Document:

ORBIT ENERGY RHODE ISLAND, LLC PURCHASE
AGREEMENT

 

This Orbit Energy Rhode
Island, LLC Purchase Agreement (this “Agreement”) is made and entered into as of October 19, 2012, (the
“Effective Date”) by and between Bluesphere Corporation, a Nevada corporation (“Purchaser”),
and Orbit Energy, Inc., a North Carolina corporation (“Seller”).

 

RECITALS

 

A.           Seller
has established Orbit Energy Rhode Island, LLC (the “LLC”) to implement an anaerobic digestion and energy
generation project in Johnston, Rhode Island, or at an alternate site in Rhode Island (the “Project”).

 

B.           In
accordance with the terms of this Agreement, Seller desires to sell and transfer 100% of its right, title and interest in, to and
under the LLC to Purchaser and Purchaser desires to purchase and accept 100% of the right, title and interest in, to and under
the LLC for the purpose of implementing the Project.

 

Now, therefore, the parties hereby agree
as follows.

 

1.          RECITALS.
The foregoing recitals are incorporated by reference as if fully set forth herein.

 

2.          SALE
AND PURCHASE OF THE LLC. 

 

2.1           Terms
of Sale and Purchase; Purchaser Option. Subject to the terms and conditions of this Agreement, Seller hereby agrees to
sell to Purchaser, and Purchaser hereby agrees to purchase from Seller, 100% of its right, title and interest in, to and under
the LLC, which owns and holds the right to implement the Project, in exchange for the compensation set forth on Annex A
hereto (the “Purchase Price”). Notwithstanding anything else to the contrary herein, Purchaser shall
have an option (exercisable in its sole discretion) (i) to terminate this Agreement without any liability to Seller or (ii) to
delay the closing for so long as it deems necessary if at any time Anwar Shareef is not chief executive officer and majority shareholder
of Seller.

 

2.2           LLC
Transfer in Escrow. Within 10 days of the date hereof, Seller agrees to deposit in escrow a signed agreement in form and
substance acceptable to Purchaser (the “Transfer Agreement”) transferring 100% of the right, title and
interest in, to and under the LLC to Purchaser. The Transfer Agreement will be dated the date on which it is signed and delivered
to the escrow agent. The original, signed copy of the Transfer Agreement will be released by the escrow agent and irrevocably delivered
to Purchaser on the date of the Closing (as defined below). In this connection, Purchaser will prepare a draft escrow agreement
reflecting the foregoing and select an escrow agent reasonably acceptable to Seller and the parties will use their best efforts
to finalize and enter into such escrow agreement within 10 days of the date hereof. If the Closing does not take place in accordance
with the terms hereof, Seller will receive back the original, signed copy of the transfer agreement 180 days from the date hereof
or when Purchaser notifies Seller in writing that it has irrevocably decided not to proceed, whichever is earlier.

 

    	 

    	 

    

 

2.3           Seller’s
Covenants. Seller is obligated to deliver or demonstrate at or prior to the Closing: (i) valid and binding feedstock agreement(s)
in form and substance acceptable to Purchaser, (ii) a valid and binding power purchase agreement (in respect of which there is
reasonable time to satisfy all timing and milestone requirements and which is in form and substance acceptable to Purchaser in
its sole discretion), (iii) submitted applications in respect of required permits, (iv) a valid, signed and binding agreement or
debt commitment letter in respect of debt finance on terms and conditions acceptable to Purchaser in its sole discretion, (v) valid
and binding lease and/or purchase agreement (in form and substance acceptable to Purchaser in its sole discretion) in respect of
the land on which the Project will be located and (vi) valid and binding agreement in respect of the equipment, procurement and
construction for and on behalf of the Project in form and substance acceptable to Purchaser in its sole discretion. The foregoing
items (i) – (vi) are collectively referred to as the “Seller Conditions”.

 

2.4           Purchaser
Condition.         Purchaser is obligated to deliver at or prior to the Closing
a tax credit and depreciation sale agreement or other agreement monetizing the Project’s applicable tax credits and depreciation
benefits (the “Purchaser Condition”).

