Document:

EXHIBIT 10.01

 

EXCHANGE
AGREEMENT

 

This
Exchange Agreement (the “Agreement”) is entered into as of this 23rd day of December, 2019, by and between
ToughBuilt Industries, Inc., a Nevada corporation with offices located at 25371 Commercentre Drive, Suite 200, Lake Forest, CA
9263 (the “Company”) and the Holder signatory hereto (the “Holder”), with reference to the
following facts:

 

A. Prior
to the date hereof, pursuant to that Securities Purchase Agreement, dated as of August 19, 2019, by and between the Company and
the investors party thereto (the “Securities Purchase Agreement”), the Company issued, among other things,
senior convertible notes, convertible into shares of Common Stock (as defined below), in accordance with the terms thereof (the
“Original Notes”). Capitalized terms used but not otherwise defined herein shall have the meanings as set forth
in the Securities Purchase Agreement (as amended hereby).

 

B. The
Company has authorized a new series of convertible preferred stock of the Company designated as Series D Convertible Preferred
Stock, $0.001 par value, the terms of which are set forth in the certificate of designation for such series of preferred stock
(the “New Certificate of Designations”) in the form attached hereto as Exhibit A (together with
any convertible preferred shares issued in replacement thereof in accordance with the terms thereof, the “Series D Preferred
Stock”), which Series D Preferred Stock shall be convertible into shares of Common Stock, in accordance with the terms
of the New Certificate of Designations.

 

C. The
Company and the Holder desire to exchange (the “Exchange” or the “Transaction”) such aggregate
principal of the Original Note issued to the Holder as set forth on the signature page of the Holder attached hereto (the “Existing
Note”), on the basis and subject to the terms and conditions set forth in this Agreement, for (x) such aggregate number
of shares of Series D Preferred Stock as set forth on the signature page of the Holder attached hereto (the “New Preferred
Shares”, and such shares of Common Stock issuable pursuant to the terms of the Series D New Certificate of Designations,
including, without limitation, upon conversion or otherwise, collectively, the “New Conversion Shares”, and
together with the New Preferred Shares, the “New Securities”). The New Preferred Shares, the New Conversion
Shares and this Agreement and such other documents and certificates related thereto are collectively referred to herein as the
“Exchange Documents”.

 

D. The
Exchange is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933,
as amended (the “1933 Act”).

 

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree
as follows:

 

1. Exchange.
On the date hereof, pursuant to Section 3(a)(9) of the 1933 Act, the Holder hereby agrees to convey, assign and transfer the Existing
Note to the Company in exchange for which the Company agrees to issue the New Preferred Shares to the Holder. On the date hereof,
in exchange for the Existing Note, the Company shall issue the New Preferred Shares to the Holder. On the date hereof, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the New Preferred Shares and shall be entitled
to exercise all of its rights with respect to the New Preferred Shares and, irrespective of the date the Company delivers the
certificates evidencing the New Preferred Shares and to the Holder.

 

    	 	 	 

    	 

    

 

2. Ratifications;
Incorporation of Terms under Transaction Documents; Waivers.

 

(a) Ratifications.
Except as otherwise expressly provided herein, the Securities Purchase Agreement, and each other Transaction Document, is, and
shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after
the date hereof: (i) all references in the Securities Purchase Agreement to “this Agreement”, “hereto”,
“hereof”, “hereunder” or words of like import referring to the Securities Purchase Agreement shall mean
the Securities Purchase Agreement as amended by this Agreement, and (ii) all references in the other Transaction Documents to
the “Securities Purchase Agreement”, “thereto”, “thereof”, “thereunder” or words
of like import referring to the Securities Purchase Agreement shall mean the Securities Purchase Agreement as amended by this
Agreement.

 

(b) Amendments
and Incorporation of Terms under Transaction Documents. Effective as of the date hereof, the Securities Purchase Agreement
and each of the other Transaction Documents are hereby amended as follows (and any such agreements, covenants and related provisions
therein shall be deemed incorporated by reference herein, mutatis mutandis, as amended as such):

 

(i)
The defined term “Notes” is hereby amended to include the New Preferred Shares (as defined herein).

 

(ii)
The defined term “Conversion Shares” is hereby amended to include New Conversion Shares (as defined herein).

 

(iii)
The defined term “Transaction Documents” is hereby amended to include this Agreement.

 

(iv)
The defined term “Event of Default” is hereby amended to include the Triggering Events (as defined in the Certificate
of Designations).

 

(c) Waivers.
Effective as of the date hereof, until such time as no New Preferred Shares remain outstanding and no other payment amounts remain
outstanding under the Certificate of Designations, the Company hereby waives (i) any right to effect a Company Optional Redemption
(as defined in the Existing Notes) of any Existing Note and (ii) any right to effect any Netting at the election of the Company
in any of the Transaction Documents (except, for the avoidance of doubt, any Netting made at the election of the applicable holder
of Existing Notes).

