Document:

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of April 17, 2015 between Saleen Automotive, Inc.,
a Nevada corporation (the “Company”), each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively the “Purchasers”), and GreenTech
Automotive, Inc., which will serve as the representative of the Purchasers, and is referred to herein from time to time as the
“Purchaser Representative”.

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE
I. DEFINITIONS

 

1.1
Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings
set forth in this Section 1.1:

 

“Affiliate”
means any 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.

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

 

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

 

“Closing”
shall have the meaning ascribed to such term in Section 2.1(a). “Closing Date” shall have the meaning ascribed
to such term in Section 2.1(a). “Commission” means the Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed into.

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

“Company
Counsel” means _________________.

 

    	 

    	 

    

 

“Conversion
Price” shall have the meaning ascribed to such term in the Notes.

 

“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.

 

“Discussion
Time” shall have the meaning ascribed to such term in Section 3.2(f).

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(q).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“IP
Security Agreement” means the Intellectual Property Security Agreement, dated the date hereof, by the Company in favor
of the Purchasers, in the form of Exhibit C attached hereto, securing the obligations of the Company under the Notes and
other Transaction Documents.

 

“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.

 

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“Notes”
means the 10.0% First Lien Secured Convertible Notes due, subject to the terms therein, niney (90) days from their date of issuance,
issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.

 

“Person”
means 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.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.(iii).

 

“Purchaser
Representative” shall have the meaning ascribed to such term in Section 2.1(c)(i).

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise or conversion in full
of all Notes (including Underlying Shares issuable as payment of interest), ignoring any conversion or exercise limits set forth
therein, and assuming that the Conversion Price is at all times on and after the date of determination 75% of the then Conversion
Price on the Trading Day immediately prior to the date of determination.

 

“Regulation
13D-G” means Regulation 13D-G promulgated by the Commission pursuant to the Exchange Act, as such Regulation and the
Rules thereunder may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Regulation.

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Saleen
Entities” shall have the meaning ascribed to such term in the recitals hereto.

 

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“Saleen
Entities Financial Statements” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Saleen
Parties Intellectual Property” shall have the meaning ascribed to such term in Section 3.1(n).

 

“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities”
means the Notes and the Underlying Shares.

 

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

 

“Security
Agreement” means the Security Agreement, dated the date hereof, by the Company in favor of the Purchasers, in the form
of Exhibit B attached hereto, securing the obligations of the Company under the Notes and other Transaction Documents.

 

“Security
Documents” means any and all means any and all security agreements, pledge agreements, hypothecation agreements, collateral
assignments, mortgages, deeds of trust, control agreements and similar such agreements, executed and delivered by the Company,
any of its Subsidiaries and/or any third party in favor of the Purchasers pursuant to the Transaction Documents which secures
the Company’s obligations under the Transaction Documents and/or any of the Securities, and other documents executed, delivered
and/or filed by the Company, any of its Subsidiaries, any third party and/or the Purchasers as permitted or required under any
of the foregoing, including without limitation the Security Agreement and the IP Security Agreement.

 

“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

 

“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes purchased hereunder as specified below
such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds. The initial principal amount of each Purchaser’s Note shall
be equal to such Purchaser’s Subscription Amount.

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Subsidiary
Guarantee” means the Subsidiary Guarantee, in the form attached hereto as Exhibit E, executed by each Subsidiary
in favor of the Purchasers, guaranteeing the Company’s obligations under the Notes.

 

“Supplemental
Agreement” means the Supplemental Agreement between the Company, Steve Saleen and GreenTech Automotive, Inc. dated of
even date herewith.

 

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

 

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“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange or the OTC Bulletin Board.

 

“Transaction
Documents” means this Agreement, the Notes, the Security Documents, the Registration Rights Agreement, the Voting Agreement
and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions
contemplated hereunder.

 

“Transfer
Agent” means Action Stock Transfer, the current transfer agent of the Company with a mailing address of 2469 E. Fort
Union Blvd., Suite 214, Salt Lake City, UT 84121, and a facsimile number of (801) 274-1099, and any successor transfer agent of
the Company.

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Notes and issued and
issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes.

 

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

 

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ARTICLE
II. PURCHASE AND SALE

 

	2.1	Closing.

 

The
purchase and sale of the Notes (the “Closing”) shall take place on March _, 2015, at 10:00 a.m., Pacific Time
(“Closing Date”), at the offices of Company or at such other location or time or on such other date mutually
agreed upon by the Company and all of the Purchasers, subject to the conditions precedent for the Closing as set forth in Section
2.3, and to each party’s obligations hereunder having been satisfied or waived. At the Closing, upon the terms and subject
to the conditions set forth herein, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase,
in the aggregate, $500,000 in principal amount of the Notes. On or prior to the Closing, each Purchaser participating in the Closing
shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to its Subscription Amount
and the Company shall deliver to each Purchaser its respective Note, as determined pursuant to Section 2.2(a), and the Company
and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.

 

		(a)	Purchaser
                                         Representative.

 

(i)By
virtue of the execution of this Agreement by each Purchaser, each of the Purchasers shall be deemed to have agreed to appoint
GreenTech Automotive, Inc. as its agent and attorney-in-fact, as the purchaser representative (the “Purchaser Representative”)
for and on behalf of the Purchasers to give and receive notices and communications, to agree to, negotiate, enter into settlements
and compromises of, and comply with orders of courts with respect to any indemnification claims, to assert, negotiate, enter into
settlements and compromises of, and comply with orders of courts with respect to, any other claim by the Company against any Purchaser
or by any such Purchaser against the Company, in each case relating to this Agreement or the transactions contemplated hereby,
and to take all other actions that are either (A) necessary or appropriate in the judgment of the Purchaser Representative for
the accomplishment of the foregoing or (B) specifically mandated by the terms of this Agreement. Such agency may be changed by
the Purchasers from time to time upon not less than thirty (30) days prior written notice to the Company; provided, however,
that the Purchaser Representative may not be removed unless Purchasers holding at least two-thirds (2/3) of the outstanding principal
amount of the Notes agree to such removal and to the identity of the substituted agent. A vacancy in the position of Purchaser
Representative, whether due to the resignation, removal or dissolution of the Purchaser Representative or for any other reason,
may be filled by the recipients of a majority in interest of the outstanding principal amount of the Notes. No bond shall be required
of the Purchaser Representative, and the Purchaser Representative shall not receive any compensation for its services. Notices
or communications to or from the Purchaser Representative shall constitute notice to or from the Purchasers.