 

2.5           Closing
Timing. If any of the Seller Conditions or Purchaser Condition is not fulfilled or delivered in time for the Closing, the
Closing shall be moved to such date that is three business days after the last Purchaser Condition and/or Seller Condition has
been fulfilled or delivered in the sole discretion of Purchaser. Section 3.2 below shall be amended accordingly without any further
action from any party hereto.

 

2.6           HSAD
License. Seller hereby grants Purchaser one unconditional and irrevocable, non-exclusive license to use Seller’s
high solids anaerobic digestion (HSAD) technology consisting of a proprietary process that uses an anaerobic digester design developed
by the U.S. Department of Energy and subsequently modified by Seller in combination with the proprietary bacteria to be supplied
by Seller (the “Technology”) at the Project site for so long as the Project is in operation (the “License”).
Purchaser may freely sell or transfer the License in the event of a sale or transfer of its rights in the Project to another party.
If the license is to be granted by another party, then Seller will deliver within 5 days of the date hereof a signed license agreement
from such party.

 

2.7           Purchaser
Support of Seller. (a) Purchaser hereby agrees to support Seller to meet certain Project deadlines by taking such measures
and making such payments as Purchaser shall deem necessary or expedient to implement the Project in a timely manner. Purchaser
will use its reasonable efforts to cause itself to be reimbursed for any such payments made by it out of the equity funds to be
invested in the Project. However, if for any reason Purchaser is not so reimbursed, then Purchaser shall be entitled to deduct
any amount not reimbursed to it out of the development fee described on Annex A hereto.

 

(b) Subject to the following
sentence, Purchaser also agrees to reimburse Seller out of the equity funds to be invested in the Project for certain expenses
already incurred by Seller, as described in more detail on Annex B hereto (the “Annex B Expenses”).
Seller and Purchaser agree that there will be no obligation to make any reimbursement of any nature whatsoever unless and until
Seller delivers to Purchaser documentary evidence in form and substance satisfactory to Purchaser in its sole discretion as to
the amount, timing and nature of each Annex B Expense. Seller and Purchaser further agree that the Annex B Expenses are the sole
expenses for which Seller will receive any reimbursement. Seller hereby waives any and all claims it may have for any reimbursement
now or in the future except for claims relating to the Annex B Expenses.

 

    	 

    	 

    

 

3.          CLOSING.

 

3.1           Conditions
to Closing. Notwithstanding anything else herein to the contrary and for the avoidance of doubt, the parties agree that
the Closing will take place if (and only if) the Purchaser Condition and the Seller Conditions have been delivered or satisfied
at or prior to the Closing.

 

3.2           Closing.
The parties will use their reasonable efforts to fulfill all applicable conditions and close in 2012 (as extended by Section
2.5 above). After the fulfillment of all conditions, Seller and Purchaser agree to accomplish the following transactions (the “Closing”):

 

3.2.1        Evidence
of all Conditions being satisfied. At the Closing, each party will deliver evidence that the conditions applicable to it
have been satisfied or delivered.

 

3.2.2        Transfer
of the LLC. Purchaser will receive out of escrow the Transfer Agreement reflecting the transfer to it of 100% of the right,
title and interest in, to and under the LLC and Seller will enter into, sign and deliver any and all agreements and take any and
all actions necessary or helpful to accomplish the foregoing.

 

3.3           Post-Closing
Actions.   After the Closing, Seller will record (or will assist Purchaser
in recording, if necessary) the ownership of the LLC in the name of Purchaser and deliver to Purchaser evidence (satisfactory
to Purchaser in its sole discretion) of such recordation within five business days of the Closing. Purchaser will have 15 days
from the date of receipt of such recordation to pay Seller the development fee described on Annex A hereto.

 

3.4           No
Adverse Change.  It is understood and agreed that Purchaser’s
obligations under this Agreement are at all times subject to the absence of any material, adverse changes in the commercial, legal
and/or financial prospects of the Project in the sole discretion of Purchaser so that, by way of example without limitation, if,
at any point in time, whether before or during Project implementation, there is not a valid and binding lease or property purchase
agreement in form and substance acceptable to Purchaser, then Purchaser shall have no obligation to close, make any payments or
investment or continue with the Project (as applicable).