 

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3. Representations
and Warranties. As of the date hereof:

 

3.1 Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse
Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise)
or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or
in any of the other Exchange Documents or (iii) the authority or ability of the Company or any of its Subsidiaries to perform
any of their respective obligations under any of the Exchange Documents (as defined below). Other than the Persons (as defined
below) listed in the SEC Documents, the Company has no Subsidiaries. “Subsidiaries” means any Person in which
the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of
such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and each
of the foregoing, is individually referred to herein as a “Subsidiary.” For purposes of this Agreement, (x)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof and (y)
“Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction
of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national
organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or any of the foregoing.

 

3.2 Authorization
and Binding Obligation. The Company has the requisite power and authority to enter into and perform its obligations under
this Agreement and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated
by the Exchange Documents and to consummate the Transaction (including, without limitation, the issuance of the New Preferred
Shares in accordance with the terms hereof and the reservation and issuance of the New Conversion Shares in accordance with the
terms of the New Certificate of Designations). The execution and delivery of the Exchange Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the New Preferred
Shares in accordance with the terms hereof and the reservation and issuance of the New Conversion Shares in accordance with the
terms of the New Certificate of Designations, has been duly authorized by the Company’s Board of Directors and no further
filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the
other Exchange Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights
to indemnification and to contribution may be limited by federal or state securities laws.

 

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3.3 No
Conflict. Except as set forth on Schedule 3.3, the execution, delivery and performance of the Exchange Documents by
the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the New Preferred Shares in accordance with the terms hereof and the reservation and issuance of the New Conversion
Shares in accordance with the terms of the New Certificate of Designations, as applicable) will not (i) result in a violation
of the Articles of Incorporation (as defined below) or any other organizational documents of the Company or any of its Subsidiaries,
any capital stock of the Company or any of its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries,
(ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the
Nasdaq Capital Market (the “Principal Market”) and including all applicable federal laws, rules and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries
is bound or affected.

 

3.4 No
Consents. Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make
any filing or registration with (other than the filing with the Securities and Exchange Commission (the “SEC”)
of a Form D with the SEC, any other filings as may be required by any state securities agencies, filing of UCC financing statements
and approval by the Principal Market of a listing of additional shares application in respect of the New Conversion Shares as
required by Section 7 hereof), any court, governmental agency or any regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents,
in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations
which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which
might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings
contemplated by the Exchange Documents. Except as disclosed in the SEC Documents, the Company is not in violation of the requirements
of the Principal Market and has no knowledge of any facts or circumstances which would reasonably lead to delisting or suspension
of the Common Stock in the foreseeable future.

 

3.5 Securities
Law Exemptions. Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and
issuance by the Company of the New Securities is exempt from registration under the 1933 Act pursuant to the exemption provided
by Rule 3(a)(9) thereof.

 

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3.6 Issuance
of New Securities. The issuance of the New Preferred Shares are duly authorized and, upon issuance in accordance with the
terms of this Agreement, the New Preferred Shares shall be validly issued, fully paid and non-assessable and free from all preemptive
or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Liens”) with respect to the issue thereof. Upon exercise in
accordance with the New Certificate of Designations, the New Conversion Shares, when issued, will be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock. The offer and issuance by the Company of the New Securities
is exempt from registration under the 1933 Act.

 

3.7 Transfer
Taxes. On the date hereof, all share transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance of the New Securities to be exchanged with the Holder hereunder will be, or will have been,
fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

3.8 SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all reports,
schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date hereof, including without limitation, Current Reports
on Form 8-K filed by the Company with the SEC whether required to be filed or not (but excluding Item 7.01 thereunder), and all
exhibits and appendices included therein (other than Exhibits 99.1 to Form 8-K) and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”).
The Company has delivered or has made available to the Holder or its representatives true, correct and complete copies of each
of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements
of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments
which will not be material, either individually or in the aggregate). No other information provided by or on behalf of the Company
to the Holder which is not included in the SEC Documents (including, without limitation, information in the disclosure schedules
to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to
make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is
not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any
letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial
Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend
or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with
GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate
any of the Financial Statements.

