Document:

Exhibit 10.3

 

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

Original Conversion Price (subject to
adjustment herein): $0.57

 

$1,000,000.00

 

SENIOR
CONVERTIBLE DEBENTURE

DUE
____________

 

THIS SENIOR CONVERTIBLE
DEBENTURE is one of a series of duly authorized and validly issued Senior Convertible Debentures of MagneGas Corporation, a Delaware
corporation, (the “Company”), having its principal place of business at _____________________________, designated
as its Senior Convertible Debenture due __________ (this debenture, the “Debenture” and, collectively with
the other debentures of such series, the “Debentures”).

 

FOR VALUE RECEIVED,
the Company promises to pay to Alpha Capital Anstalt or its registered assigns (the
“Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $1,000,000.00 on ____________
(the “Maturity Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided
hereunder, to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with
the provisions hereof. This Debenture is subject to the following additional provisions:

 

Section 1.            Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (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).

 

    	 	1	 

     

    

 

“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 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 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, (g) the Company
or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) 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).

 

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

 

“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 New York are authorized or required by law or other governmental action
to close.

 

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

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 33% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and
the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any
Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately
after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events
set forth in clauses (a) through (d) above.

 

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“Conversion”
shall have the meaning ascribed to such term in Section 4.

 

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

 

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

 

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

 

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

 

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

 

“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).

 

“Effectiveness
Period” shall have the meaning set forth in the Registration Rights Agreement.

 

“Event
of Default” shall have the meaning set forth in Section 8(a).

 

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

 

“Issuable
Maximum” shall have the meaning set forth in Section 4(e).

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Debenture, plus all
accrued and unpaid interest hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded
(if demand or notice is required to create an Event of Default) or otherwise due or (B) paid in full, whichever has a lower Conversion
Price, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in
full, whichever has a higher VWAP, or (ii) 130% of the outstanding principal amount of this Debenture, plus 100% of accrued and
unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.

 

    	 	3	 

     

    

 

“New
York Courts” shall have the meaning set forth in Section 9(d).

 

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

 

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

 

“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(aa) attached to the Purchase Agreement and (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.

 

“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,
(c) Liens incurred in connection with Permitted Indebtedness under clauses (a), and (d) Liens incurred in connection with Permitted
Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of the Company or its Subsidiaries
other than the assets so acquired or leased.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 27, 2016 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Company and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.

 

“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Underlying Shares by each Holder as provided for in the Registration Rights Agreement.

 

    	 	4	 

     

    

 

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

 

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

 

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

 

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

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

 

Section 2.            Interest;
Prepayment.

 

a)          Payment
of Interest. The Company shall not be required to pay interest to the Holder of this Debenture.

 

b)          Prepayment.
Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture
without the prior written consent of the Holder.

 

Section 3.            Registration
of Transfers and Exchanges.

 

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

 

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

 

    	 	5	 

     

    

 

Section 4.            Conversion.

 

a)          Voluntary
Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall
be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(d) and Section 4(e) hereof). The Holder shall effect conversions
by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice
of Conversion”), specifying therein the principal amount of this Debenture to be converted and the date on which such
conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original
Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any
Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Debenture to the Company unless the entire principal amount of this Debenture has been so converted in which case
the Holder shall surrender this Debenture as promptly as is reasonably practicable after such conversion without delaying the
Company’s obligation to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of lowering
the outstanding principal amount of this Debenture 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). The Company may deliver an
objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The
Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less
than the amount stated on the face hereof.

 

b)          Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to $0.57, subject to adjustment herein
(the “Conversion Price”).

 

c)          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 (x) the outstanding principal amount of this Debenture to be converted
by (y) the Conversion Price.