 

4.          PROJECT
MANAGEMENT. Seller hereby agrees to manage the implementation and operation of the Project subject, in each case, to (i)
any agreements entered into or to be entered into in respect of the Project by Purchaser and (ii) the supervision and control of
Purchaser. Seller’s management of the implementation and operation of the Project shall consist of (i) reporting to all applicable
authorities, (ii) permit compliance and renewal, (iii) presence at the site, advise and assistance in operation of the Project,
in each case, as required or helpful, (iv) ongoing identification of feedstock sources, compost off-takers and other third-parties
participating in the Project and (v) such other actions as may be required or desirable in the reasonable discretion of either
Seller or Purchaser for the management of the Project. Seller shall manage the project as a reasonably prudent operator. Seller
shall receive an annual fee of U.S. $187,500 for providing such management services.

 

    	 

    	 

    

 

5.          REPRESENTATIONS
AND WARRANTIES OF SELLER. Seller represents and warrants to Purchaser as follows.

 

5.1           No
Broker-Dealer. Except for the involvement of Excelsior Capital, Seller has not effected this transfer of the LLC by or
through any intermediaries.

 

5.2           Title
to the LLC. Seller has valid marketable title to the LLC, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest (“Encumbrances”). Upon the sale and transfer of the LLC, and payment therefor,
in accordance with the provisions of this Agreement, Purchaser will acquire valid marketable title to the LLC, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest.

 

5.3           Consents.
All consents, approvals, authorizations and orders required for the execution and delivery of this Agreement and the transfer of
the LLC under this Agreement have been obtained and are in full force and effect.

 

5.4           Authority.
Seller has full legal right, power and authority to enter into and perform its obligations under this Agreement and to transfer
the LLC under this Agreement, and Seller is not obligated to transfer the LLC to any other person or entity. Seller has been duly
organized and is validly existing in good standing under the laws of the jurisdiction of its organization as the type of entity
that it purports to be and all corporate or other entity actions necessary to authorize the transactions contemplated by this Agreement
have been duly taken. The person(s) executing and delivering this Agreement on behalf of Seller are duly authorized to do so.

 

5.5           Intellectual
Property. Seller owns or holds a valid license to any and all intellectual property relating to the Technology and has
full authority to grant the License. Purchaser’s use of the Technology and License and/or any subsequent transfer thereof
will not infringe on the rights of any third parties or give rise to any claims on the part of any third-parties.

 

6.          COMPLIANCE
WITH LAWS AND REGULATIONS. The sale and transfer of the LLC and the implementation and management of the Project will be
subject to and conditioned upon compliance by Purchaser with all applicable state and federal laws and regulations at the time
of such sale, transfer, implementation and/or management.

 

7.          GENERAL
PROVISIONS.

 

7.1           Successors
and Assigns; Assignment. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations
of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors,
administrators and legal representatives. Each party hereto may assign its rights in, to and under this Agreement with the consent
of the other party with such consent not to be unreasonably withheld or delayed.

 

    	 

    	 

    

 

7.2           Governing
Law. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of North Carolina
without giving effect to its body of laws pertaining to conflict of laws.

 

7.3           Notices.
Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing
and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following:
(a) at the time of personal delivery, if delivery is in person; (b) one (1) business day after deposit with an express
overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United
States; or (c) three (3) business days after deposit in the United States mail by certified mail (return receipt requested)
for United States deliveries. All notices for delivery outside the United States will be sent by express courier. All notices not
delivered personally will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified
at the address set forth below the signature lines of this Agreement or at such other address as such other party may designate
by one of the indicated means of notice herein to the other party hereto. A “business day” shall be a day, other than
Saturday or Sunday, when the banks in the city of New York are open for business.

 

7.4           Further
Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may
be reasonably necessary to carry out the purposes and intent of this Agreement.

 

7.5           Titles
and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded
in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections”
and “exhibits” will mean “sections” and “exhibits” to this Agreement.

 

7.6           Entire
Agreement. This Agreement and the documents referred to herein constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Agreement and supersede all prior understandings and agreements, whether oral
or written, between or among the parties hereto with respect to the specific subject matter hereof.