 

(ii)The
Purchaser Representative shall not be liable for any act done or omitted hereunder as Purchaser Representative while acting (A)
in good faith or (B) with the consent of the holders of a majority in interest of the outstanding principal amount of the Notes..
A decision, act, consent or instruction of the Purchaser Representative, including, but not limited to, an amendment, extension
or waiver of this Agreement, shall constitute a decision of the Purchasers and shall be final, binding and conclusive upon the
Purchasers; and the Company may rely upon any such decision, act, consent or instruction of the Purchaser Representative as being
the decision, act, consent or instruction of the Purchasers.

 

	 	2.2	Deliveries.

 

(a)On
the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)this
Agreement, duly executed by the Company;

 

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(ii)a
Note with a principal amount equal to such Purchaser’s Subscription Amount, registered in the name of such Purchaser;

 

(iii)the
Security Documents, including, without limitation, the Security Agreement and the IP Security Agreement, duly executed by the
Company and each Subsidiary;

 

(iv)the
Subsidiary Guarantee, duly executed by each Subsidiary of the Company; and

 

(v)
the Supplemental Agreement, duly executed by the Company.

 

(b)On
the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)this
Agreement, duly executed by such Purchaser;

 

(ii)such
Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the;

 

(iii)the
Security Documents to which each Purchaser is a party and required by law to be signed by such Party in order to be binding;

 

(iv)
the Supplemental Agreement, duly executed by such Purchaser.

 

	 	2.3	Closing
                                         Conditions.

 

(a)The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)the
accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein;

 

(ii)all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and

 

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(iii)at
the Closing, the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b)The
respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being
met:

 

(i)the
accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained
herein;

 

(ii)all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;

 

(iii)at
the Closing, the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv)there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

(v)from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the applicable
Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New
York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

 

ARTICLE
III. REPRESENTATIONS AND WARRANTIES

 

	3.1	Representations
    and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser.
    However, it is understood and agreed that,.

 

(a)Subsidiaries.
All of the direct and indirect subsidiaries of the Company are accurately disclosed in the Company’s filings with the Securities
Exchange Commission (the “SEC”). The Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens (other than Liens in respect of the Second Lien Obligations, as defined
in the Intercreditor Agreement of even date herewith), and all of the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

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(b)Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation or default of any of the provisions of its respective articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
The Company’s SEC Reports (as hereinafter defined) contain true and correct copies of the Company’s articles of incorporation
and the Company’s bylaws, as each is currently in effect.

 

(c)Authorization;
Enforcement. The Company and the Subsidiaries have the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents and otherwise to carry out their obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents by the Company and the Subsidiaries and the consummation
by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the
Company and the Subsidiaries and no further action is required by the Company, the Subsidiaries, their board of directors or their
stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been
(or upon delivery will have been) duly executed by the Company and the Subsidiaries, as applicable, and, when delivered in accordance
with the terms hereof and thereof, will constitute the valid and binding obligation of the Company and the Subsidiaries enforceable
against the Company and the Subsidiaries in accordance with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

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(d)No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the Subsidiaries and the
consummation by the Company and the Subsidiaries of the other transactions contemplated hereby and thereby do not and will not:
(i) conflict with or violate any provision of the Company’s or any Subsidiary’s articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of
the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, loan or credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected (other than Liens in favor of the Purchasers), or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)Filings,
Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company and the Subsidiaries of the
Transaction Documents, other than (i) filings required pursuant to Section 4.6, (ii) the notice and/or application(s) to each
applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon
in the time and manner required thereby, (iii) the filing of Form D with the Commission and such filings as are required to be
made under applicable state securities laws, and (iv) filings required under the terms of the Security Documents (collectively,
the “Required Approvals”).

 

(f)Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required
Minimum on the date hereof.

 

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(g)Capitalization.
The Company has furnished to the Purchases the shareholder list from its transfer agent and DTC nominee accounts, which comprises
the capitalization of the Company as of the most recent date set forth therein, which includes the number of shares of Common
Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any capital
stock since its most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.
Except as set forth in the Company’s SEC Reports and a result of the purchase and sale of the Securities, there are
no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and
sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further
approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.
There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(h) SEC Reports; Financial
Statements.

 

(i)The
Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements
of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

 

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(ii)On
Schedule 3.1(h) are set forth the following financial statements of the Saleen Entities (collectively the “Saleen
Entities Financial Statements”): audited consolidated balance sheets and statements of income, changes in stockholders’
equity, and cash flow as of and for the fiscal years ended March 31, 2013 and 2012. The Saleen Entities Financial Statements have
been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Saleen Entities as of such dates and the results of operations of the Saleen Entities for such periods,
are correct and complete, and are consistent with the books and records of the Saleen Entities. Since March 31, 2013, the Saleen
Entities have not effected any change in any method of accounting or accounting practice, except for any such change required
because of a concurrent change in GAAP.

 

(i)Material
Changes. Since the date of the latest audited financial statements included within the SEC Reports and/or the Saleen Entities
Financial Statements, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof or disclosed
on Schedule 3.1(i), (i) there has been no event, occurrence or development that has had or that could reasonably be expected
to result in a Material Adverse Effect, (ii) the Company and the Subsidiaries have not incurred any liabilities (contingent or
otherwise) other than (A) that have been incurred since the date of the most recent balance sheet included in the SEC Reports
or the Saleen Entities Financial Statements in the ordinary course of business and are not (singly or in the aggregate) material
to the Company’s business, and (B) not due and payable or to be performed or satisfied after the date hereof under the Company
and the Subsidiaries’ material contracts in accordance with their terms, in each case which are not (singly or in the aggregate)
material to the Company’s business, (iii) the Company and the Subsidiaries have not altered their method of accounting,
(iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate. The Company does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule
3.1(i), no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed on or prior
to the date that this representation is made.

 

(j)Litigation.
There is no suit, action, claim, arbitration, proceeding or investigation pending or, to the knowledge of the Company, threatened
against, relating to or involving the Company, any Subsidiary, or real or personal property of the Company or any Subsidiary,
before any Governmental Entity (as such term is defined in the Merger Agreement) or other third party. To the knowledge of the
Company, there is no basis for any such suit, action, proceeding or investigation. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

 

    	12

    	 

    

 

(k)Labor;
Benefits. Schedule 3.1(k) contains a true and complete list of each benefit plan currently sponsored, maintained or
contributed to by the Company and the Subsidiaries. The Company’s records accurately reflect the service histories of the
Company and the Subsidiaries’ employees, contractors and consultants, including their hours of service, and all such data
is maintained in a usable form. Neither the Company nor any Subsidiary is a party to any employment, contractor or consultant
agreement which could result in the payment to any current, former or future director, employee, contractor or consultant of the
Company or the Subsidiaries of any money or other property or rights or accelerate or provide any other rights or benefits to
any such director, employee, contractor or consultant as a result of the transactions contemplated by the Merger or this Agreement,
whether or not (i) such payment, acceleration or provision would constitute a “parachute payment” (within the meaning
of Section 280G of the Code), or (ii) some other subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered.