 

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ii.          Delivery
of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares which,
on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective 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 Debenture (including, if the Company has given continuous
notice pursuant to Section 2(b) for payment of interest in shares of Common Stock at least 20 Trading Days prior to the date on
which the Notice of Conversion is delivered to the Company, shares of Common Stock representing the payment of accrued interest
otherwise determined pursuant to Section 2(a) but assuming that the Interest Notice Period is the 20 Trading Days period immediately
prior to the date on which the Notice of Conversion is delivered to the Company and excluding for such issuance the condition
that the Company deliver Interest Conversion Shares as to such interest payment prior to the commencement of the Interest Notice
Period) and (B) a bank check in the amount of accrued and unpaid interest (if the Company has elected or is required to pay accrued
interest in cash). On or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date,
the Company shall deliver any Conversion Shares required to be delivered by the Company under this Section 4(c) electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.  

 

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

 

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iv.         Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Debenture 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 Debenture 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 Debenture shall have been sought and obtained, and the Company posts a surety bond
for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, 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, if applicable, cash, upon a properly noticed conversion. If the Company fails for any
reason to deliver to the Holder such Conversion Shares pursuant to Section 4(c)(ii) by the second 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 $5,000 of principal
amount being converted, $50 per Trading Day (increasing to $200 per Trading Day on the fifth (5th) Trading Day after
such liquidated damages begin to accrue) for each Trading Day after such second Trading Day after the Share Delivery Date until
such Conversion Shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to
pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion
Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of
any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.

 

v.          Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares 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 Conversion Shares by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in
addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total
purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate
number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions)
and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to the principal
amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number
of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under
Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted conversion of this Debenture 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 Conversion Shares upon conversion of this Debenture as required pursuant to the terms hereof.

 

    	 	8	 

     

    

 

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 Debenture, free from preemptive
rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures),
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 and restrictions of Section 5) upon the conversion of the
then outstanding principal amount of this Debenture. The Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

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

 

viii.       Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Debenture 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 Conversion
Shares, 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 Conversion Shares upon conversion in a name other than that of the Holder of this Debenture
so converted and the Company shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of
any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing
similar functions) required for same-day electronic delivery of the Conversion Shares.

 

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d)          Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right
to convert any portion of this Debenture, 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 Persons acting as a group together
with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)) 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 and Attribution Parties
shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Debenture beneficially owned by the Holder or any of its Affiliates or Attribution Parties
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Debentures
or the Warrants) beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in
the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in
this Section 4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by
the Holder together with any Affiliates and Attribution Parties) and of which principal amount of this Debenture 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 Debenture may be converted (in relation to other securities owned by the Holder together with any
Affiliates or Attribution Parties) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time
it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following:
(i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent
public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer
agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the
Company shall within two 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 Debenture, by the Holder or its Affiliates since the date as of which such number
of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of
the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon conversion of this Debenture held by the Holder. The Holder, upon notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Company.  The
Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Debenture.

 

    	 	10	 

     

    

 

e)          Issuance
Limitations. Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval, then the
Company may not issue, upon conversion of this Debenture, a number of shares of Common Stock which, when aggregated with any shares
of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date (i) in connection with the conversion
of any Debentures issued pursuant to the Purchase Agreement (ii) in connection with the exercise of any Series E-3, E-4 and E-7
Warrants issued pursuant to the Purchase Agreement, would exceed 9,179,9051 shares of Common Stock (subject to adjustment
for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the “Issuable Maximum”).
Each Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the original
principal amount of the Holder’s Debenture by (y) the aggregate original principal amount of all Debentures issued on the
Original Issue Date to all Holders. In addition, each Holder may allocate its pro-rata portion of the Issuable Maximum among Debentures
and such Warrants held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Holder no longer
holds any Debentures or such Warrants and the amount of shares issued to the Holder pursuant to the Holder’s Debentures
and such Warrants was less than the Holder’s pro-rata share of the Issuable Maximum.

 

 

1 19.99% of
the number of shares of Common Stock outstanding on the Trading Day immediately preceding the date of the Purchase Agreement.

 

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Section 5.            Certain
Adjustments.