 

7.7           Severability.
If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto.
If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this
Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable)
never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial
benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of
competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.

 

    	 

    	 

    

 

7.8           Amendment
and Waivers. This Agreement may be amended only by a written agreement executed by each of the parties hereto. No amendment
of or waiver of, or modification of any obligation under this Agreement will be enforceable unless set forth in a writing signed
by the party against which enforcement is sought. Any amendment effected in accordance with this section will be binding upon all
parties hereto and each of their respective successors and assigns. No delay or failure to require performance of any provision
of this Agreement shall constitute a waiver of that provision as to that or any other instance. No waiver granted under this Agreement
as to any one provision herein shall constitute a subsequent waiver of such provision or of any other provision herein, nor shall
it constitute the waiver of any performance other than the actual performance specifically waived.

 

7.9           Confidentiality.
Each of Seller and Purchaser agrees that it will keep confidential and will not disclose or use for any purpose any
information about the terms of this Agreement and the transactions contemplated hereby and any confidential information
obtained from the Company in connection herewith, unless any such information (a) is known or becomes known to the public in
general (other than as a result of a breach of this Agreement by the disclosing party), or (b) is or has been made known or
disclosed to the disclosing party by a third party without a breach of any confidentiality obligations by such third party; provided,
however, that either Seller or Purchaser may disclose such information (i) to its attorneys, accountants, consultants,
financiers and other professionals to the extent necessary to obtain their services in connection with the transfer and
ownership of the LLC or the implementation of the Project; (ii) to any affiliate in the ordinary course of business, provided that
such affiliate agrees to maintain the confidentiality of such information in accordance herewith; or (iii) as may be required
by law, provided that the disclosing party promptly notifies the other parties hereto in advance of such disclosure
and agrees to cooperate to take reasonable steps to minimize the extent of any such required disclosure.

 

7.10        Counterparts;
Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which when so executed and
delivered will be deemed an original, and all of which together shall constitute one and the same agreement. This Agreement may
be executed and delivered by facsimile or other means of electronic delivery and upon such delivery the signature will be deemed
to have the same effect as if the original signature had been delivered to the other party.

 

7.11         Expenses.
Each party hereto shall pay its own expenses in connection with this Agreement.

 

7.12         Specific
Performance. Unless this Agreement has been terminated, each party to this Agreement acknowledges and agrees that any breach
by it of this Agreement shall cause any (or either) of the other parties irreparable harm which may not be adequately compensable
by money damages. Accordingly, except in the case of termination, in the event of a breach or threatened breach by a party of any
provision of this Agreement, each party shall be entitled to seek the remedies of specific performance, injunction or other preliminary
or equitable relief, without having to prove irreparable harm or actual damages. The foregoing right shall be in addition to such
other rights or remedies as may be available to any party for such breach or threatened breach, including but not limited to the
recovery of money damages.

 

7.13         Indemnification/Pledge.
Seller hereby agrees to indemnify and hold harmless Purchaser from any claims, damages, losses, liabilities and/or costs (including,
for the avoidance of doubt, reasonable counsel fees) relating to or arising out of Purchaser’s use of the Technology or License
in Project. To the extent that Seller lacks the funds to fulfill its indemnity obligations hereunder, Seller hereby pledges its
rights, title and interest in, to and under the Technology to Purchaser for Purchaser’s full and unfettered use until such
time as Purchaser has been made whole and recouped any losses, costs or other out-of-pocket amounts.

 

    	 

    	 

    

 

 

Costs of Enforcement.
If any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings against any other party to
this Agreement, the non-prevailing party or parties named in such legal proceedings shall pay all costs and expenses incurred by
the prevailing party or parties, including, without limitation, all reasonable attorneys’ fees.

 

7.14         IN
WITNESS WHEREOF, Seller and Purchaser have each executed this Stock Transfer Agreement as of the Effective Date.

