruments delivered in connection herewith; (iii) that no further proceedings or actions
are necessary to authorize the execution and delivery of this Agreement or the performance by the Creditor of its obligations hereunder;
and (iv) that this Agreement constitutes the legal and binding obligation of the Creditor, enforceable against it in accordance
with these terms.

 

    	 	1	 

     

    

 

In addition, the Creditor
hereby represents and warrants to the Company as of the Effective Date as follows:

 

(a) 
Non-U.S. Purchaser. The Creditor is outside the United States when receiving and executing this Agreement and the Creditor
is not a U.S. Person as defined in Rule 902 of Regulation S. The Creditor acknowledges that the offer and sale of the Note has
taken place, and is taking place in an “offshore transaction,” as such term is defined in Regulation S;

 

(b) 
Own Account. The Creditor is not a “distributor” of securities, as that term is defined in Regulation S, nor
a dealer in securities, and is acquiring the Note as principal for its own account, and not for the account or benefit of, directly
or indirectly, any U.S. Person. The Creditor has no intention to distribute either directly or indirectly the Note or any of the
shares issuable upon conversion of the Note (the “Conversion Shares” and together with the Note, the “Securities”)
in the United States or to U.S. Persons;

 

(c) 
Exemption. The Creditor understands that the offer and sale of the Securities is not being registered under the Securities
Act or any state securities laws and is intended to be exempt from registration provided by Rule 903 of Regulation S. The Creditor
acknowledges and agrees that, pursuant to the provisions of Regulation S, the Securities cannot be sold, assigned, transferred,
conveyed, pledged or otherwise disposed of to any U.S. Person or within the United States of America or its territories or possessions
for a period of 40 days from and after the Effective Date, unless such Securities are registered for sale in the United States
pursuant to an effective registration statement under the Securities Act or another exemption from such registration is available;

 

(d) 
No Registration. The Securities have not been registered under the Securities Act or any state securities laws and may not
be transferred, sold, assigned, hypothecated or otherwise disposed of unless registered under the Securities Act and applicable
state securities laws or unless registered or an exemption from such registration is available. The Creditor represents and warrants
and hereby agrees that all offers and sales of the Securities shall be made only pursuant to such registration or to such exemption
from registration;

 

(e) 
Financial Risk. The Creditor represents, warrants and agrees that the Creditor will not sell or otherwise transfer the Securities
unless registered under the Securities Act or in reliance upon an exemption therefrom, and fully understands and agrees that the
Creditor must bear the economic risk of his investment in the Securities for an indefinite period of time because, among other
reasons, the Securities have not been registered under the Securities Act or under the securities laws of certain states and, therefore,
cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and
under the applicable securities laws of such states or an exemption from such registration is available. The Creditor has the financial
ability to bear the economic risk of his investment in the Securities, has adequate means for providing for his current needs and
personal contingencies and has no need for liquidity with respect to his investment in the Securities; and

 

    	 	2	 

     

    

 

(f) 
No Directed Selling Efforts. The Creditor has not acquired the Note as a result of, and will not itself engage in, any “directed
selling efforts” (as defined in Regulation S) in the United States in respect of the Securities, which would include any
activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in
the United States for the resale of the Securities; provided, however, that the Purchaser may sell or otherwise dispose of the
Securities pursuant to registration thereof under the Securities Act and any applicable state and provincial securities laws or
under an exemption from such registration requirements;

 

(g) 
No Plan or Scheme. The Creditor acknowledges that the statutory and regulatory basis for the exemption from U.S. registration
requirements claimed for the offer of the Securities, although in technical compliance with Regulation S, would not be available
if the offering is part of a plan or scheme to evade the registration provisions of the Securities Act or any applicable state
or provincial securities laws;

 

(h) 
Foreign Subscriber. The Creditor has satisfied itself as to the full observance of the laws of its jurisdiction in connection
with any invitation to acquire the Securities or any use of this Agreement, including: (a) the legal requirements within its jurisdiction
for the acquisition of the Securities; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental
or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Securities. Such Creditor’s acquisition of and payment for,
and its continued beneficial ownership of the Securities, will not violate any applicable securities or other laws of the Creditor’s
jurisdiction;

 