 

a)          Stock
Dividends and Stock Splits. If the Company, at any time while this Debenture 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 the Debentures), (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)          Subsequent
Equity Sales. If, at any time while this Debenture is outstanding, the Company or any Subsidiary, as applicable, sells or
grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale,
grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base
Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the
Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that
is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such
date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment
will be made under this Section 5(b) in respect of an Exempt Issuance. If the Company enters into a Variable Rate Transaction,
despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised. The Company
shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive
Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice
of Conversion.

 

    	 	12	 

     

    

 

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

 

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

 

    	 	13	 

     

    

 

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

 

    	 	14	 

     

    

 

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

 

g)          Notice
to the Holder.

 

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

 

    	 	15	 

     

    

 

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

 

Section 6.            [Reserved]

 

Section 7.            Negative
Covenants. As long as any portion of this Debenture remains outstanding, the Company shall not, and shall not permit any of
the Subsidiaries to, directly or indirectly:

 

    	 	16	 

     

    

 

a)          other
than Permitted Indebtedness or Indebtedness of up to $150,000 in the aggregate in any 12 month-period, 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)          amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;

 

d)          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 or Warrant Shares as permitted or required
under the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors
of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors during
the term of this Debenture;

 

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

 

f)          repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata basis,
other than regularly scheduled principal and interest payments as such terms are in effect as of the Original Issue Date, provided
that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exist
or occur;

 

g)          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 made on an arm’s-length basis and expressly approved by a majority of the disinterested directors
of the Company (even if less than a quorum otherwise required for board approval); or

 

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

 

Section 8.            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):

 

    	 	17	 

     

    

 

i.            any
default in the payment of the principal amount of any Debenture and other amounts owing to a Holder on any Debenture, 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 Debentures (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) or in any Transaction Document, which failure is not cured, if possible to cure, within the earlier to occur of (A)
5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after
the Company has become or should have become aware of such failure;

 

iii.         a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (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) and payment is made or judgement is entered
for payment against the Company; which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading
Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company
has become or should have become aware of such failure;

 

iv.         any
representation or warranty made in this Debenture, 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; which failure is not cured, if possible to cure, within
the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company
and (B) 10 Trading Days after the Company has become or should have become aware of such failure

 

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

 

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 $150,000, 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;

 

    	 	18	 

     

    

 

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

 

viii.       the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of
all or in excess of 33% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute
a Change of Control Transaction);

 

ix.          if,
during the Effectiveness Period (as defined in the Registration Rights Agreement), either (a) the effectiveness of the Registration
Statement lapses for any reason or (b) the Holder shall not be permitted to resell Registrable Securities (as defined in the Registration
Rights Agreement) under the Registration Statement for a period of more than 20 consecutive Trading Days or 30 non-consecutive
Trading Days during any 12 month period; provided, however, that if the Company is negotiating a merger, consolidation,
acquisition or sale of all or substantially all of its assets or a similar transaction and, in the written opinion of counsel
to the Company, the Registration Statement would be required to be amended to include information concerning such pending transaction(s)
or the parties thereto which information is not available or may not be publicly disclosed at the time, the Company shall be permitted
an additional 10 consecutive Trading Days during any 12 month period pursuant to this Section 8(a)(x);

 

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

 

xi.          any
Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement;

 

xii.         the
electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a “chill”; or

 

xiii.        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 $250,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

 

    	 	19	 

     

    

  

(b)         Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, 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, immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days after the
occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture
shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon
the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture 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 Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such rescission
or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

Section 9.            Miscellaneous.

 

a)          Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address set forth above, Attention: Luisa Ingargiola,
facsimile number (727) 934-6260 or email Address: luisaingargiola@magnegas.com,
or such other facsimile number, email address, or address as the Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section 9(a).  Any and all notices or other communications or deliveries to be provided
by the Company hereunder shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile number or email address or address of the Holder
appearing on the books of the Company, or if no such facsimile number or email attachment or address appears on the books of the
Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement.  Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth
on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to
the email 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, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

    	 	20	 

     

    

 

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

 

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

 

d)          Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles
of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the 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 City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the 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 New York Courts, or such New York 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 Debenture 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 Debenture or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

    	 	21	 

     

    

 

e)          Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Debenture 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 Debenture. The failure of the
Company or the Holder to insist upon strict adherence to any term of this Debenture 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
Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.