 

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3.9 Absence
of Certain Changes. Except as set forth in the SEC Documents, since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, there has been no material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the
Company or any of its Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in
a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, outside of the ordinary course of business or (iii) except as disclosed in the SEC Documents, made any capital
expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization,
receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any
of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis, are not
as of the date hereof, and after giving effect to the transactions contemplated hereby to occur on the date hereof, will not be
Insolvent (as defined below). For the purpose of this Agreement (x) “Insolvent” means, (i) with respect to
the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its
Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness
(as defined below), (B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur
or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect to
the Company and each Subsidiary, individually, (A) the present fair saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (B) the Company or such
Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (C) the Company or such Subsidiary (as the case may be) intends to
incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature; (y) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance
with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all
reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations
evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds
of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which,
in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness,
and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; and (z) “Contingent Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

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3.10 No
Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Documents, no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any
of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof)
or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws
on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced, (ii) would reasonably expected to have a material adverse effect on the Holder’s
investment hereunder or (iii) would reasonably be expected to have a Material Adverse Effect.

 

3.11 Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of
preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation,
memorandum of association, articles of association, Articles of Incorporation or bylaws, respectively. Except as set forth in
the SEC Documents, neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually
or in the aggregate, have a Material Adverse Effect. Except as set forth in the SEC Documents, without limiting the generality
of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and
has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. During the two years prior to the date hereof, (i) the Common Stock has been listed
or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the
Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in
the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any
business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually
or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company
or any of its Subsidiaries.

 

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3.12 Transactions
With Affiliates. Except as set forth in the SEC Documents, no current or former employee, partner, director, officer or stockholder
(direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate
of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or
has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments
to, any such director, officer or stockholder or such associate or affiliate or relative Subsidiaries (other than for ordinary
course services as employees, consultants, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct
or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier
or customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common
stock of a company whose securities are traded on or quoted through an Eligible Market), nor does any such Person receive income
from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or
should properly accrue to the Company or its Subsidiaries. No employee, officer, stockholder or director of the Company or any
of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be,
nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them,
other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the
Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock
option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).

 

3.13 Equity
Capitalization.

 

(a) Definitions:

 

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

 

(ii) “Preferred
Stock” means (x) the Company’s blank check preferred stock, $0.001 par value per share, the terms of which may
be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such
preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other
than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

(b) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 100,000,000
shares of Common Stock, of which, million are issued and outstanding as of the date hereof and 35,500,000 million are reserved
for issuance pursuant to Convertible Securities (as defined below), in each case exercisable or exchangeable for, or convertible
into, shares of Common Stock, and (B) 10 million shares of Preferred Stock, of which 7,040 shares are issued and outstanding.
4,000,000 shares of Common Stock are held in the treasury of the Company. “Convertible Securities” means any
capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly
or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.

 

(c) Valid
Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. Schedule 3.13 sets forth the number of shares of Common Stock
that are (A) reserved for issuance pursuant to Convertible Securities and (B) that are, as of the date hereof, owned by Persons
who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates”
without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or
any of its Subsidiaries.

 

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(d) Existing
Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s
shares, interests or capital stock is subject to from all preemptive or similar rights, mortgages, defects, claims, liens, pledges,
charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”)
suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares,
interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933
Act; (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption
or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of
its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the New Securities; and
(F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement.

 

(e) Organizational
Documents. The Company has furnished to the Holder true, correct and complete copies of the Company’s Articles of Incorporation,
as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws,
as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Convertible Securities
and the material rights of the holders thereof in respect thereto.

 

3.14 Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed in the SEC Documents, has any
outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound,
(ii) is a party to any contract, agreement or instrument, except as disclosed in the SEC Documents, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result
in a Material Adverse Effect, (iii) has any financing statements securing obligations in any amounts filed in connection with
the Company or any of its Subsidiaries, except as disclosed in the SEC Documents; (iv) is in violation of any term of, or in default
under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to
be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course
of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or
could not have a Material Adverse Effect.

 

    	 	9	 

    	 

    

 

3.15 Litigation.
There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public
board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’
officers or directors that would reasonably be expected to have a Material Adverse Effect on the Company or its Subsidiaries,
whether of a civil or criminal nature or otherwise, in their capacities as such, except as disclosed in the SEC Documents. No
director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged
in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries
or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop order
or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934
Act. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination
or award of any Governmental Entity.

 

3.16 Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided the Holder or its agents or counsel
with any information that constitutes or would reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other
Exchange Documents. The Company understands and confirms that the Holder will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the Holder regarding the Company and its Subsidiaries, their
businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the
Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months
preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. No event or circumstance has occurred or information exists with respect
to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure
at or before the date hereof or announcement by the Company but which has not been so publicly announced or disclosed.

 

4. Holder’s
Representations and Warranties. As a material inducement to the Company to enter into this Agreement and consummate the
Exchange, the Holder represents, warrants and covenants with and to the Company as follows:

 

4.1 Reliance
on Exemptions. The Holder understands that the New Securities are being offered and exchanged in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Holder set forth herein and in the Exchange Documents in order to determine the availability of such
exemptions and the eligibility of the Holder to acquire the New Securities.