 

(l)Compliance.
To the knowledge of the Company, the Company and the Subsidiaries are in compliance in all material respects with all applicable
laws (including, without limitation, applicable laws relating to zoning, environmental matters and the safety and health of employees),
ordinances, regulations and orders of all Governmental Entities. Neither the Company nor any of the Subsidiaries has been charged
with and, to the knowledge of the Company, is not now under investigation with respect to, a violation of any applicable law,
regulation, ordinance, order or other requirement of a Governmental Entity. Neither the Company nor any of its Subsidiaries is
a party to or bound by any order, judgment, decree or injunction of any Governmental Entity.

 

(m)Title
to Assets. The Company and the Subsidiaries have good, clear and marketable title to all the tangible properties and tangible
assets reflected in their latest balance sheet as being owned by them or acquired after the date thereof which are, individually
or in the aggregate, material to the Company’s business (except properties sold or otherwise disposed of since the date
thereof in the ordinary course of business), free and clear of all Liens. All equipment and other items of tangible personal property
and assets of the Company and the Subsidiaries (i) are in good operating condition and in a state of good maintenance and repair,
ordinary wear and tear excepted, and (ii) are usable in the regular and ordinary course of the Company’s business. The Company
and the Subsidiaries do not own any real property. The Company has provided to the Purchasers true and complete copies of all
real property leases to which the Company and the Subsidiaries are a party. The Company and/or the Subsidiaries, as applicable,
have a valid leasehold interest in such leased real property, and such leases are in full force and effect. The improvements and
fixtures on such real property leased by the Company and/or the Subsidiaries are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted.

 

    	13

    	 

    

 

(n)
Intellectual Property.

 

(i)Saleen
and/or the Saleen Entities own or have the right to use pursuant to an enforceable contract all Intellectual Property necessary
or desirable to operate the Saleen businesses as currently conducted and as currently proposed to be conducted (the “Saleen
Parties Intellectual Property”). Other than the Saleen Parties Intellectual Property, the Company has no Intellectual
Property. The Saleen Parties have taken all necessary and desirable action to maintain and protect each item of Saleen Parties
Intellectual Property.

 

(ii)The
Company has delivered to the Purchasers correct and complete copies of all written documentation evidencing ownership and prosecution
(if applicable) of each item of any Saleen Parties Intellectual Property. With respect to each such item of Saleen Parties Intellectual
Property:

 

(A)The
Saleen Parties possess all right, title, and interest in and to the item, free and clear of any Lien;

 

(B)the
item is not subject to any order, judgment, decree or injunction of any Governmental Entity;

 

(C)no
action or proceeding is pending or, to the Company’s best knowledge, threatened (and, to the Company’s best knowledge,
there is no basis therefor) which challenges the enforceability, use, or ownership of the item; and

 

(D)neither
the Company nor any Subsidiary has ever agreed to indemnify any Person for or against any interference, infringement, misappropriation,
or other conflict with respect to the item.

 

(iii)The
Saleen Parties Intellectual Property does not interfere with, infringe upon, misappropriate, or otherwise violate or come into
conflict with any other Person’s Intellectual Property, and neither the Company nor any Subsidiary has received any notice
alleging any such interference, infringement, misappropriation, violation, or conflict (including any claim that the Company or
any Subsidiary must license or refrain from using any other Person’s Intellectual Property). No third Person has any Intellectual
Property that interferes or would be likely to interfere with the Company’s use of any Saleen Parties Intellectual Property.
The Saleen Parties Intellectual Property will not interfere with, infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of any other Person as a result of the continued operation by the Company or the Subsidiaries
of their businesses as currently conducted and as currently proposed to be conducted. No other Person has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Saleen Parties Intellectual Property.

 

(iv)The
Company has furnished to the Purchasers correct and complete copies of all contracts with respect to which the Company or any
Subsidiary has granted to a third party rights under or with respect to any Saleen Parties Intellectual Property (together with
any exceptions). With respect to the Contracts (1) related to each item of Saleen Parties Intellectual Property, the statements
in clauses (A) through (G) below are true and correct, and (2) in Schedule 3.1(n), the statements in clauses (A) through
(D) below are true and correct:

 

    	14

    	 

    

 

(A)the
contract is enforceable against each of the parties thereto in accordance with its terms;

 

(B)The
Saleen Entities are not (and no counter-party is) in breach of such contract, and no event has occurred that with notice or lapse
of time would constitute a breach thereunder;

 

(C)no
party to the contract has repudiated any provision thereof;

 

(D)with
respect to each sublicense contract, the representations and warranties set forth in (A) – (D) are true and correct with
respect to the underlying license contract;

 

(E)the
underlying item of Saleen Parties Intellectual Property is not subject to any outstanding order, judgment, decree or injunction
of any Governmental Entity;

 

(F)no
action or proceeding is pending or threatened (and there is no basis therefor) that challenges the enforceability of the underlying
item of Intellectual Property; and

 

(G)neither
the Company nor any Subsidiary has granted any sublicense or similar contract with respect to the contract.

 

(v)All
former and current employees, contractors and consultants of the Saleen Entities have executed written contracts with the Saleen
Entities that assign to the Saleen Entities all rights to any inventions, improvements, discoveries or information relating to
the Saleen Entities’ business. No employee, contractor or consultant of the Saleen Entities has entered into any contract
that restricts or limits in any way the scope or type of work in which the employee, contractor or consultant may be engaged or
requires the employee, contractor or consultant to transfer, assign, or disclose information concerning his or her work to any
Person other than Saleen Entities.

 

(vi)To
the Company’s knowledge, there are no new products, inventions, procedures, or methods of manufacturing or processing that
any competitors or other Person have developed which reasonably could be expected to supersede or make obsolete any, or any planned,
product or process of the Saleen Entities.

 

(o)Insurance.The
Company and the Subsidiaries maintain insurance policies with coverage from carriers and in amounts reasonably adequate for the
business conducted by such Persons.

 

    	15

    	 

    

 

(p)Transactions
with Affiliates and Employees. The Company and the Subsidiaries are not a party to any contract, lease, license, commitment
or arrangement, written or oral, which, were the Saleen Entities “registrants” under the Exchange Act, would be required
to be disclosed pursuant to Item 404(a) or (c) of Regulation S-K as promulgated by the SEC, and there are no loans outstanding
to or from any Person specified in Item 404(a) of Regulation S-K from or to the Company or the Subsidiaries.

 

(q)Sarbanes-Oxley;
Internal Accounting Controls. The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date,
the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control
over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.

 

(r)Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.

 

(s)Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

    	16

    	 

    

 

(t)Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of
1940, as amended.