 

	SELLER:	 	PURCHASER:	 
	 	 	 	 
	By:	Anwar Shareef, CEO	 	By:	 
	 	 	 	 	 
	Address:	Orbit Energy, Inc.	 	Address:	 
	 	 	 	 	 
	3301 Benson Dr., Suite 401	 	 
	 	 	 
	Raleigh, NC 27609	 	 

 

Attachments:

Annex A – Compensation to Seller

Annex B – Seller Expenses

Annex C – Wire Instructions

 

    	 

    	 

    

 

ANNEX A

 

1. Seller to receive a $600,000 development
fee, less any amounts not reimbursed to Purchaser in accordance with Section 2.7 of the Agreement, to be paid to it within 15 days
after Seller irrevocably transfers and, if applicable, records 100% of the right, title and interest in, to and under the LLC to
Purchaser.

 

2. Seller will participate in the distributable
cash of the LLC as follows:

 

		·	Purchaser will be entitled to recoup its investment in full before any distributions of any nature
are made to Seller.

		·	After Purchaser recoups its investment, Purchaser shall receive all distributable cash from the
Project until it achieves a 30% internal rate of return (“IRR”), which for the avoidance of doubt, will take into account
and be computed on the basis of any and all benefits from tax credits and depreciation. Any distributable cash above such 30% IRR
will be allocated 30% to Seller and 70% to Purchaser.

 

    	 

    	 

    

 

ANNEX B

 

Johnston Project incurred cost:

 

	Project Development Security	 	$	45,000	 
	Interconnection Application Fee	 	 	2,500	 
	Interconnection Prep - Kupper Engr.	 	 	3,938	 
	SW Composting Permit Fee	 	 	1,000	 
	SW Composting Permit - Fuss & O'Neill Support	 	 	4,808	 
	Attorney Fees – PLDW	 	 	11,630	 
	Attorney Fees – Bost (est.)	 	 	15,000	 
	Preliminary Design Support – ATI	 	 	2,556	 
	TOTAL	 	$	86,432	 

 

    	 

    	 

    

 

ANNEX C

 

WIRE
INSTRUCTIONS

Company Wire Instructions

 

	Beneficiary Name: Orbit Energy, Inc.	 
	
        Beneficiary Account:
        0094345120

         
	 
	
        Beneficiary Bank: Regions
        Bank

         
	 
	Bank Address: 4900 Falls of Neuse Road, Suite 100	 
	Raleigh, NC 27609	 
	 	 
	ABA Routing Number: 062005690	 
	Swift Code: UPNBUS44	 

 

Note: Please include Seller's name in the
reference field.NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

 

	Principal Amount: $32,500.00	Issue Date: November 11, 2011
	 	 
	Purchase Price: $32,500.00	 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, BLUE
SPHERE CORP., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order
of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the “Holder”) the sum of
$32,500.00 together with any interest as set forth herein, on August 16, 2012 (the “Maturity Date”), and to pay
interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum
from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly
set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate
of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”).
Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year
and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par
value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the
United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by
written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a
business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on
such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to
remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that
certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the
“Purchase Agreement”).

 

    	 

    	 

    

  

This Note is free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights
of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

The following terms shall apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1 Conversion Right. The
Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred
eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of
payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the
remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount
of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any
shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or
reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a
“Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of
this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security
of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the
number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the
determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such
proviso. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by
dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in
the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the
Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile
or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New
York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount”
means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such
conversion plus (2) at the Borrower’s option, accrued and unpaid interest, if any, on such principal amount at
the interest rates provided in this Note to the Conversion Date, plus (3) at the Borrower’s option, Default
Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the
Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

    	 

    	 

    

  

1.2 Conversion Price.

 

Calculation of Conversion
Price.The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined
herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to
the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 55%
multiplied by the Market Price (as defined herein) (representing a discount rate of 45%). “Market Price” means
the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day
period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any
security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the
“OTCBB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such
security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid
price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market
makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If the
Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be
the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being
converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such
Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on
the principal securities exchange or other securities market on which the Common Stock is then being traded.

 

    	 

    	 

    

  

Conversion Price During Major
Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes
a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the
Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly
announces a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement
Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been
applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in
effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth
in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with
respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by
this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or
entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the
proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

1.3 Authorized Shares. The Borrower
covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common
Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion
of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved four
times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes
in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance
with the Borrower’s obligations pursuant to Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities
or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall
be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion
of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates
for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full
authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

 

    	 

    	 

    

  

If, at any time the Borrower does not maintain
the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

 

1.4 Method of Conversion.

 

(a) Mechanics of Conversion. Subject
to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date,
by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched
on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at
the principal office of the Borrower.