 

    	 	10	 

    	 

    

 

4.2 No
Governmental Review. The Holder understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the New Securities or the fairness or suitability of the investment
in the New Securities nor have such authorities passed upon or endorsed the merits of the offering of the New Securities.

 

4.3 Validity;
Enforcement. This Agreement and the Exchange Documents to which the Holder is a party have been duly and validly authorized,
executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding obligations of the Holder enforceable
against the Holder in accordance with their respective terms, except as such enforceability may be limited by general principles
of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

4.4 No
Conflicts. The execution, delivery and performance by the Holder of this Agreement and the Exchange Documents to which the
Holder is a party, and the consummation by the Holder of the transactions contemplated hereby and thereby will not (i) result
in a violation of the organizational documents of the Holder or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Holder, except
in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations
hereunder.

 

4.5 Investment
Risk; Sophistication. The Holder is acquiring the New Securities hereunder in the ordinary course of its business. The Holder
has such knowledge, sophistication, and experience in business and financial matters so as to be capable of evaluation of the
merits and risks of the prospective investment in the New Securities, and has so evaluated the merits and risk of such investment.
The Holder is an “accredited Holder” as defined in Regulation D under the 1933 Act.

 

4.6 Ownership
of Existing Note. The Holder owns the Existing Note free and clear of any Liens (other than the obligations pursuant to this
Agreement and applicable securities laws).

 

    	 	11	 

    	 

    

 

 

5. Disclosure
of Transaction. The Company shall, on or before 8:30 a.m., New York City Time, on or prior to the first business day after
the date of this Agreement, file a Current Report on Form 8-K describing the terms of the transactions contemplated hereby in
the form required by the 1934 Act and attaching the forms of the New Certificate of Designations and this Agreement as an exhibit
to such filing (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing,
the Company shall have disclosed all material, non-public information (if any) provided up to such time to the Holder by the Company
or any of its Subsidiaries or any of their respective officers, directors, employees or agents. In addition, effective upon the
filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any
agreement with respect to the transactions contemplated by the Exchange Documents or as otherwise disclosed in the 8-K Filing,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and any of the Holder or any of their affiliates, on the other hand, shall terminate. Neither
the Company, its Subsidiaries nor the Holder shall issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior
approval of the Holder, to make a press release or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith or (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) the Holder shall be consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of the Holder (which may be granted or withheld in
the Holder’s sole discretion), except as required by applicable law, the Company shall not (and shall cause each of its
Subsidiaries and affiliates to not) disclose the name of the Holder in any filing, announcement, release or otherwise.

 

6. No
Integration. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf shall,
directly or indirectly, make any offers or sales of any security (as defined in the 1933 Act) or solicit any offers to buy any
security or take any other actions, under circumstances that would require registration of any of the New Conversion Shares under
the 1933 Act or cause this offering to be integrated with such offering or any prior offerings by the Company for purposes of
Regulation D under the 1933 Act.

 

7. Listing.
The Company shall promptly secure the listing or designation for quotation (as applicable) of all of the New Conversion Shares
upon the Principal Market (subject to official notice of issuance) and shall maintain such listing of all the New Conversion Shares
from time to time issuable under the terms of the Exchange Documents. The Company shall maintain the Common Stock’s authorization
for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this Section 7.

 

8. Fees.
The Company shall reimburse Kelley Drye & Warren, LLP (counsel to the lead Holder) in an aggregate non-accountable amount
of $[ ] for costs and expenses incurred by it in connection with drafting and negotiation of the Exchange Documents. Each party
to this Agreement shall bear its own expenses in connection with the structuring, documentation, negotiation and closing of the
transactions contemplated hereby, except as provided in the previous sentence and except that the Company shall be responsible
for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, Depository Trust Company (“DTC”)
fees relating to or arising out of the transactions contemplated hereby.

 

    	 	12	 

    	 

    

 

9. Holding
Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the New Preferred Shares (and
upon conversion thereof, the New Conversion Shares) may be tacked onto the holding period of the Existing Note the Company agrees
not to take a position contrary to this Section 9. The Company acknowledges and agrees that (assuming the Holder is not an affiliate
of the Company) (i) the New Preferred Shares (and upon conversion thereof, the New Conversion Shares) will be, as of February
19, 2020, eligible to be resold pursuant to Rule 144, (ii) the Company is not aware of any event reasonably likely to occur that
would reasonably be expected to result in the New Preferred Shares (and upon conversion thereof, the New Conversion Shares), from
and after February 19, 2020, becoming ineligible to be resold by the Holder pursuant to Rule 144 and (iii) in connection with
any resale of the New Conversion Shares pursuant to Rule 144, from and after February 19, 2020, the Holder shall solely be required
to provide reasonable assurances that such applicable New Conversion Shares are eligible for resale, assignment or transfer under
Rule 144, which shall not include an opinion of Holder’s counsel. The Company shall be responsible for any transfer agent
fees or DTC fees or legal fees of the Company’s counsel with respect to the removal of legends, if any, or issuance of any
New Conversion Shares in accordance with the terms of the New Certificate of Designations.