 

(u)Registration
Rights. Except as provided in those certain Registration Rights Agreements disclosed in the SEC Reports, no Person has any
right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(v)Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as set forth in the SEC Reports, the Company has not, in the twelve (12) months preceding the date hereof,
received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements of such Trading Market. Except as set forth in the SEC Reports,
the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements.

 

(w)Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s articles of incorporation or the laws of its state of incorporation
that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations
or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(x)Disclosure.
None of the Transaction Documents, nor any Schedule or Exhibit thereto, nor any other statements, documents or certificates made
or delivered in connection herewith or therewith contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein and therein not misleading in light of the circumstances under which such
statements were made.

 

(y)No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.

 

    	17

    	 

    

 

(z)Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to
carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof,
and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect
of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports disclose
all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (a) any liabilities for borrowed
money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are
or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of business, and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company
nor any Subsidiary is in default with respect to any Indebtedness.

 

(aa)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

 

(bb)
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(cc)
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is
in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

    	18

    	 

    

 

(dd)
Accountants. The Company’s accounting firm is Weinberg & Company. To the knowledge and belief of the Company,
such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the Company’s Annual Report for the year ending March 31, 2013.

 

(ee)
Seniority. As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Notes in right of
payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by
purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations
(which is senior only as to the property covered thereby).

 

(ff)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.

 

(gg)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.
The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

 

    	19

    	 

    

 

(hh) Acknowledgment Regarding Purchasers’
Trading Activity. Notwithstanding anything in this Agreement or elsewhere herein to the contrary (except for Section 3.2(f)),
it is understood and acknowledged by the Company that (i) none of the Purchasers has been asked to agree by the Company, nor has
any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open
market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions
to which any such Purchaser is a party, directly or indirectly, may presently have a “short” position in the Common
Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction. The Company further understands and acknowledges that (a) one or more Purchasers
may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares deliverable with respect to Securities are being determined and (b)
such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at
and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction Documents.

 

(ii)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the securities of the Company or (iii) paid or agreed to pay to any Person any compensation
for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation
paid to the Company’s placement agent in connection with the placement of the Securities.

 

(jj)
Significant Shareholders. Except for Steve Saleen and except as disclosed in the SEC Reports, no Person has any direct
or indirect beneficial ownership (as determined in accordance with Regulation 13D-G) of shares of Common Stock which exceeds in
the aggregate (together with other Persons which would constitute a “group” under Regulation 13D-G) five percent (5%)
of the total number of outstanding shares of Common Stock as of the date hereof and the Closing Date, including, without limitation,
as a result of any Person’s beneficial interest in a trust. For purposes of the calculations under this paragraph, any limitations
on beneficial ownership contained in any instrument directly or indirectly convertible, exchangeable or exercisable into or for
Common Stock shall be ignored and any such instruments shall be deemed to be currently convertible, exchangeable or exercisable
in full.

 

    	20

    	 

    

 

	3.2	Representations
    and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants
    as of the date hereof and as of the Closing Date to the Company as follows:

 

(a)Organization;
Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents
have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document
to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with
its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

(b)Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s
right to sell the Securities pursuant to any registration statement filed under the Securities Act or otherwise in compliance
with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law.
Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and at the date hereof it is, and on each date on which
it or its permitted assignee converts any Notes it or such permitted assignee, as the case may be, will be an “accredited
investor” as defined in Rule 501 under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act.

 

(d)Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(e)General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.

 

    	21

    	 

    

 

(f)Short
Sales and Confidentiality Prior To The Date Hereof. Other than consummating the transactions contemplated hereunder, such
Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser,
executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing from the
time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder until the date hereof (“Discussion Time”).
Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction).

 

ARTICLE
IV.

OTHER
AGREEMENTS OF THE PARTIES

 

	4.1	Transfer
                                         Restrictions.

 

(a)The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the
terms of this Agreement and shall have the rights of a Purchaser under this Agreement.

 

(b)The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:

 

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

 

    	22

    	 

    

 

The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501 under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including,
if the Securities are subject to a registration statement filed under the Securities Act, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately
amend the list of selling stockholders thereunder.

 

(c)Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), except
for any legend reasonably referring to any applicable transfer restrictions under state securities laws: (i) while a registration
statement covering the resale of such security is effective under the Securities Act, or (ii) if such Underlying Shares are eligible
for resale under Rule 144 and the holder thereof is not an Affiliate of the Company, or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
Commission). If required by the Transfer Agent to effect the removal of the legend hereunder, the Company shall cause its counsel
to issue a legal opinion to the Transfer Agent promptly after the date which is six (6) months following the Closing Date (if
the Company has been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for the then preceding ninety
(90) days and has filed all reports required to be filed thereunder during the then preceding twelve (12) months (or such shorter
period that the Company was required to file such reports) and the holder thereof is not an Affiliate of the Company). If all
or any portion of a Note is converted or exercised (as applicable) at a time when there is an effective registration statement
to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 or if such legend is not
otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends, except for any legend
reasonably referring to any applicable transfer restrictions under state securities laws. The Company agrees that at such time
as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery
by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with
a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer
Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System
as directed by such Purchaser.

 

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(d)In
addition to such Purchaser’s other available remedies, the Company shall be subject to the liquidated damage provisions
and other remedies for failing timely to provide proper certificates to a Purchaser which are set forth in such Purchaser’s
Note. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to
pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief.

 

(e)Each
Purchaser, severally and not jointly with the other Purchasers, agrees that such Purchaser will sell any Securities pursuant to
either Rule 144 or the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a registration statement filed under the Securities Act,
they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive
legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance
upon this understanding.

 

(f)The
Company represents and warrants that, except as may otherwise be set forth in the Disclosure Schedules, none of the Purchasers
is currently nor has been, nor upon consummation of the Closing will become, an affiliate of the Company for purposes of Rule
144. With respect to each Purchaser, the Company covenants and agrees to take the position at all times in the future that such
Purchaser is not an affiliate of the Company for purposes of Rule 144 solely as result of such Purchaser’s ownership of
the Securities, except that this covenant shall not apply if such Purchaser beneficially owns (as determined in accordance with
Regulation 13D-G of the Exchange Act) in excess of ten percent (10%) of the outstanding shares of Common Stock.

 

	4.2	Acknowledgment
    of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
    of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that
    its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares
    pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim,
    delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser
    and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

 

    	24

    	 

    

 

	4.3	Furnishing
    of Information. Until the time that no Purchaser owns Securities, the Company covenants to timely file (or obtain extensions
    in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the
    date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
    Act. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act,
    it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information
    as would be required if the Purchasers were able to sell the Securities under Rule 144. The Company further covenants that
    it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time
    to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the
    exemption provided by Rule 144 if such exemption becomes available. So long as any Securities are outstanding, the Company
    shall cause itself to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and timely file
    all reports required to be filed thereunder.
	 	 