 

f)          Severability.
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture 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 Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants
or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits
or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been
enacted.

 

    	 	22	 

     

    

 

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

 

h)          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.

 

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

 

Section 10.          Disclosure.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Debenture, unless the Company has in
good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries, the Company shall within two (2) Business Days after such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder
contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume
that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.

 

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

 

(Signature Pages Follow)

 

    	 	23	 

     

    

 

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

 

	 	magnegas corporation
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	Facsimile No. for delivery of Notices: _______________

 

    	 	24	 

     

    

 

ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned hereby
elects to convert principal under the Senior Convertible Debenture due ________ of MagneGas Corporation, a Delaware 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 Debenture, 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.

 

Conversion calculations:

	 	Date
    to Effect Conversion:
	 	 
	 	Principal
    Amount of Debenture to be Converted:
	 	 
	 	Number
    of shares of Common Stock to be issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Address
    for Delivery of Common Stock Certificates:
	 	 
	 	Or
	 	 
	 	DWAC
    Instructions:
	 	 
	 	Broker
    No:________________ 
	 	Account
    No:______________

 

    	 	25	 

     

    

 

Schedule 1

 

CONVERSION SCHEDULE

 

The Senior Convertible Debentures due
on ________ in the aggregate principal amount of $1,000,000.00 are issued by MagneGas Corporation, a Delaware corporation. This
Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.

 

Dated:

 

	Date of Conversion

    (or for first entry,

    Original Issue Date)	Amount of

    Conversion	Aggregate

    Principal

    Amount

    Remaining

    Subsequent to

    Conversion

    (or original

    Principal

    Amount)	Company Attest
	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         
	 

         

         
	 

         

         
	 

         

	 

         
	 

         

         
	 

         
	 

         

	 

         
	 

         

         
	 

         
	 

         

	 

         
	 

         

         
	 

         
	 

         

	 

         
	 

         

         
	 

         
	 

         

 

    	 	26Exhibit 10.4

 

 

SUBSIDIARY GUARANTEE

 

SUBSIDIARY GUARANTEE,
dated as of June 27, 2016 (this “Guarantee”), made by each of the signatories hereto (together with any other
entity that may become a party hereto as provided herein, the “Guarantors”), in favor of the purchasers signatory
(together with their permitted assigns, the “Purchasers”) to that certain Securities Purchase Agreement, dated
as of the date hereof, between MagneGas Corporation, a Delaware corporation (the “Company”) and the Purchasers.

 

W I T N E S S E T H:

 

WHEREAS, pursuant
to that certain Securities Purchase Agreement, dated as of the date hereof, by and between the Company and the Purchasers (the
“Purchase Agreement”), the Company has agreed to sell and issue to the Purchasers, and the Purchasers have
agreed to purchase from the Company the Debentures, subject to the terms and conditions set forth therein; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company represented by the issuance of the
Debentures; and

 

NOW, THEREFORE, in
consideration of the premises and to induce the Purchasers to enter into the Purchase Agreement and to carry out the transactions
contemplated thereby, each Guarantor hereby agrees with the Purchasers as follows:

 

1.Definitions.
Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them
in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder”
and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision
of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to
terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The following terms shall
have the following meanings:

 

“Guarantee”
means this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

“Obligations” means, in addition to all other costs and expenses of collection incurred by Purchasers in enforcing
any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent,
sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the
Company or any Guarantor to the Purchasers, including, without limitation, all obligations under this Guarantee, the Debentures
and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each
case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from any of the Purchasers as a preference, fraudulent transfer or otherwise as
such obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality
of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on the
Debentures and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities
of the Company or any Guarantor from time to time under or in connection with this Guarantee, the Debentures and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including
but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations
to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Company or any Guarantor.

 

    	 	1	 

     

    

 

2.Guarantee.