 

10. Blue
Sky. The Company shall make all filings and reports relating to the Exchange required under applicable securities or “Blue
Sky” laws of the states of the United States following the date hereof, if any.

 

11. Most
Favored Nation. The Company hereby represents and warrants as of the date hereof and covenants and agrees that none of
the terms offered to any Person with respect to any exchange of any Original Note, including, without limitation with respect
to any consent, release, amendment, settlement, or waiver relating thereto (each an “Settlement Document”),
is or will be more favorable to such Person (other than any reimbursement of legal fees) than those of the Holder and this Agreement.
If, and whenever on or after the date hereof, the Company enters into a Settlement Document, then (i) the Company shall provide
notice thereof to the Holder immediately following the occurrence thereof and (ii) the terms and conditions of this Agreement
shall be, without any further action by the Holder or the Company, automatically amended and modified in an economically and legally
equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may
be) set forth in such Settlement Document, provided that upon written notice to the Company at any time the Holder may elect not
to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this
Agreement shall apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment
or modification never occurred with respect to the Holder. The provisions of this Section 11 shall apply similarly and equally
to each Settlement Document.

 

    	 	13	 

    	 

    

 

12. Independent
Nature of Holder’s Obligations and Rights. The obligations of the Holder under this Agreement are several and not joint
with the obligations of any other holder of securities of the Company (each, an “Other Holder”), and the Holder
shall not be responsible in any way for the performance of the obligations of any Other Holder under any other agreement by and
between the Company and any Other Holder (each, an “Other Agreement”). Nothing contained herein or in any Other
Agreement, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and Other Holders as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holder and Other Holders
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement
or any Other Agreement and the Company acknowledges that, to the best of its knowledge, the Holder and the Other Holders are not
acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement or any Other
Agreement. The Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions
contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for
any Other Holder to be joined as an additional party in any proceeding for such purpose.

 

13. Miscellaneous.

 

1. Successors
and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the parties hereto and the respective successors and assigns of the parties. Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

2. Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state or federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

    	 	14	 

    	 

    

 

3. Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

4. Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon delivery, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail; or (iii) one Trading Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall
be as set forth on the signature pages attached hereto or to such other address, facsimile number and/or e-mail address and/or
to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5)
days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or e-mail
containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

5. Finder’s
Fees. Each party represents that it neither is nor will be obligated for any finders’ fee or commission in connection
with this transaction. The Company shall indemnify and hold harmless the Holder from any liability for any commission or compensation
in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for
which the Company or any of its officers, employees or representatives is responsible.

 

6. Amendments
and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company
and the Holder.

 

7. Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms so long as this Agreement as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s)
in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close
as possible to that of the prohibited, invalid or unenforceable provision(s).

 

8. Entire
Agreement. This Agreement together with the other Exchange Documents, represents the entire agreement and understandings between
the parties concerning the Exchange and the other matters described herein and therein and supersedes and replaces any and all
prior agreements and understandings solely with respect to the subject matter hereof and thereof. Except as expressly set forth
herein, nothing herein shall amend, modify or waive any term or condition of the other Exchange Documents.

 

    	 	15	 

    	 

    

 

9. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

 

10. Interpretation.
Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular
the plural, the part the whole, (b) references to any gender include all genders, (c) “including” has the inclusive
meaning frequently identified with the phrase “but not limited to” and (d) references to “hereunder” or
“herein” relate to this Agreement.

 

11. No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

12. Survival.
The representations, warranties and covenants of the Company and the Holder contained herein shall survive the consummation of
the Exchange and the issuance and delivery of the New Securities.

 

13. Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

14. No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

[The
remainder of the page is intentionally left blank]

 

    	 	16	 

    	 

    

 

IN
WITNESS WHEREOF, Holders and the Company have executed this Agreement as of the date set forth on the first page of this Agreement.

 

	 	COMPANY:
	 	 	 
	 	TOUGHBUILT
    INDUSTRIES, INC.
	 	 	                    
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Address:	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

    	 	 	 

    	 

    

 

IN
WITNESS WHEREOF, Holders and the Company have executed this Agreement as of the date set forth on the first page of this Agreement.

 

	 	 	HOLDER:
	 	 	 	 
	Aggregate
    Principal of Original Note to be exchanged:	 	[                           }
	 	 	 	                  
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	Aggregate
    Number of Preferred Shares to be issued in Exchange:	 	Address:EXHIBIT 10.02

 

CERTIFICATE
OF DESIGNATIONS OF

SERIES D CONVERTIBLE PREFERRED STOCK OF

TOUGHBUILT INDUSTRIES, INC.