	4.4	Integration.
    The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as
    defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities to the Purchasers
    in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or
    that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading
    Market.
	 	 
	4.5	Conversion
    Procedures. The form of Notice of Conversion included in the Notes set forth the totality of the procedures required of
    the Purchasers in order to convert the Notes. No additional legal opinion or other information or instructions shall be required
    of the Purchasers to convert their Notes. The Company shall honor conversions of the Notes and shall deliver Underlying Shares
    in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
	 	 
	4.6	Securities
    Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the Trading Day following the date
    hereof, issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and attaching
    the Transaction Documents as exhibits thereto. The Company and each Purchaser shall consult with each other in issuing any
    other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall
    issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect
    to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of
    the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in
    which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.
    Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any
    Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent
    of such Purchaser, except (a) as required by federal securities law in connection with (i) any registration statement filed
    under the Securities Act covering the resale of the Securities, and (ii) the filing of final Transaction Documents (including
    signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations,
    in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

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	4.7	Shareholder
    Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that
    any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill
    (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
    adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by
    virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
	 	 
	4.8	Non-Public
    Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
    Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser
    or its agents or counsel with any information that the Company believes constitutes material non-public information, unless
    prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
    The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
    in securities of the Company.
	 	 
	4.9	Use
    of Proceeds. Except as set forth on Schedule 4.9 attached hereto or as provide in Section 5.2 hereof, the Company
    shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceeds
    for (a) the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary
    course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents
    or (c) the settlement of any outstanding litigation.
	 	 
	4.10	Indemnification
    of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and
    its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
    equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who
    controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
    directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent
    role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each,
    a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies,
    damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’
    fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach
    of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction
    Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates,
    by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated
    by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties
    or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder
    or any violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes
    fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in
    respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company
    in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably
    acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action
    and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser
    Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii)
    the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
    there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position
    of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable
    fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this
    Agreement (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall
    not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability
    is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made
    by such Purchaser Party in this Agreement or in the other Transaction Documents.

 

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	4.11	Reservation
    and Listing of Securities.

 

(a)The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may be required to fulfill its obligations in full under the Transaction Documents.

 

(b)If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s articles
of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at
such time, as soon as possible and in any event not later than the seventy-fifth (75th) day after such date.

 

(c)If
applicable, the Company shall (i) in the time and manner required by the principal Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required
Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for
listing on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing, and (iv)
maintain the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market.

 

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4.12Corporate
Structure. For a period of twelve (12) months following the Closing, the Company and its Subsidiaries shall maintain and conduct
its business at a physical office or offices, hire and retain key employees and other personnel, and otherwise operate its business
in a reasonable and customary manner similar to other public reporting companies engaged in similar businesses.

 

4.13Bank
Account Signatures. So long as any Notes remain outstanding, any check written against or other withdrawal from the Company
or any of its Subsidiaries’ bank account(s) in an amount greater than $5,000.00 shall require the signature of two executive
officers.

 

4.14Equal
Treatment of Purchasers. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the
Transaction Documents. Further, the Company shall not make any payment of principal or interest on the Notes in amounts which
are disproportionate to the respective principal amounts outstanding on the Notes at any applicable time. For clarification purposes,
this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser,
and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting
in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.15Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.

 

4.16Security.
The Company’s and any Subsidiaries’ obligations under the Notes and other Transaction Documents shall be secured by
all the assets of the Company and its Subsidiaries. As of the Closing, the Purchasers participating therein shall be granted a
security interest in all the assets of the Company, including, without limitation, all of its Intellectual Property Rights and
its ownership of any and all Subsidiaries, and in the assets of any such Subsidiaries, to be memorialized in the Security Documents.
The Company shall execute such other agreements, documents and financing statements reasonably requested by Purchasers, which
will be filed at the Company’s expense with the applicable jurisdictions and authorities. The Company shall also execute
all such documents reasonably necessary in the opinion of the Purchasers to memorialize and further protect the security interests
described herein. The Purchasers may appoint a collateral agent to represent them collectively in connection with the security
interests being granted to the Purchasers.

 

4.17Additional
Guarantors. The Company shall cause each of its Subsidiaries, including those formed or acquired on or after the date hereof,
to execute and deliver to the Purchasers a Subsidiary Guarantee and a Security Agreement in conformity with those executed and
delivered at the Closing.

 

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ARTICLE
V. MISCELLANEOUS

 

5.1Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before April 30, 2015; provided, however, that such termination will not affect the
right of any party to sue for any breach by the other party (or parties).

 

5.2Fees
and Expenses. The Company shall pay all fees and expenses incurred by the Purchasers in connection with the preparation, negotiation
and execution and delivery of the Transaction documents and the consummation of the transactions contemplated hereby and thereby.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers. The amounts set forth in this paragraph as payable by the Company shall be so payable regardless
of whether the Closing occurs.

 

5.3Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of (a) the date of transmission or delivery, if such notice or communication
is delivered via facsimile at the facsimile number, or delivered by a U.S. nationally recognized overnight courier service to
the address, set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number,
or delivered by such courier service to the address, set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading Day, or (c) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached
hereto.

 

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5.5Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers of at least a majority in interest of the Securities still held
by Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.6Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto 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, except as
otherwise set forth in Section 4.10.

 

5.9Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the County of Los Angeles. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the County of Los Angeles for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is
an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

    	30

    	 

    

 

5.10Survival.
The representations and warranties shall survive the Closing and the delivery of the Securities for the applicable statute of
limitations.

 

5.11Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” or other document image format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” or other document image format data file signature page were an original thereof.

 

5.12Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

5.13Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then, until the
earlier of sixty (60) days after such failure by the Company or the Company performs such obligations, such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, in the case of a rescission
of a conversion of a Note, the Purchaser shall be required to return any shares of Common Stock delivered in connection with any
such rescinded conversion or exercise notice.

 

5.14Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.

 

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5.15Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.

 

5.16Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.17Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order
to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to
the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof,
the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from
the effective date forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest
in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at such Purchaser’s election.

 

5.18Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers
as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are
in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. In furtherance of the foregoing, the signature page of the Company and each Purchaser to each Transaction Document
shall evidence the binding agreement of the Company and such Purchaser to such Transaction Document, and no Purchaser shall be
entitled to receive a copy of the signature page of any other Purchaser to any other Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement
or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review
and negotiation of the Transaction Documents. For reasons of administrative convenience only, Purchasers and their respective
counsel have chosen to communicate with the Company through W-Net. W-Net does not represent all of the Purchasers but only W-Net.
The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the Purchasers.