 

(a)Guarantee.

 

(i)The
Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Purchasers and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations.

 

(ii)Anything
herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder
and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under
applicable federal and state laws, including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or
laws affecting the rights of creditors generally (after giving effect to the right of contribution established in Section 2(b)).

 

(iii)Each
Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchasers hereunder.

 

(iv)The
guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been satisfied by indefeasible payment in full.

 

    	 	2	 

     

    

 

(v)No
payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchasers
from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected
from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor
hereunder until the Obligations are indefeasibly paid in full.

 

(vi)Notwithstanding
anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations the specific performance of
which by the Guarantors is not reasonably possible (e.g. the issuance of the Company's Common Stock), the Guarantors shall only
be liable for making the Purchasers whole on a monetary basis for the Company's failure to perform such Obligations in accordance
with the Transaction Documents.

 

(b)Right
of Contribution. Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid
more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution
from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right
of contribution shall be subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no
respect limit the obligations and liabilities of any Guarantor to the Purchasers and each Guarantor shall remain liable to the
Purchasers for the full amount guaranteed by such Guarantor hereunder.

 

(c)No
Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor
by the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against the Company
or any other Guarantor or any collateral security or guarantee or right of offset held by the Purchasers for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company on
account of the Obligations are indefeasibly paid in full. If any amount shall be paid to any Guarantor on account of such subrogation
rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in
trust for the Purchasers, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor,
be turned over to the Purchasers in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Purchasers,
if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Purchasers may determine.

 

    	 	3	 

     

    

 

(d)Amendments,
Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Purchasers may be rescinded by the Purchasers and any of the Obligations continued, and the Obligations,
or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Purchasers, and the Purchase Agreement and the other Transaction Documents
and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Purchasers may deem advisable from time to time, and any collateral security, guarantee or right of offset
at any time held by the Purchasers for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.
The Purchasers shall have no obligation to protect, secure, perfect or insure any Lien at any time held by them as security for
the Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

(e)Guarantee
Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Purchasers upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and
all dealings between the Company and any of the Guarantors, on the one hand, and the Purchasers, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor
waives to the extent permitted by law diligence, presentment, protest, demand for payment and notice of default or nonpayment
to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the
guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment and
performance without regard to (a) the validity or enforceability of the Purchase Agreement or any other Transaction Document,
any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time
or from time to time held by the Purchasers, (b) any defense, set-off or counterclaim (other than a defense of payment or performance
or fraud by Purchasers) which may at any time be available to or be asserted by the Company or any other Person against the Purchasers,
or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes,
or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise
pursuing its rights and remedies hereunder against any Guarantor, the Purchasers may, but shall be under no obligation to, make
a similar demand on or otherwise pursue such rights and remedies as they may have against the Company, any other Guarantor or
any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto,
and any failure by the Purchasers to make any such demand, to pursue such other rights or remedies or to collect any payments
from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise
any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral security,
guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchasers against any Guarantor.
For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.

 

    	 	4	 

     

    

 

(f)Reinstatement.
The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchasers
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor
or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

(g)Payments.
Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchasers without set-off or counterclaim in U.S.
dollars at the address set forth or referred to in the Signature Pages to the Purchase Agreement.

 

3.Representations
and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the date hereof:

 

(a)Organization
and Qualification. The Guarantor is a corporation, duly incorporated, validly existing and in good standing under the laws
of the applicable jurisdiction set forth on Schedule 1, with the requisite corporate power and authority to own and use its properties
and assets and to carry on its business as currently conducted. The Guarantor has no subsidiaries other than those identified
as such on the Disclosure Schedules to the Purchase Agreement. The Guarantor is duly qualified to do business and is in good standing
as a foreign corporation 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, individually
or in the aggregate, (x) adversely affect the legality, validity or enforceability of any of this Guaranty in any material respect,
(y) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor or
(z) adversely impair in any material respect the Guarantor's ability to perform fully on a timely basis its obligations under
this Guaranty (a “Material Adverse Effect”).