 

I,
Michael Panosian, hereby certify that I am the CEO and Chairman of Toughbuilt Industries, Inc (the “Company”),
a corporation organized and existing under the D Chapter 78 of the Nevada Revised Statues (the “NRS”), and
further do hereby certify:

 

That
pursuant to the authority expressly conferred upon the Board of Directors of the Company (the “Board”) by the
Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), and Section 1955 of
the NRS, the Board on December 21, 2019 adopted the following resolution determining it desirable and in the best interests of
the Company and its shareholders for the Company to create a series of 5,775 shares of preferred stock designated as “Series
D Convertible Preferred Stock”, none of which shares have been issued, to be issued in compliance with the exemption
provided by Section 3(a)(9) of the 1933 Act (as defined below) in exchange for $5,550,000 of the Notes (as defined below) originally
issued pursuant to the Securities Purchase Agreement (as defined below), in accordance with the terms of the Exchange Agreements
(as defined below):

 

RESOLVED,
that pursuant to the authority vested in the Board this Company, in accordance with the provisions of the Articles of Incorporation,
a series of preferred stock, par value $0.001 per share, of the Company be and hereby is created, and that the designation and
number of shares thereof and the voting and other powers, preferences and relative, participating, optional or other rights of
the shares of such series and the qualifications, limitations and restrictions thereof are as follows:

 

TERMS
OF SERIES D CONVERTIBLE PREFERRED STOCK

 

1.
Designation and Number of Shares. There shall hereby be created and established a series of preferred stock of the Company
designated as “Series D Convertible Preferred Stock” (the “Preferred Shares”). The authorized number
of Preferred Shares shall be 5,775 shares. Each Preferred Share shall have a par value of $0.001. Capitalized terms not defined
herein shall have the meaning as set forth in Section 32 below.

 

2.
Ranking. Except to the extent that the holders of at least a majority of the outstanding Preferred Shares (the “Required
Holders”) expressly consent to the creation of Parity Stock (as defined below) or Senior Preferred Stock (as defined
below) in accordance with Section 17, all shares of capital stock of the Company shall be junior in rank to all Preferred Shares
with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of
the Company (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such
shares of capital stock of the Company shall be subject to the rights, powers, preferences and privileges of the Preferred Shares.
Without limiting any other provision of this Certificate of Designations, without the prior express consent of the Required Holders,
voting separate as a single class, the Company shall not hereafter authorize or issue any additional or other shares of capital
stock that is (i) of senior rank to the Preferred Shares in respect of the preferences as to dividends, distributions and payments
upon the liquidation, dissolution and winding up of the Company (collectively, the “Senior Preferred Stock”),
(ii) of pari passu rank to the Preferred Shares in respect of the preferences as to dividends, distributions and payments upon
the liquidation, dissolution and winding up of the Company (collectively, the “Parity Stock”) or (iii) any
Junior Stock having a maturity date or any other date requiring redemption or repayment of such shares of Junior Stock prior to
such time as no Preferred Shares remain outstanding. In the event of the merger or consolidation of the Company with or into another
corporation, the Preferred Shares shall maintain their relative rights, powers, designations, privileges and preferences provided
for herein and no such merger or consolidation shall result inconsistent therewith.

 

    	 	 	 

    	 

    

 

3.
Dividends.

 

(a)
From and after December 23, 2019 (the “Initial Issuance Date”), each holder of a Preferred Share (each, a “Holder”
and collectively, the “Holders”) shall be entitled to receive dividends (“Dividends”), which
Dividends shall be computed on the basis of a 360-day year and twelve 30-day months and shall increase the Stated Value of the
Preferred Shares on each Dividend Date (each, a “Capitalized Dividend”).

 

(b)
Prior to the capitalization of Dividends on an Dividend Date, Dividends on the Preferred Shares shall accrue at the Dividend Rate
and be payable by way of inclusion of the Dividends in the Conversion Amount on each Conversion Date in accordance with Section
4(c)(i) or upon any redemption in accordance with Section 12 or upon any required payment upon any Bankruptcy Triggering Event.
From and after the occurrence and during the continuance of any Triggering Event, the Dividend Rate shall automatically be increased
to eighteen percent (18.0%) per annum (the “Default Rate”). In the event that such Triggering Event is subsequently
cured (and no other Triggering Event then exists), the adjustment referred to in the preceding sentence shall cease to be effective
as of the calendar day immediately following the date of such cure; provided that the Dividends as calculated and unpaid at such
increased rate during the continuance of such Triggering Event shall continue to apply to the extent relating to the days after
the occurrence of such Triggering Event through and including the date of such cure of such Triggering Event.