 

Surrender of Note Upon Conversion.
Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this
Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates
of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require
physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower
shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if
any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders
this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like
tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge
and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

Payment of Taxes. The Borrower shall
not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of
Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name),
and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the
person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s
account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to
the satisfaction of the Borrower that such tax has been paid.

 

    	 

    	 

    

  

Delivery of Common Stock Upon Conversion.
Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication)
of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and
deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon
such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion
of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

 

Obligation of Borrower to Deliver
Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of
record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and
unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its
obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to
issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any
action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other
obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance
which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion
Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by
the Borrower before 6:00 p.m., New York, New York time, on such date.

 

Delivery of Common Stock by Electronic
Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the
Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”)
program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the
Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion
to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission
(“DWAC”) system.

 

    	 

    	 

    

  

Failure to Deliver Common Stock Prior
to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or
equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered
by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed
by such Section) the Borrower shall pay to the Holder $1,000 per day in cash, for each day beyond the Deadline that the Borrower
fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month
in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following
the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon
in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance
with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting
from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly
the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

 

1.5 Concerning the Shares.
The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are
sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been
furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a
successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in
Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and
who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement
(and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon
conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for
shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration
statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of
the legend, shall bear a legend substantially in the following form, as appropriate:

 

    	 

    	 

    

  

“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The legend set forth above shall be removed
and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer
agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions,
to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon
conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under
the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular
date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Buyer
with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the
Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

1.6 Effect of Certain Events.

 

Effect of Merger, Consolidation, Etc.
At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the
effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the
Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person
(as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined
in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition
to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b)
hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust
or other entity or organization.

 

    	 

    	 

    

  

Adjustment Due to Merger, Consolidation,
Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares
of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock
or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets
of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall
thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which
the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such
transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall
be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note)
shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable
upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first
gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written
notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation
of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during
which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower)
assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share exchanges.

 

Adjustment Due to Distribution.
If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock
as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s
shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”),
then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders
entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to
the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such Distribution.

 

    	 

    	 

    

 

 (d) Adjustment Due to Dilutive
Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this
Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration
per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith)
less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive
Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration
per share received by the Borrower in such Dilutive Issuance.

 

The Borrower shall be deemed to have issued
or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee
stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible
into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price
shall be equal to such price per share. For purposes of the preceding sentence, the “price per share for which Common Stock
is issuable upon the exercise of such Options” is determined by dividing (i) the total amount, if any, received or receivable
by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion
or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

 

    	 

    	 

    

 

 Additionally, the Borrower shall
be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities,
whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per
share for which Common Stock is issuable upon such “price per share for which Common Stock is issuable upon such conversion
or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration
for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities.

 

Purchase Rights. If, at any time
when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants,
securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then
the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase
Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which
a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which
the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6,
the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.
The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth
(i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock
and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

 

1.7 Trading Market Limitations.
Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed
or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued
pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant
to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum Share
Amount”), which shall be 4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement),
subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and
similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if
the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s
ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note,
this will be considered an Event of Default under Section 3.3 of the Note.

 

    	 

    	 

    

 

1.8 Status as Shareholder. Upon
submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be
issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount)
shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion
of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to
any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to
comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of
Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion
of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying
the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note
and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered,
adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all
of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section
1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have
the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s
failure to convert this Note.

 

1.9 Prepayment. Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and ending on the date
which is thiry (30) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading
Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in
accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional
Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at
least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower
shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to 125%, multiplied
by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred
to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower
delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within three
(3) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant
to this Section 1.9.