(i) 
Non-Affiliate. The Creditor is not an Affiliate of the Company nor is any Affiliate of such Regulation S Person an Affiliate
of the Company. An “Affiliate” is an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or
other entity of any kind (each of the foregoing, a “Person”) that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under
the Securities Act; and

 

(j) 
Legend. The Securities shall bear a legend in substantially the following form, and the Creditor understands that the Company
shall be required to refuse to register any transfer of the Securities not made in accordance with applicable U.S. securities laws:

 

THESE SECURITIES WERE ISSUED
IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE
RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED
OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN) OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING
THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES" AND "U.S. PERSON"
ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

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4. 
Representations of the Creditor with Respect to the Invoices. The Creditor hereby represents as to the Invoices as follows:
(i) each of the Invoices represents a bona fide outstanding claim against the Company, and is an enforceable obligation arising
in the ordinary course of business, for money due and payable to the Creditor for services rendered or goods delivered pursuant
to a written or verbal agreement, by and between the Creditor and the Company (and/or one or more of its subsidiaries), in each
case, in good faith; (ii) each of the Invoices is currently due and owing and is payable in full; (iii) the documents attached
hereto are true and, correct and complete copies of the Invoices; (iv) the Creditor is the sole owner of the Invoices, and has
not previously sold, transferred, encumbered or released any part of the Invoices; and (v) there is no action based on any of the
Invoices that is currently pending in any court or other legal venue and no judgments based upon the Invoices have been previously
entered in any legal proceeding.

 

5. 
Release. Effective upon delivery of the Note to the Creditor, the Creditor hereby knowingly and voluntarily releases and
forever discharges the Company and its predecessors, successors, direct and indirect parent companies, direct and indirect subsidiary
companies, companies under common control with any of the foregoing, assigns, directors, officers, affiliates, agents and representatives
(collectively, the “Released Parties”), from all claims, liabilities, demands, costs, charges, expenses, actions, causes
of action, judgments, and executions, past, present or future, with respect to the Invoices. The parties agree that the foregoing
release is not intended to release, and shall not release, any claims between any of the parties that may arise under this Agreement
or the Note. Upon the execution of this Agreement, the Creditor shall be deemed to have received sufficient consideration for the
releases set forth in this Section 5.

 

6. 
Voluntary and Knowing Agreement and Release. Each of the parties hereto acknowledges that they have entered into this Agreement
of their own free will, and that no promises or representations have been made to them by any person to induce them to enter into
this Agreement other than the express terms set forth herein. Each of the parties hereto further acknowledges that they have read
this Agreement and understands all of their respective terms.

 

7. 
Advice of Counsel. The Creditor acknowledges that before entering into this Agreement, it has had the opportunity to consult
with an attorney of its choice.

 

8. 
Attorneys’ Fees. Each party shall bear its own legal fees and expenses in connection with the negotiation, execution
and delivery of this Agreement.

 

9. Choice of Law
and Venue. This Agreement shall be governed by and construed according to the laws of the State of New York, without giving
effect to its choice of law principles. The parties agree that all actions and proceedings arising out of or relating directly
or indirectly to this Agreement or any ancillary agreement or any other related obligations shall be litigated solely and exclusively
in the state or federal courts located in the City of New York, New York, and that such courts are convenient forums. Each party
hereby submits to the personal jurisdiction of such courts for purposes of any such actions or proceedings.

 

10. 
Severance of Provisions; Survival of Representations and Warranties. If any of the provisions of this Agreement shall be
held invalid, the remainder of this Agreement shall not be affected thereby, and shall remain in full force and effect. The representations,
warranties and agreements of the Parties shall survive the delivery of the Note under this Agreement.

 

    	 	4	 

     

    

 

11. 
Notices. All notices and other communications shall be in writing and shall be provided to the recipient party to the addresses
set forth on the signature page hereto. All notices and communications shall be deemed made and effective as follows: (i) if transmitted
for overnight delivery via a nationally recognized delivery service, the first business day after being delivered by the transmitting
party to such overnight delivery service, (ii) if faxed, when transmitted in legible form by facsimile machine to the recipient
party’s correct facsimile machine number, (iii) if by e-mail, when transmitted by e-mail, or (iv) if mailed via regular mail,
upon delivery. Any party may designate a superseding notice contact name, street address, e-mail address or fax number by providing
the other parties with written notice pursuant to the provisions hereof.