 

    	 	5	 

     

    

 

(b)Authorization;
Enforcement. The Guarantor has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guaranty
by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the Guarantor and constitutes
the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

 

(c)No
Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor
of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of
Incorporation or By-laws or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Guarantor is a party, or (iii) 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 Guarantor is subject (including
Federal and State securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected,
except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the
Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, do not have a Material Adverse Effect.

 

    	 	6	 

     

    

 

(d)Consents
and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing
or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection
with the execution, delivery and performance by the Guarantor of this Guaranty.

 

(e)Purchase
Agreement. The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor,
each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed
to be made pursuant to such Purchase Agreement, and the Purchasers shall be entitled to rely on each of them as if they were fully
set forth herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for
the purposes of this Section 3, be deemed to be a reference to such Guarantor's knowledge.

 

(f)Foreign
Law. Each Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations
for which non-U.S. law is applicable. Such foreign counsel have advised each applicable Guarantor that such counsel knows of no
reason why any of the above representations would not be true and accurate. Such foreign counsel were provided with copies of
this Subsidiary Guarantee and the Transaction Documents prior to rendering their advice.

 

4.Covenants.

 

(a)Each
Guarantor covenants and agrees with the Purchasers that, from and after the date of this Guarantee until the Obligations shall
have been indefeasibly paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially
reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of Default (as defined in the
Debentures) is caused by the failure to take such action or to refrain from taking such action by such Guarantor.

 

(b)So
long as any of the Obligations are outstanding, unless Purchasers holding at least 81% of the aggregate principal amount of the
then outstanding Debentures shall otherwise consent in writing, each Guarantor will not directly or indirectly on or after the
date of this Guarantee:

 

i.other
than Permitted Indebtedness or Indebtedness of up to $150,000 in the aggregate in any 12 month-period, 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;

 

    	 	7	 

     

    

 

ii.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;

 

iii.amend
its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of any Purchaser;

 

iv.repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt
obligations;

 

v.pay
cash dividends on any equity securities of the Company; or

 

vi.enter
into any agreement with respect to any of the foregoing.

 

5.Miscellaneous.

 

(a)Amendments
in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except
in writing by the Purchasers.

 

(b)Notices.
All notices, requests and demands to or upon the Purchasers or any Guarantor hereunder shall be effected in the manner provided
for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed to
such Guarantor at its notice address set forth on Schedule 5(b).

 

(c)No
Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall not by any act (except by a written instrument pursuant
to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced
in any default under the Transaction Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the
part of the Purchasers, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Purchasers of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Purchasers would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided
by law.

 

    	 	8	 

     

    

 

(d)Enforcement
Expenses; Indemnification.

 

(i)Each
Guarantor agrees to pay, or reimburse the Purchasers for, all its costs and expenses incurred in collecting against such Guarantor
under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Guarantee and the other
Transaction Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements
of counsel to the Purchasers.

 

(ii)Each
Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities with respect to, or resulting from
any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection
with any of the transactions contemplated by this Guarantee.

 

(iii)Each
Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to
the Purchase Agreement.

 

(iv)The
agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement
and the other Transaction Documents.

 

(e)Successor
and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit
of the Purchasers and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any
of its rights or obligations under this Guarantee without the prior written consent of the Purchasers.

 

(f)Set-Off.
Each Guarantor hereby irrevocably authorizes the Purchasers at any time and from time to time while an Event of Default under
any of the Transaction Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor,
any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits,
indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by the Purchasers to or for the credit or the account of such Guarantor, or any part thereof in such
amounts as the Purchasers may elect, against and on account of the obligations and liabilities of such Guarantor to the Purchasers
hereunder and claims of every nature and description of the Purchasers against such Guarantor, in any currency, whether arising
hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Purchasers may elect, whether or
not the Purchasers have made any demand for payment and although such obligations, liabilities and claims may be contingent or
unmatured. The Purchasers shall notify such Guarantor promptly of any such set-off and the application made by the Purchasers
of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application.
The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Purchasers may have.