 

    	 

    	 

    

 

 Notwithstanding anything to the
contrary contained in this Note, at any time during the period beginning on the date which is thiryt-one (31) days following the
issue date and ending on the date which is sixty (60) days following the issue date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note,
and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.
On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to
or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the
Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the “Second Optional Prepayment Amount”) equal to 130%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within three (3) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

    	 

    	 

    

 

Notwithstanding anything to the
contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days following
the issue date and ending on the date which is ninety (90) days following the issue date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be
delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of
the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional
Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower
at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note,
the Borrower shall make payment to the Holder of an amount in cash (the “Third Optional Prepayment Amount”) equal
to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if
any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment
Amount due to the Holder of the Note within three (3) business days following the Optional Prepayment Date, the Borrower
shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding any to the contrary stated
elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from the issue date and ending
one hundred twenty (120) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3)
Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in
full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered
addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which
shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date,
the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to or upon the order of the Holder
as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the
Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Fourth
Optional Prepayment Amount”) equal to 140%, multiplied by the sum of: (w) the then outstanding principal amount of this Note
plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fourth
Optional Prepayment Amount due to the Holder of the Note within three (3) business days following the Optional Prepayment Date,
the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

    	 

    	 

    

 

Notwithstanding any to the contrary
stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one (121) day from
the issue date and ending one hundred eighty (180) days following the issue date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be
delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of
the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional
Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower
at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note,
the Borrower shall make payment to the Holder of an amount in cash (the “Fifth Optional Prepayment Amount”) equal
to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if
any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fifth Optional Prepayment
Amount due to the Holder of the Note within three (3) business days following the Optional Prepayment Date, the Borrower
shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

After the expiration of one hundred eighty
(180) following the date of the Note, the Borrower shall have no right of prepayment.

 

ARTICLE II. CERTAIN COVENANTS

 

2.1 Distributions on Capital Stock.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent
(a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities)
on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock
or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock
except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s
disinterested directors.

 

    	 

    	 

    

  

2.2 Restriction on Stock Repurchases.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent
redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any
one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options
to purchase or acquire any such shares.

 

2.3 Borrowings. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, create, incur, assume
guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership,
joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist
any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower
has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred
in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.

 

2.4 Sale of Assets. So long as the
Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease
or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition
of any assets may be conditioned on a specified use of the proceeds of disposition.

 

2.5 Advances and Loans. So long
as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent,
lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers,
directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed
on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course
of business or (c) not in excess of $100,000.

 

ARTICLE III. EVENTS OF DEFAULT

 

If any of the following events of default (each, an
“Event of Default”) shall occur:

 

3.1 Failure to Pay Principal or Interest.
The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration
or otherwise.

 

    	 

    	 

    

 

3.2 Conversion and the Shares. The
Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation
to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to
transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of
Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the
Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing)
(electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion
of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not
to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop
transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion
of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat
that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any
written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business
days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its
obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered
or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances
any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower
to the Holder within forty eight (48) hours of a demand from the Holder.

 

3.3 Breach of Covenants. The
Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral
documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after
written notice thereof to the Borrower from the Holder.

 

3.4 Breach of Representations and Warranties.
Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant
hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of
the Holder with respect to this Note or the Purchase Agreement.

 

3.5 Receiver or Trustee. The Borrower
or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment
of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise
be appointed.

 

    	 

    	 

    

 

3.6 Judgments. Any money judgment,
writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property
or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless
otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7
Bankruptcy.Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.

 

3.8 Delisting of Common Stock. The
Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent replacement exchange,
the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 

3.9 Failure to Comply with the Exchange
Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease
to be subject to the reporting requirements of the Exchange Act.

 

3.10 Liquidation. Any dissolution,
liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11
Cessation of Operations.Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable
to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue
as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.12
Maintenance of Assets.The failure by Borrower to maintain any material intellectual property rights, personal, real
property or other assets which are necessary to conduct its business (whether now or in the future).

 

3.13
Financial Statement Restatement.The restatement of any financial statements filed by the Borrower with the SEC for
any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.14
 Reverse Splits.The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written
notice to the Holder.

 

    	 

    	 

    

 

3.15 Replacement of Transfer Agent.
In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date
of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the
Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount)
signed by the successor transfer agent to Borrower and the Borrower.