 

12. 
Entire Agreement. This Agreement sets forth the entire understanding of the parties and supersedes any and all prior agreements,
oral or written, relating to the subject matter hereof. The parties attest that no other representations were made regarding this
Agreement other than those contained herein.

 

13. 
Confidentiality. Each of the parties hereby agrees, without the prior written consent of the other, to not disclose, and
to otherwise keep confidential, the transactions contemplated hereby, except to the extent that disclosure thereof is required
by law, rule or regulation; provided, however, that each of the parties may disclose information regarding such sale to their respective
accountants, attorneys, shareholders and other interest holders.

 

14. 
No Third Party Beneficiaries. This Agreement is intended for the benefit of the Creditor and the Company and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

15. 
Modifications. This Agreement may not be modified except by a writing, signed by each of the parties hereto. This Agreement
shall be binding upon the parties and their respective successors and assigns.

 

16. 
Counterparts. This Agreement may be signed in counterparts, and said counterparts shall be treated as though signed as one
document. Facsimile or other electronic signatures to this Agreement shall be treated as original signatures.

 

(SIGNATURES APPEAR ON THE FOLLOWING PAGE)

 

    	 	5	 

     

    

 

IN WITNESS WHEREOF,
the Creditor and the Company have caused this Settlement Agreement and Release to be signed by their respective duly authorized
officers or representatives as of the date first above written.

 

	 	CREDITOR:
	 	 	 
	 	M.
    DALAKOS – I. FASSOLIS – N. THEOFANOPOULOS & PARTNERS LAW FIRM
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Address for delivery of notice:
	 	 	 
	 	15, SACHTOURI STR.
	 	185 36 PIRAEUS, GREECE
	 	TEL: +30 210 4284680
	 	FAX: +30 210 4183015
	 	E-MAIL: dftlaw@otenet.gr
	 	 	 
	 	COMPANY:
	 	 	 
	 	FREESEAS INC.
	 	 	 
	 	By:	 
	 	Name:
    	Dimitris
    Papadopoulos
	 	Title:
    	Chief
    Financial Officer
	 	 	 
	 	Address for delivery of notice:
	 	 	 
	 	10, Eleftheriou Venizelou Street
	 	(Panepistimiou Ave.)
	 	106 71, Athens, Greece
	 	Attention: Chief Financial Officer
	 	Fax: +30 210 4291 010
	 	Email: dp@freeseas.gr

 

    	 	6	 

     

    

 

SCHEDULE A

 

Invoices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7Exhibit
4.43

 

CONVERTIBLE
NOTE

 

THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATIONS
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE SECURITIES TO
WHICH THIS CERTIFICATE RELATES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED
HEREIN OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH
CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED
BY REGULATION S UNDER THE 1933 ACT. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

 

FREESEAS
INC.

 

Convertible
Note

 

	Issuance Date:  August 16, 2016	Original Principal Amount: U.S. $ 107,601.01

 

FOR
VALUE RECEIVED, FREESEAS INC., a corporation incorporated and existing under the laws of the Republic of the Marshall
Islands (the “Company”), hereby promises to pay to the order of M. DALAKOS – I. FASSOLIS –
N. THEOFANOPOULOS & PARTNERS LAW FIRM or its registered assigns (“Holder”) the amount set out
above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise,
the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption
or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on
any outstanding Principal (as defined below) (as such interest on any outstanding Principal may be reduced pursuant to the terms
hereof pursuant to redemption, conversion or otherwise) at the applicable Interest Rate (as defined below) from the date set out
above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon
the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This
Convertible Note (this “Note”, including all Convertible Notes issued in exchange, transfer or replacement
hereof, collectively, the “Notes”) is issued pursuant to the Debt Exchange Agreement (as defined below)
on the Closing Date (as defined below). Certain capitalized terms used herein are defined in Section 28. 