 

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5.19Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.

 

5.20Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

5.21Construction.
The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

 

5.22Waiver
of Jury Trial. In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the parties
each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably
and expressly waives forever trial by jury.

 

(Signature
Pages Follow)

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the parties have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above:

 

SALEEN
AUTOMOTIVE, INC.

 

	By:	 	 
	Name:	 	 
	Title:	 	 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR PURCHASERS FOLLOWS]

 

    	 

    	 

    

 

PURCHASER:

 

GREENTECH
AUTOMOTIVE, INC.

 

	By:		 
	 	Gary
    Y. Tang	 
	 	Executive
    Vice President – Finance	 

 

1600
Tysons Boulevard, Suite 1150

McLean
Virginia 22102NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND
THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

Original
Issue Date: April 17, 2015

 

$500,000.00

 

SALEEN
AUTOMOTIVE, INC.

10.0%
FIRST LIEN CONVERTIBLE NOTE

 

THIS
NOTE is issued for 10.0% First Lien Secured Convertible Notes of Saleen Automotive, Inc., a Nevada corporation (the “Company”),
having its principal place of business at 2735 Wardlow Road, Corona, CA 92882, designated as its 10.0% First Lien Convertible
Notes (this Note, the “Note” and, collectively with the other Notes of such series, the “Notes”).

 

FOR
VALUE RECEIVED, the Company promises to pay to GreenTech Automotive, Inc.., or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $500,000.00 on August 17, 2015 (the “Maturity
Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, or such later
date as may be permitted by the Holder as set forth in Section 2 hereof, and to pay interest to the Holder on the aggregate unconverted
and then outstanding principal amount of this Note in accordance with the provisions hereof.

 

The
Company’s and its Subsidiaries’ obligations under this Note and the other Transaction Documents are secured by the
Collateral (as defined in the Intercreditor Agreement) pursuant to the terms of the Intercreditor Agreement and the obligations
under this Note and are guaranteed by the Subsidiaries pursuant to the Intercreditor Agreement.

 

    	 

    	 

    

 

This
Note is subject to the following additional provisions:

 

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

 

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

 

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

 

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

 

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

 

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

 

“Common
Stock Equivalents” means any securities of the Company or its subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

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

 

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

 

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“Conversion
Shares” means, collectively, the shares of Common Stock issued or issuable upon conversion or redemption of this Note
in accordance with the terms hereof, including without limitation shares of Common Stock issued or issuable as interest hereunder
or as damages under the Transaction Documents.

 

“Dilutive
Issuance” shall have the meaning set forth in Section 5(b).

 

“Dilutive
Issuance Notice” shall have the meaning set forth in Section 5(b).

 

“Event
of Default” shall have the meaning set forth in Section 7(a).

 

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

 

“Fundamental
Transaction Cash Amount” means the sum of (a) two hundred percent (200%) of the then outstanding principal amount of
this Note, plus one hundred percent (100%) of accrued and unpaid interest thereon, and (b) all other amounts, costs, expenses
and liquidated damages due in respect of this Note.

 

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

 

“Mandatory
Default Amount” means the sum of (a) one hundred twenty percent (120%) of the then outstanding principal amount of this
Note, (b) plus one hundred percent (100%) of accrued and unpaid interest hereon, and (c) all other amounts, costs, expenses and
liquidated damages due in respect of this Note.

 

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

 

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

 

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

 

“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) the indebtedness existing on the initial Closing
Date and disclosed in the SEC Reports, (c) lease obligations and purchase money indebtedness incurred in connection with the acquisition
of capital assets and lease obligations with respect to newly acquired or leased assets, (d) loans previously provided to Saleen
Automotive, Inc., SMS Signature Cars and/or Steve Saleen by the Small Business Administration and (e) indebtedness that is expressly
subordinate to the Notes pursuant to a written subordination agreement with the Purchasers that is acceptable to each Purchaser
in its sole and absolute discretion; provided that such Permitted

 

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Indebtedness
shall not exceed seventy-five percent (75%) of the aggregate principal amount of all Notes then outstanding.

 

“Permitted
Lien” means the individual and collective reference to the following:

 

(a)
Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith
judgment of the management of the Company) have been established in accordance with GAAP; (b) Liens imposed by law which were
incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’
Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business,
and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested
in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture
or sale of the property or asset subject to such Lien; and (c) Liens incurred in connection with Permitted Indebtedness and disclosed
in the SEC Reports.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of March 25, 2015, among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

  

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

 

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

 

“Subsidiary”
shall have the meaning set forth in the Purchase Agreement.

 

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

 

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

 

“Transaction
Documents” shall have the meaning set forth in the Purchase Agreement.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading

 

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Market,
the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board;

 

(c)
if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported
in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company.

 

Section
2. Interest; No Prepayment.

 

a)
Interest Rate. Interest shall accrue daily on the outstanding principal amount of this Note at a rate per annum equal to
10.0%, subject to Section 2(d) below.

 

b)
Payment of Interest. On the Maturity Date, the Company shall pay to the Holder any accrued but unpaid and unconverted interest
hereunder on the aggregate unconverted and then outstanding principal amount of this Note, and on each Conversion Date the Company
shall pay to the Holder any accrued but unpaid and unconverted interest hereunder on that portion of the principal amount then
being converted. The amount of interest payable on each Conversion Date and the Maturity Date (“Interest Amount”)
may be added to and included with the principal amount being so converted or redeemed on such date.

 

c)
Interest Calculations. Interest shall be calculated on the basis of a three hundred sixty (360)-day year, consisting of
twelve (12) thirty (30) calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full
of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become
due hereunder, has been made. Interest hereunder will be paid to the Person in whose name this Note is registered on the records
of the Company regarding registration and transfers of this Note (the “Note Register”). Except as otherwise
provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common Stock to the holders
of the Notes, then such payment of cash shall be distributed ratably among the holders of the then-outstanding Notes based on
their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.

 

d)
Default Interest. After the occurrence and during the continuance of any Event of Default, the interest rate on this Note
shall accrue at an interest rate equal to the lesser of twelve percent (12%) per annum, compounded daily, or the maximum rate
permitted under applicable law.

 

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e)
Prepayment. This Note may not be prepaid except with the consent of the holder hereof.

 

Section
3. Registration of Transfers and Exchanges.

 

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

 

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

 

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

 

d)
Transfer Restrictions. Any transfer of this Note shall also be subject to the applicable restrictions and requirements
of Sections 3.2 and 4.1 of the Purchase Agreement and other provisions of the Transaction Documents.

 

Section
4. Conversion.