 

3.16 Cross-Default. Notwithstanding
anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower
of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice
and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements,
in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the
terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder.
“Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower,
and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided,
however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the
loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower
to the Holder.

 

    	 

    	 

    

 

Upon the occurrence and during the
continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or
interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay
to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein).
UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME
IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN
AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) 175% (2). Upon the occurrence and during the
continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or
interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration),
3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the
Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the
remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date
specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal
amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if
any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts
referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the
“parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares
of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating
the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of
determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a
specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the
highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of
Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts
payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby
are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the
Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

 

If the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right
at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares),
to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

 

ARTICLE IV. MISCELLANEOUS

 

4.1 Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

    	 

    	 

    

  

4.2 Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram,
or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall
be:

 

If to the Borrower, to:

 

BLUE SPHERE CORP.

 

35 Asuta Street

 

Even Yehuda, Israel 40500

 

Attn: SHLOMO PALAS, Chief Executive Officer

 

facsimile:

 

With a copy by fax only to (which copy shall not
constitute notice):

 

[enter name of law firm] Attn: [attorney name] [enter
address line 1] [enter city, state, zip] facsimile: [enter fax number]

 

If to the Holder:

 

ASHER ENTERPRISES, INC.

 

1 Linden Pl., Suite 207 Great Neck, NY. 11021 Attn:
Curt Kramer, President facsimile: 516-498-9894

 

    	 

    	 

    

  

With a copy by fax only to (which copy shall not constitute
notice):

 

Naidich Wurman Birnbaum & Maday, LLP

 

80 Cuttermill Road, Suite 410

 

Great Neck, NY 11021 facsimile: 516-466-3555

 

4.3 Amendments. This Note and any
provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note”
and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant
to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4 Assignability. This Note shall
be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors
and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act).
Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement.

 

4.5 Cost of Collection. If default
is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’
fees.

 

4.6 Governing Law. This Note
shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of
conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The
parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and
shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower
and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision of any agreement.Each party hereby irrevocably waives personal service of process
and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other
Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law.

 

    	 

    	 

    

  

4.7 Certain Amounts. Whenever pursuant
to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required
to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree
that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount
to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part
for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion
of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree
that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a
cash payment without the opportunity to convert this Note into shares of Common Stock.

 

4.8 Purchase Agreement. By its acceptance
of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

 

4.9 Notice of Corporate Events.
Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to
the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting
of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of
any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive
any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale,
lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding
up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified
therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which
any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding
the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall
make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification
to the Holder in accordance with the terms of this Section 4.9.

 

    	 

    	 

    

  

4.10 Remedies. The Borrower
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by
the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the
necessity of showing economic loss and without any bond or other security being required.

 

IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by its duly authorized officer this November 11, 2011.

 

	 	BLUE SPHERE CORP.
	 	 	 
	 	By:	 
	 	 	 
	 	 	SHLOMO PALAS
	 	 	 
	 	 	Chief Executive Officer

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert $   principal
amount

 

of the Note (defined below) into that number
of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below,
of BLUE SPHERE CORP., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of
the Borrower dated as of November 11, 2011 (the “Note”), as of the date written below. No fee will be charged to the
Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

		 ̈	The Borrower shall electronically transmit the Common
Stock issuable pursuant to this Notice of Conversion to
the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

 

Name of DTC Prime Broker: Account Number:

 

    	 

    	 

    

 

		 ̈	The undersigned hereby requests that the Borrower
issue a certificate or certificates for the number of
shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s)
specified immediately below or, if additional space is necessary, on an attachment hereto:

 

 ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207

 

Great Neck, NY. 11021

 

Attention: Certificate Delivery

 

(516) 498-9890

 

Date of Conversion:

 

Applicable Conversion Price:$

Number of Shares of Common Stock to be Issued

 

Pursuant
to Conversion of the Notes:_

Amount of Principal Balance Due remaining

 

Under the Note after this conversion:

 

ASHER ENTERPRISES, INC.

 

By:

 

Name: Curt Kramer Title: President

 

Date: 

1 Linden Pl., Suite 207 Great Neck, NY. 11021

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