 

     

     

    

 

1. 
PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 23(c)) on such Principal and
Interest). Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

 

2. 
INTEREST; INTEREST RATE.

 

(a) 
Interest on this Note shall commence accruing on the Issuance Date, shall accrue daily at the Interest Rate on the outstanding
Principal amount from time to time, shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable
to the Holder on the Maturity Date or any applicable Redemption Date (each, an “Interest Date”). Interest
shall be payable on each Interest Date, to the record holder of this Note on the applicable Interest Date, in freely-tradable
shares of Common Stock that have been registered for resale by the Holder ("Interest Shares") under the
Securities Act of 1933, as amended, so long as there has been no Equity Conditions Failure; provided however, that the Company
may, at its option following notice to the Holder, pay Interest on any Interest Date in cash ("Cash Interest")
or in a combination of Cash Interest and Interest Shares. The Company shall deliver a written notice (each, an "Interest
Election Notice") to each holder of the Notes on or prior to the Interest Notice Due Date (the date such notice is
delivered to all of the holder, the "Interest Notice Date") which notice (i) either (A) confirms that
Interest to be paid on such Interest Date shall be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest
or a combination of Cash Interest and Interest Shares and specifies the amount of Interest that shall be paid as Cash Interest
and the amount of Interest, if any, that shall be paid in Interest Shares and (ii) if any Interest is to be paid in Interest Shares,
certifies that there has been no Equity Conditions Failure. If the Equity Conditions are not satisfied as of the Interest Notice
Date, then unless the Company has elected to pay such Interest as Cash Interest, the Interest Notice shall indicate that unless
the Holder waives the Equity Conditions, the Interest shall be paid as Cash Interest. If the Equity Conditions were satisfied
as of the Interest Notice Date but the Equity Conditions are no longer satisfied at any time prior to the Interest Date, the Company
shall provide the Holder a subsequent notice to that effect indicating that unless the Holder waives the Equity Conditions, the
Interest shall be paid in cash. Interest to be paid on an Interest Date in Interest Shares shall be paid in a number of fully
paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a)) of Common Stock equal to the
quotient of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and (2) the Conversion Price
in effect on the applicable Interest Date.

 

(b) 
When any Interest Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company's transfer agent
(the "Transfer Agent") is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer Program, credit such aggregate number of Interest Shares to which the Holder shall be entitled
to the Holder's or its designee's balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver on the applicable Interest
Date, to the address set forth in the register maintained by the Company for such purpose pursuant to the Debt Exchange Agreement
or to such address as specified by the Holder in writing to the Company at least two (2) Business Days prior to the applicable
Interest Date, a certificate, registered in the name of the Holder or its designee (and without any restrictive legend or stop
transfer order maintained against it), for the number of Interest Shares to which the Holder shall be entitled and (ii) with respect
to each Interest Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of any Cash Interest.

 

    	 	2	 

     

    

 

(c) 
Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by
way of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i). From and
after the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to
eighteen percent (18.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to
in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and
unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to
the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default. The
Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of Interest Shares.

 

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

 

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

 

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

 

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

 

    	 	3	 

     

    

 

(ii) “Conversion
Price” means, for any date of determination, the lesser of (A) the product of (x) the lowest VWAP of the Common
Stock during the twenty-one (21) consecutive Trading Days ending and including the Trading Day immediately preceding the applicable
Conversion Date (the “Variable Conversion Base Price”) and (y) seventy five percent (75%), and (B) $
0,0465 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions). All such determinations
to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such
measuring period.

 

(c) 
Mechanics of Conversion.

 

(i) 
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion
Date”), the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:00 p.m., New
York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company. If required by Section 3(c)(iii), the Holder shall surrender this Note to a nationally
recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note
in the case of its loss, theft or destruction as contemplated by Section 17(b)). On or before the second (2nd) Trading
Day following the date of receipt of a Conversion Notice, the Company shall (1) provided that the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program and such shares of Common Stock may be issued without restrictive legend,
credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program or such shares of Common Stock may not be issued without restrictive legend,
issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered
in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If
this Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note
is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable
and in no event later than three (3) Trading Days after receipt of this Note and at its own expense, issue and deliver to the
Holder (or its designee) a new Note (in accordance with Section 17(d)) representing the outstanding Principal not converted. The
Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

    	 	4	 

     

    

 

(ii) 
Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to the
Holder within three (3) Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile or otherwise)
(the “Share Delivery Deadline”), a certificate for the number of shares of Common Stock to which the Holder
is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s or
its designee’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the
Holder’s conversion of any Conversion Amount (as the case may be) (a “Conversion Failure”) then, in addition
to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery
Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 1% of the product of (A) the
sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied
by (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company
could have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written
notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion
of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice
shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant
to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline, the Company
shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share
register or credit the Holder’s or its designee’s balance account with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if on or after such Share
Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable upon such conversion that the Holder
so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall,
within three (3) Business Days after receipt of the Holder’s request and in the Holder’s discretion, either: (I) pay
cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect,
or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue
and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common
Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates
representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied
by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Conversion Notice and ending on the date of such issuance and payment under this clause (II).