 

a)
Voluntary Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall
be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(c) hereof). The Holder shall effect conversions by delivering to
the Company a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice of Conversion”),
specifying therein the principal amount of this Note and any accrued but unpaid interest thereon to be converted and the future
date (which may be the same date as the date such notice is deemed effective pursuant to Section 8(a)) on which such conversion
shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion,
the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder,
the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note,
plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain
records showing the principal amount(s) converted and the date of such conversion(s). In the event of any dispute or discrepancy,
the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee
by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of
a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face
hereof.

 

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b)
Conversion Price.  The conversion price shall equal the lesser of (A) $0.075 (subject to adjustment as provided in this
Note) and (B) seventy percent (70%) of the average of the three (3) lowest VWAPs occurring during the twenty (20) consecutive
Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note
(as applicable, the “Conversion Price”); provided, however, that in no event shall the Conversion Price be less than
$0.02 (the “Conversion Price”).

 

c)
Conversion Limitations.

 

i.
Holder’s Restriction on Conversion. The Company shall not effect any conversion of this Note, and a Holder shall
not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on
the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any other person or entity acting
as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note
with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable
upon (A) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject
to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other
Notes) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes
of this Section 4(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. To the extent that the limitation contained in this paragraph applies, the determination
of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of
which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice
of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other
securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case
subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent
to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set
forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this paragraph, in determining the number of

 

    	7

    	 

    

 

outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of
the following: (A) the Company’s most recent periodic or annual report, as the case may be; (B) a more recent public announcement
by the Company; or (C) a more recent notice by the Company or the Company’s transfer agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within three (3) Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be four and nine-tenths percent (4.9%) of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. By written notice to the Company, the Holder may at any time and from time to time increase or
decrease the Beneficial Ownership Limitation to any other percentage specified in such notice (or specify that the Beneficial
Ownership Limitation shall no longer be applicable), provided, however, that (A) any such increase (or inapplicability) shall
not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (B) any such increase or
decrease shall apply only to the Holder and not to any other holder of Notes. The provisions of this paragraph shall be construed
and 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 Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained
in this paragraph shall apply to a successor holder of this Note.

 

ii.
Unless otherwise approved in writing by the Company, any individual conversion under Section 4(a) must be for at least 10,000
Conversion Shares (such number to be appropriately adjusted for any stock splits, stock dividends and similar events).

 

d) 
Mechanics of Conversion.

 

i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a
conversion hereunder shall be determined by the quotient obtained by dividing (a) the outstanding principal amount of this Note
to be converted plus any accrued but unpaid interest thereon, by (b) the Conversion Price.

 

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ii.
Delivery of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the Legend Removal Date, shall be free of restrictive legends and trading restrictions
(other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired
upon the conversion of this Note. On or after the date which is six (6) months following the Original Issue Date on which this
Note is issued, the Company shall use commercially reasonable efforts to deliver any certificate(s) or shares required to be delivered
by the Company under this Section 4 electronically through the Depository Trust Company or another established clearing corporation
performing similar functions.

 

iii.
Failure to Deliver Certificates. If in the case of any Notice of Conversion such certificate(s) or shares are not delivered
to or as directed by the applicable Holder by the second (2nd) Trading Day after the Conversion Date, the Holder shall be entitled
to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind
such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and
the Holder shall promptly return to the Company the Common Stock certificates representing the principal amount of this Note unsuccessfully
tendered for conversion to the Company.

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that
such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the
event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not
refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any
violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or
enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for
the benefit of the Holder in the amount of one hundred percent (100%) of the outstanding principal amount of this Note, which
is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying
dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction,
the Company shall issue Conversion Shares or,

 

    	9

    	 

    

 

if
applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate(s)
or shares pursuant to Section 4(d)(ii) by the third (3rd) Trading Day after the Share Delivery Date, the Company shall pay to
the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $7.00 per
Trading Day (increasing to $13.00 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue)
for each Trading Day after such third (3rd) Trading Day after the Share Delivery Date until such certificates are delivered. Nothing
herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 7 hereof
for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the
right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law. Notwithstanding any portion of the foregoing to the contrary, if
the Company fails to deliver to the Holder such certificate(s) or shares by the Share Delivery Date pursuant to Section 4(d)(ii)
because (A) the conversion by the Holder is delivered in connection with a proposed sale by the Holder of the Conversion Shares
under Rule 144 promulgated under the Securities Act, and (B) in connection with such sale, the Holder has failed to deliver customary
representation letters, as prepared by the brokerage firm of Holder in the ordinary course of its business, appropriate to evidence
compliance with such rule, then the liquidated damages provisions herein shall not begin to accrue until the Trading Day immediately
following the date that the Holder has delivered such representation letters.

 

v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights
available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate(s) or shares by the Share
Delivery Date pursuant to Section 4(d)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm
to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive
upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash
to the Holder (in addition to any other remedies available to or elected by the Holder) the amount by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the
principal amount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would have

 

    	10

    	 

    

 

been
issued if the Company had timely complied with its delivery requirements under Section 4(d)(ii). For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with
respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase
obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares
of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

 

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

 

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

 

viii.
Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificates, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this
Note and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

 

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Section
5. Certain Adjustments.

 

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

 

b)
[RESERVED].

 

c)
Subsequent Rights Offerings. The Company shall not, at any time while the Note is outstanding, issue rights, options or
warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the VWAP at the record date mentioned below.

 

d)
Pro Rata Distributions. The Company shall not, at any time while this Note is outstanding, distribute to all holders of
Common Stock (and not to Holders of the Notes) evidences of its indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security other than the Common Stock.

 

e)
Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company effects any merger or consolidation
of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one
or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property,
or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property (each, a “Fundamental Transaction”),
then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and
amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction
if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate
Consideration”). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1)
share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note
following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company
or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note consistent with the foregoing provisions
and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms of any agreement pursuant
to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply
with the provisions of this Section 5(e) and insuring that this Note (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction. In the event of a Fundamental Transaction the Holder may
elect, by giving written notice of such election to the Company at least five (5) Trading Days before the closing of such Fundamental
Transaction, to sell this Note to the Company or its designated assignee, concurrently with such closing, for a cash payment equal
to the Fundamental Transaction Cash Amount at the time of the closing. Notice of any such proposed Fundamental Transaction and
of such election shall be given to the Holder at least fifteen (15) calendar days before such closing. In connection with such
purchase, the Holder shall assign this Note to the Company or its assignee, free and clear of any liens, claims or encumbrances
other than transfer restrictions under applicable securities laws.

 

    	12

    	 

    

 

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

 

g)
 Notice to the Holder.