 

    	 	9	 

     

    

 

(g)Counterparts.
This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

(h)Severability.
Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

(i)Section
Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.

 

(j)Integration.
This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Purchasers with respect to
the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchasers
relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

 

(k)Governing
Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. Each of the Company and the Guarantors agree that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Guarantee (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of Manhattan. Each of the Company and the Guarantors hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such 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 Guarantee
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party 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 Guarantee or the transactions contemplated hereby.

 

    	 	10	 

     

    

 

(l)Acknowledgements.
Each Guarantor hereby acknowledges that:

 

(i)it
has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Transaction Documents to
which it is a party;

 

(ii)the
Purchasers have no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or
any of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Purchasers, on the
other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(iii)no
joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Guarantors and the Purchasers.

 

(m)Additional
Guarantors. The Company shall cause each of its subsidiaries formed or acquired on or subsequent to the date hereof to become
a Guarantor for all purposes of this Guarantee by executing and delivering an

Assumption Agreement in the form of Annex 1 hereto.

 

(n)Release
of Guarantors. Each Guarantor will be released from all liability hereunder concurrently with the indefeasible repayment in
full of all amounts owed under the Purchase Agreement, the Debentures and the other Transaction Documents.

 

(o)Seniority.
The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the Purchase
Agreement) of such Guarantor.

 

(p)WAIVER
OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

 

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

 

 

 

(Signature
Pages Follow)

    	 	11	 

     

    

 

IN WITNESS WHEREOF,
each of the undersigned has caused this Guarantee

to be duly executed and delivered as of the date first above written.

[SUBSIDIARY

 

By:_________________________________

Name:

Title:

 

 

 

    	 	12	 

     

    

 

SCHEDULE 1

 

GUARANTORS

 

The following are the names, notice addresses
and jurisdiction of organization of each Guarantor.

 

		 	COMPANY
	 	JURISDICTION OF 	OWNED BY
	 	INCORPORATION 	PERCENTAGE
	 	--------------------	--------------------
	 	 	 
	--------------------	 	 

 

 

 

    	 	13	 

     

    

 

Annex 1 to

SUBSIDIARY GUARANTEE

 

ASSUMPTION AGREEMENT, dated as of ____
__, ______ made by ______________________________, a ______________ corporation (the “Additional Guarantor”),
in favor of the Purchasers pursuant to the Purchase Agreement referred to below. All capitalized terms not defined herein shall
have the meaning ascribed to them in such Purchase Agreement.

W I T N E S S E T H :

WHEREAS, MagneGas Corporation, a Delaware corporation (the “Company”) and the Purchasers have entered into
a Securities Purchase Agreement, dated as of ________ ___, 2016 (as amended, supplemented or otherwise modified from time to time,
the “Purchase Agreement”);

WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the Company (other than the Additional Guarantor)
have entered into the Subsidiary Guarantee, dated as of ______________ ____, 2016 (as amended, supplemented or otherwise modified
from time to time, the “Guarantee”) in favor of the Purchasers;

WHEREAS, the Purchase Agreement requires the Additional Guarantor to become a party to the Guarantee; and

WHEREAS, the Additional Guarantor has agreed to execute and

deliver this Assumption Agreement in order to become a party to the Guarantee;

 

NOW, THEREFORE,
IT IS AGREED:

 

1.Guarantee.
By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee,
hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein
as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities
of a Guarantor thereunder. The information set forth in Annex 1 hereto is hereby added to the information set forth in Schedule
1 to the Guarantee. The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained
in Section 3 of the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect
to this Assumption Agreement) as if made on and as of such date.

 

2.Governing
Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.

 

    	 	14	 

     

    

 

IN WITNESS WHEREOF,
the undersigned has caused this Assumption

Agreement to be duly executed and delivered as of the date first above written.

	 	[ADDITIONALGUARANTOR]	 
	 	 	 
	 	By:		 
	 	Name:	 	 
	 	Title:	 	 

 

    	 	15

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