 

(iii) 
Book-Entry. Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion
of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company
unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered
to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with
prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender
of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or
paid and/or adjusted (as the case may be) and the dates of such conversions and/or payments and/or adjustments (as the case may
be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender
of this Note upon conversion.

 

    	 	5	 

     

    

 

(iv) 
Pro Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder
in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in
dispute and resolve such dispute in accordance with Section 22.

 

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

 

    	 	6	 

     

    

 

4. 
RIGHTS UPON EVENT OF DEFAULT.

 

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

 

(i) 
the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for
a period of ten (10) consecutive days or for more than an aggregate of thirty (30) days in any 365-day period;

 

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

 

(iii) 
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted
by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not
be dismissed within forty-five (45) days of their initiation;

 

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

 

    	 	7	 

     

    

 

(v) 
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of
a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt
or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of sixty (60) consecutive days;

 

(vi) 
other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary materially breaches
any representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach
of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive
Trading Days;

 

(vii) 
any Material Adverse Effect occurs; or

 

(viii) 
any Change of Control occurs.

 

(b) 
Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note,
the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier (with next day
delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the
Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require
the Company to redeem, at any time during the period commencing on the date the Holder first becomes aware of such Event of Default
through and including the tenth (10th) Trading Day after the later of (x) the date the Holder receives the applicable
Event of Default Notice with respect thereto and (y) the date such Event of Default has been cured, all or any portion of this
Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company,
which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion
of this Note subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal
to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii)
the product of (X) the Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an
Event of Default Redemption Notice multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such
Event of Default and ending on the date the Company makes the entire payment required to be made under this Section 4(b) (the
“Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance
with the provisions of Section 10. To the extent redemptions required by this Section 4(b) are deemed or determined by a court
of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the Event of Default Redemption
Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section
4(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant
to the terms of this Note. In the event of the Company’s redemption of any portion of this Note under this Section 4(b),
the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly,
any redemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate
of the Holder’s actual loss of its investment opportunity and not as a penalty.

 

    	 	8	 

     

    

 

5. 
RIGHTS UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.

 

(a) 
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity
assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with
the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved
by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such
Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the
Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding
and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking
to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Section 14, which shall continue to be receivable thereafter) issuable upon the conversion or redemption
of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the
Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such
Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any
limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing,
the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the
Fundamental Transaction without the assumption of this Note.

 

    	 	9	 

     

    

 

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

 

(c) 
The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events
and shall be applied without regard to any limitations on the conversion of this Note.

 

(a) 
Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase
Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.

 

6. 
[Intentionally Omitted]

 

7. 
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its articles of incorporation,
bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of
this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required
to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall
not increase the par value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then
in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as
any of the Notes are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the Notes, the maximum number of shares of Common Stock
as shall from time to time be necessary to effect the conversion of the Notes then outstanding (without regard to any limitations
on conversion).

 

    	 	10	 

     

    

 

8.RESERVATION
OF AUTHORIZED SHARES.

 

(a) 
Reservation. So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, a
number of shares of Common Stock, as of any date of determination, for each of the Notes in accordance with the following formula:

 

P

------------------ x 1 = Share Reserve

 

(T
x B)

 

P
= The aggregate principal amount of the Note outstanding as of such date of determination;

 

T
= The applicable Conversion Price as of such date of determination;

 

B
= 0.85;

 

provided,
that, the Share Reserve shall in no event be less than 100% of the number of shares of Common Stock as shall from time to time
be necessary to effect the conversion of all of the Notes then outstanding (without regard to any limitations on conversions)
(the “Required Reserve Amount”).