 

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

 

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

 

    	13

    	 

    

 

Section
6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of at least a majority
in principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and
shall not permit any of its subsidiaries (whether or not a Subsidiary on any Closing Date) to, directly or indirectly:

 

a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed
money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom;

 

b)
other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to
any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

c)
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock or Common Stock Equivalents other than as to (i) the Conversion Shares as permitted or required under the Transaction Documents
and (ii) repurchases of Common Stock or Common Stock Equivalents of departing employees of the Company, provided that such repurchases
shall not exceed an aggregate of $150,000 for all employees during the term of this Note;

 

d)
pay cash dividends or distributions on Common Stock of the Company;

 

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

 

    	14

    	 

    

 

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

 

For
the avoidance of doubt, subject to the express provisions of the Transaction Documents, the Company shall be entitled to seek
and obtain additional debt or equity financing from parties other than the purchasers of the Notes, as approved by its board of
directors.

 

Section
7. Events of Default.

 

a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event
and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or governmental body), provided that an event specified
in item i, ii, iii, or viii below will not become an Event of Default unless and until it is not cured, if possible to cure, within
the earlier to occur of (i) five (5) Trading Days after notice of such failure sent by the Holder or by any other Holder and (ii)
ten (10) Trading Days after the Company has become or should have become aware of such failure:

 

i.
any default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing
to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date
or by acceleration or otherwise);

 

ii.
the Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the
Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause
(xi) below);

 

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

 

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

 

v.
the Company or any Significant Subsidiary shall be subject to a Bankruptcy Event;

 

    	15

    	 

    

 

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

 

vii.
if the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to
resume listing or quotation for trading thereon within ten (10) Trading Days;

 

viii.
if at any time after three (3) months following the Closing Date the Company is not subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act or has failed to file all reports required to be filed thereunder during the then preceding twelve
(12) months (or such shorter period that the Company was required to file such reports);

 

ix.
if any of the Security Documents or Subsidiary Guaranties ceases to be in full force and effect (including failure to create,
to the extent reasonably feasible, a valid and perfected first priority lien (subject to the Permitted Liens) on and security
interest in all the Collateral (as defined in the Security Agreement) and Intellectual Property Rights of the Company and its
Subsidiaries) at any time for any reason;

 

x.
if Steve Saleen ceases to serve full time as the President and Chief Executive Officer of the Company and perform the duties consistent
with such positions for similarly situated companies, provided that if such cessation is due to Steve Saleen’s death, permanent
disability, voluntary termination or termination by the Company for cause, then (A) an Event of Default shall not be deemed to
have occurred unless and until the Company shall have failed to retain a full-time replacement reasonably acceptable to the Holder
within ninety (90) days following such death, permanent disability, voluntary termination or termination by the Company for cause,
and (B) following any such acceptable replacement this clause shall apply to such replacement in lieu of Steve Saleen;

 

xi.
the Company shall fail for any reason to deliver certificates to a Holder prior to the tenth (10th) Trading Day after a Conversion
Date or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s
intention to not honor requests for conversions of any Notes in accordance with the terms hereof; or

 

    	16

    	 

    

 

xii.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of forty-five (45) calendar days; provided, however, that any judgment which is covered by insurance
or an indemnity from a creditworthy party (such creditworthiness as reasonably determined by the Holder) shall not be included
in calculating the amount of such judgment, writ or final process so long as the Company provides the Holder a written statement
from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect
that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity
within forty- five (45) calendar days of the issuance of such judgment.

 

b)
Acceleration Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus
accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall
become, at the Holder’s election (which the Holder shall not make more than the later of thirty (30) calendar days after
the date (a) such Event of Default is cured or otherwise resolved and (b) the Holder is aware of such cure or resolution), immediately
due and payable in cash at the Mandatory Default Amount. After the occurrence and during the continuance of any Event of Default,
the interest rate on this Note shall accrue as set forth in Section 2(d). If there is such an acceleration, then upon the payment
in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection
with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and
all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the
Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent thereon.

 

Section
8. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address
as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section 8. Any and all notices
or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address
of the Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place
of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission or delivery, if such notice or communication is delivered via facsimile at the facsimile
number, or delivered by such courier service to the address, specified in this Section 8 prior to 5:30 p.m. (New York City time),
(ii) the date immediately following the date of transmission or delivery, if such notice or communication is delivered via facsimile
at the facsimile number, or delivered by such courier to the address, specified in this Section 8 between 5:30 p.m. (New York
City time) and 11:59 p.m. (New York City time) on any date, or (iii) upon actual receipt by the party to whom such notice is required
to be given. The address for such notices and communications shall be as set forth on the signature pages attached to the Purchase
Agreement.

 

    	17

    	 

    

 

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

 

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

 

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

 

    	18

    	 

    

 

e)
Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the
Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this
Note. Any waiver by the Company or the Holder must be in writing.

 

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

 

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

 

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

 

i)
Assumption. Any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to
such Fundamental Transaction, all of the obligations of the Company under this Note and the other Transaction Documents pursuant
to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed)
and (ii) issue to the Holder a new Note of such successor entity evidenced by a written instrument substantially similar in form
and substance to this Note, including, without limitation, having a principal amount and interest rate equal to the principal
amount and the interest rate of this Note and having similar ranking to this Note, which shall be satisfactory to the Holder (any
such approval not to be unreasonably withheld or delayed). The provisions of this Section 8(i) shall apply similarly and equally
to successive Fundamental Transactions and shall be applied without regard to any limitations of this Note.

 

j)
Usury. This Note shall be subject to the anti-usury limitations contained in the Purchase Agreement.

 

    	19

    	 

    

 

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

 

SALEEN AUTOMOTIVE,
INC.

 

	By:		 

 

Steve Saleen,
Chief Executive Officer

 

Facsimile
No. for delivery of Notices: (888) 729-4827

 

    	20

    	 

    

 

ANNEX
A

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the 3.0% Senior Secured Convertible Note due June 25, 2017 of Saleen Automotive,
Inc., a Nevada corporation (the Company”), into shares of common stock (the “Common Stock”), of
the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the
name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged
to the holder for any conversion, except for such transfer taxes, if any.

 

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

 

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

  

Conversion
calculations:

 

	 	Date
    to Effect Conversion:                                                                
	 	 
	 	Principal Amount
    of Note to be Converted:                                   
	 	 
	 	Interest Accrued
    on Account of Conversion at Issue:                                                                                                                
	 	 
	 	Number of shares
    of Common Stock to be issued (not less than 10,000 shares):                                     
	 	                                                                                                               
	 	 
	 	Signature:                                                                                             
	 	 
	 	Name:                                                                                                    
	 	 
	 	Address for Delivery
    of Common Stock Certificates: 
	 	                                                                                                               
	 	                                                                                                               
	 	Or
	 	 
	 	DWAC Instructions:
	 	 
	 	Broker No: 
                             
	 	Account No:

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