 

4.
Conversion. At any time after the Initial Issuance Date, each Preferred Share shall be convertible into validly issued,
fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section
4.

 

(a)
Holder’s Conversion Right. Subject to the provisions of Section 4(d), at any time or times on or after the Initial
Issuance Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into
validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 4(c) at the Conversion Rate (as
defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would
result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock
up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to
the issuance and delivery of Common Stock upon conversion of any Preferred Shares.

 

    	2

    	 

    

 

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

 

(i)
“Conversion Amount” means, with respect to each Preferred Share, as of the applicable date of determination,
the sum of (1) the Stated Value thereof plus (2) the Additional Amount thereon and any accrued and unpaid Late Charges (as defined
below in Section 25(c)) with respect to such Stated Value and Additional Amount as of such date of determination.

 

(ii)
“Conversion Price” means, with respect to each Preferred Share, as of any Conversion Date or other date of
determination, $1.00, subject to adjustment as provided herein.

 

(c)
Mechanics of Conversion. The conversion of each Preferred Share shall be conducted in the following manner:

 

(i)
Optional Conversion. To convert a Preferred Share into shares of Common Stock on any date (a “Conversion Date”),
a Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion of the share(s) of Preferred Shares subject to such conversion
in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company. If required
by Section 4(c)(iii), within two (2) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder
shall surrender to a nationally recognized overnight delivery service for delivery to the Company the original certificates, if
any, representing the Preferred Shares (the “Preferred Share Certificates”) so converted as aforesaid (or an
indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction as contemplated
by Section 19(b)). On the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic mail an
acknowledgment of confirmation and representation as to whether such shares of Common Stock may then be resold pursuant to Rule
144 or an effective and available registration statement, in the form attached hereto as Exhibit II, of receipt
of such Conversion Notice to such Holder and the Company’s transfer agent (the “Transfer Agent”), which
confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms
herein. On or before the second (2nd) Trading Day following each date on which the Company has received a Conversion Notice (or
such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade
initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share
Delivery Deadline”), the Company shall (1) provided that the Transfer Agent is participating in The Depository Trust
Company’s (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares
of Common Stock to which such Holder shall be entitled pursuant to such conversion to such Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, upon the request of such Holder, issue and deliver (via reputable overnight
courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee,
for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented
by the Preferred Share Certificate(s) submitted for conversion pursuant to Section 4(c)(iii) is greater than the number of Preferred
Shares being converted, then the Company shall, as soon as practicable and in no event later than two (2) Trading Days after receipt
of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred
Share Certificate (in accordance with Section 19(d)) representing the number of Preferred Shares not converted. The Person or
Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. Notwithstanding anything to the
contrary contained in this Certificate of Designations or the Registration Rights Agreement, after the effective date of a Registration
Statement (as defined in the Registration Rights Agreement) and prior to a Holder’s receipt of the notice of a Grace Period
(as defined in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of
Common Stock to such Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration
Rights Agreement) with respect to which such Holder has entered into a contract for sale, and delivered a copy of the prospectus
included as part of the particular Registration Statement to the extent applicable, and for which such Holder has not yet settled.

 

    	3

    	 

    

 

(ii)
Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the
applicable Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, to issue and deliver to such Holder (or its designee) a certificate for the number of shares of Common Stock
to which such Holder is entitled and register such shares of Common Stock on the Company’s share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit such Holder’s or its designee’s
balance account with DTC for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion
of any Conversion Amount (as the case may be) or (II) if the Registration Statement covering the resale of the shares of Common
Stock that are the subject of the Conversion Notice (the “Unavailable Conversion Shares”) is not available
for the resale of such Unavailable Conversion Shares and the Company fails to promptly, but in no event later than as required
pursuant to the Registration Rights Agreement (x) notify such Holder and (y) deliver the shares of Common Stock electronically
without any restrictive legend by crediting such aggregate number of shares of Common Stock to which such Holder is entitled pursuant
to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian
system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Conversion Failure”), then, in addition to all
other remedies available to such Holder, (X) the Company shall pay in cash to such Holder on each day after the Share Delivery
Deadline that the issuance of such shares of Common Stock is not timed effected an amount equal to 2% of the product of (A) the
sum of the number of shares of Common Stock not issued to such Holder on or prior to the Share Delivery Deadline and to which
such Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by such Holder in writing as in effect
at any time during the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Deadline,
and (Y) such Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned,
as the case may be, all, or any portion, of such Preferred Shares that has not been converted pursuant to such Conversion Notice;
provided that the voiding of an Conversion Notice shall not affect the Company’s obligations to make any payments which
have accrued prior to the date of such notice pursuant to this Section 4(c)(ii) or otherwise. In addition to the foregoing, if
on or prior to the Share Delivery Deadline either (A) the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, the Company shall fail to issue and deliver to such Holder (or its designee) a certificate and register such
shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of such Holder or such Holder’s
designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled upon such Holder’s
conversion hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below or (B) a Notice Failure occurs,
and if on or after such Share Delivery Deadline such Holder purchases (in an open market transaction or otherwise) shares of Common
Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such conversion that such Holder
is entitled to receive from the Company and has not received from the Company in connection with such Conversion Failure or Notice
Failure, as applicable (a “Buy-In”), then, in addition to all other remedies available to such Holder, the
Company shall, within two (2) Business Days after receipt of such Holder’s request and in such Holder’s discretion,
either: (I) pay cash to such Holder in an amount equal to such Holder’s total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other
Person in respect, or on behalf, of such Holder) (the “Buy-In Price”), at which point the Company’s obligation
to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit to the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled
upon such Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate,
or (II) promptly honor its obligation to so issue and deliver to such Holder a certificate or certificates representing such shares
of Common Stock or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the
number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion hereunder (as the case may
be) and pay cash to such Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number
of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause
(II) (the “Buy-In Payment Amount”). Nothing herein shall limit the Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock
(or to electronically deliver such shares of Common Stock) upon the conversion of this Note as required pursuant to the terms
hereof.