 

(b) 
Insufficient Authorized Shares. If, notwithstanding Section 8(a), and not in limitation thereof, at any time while any
of the Notes remain outstanding the Company does not have, for a period of two (2) consecutive days, a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least
a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting
the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting
of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such
meeting, the Company shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit
its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares
of Common Stock upon any conversion due to the failure by the Company to have sufficient shares of Common Stock available out
of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization
Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash
in exchange for the redemption of such portion of the Conversion Amount convertible into such Authorized Failure Shares at a price
equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price
of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Conversion
Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under
this Section 8(b) and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith.

 

    	 	11	 

     

    

 

9. 
Company Optional Redemption. At any time after the Issuance Date, the Company
shall have the right to redeem all, but not less than all, of the Conversion Amount then remaining under this Note (the “Company
Optional Redemption Amount”) on the Company Optional Redemption Date (as defined below) (a “Company
Optional Redemption”). The portion of this Note subject to redemption pursuant to this Section 9 shall be redeemed
by the Company in cash at a price (the “Company Optional Redemption Price”) equal to 127.5% of the Conversion
Amount of this Note then outstanding. The Company may exercise its right to require redemption under this Section 9 by delivering
an irrevocable written notice thereof by facsimile and overnight courier to the Holder (the “Company Optional Redemption
Notice” and the date the Holder receives such notice is referred to as the “Company Optional Redemption
Notice Date”). The Company may deliver only one Company Optional Redemption Notice in any ninety (90) day period.
The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption shall occur (the “Company
Optional Redemption Date”) which date shall not be less than thirty (30) calendar days nor more than ninety (90)
calendar days following the Company Optional Redemption Notice Date, (y) state the aggregate Conversion Amount of the Notes which
is being redeemed in such Company Optional Redemption from the Holder pursuant to this Section 9 on the Company Optional Redemption
Date and (z) if any Interest portion of the Company Optional Redemption Amount is being paid in Interest Shares, state the information
required in an Interest Election Notice in accordance with Section 2(a). Notwithstanding anything herein to the contrary, at any
time prior to the date the Company Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted,
in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the
Holder after the Company Optional Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required
to be redeemed on the Company Optional Redemption Date. Redemptions made pursuant to this Section 9 shall be made in accordance
with Section 10 and any payments of any Interest portion of the Company Optional Redemption Amount in Interest Shares shall be
made in accordance with Section 2.

 

10. 
REDEMPTIONS.

 

(a) 
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five
(5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice. The Company shall
deliver the applicable Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date.
In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued
and delivered to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal which has not
been redeemed. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice
shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of
such notice with respect to the Conversion Amount subject to such notice.

 

    	 	12	 

     

    

 

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

 

12. 
INTENTIONALLY OMITTED.

 

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

 

(a) 
Reserved.

 

(b) 
Reserved.

 

(c) 
Reserved.

 

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

 

(e) 
Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of
a majority in aggregate principal amount of the Notes then outstanding, issue any other securities that would cause a breach or
default under the Notes.

 

(f) 
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock
(other than any obligations to do so outstanding as of the Issuance Date).

 

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

 

    	 	13	 

     

    

 

(h) 
Reserved.

 

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

 

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

 

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

 

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

 

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

 

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

 

14. 
PARTICIPATION. Upon any conversion of this Note, the Holder shall be entitled to receive such dividends paid and distributions
made to the holders of Common Stock from and after the initial Issuance Date to the same extent as if the Holder had effected
such conversion and had held such shares of Common Stock (issued or to be issued in such conversion) on the record date for such
dividends and distributions. Payments under the preceding sentence shall be made on or prior to the applicable Share Delivery
Deadline with respect to such conversion.

 

    	 	14	 

     

    

 

15. 
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment
to this Note.

 

16. 
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company.

 

17. 
REISSUANCE OF THIS NOTE.

 

(a) 
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 17(d)), registered as the
Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 17(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note.

 

(b) 
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below
shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding
Principal.

 

(c) 
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Note or Notes (in accordance with Section 17(d) and in principal amounts of at least
$1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion
of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d) 
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new
Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated
by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal
and Interest of this Note, from the Issuance Date.

 

    	 	15	 

     

    

 

18. 
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall
be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law
or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this
Note.

 

19. 
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the
Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The
Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that
the purchase price paid for this Note was less than the original Principal amount hereof.

 

20. 
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form
part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall
have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to
in writing by the Holder.

 

21. 
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.

 

    	 	16	 

     

    

 

22. 
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, any Redemption Price, the
Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) or the arithmetic calculation of the Conversion
Rate or the applicable Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the
disputed determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt
of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave
rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and
the Company are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination
or arithmetic calculation (as the case may be) being submitted to the Company or the Holder (as the case may be), then the Company
shall, within two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, any Redemption
Price, the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) to an independent, reputable investment
bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate or any
Redemption Price (as the case may be) to an independent, outside accountant selected by the Holder that is reasonably acceptable
to the Company. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the
determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10)
Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s
or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable
error.

 

23. 
NOTICES; CURRENCY; PAYMENTS.

 

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

 

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

 

    	 	17	 

     

    

 

(c) 
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn
on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to
the Company in writing, provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction
Documents which is not paid when due (solely to the extent such amount is not then accruing interest at the Default Rate) shall
result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of
eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).

 

24. 
CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have
been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and
shall not be reissued.

 

25. 
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note
and the Debt Exchange Agreement.

 

26. 
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. In the event that any provision of this Note is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained
herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in
any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

    	 	18	 

     

    

 

27. 
MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or
other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid
or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Company to the Holder and thus refunded to the Company.

 

28. 
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

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

 

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

 

(c) 
 “Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any
of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification
to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power
of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
(iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries.

 

(d) 
 “Closing Bid Price” and “Closing Sale Price” means, for any security as of
any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).

 

    	 	19	 

     

    

 

(e) 
“Closing Date” means the date the Company initially issued the Note pursuant to the terms of the Debt
Exchange Agreement.

 

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

 

(g) 
“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose
or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that
the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

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

 

(i) 
“Debt Exchange Agreement” means that certain Debt Exchange Agreement, dated as of the Closing Date,
by and between the Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.

 

(j) 
 “Eligible Market” means The New York Stock Exchange, the NYSE MKT, The NASDAQ Global Select Market,
The NASDAQ Global Market, The NASDAQ Capital Market, the OTCQX or the OTCQB or the OTC Pink “Current” Market run by
the OTC Markets Group Inc. (or any successor to any of the foregoing).

 

(k) 
"Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the
period beginning six (6) month prior to the applicable date of determination and ending on and including the applicable date of
determination (the "Equity Conditions Measuring Period"), all shares of Common Stock issuable upon conversion
of the Notes (including as Interest Shares) shall be eligible for sale without restriction and without the need for registration
under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common
Stock is designated for quotation on the Principal Market or any other Eligible Market and shall not have been suspended from
trading on such exchange or market (other than suspensions of not more than two (2) days and occurring prior to the applicable
date of determination due to business announcements by the Company) nor shall delisting or suspension by such exchange or market
been pending in writing by such exchange or market; (iii) during the one (1) year period ending on and including the date immediately
preceding the applicable date of determination, the Company shall have delivered shares of Common Stock upon conversion of the
Notes to the Holders on a timely basis as set forth in Section 3(c)(ii) hereof; (iv) any applicable shares of Common Stock to
be issued in connection with the event requiring determination may be issued in full without violating Section 3(d) hereof and
the rules or regulations of the Principal Market or any applicable Eligible Market; (v) the Company shall not have failed to timely
make any payments within five (5) Business Days of when such payment is due pursuant to any Transaction Document; (vi) during
the Equity Conditions Measuring Period, there shall not have occurred either (A) the public announcement of a pending, proposed
or intended Fundamental Transaction which has not been abandoned, terminated or consummated, or (B) an Event of Default or (C)
an event that with the passage of time or giving of notice would constitute an Event of Default; (vii) the Company shall have
no knowledge of any fact that would cause any shares of Common Stock issuable upon conversion of the Notes (including as Interest
Shares) not to be eligible for sale without restriction pursuant to Rule 144 and any applicable state securities laws; and (viii)
the Company otherwise shall have been in compliance with and shall not have breached any provision, covenant, representation or
warranty of any Transaction Document.

 

    	 	20	 

     

    

 

(l) 
"Equity Conditions Failure" means that (i) on any day during the period commencing ten (10) Trading Days
prior to the applicable Interest Date through the applicable Interest Date or (ii) on any day during the period commencing ten
(10) Trading Days prior to the applicable Company Optional Redemption Notice Date through the applicable Company Optional Redemption
Date, the Equity Conditions have not been satisfied (or waived in writing by the Holder).

 

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

 

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

 

    	 	21	 

     

    

 

(o) 
“Indebtedness” means, without duplication (A) all indebtedness for borrowed money, (B) all obligations
issued, undertaken or assumed as the purchase price of property or services (including, without limitation, “capital leases”
in accordance with generally accepted accounting principles) (other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired
with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby,
is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness,
and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above.

 

(p) 
“Interest Rate” means eight percent (8.0%) per annum, as may be adjusted from time to time in accordance
with Section 2.

 

(q) 
“Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries
taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority
or ability of the Company or any of its Subsidiaries to timely perform any of their respective obligations under any of the Transaction
Documents.

 

(r)
“Maturity Date” shall mean August 16, 2017; provided, however, the Maturity Date may be
extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and
be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would
result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a
Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice
is delivered prior to the Maturity Date, provided further that if a Holder elects to convert some or all of this Note
pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity
Date shall automatically be extended until such time as such provision shall not limit the conversion of this
Note.

 

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

 

    	 	22	 

     

    

 

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

 

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

 

(v) 
“Principal Market” means, as of any date of determination, the principal securities exchange or securities
market on which the Common Stock is then traded.

 

(w) 
“Redemption Notices” means, collectively, the Event of Default Redemption Notices and the Company Optional
Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”

 

(x) “Redemption
Premium” means (i) in the case of the Events of Default described in Section 4(a)
(other than Sections 4(a)(iii) through 4(a)(v)), 127.5% or (ii) in the case of the Events of Default described in Sections 4(a)(iii)
through 4(a)(v), 100%.

 

(y) 
“Redemption Prices” means, collectively, Event of Default Redemption Prices, and the Company Optional
Redemption Prices and each of the foregoing, individually, a “Redemption Price.”

 

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

 

(aa) 
“Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns a majority of
the outstanding capital stock or holds a majority of equity or similar interest of such Person or (II) controls or operates all
or any part of the business, operations or administration of such Person, and each of the foregoing.

 

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

 

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

 

    	 	23	 

     

    

 

(dd) 
“Transaction Documents” means, collectively, this Note, the Debt Exchange Agreement and each of the
other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated
hereby and thereby, as may be amended from time to time.

 

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

 

(ff) 
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security
on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function
or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market
on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 22. All
such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during such period.

 

[signature
page follows]

 

    	 	24	 

     

    

 

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

 

	 	FREESEAS
    INC.
	 	 	 
	 	By:	/s/ Dimitris
    Papadopoulos
	 	Name:	Dimitris
    Papadopoulos
	 	Title:	Chief
    Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Note - Signature Page 

     

     

    

 

EXHIBIT
I

FREESEAS INC.

CONVERSION NOTICE

 

Reference
is made to the Convertible Note (the “Note”) issued to the undersigned by FreeSeas Inc.,a corporation
incorporated and existing under the laws of the Republic of the Marshall Islands (the “Company”). In
accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note)
of the Note indicated below into shares of Common Stock, US$0.001 par value per share (the “Common Stock”),
of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the
Note.

 

	Date of Conversion:	 	 
	 	 	 
	Aggregate Principal to be converted:	 	 
	 	 	 
	Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted:	 	 
	 	 	 
	AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:	 	 
	 	 	 
	Please confirm the following information:
	 
	Conversion Price:	 	 
	 	 	 
	Number of shares of Common Stock to be issued:	 	 
	 	 	 
	Please issue the Common Stock into which the Note is being converted in the following name and to the following address:
	 
	Issue to:	 	 
	 	 	 
	 	 	 
	 	 	 
	Facsimile Number:	 	 
	 	 	 
	Holder:	 	 
	 	 	 
	By:	 	 
	Title:	 	 
	Dated:	 	 
	 	 	 
	Account Number:	 	 
	(if
electronic book entry transfer)	 	 
	 	 	 
	Transaction Code Number:	 	 
	(if electronic book entry transfer)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}]]