 

    	4

    	 

    

 

(iii)
Registration; Book-Entry. At the time of issuance of any Preferred Shares hereunder, the applicable Holder may, by written
request (including by electronic-mail) to the Company, elect to receive such Preferred Shares in the form of one or more Preferred
Share Certificates or in Book-Entry form. The Company (or the Transfer Agent, as custodian for the Preferred Shares) shall maintain
a register (the “Register”) for the recordation of the names and addresses of the Holders of each Preferred
Share and the Stated Value of the Preferred Shares and whether the Preferred Shares are held by such Holder in Preferred Share
Certificates or in Book-Entry form (the “Registered Preferred Shares”). The entries in the Register shall be
conclusive and binding for all purposes absent manifest error. The Company and each Holder of the Preferred Shares shall treat
each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including, without limitation,
the right to receive payments and Dividends hereunder) notwithstanding notice to the contrary. A Registered Preferred Share may
be assigned, transferred or sold only by registration of such assignment or sale on the Register. Upon its receipt of a written
request to assign, transfer or sell one or more Registered Preferred Shares by such Holder thereof, the Company shall record the
information contained therein in the Register and issue one or more new Registered Preferred Shares in the same aggregate Stated
Value as the Stated Value of the surrendered Registered Preferred Shares to the designated assignee or transferee pursuant to
Section 19, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of such Registered
Preferred Shares within two (2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect
such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 4,
following conversion of any Preferred Shares in accordance with the terms hereof, the applicable Holder shall not be required
to physically surrender such Preferred Shares held in the form of a Preferred Share Certificate to the Company unless (A) the
full or remaining number of Preferred Shares represented by the applicable Preferred Share Certificate are being converted (in
which event such certificate(s) shall be delivered to the Company as contemplated by this Section 4(c)(iii)) or (B) such Holder
has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance
of Preferred Shares upon physical surrender of the applicable Preferred Share Certificate. Each Holder and the Company shall maintain
records showing the Stated Value, Dividends and Late Charges converted and/or paid (as the case may be) and the dates of such
conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to such Holder and the
Company, so as not to require physical surrender of a Preferred Share Certificate upon conversion. If the Company does not update
the Register to record such Stated Value, Dividends and Late Charges converted and/or paid (as the case may be) and the dates
of such conversions and/or payments (as the case may be) within two (2) Business Days of such occurrence, then the Register shall
be automatically deemed updated to reflect such occurrence. In the event of any dispute or discrepancy, such records of such Holder
establishing the number of Preferred Shares to which the record holder is entitled shall be controlling and determinative in the
absence of manifest error. A Holder and any transferee or assignee, by acceptance of a certificate, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of any Preferred Shares, the number of Preferred Shares represented
by such certificate may be less than the number of Preferred Shares stated on the face thereof. Each Preferred Share Certificate
shall bear the following legend:

 

ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 4(c)(iii) THEREOF. THE NUMBER
OF SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES D PREFERRED
STOCK STATED ON THE FACE HEREOF PURSUANT TO SECTION 4(c)(iii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES
D PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.

 

    	5

    	 

    

 

(iv)
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one Holder for
the same Conversion Date and the Company can convert some, but not all, of such Preferred Shares submitted for conversion, the
Company shall convert from each Holder electing to have Preferred Shares converted on such date a pro rata amount of such Holder’s
Preferred Shares submitted for conversion on such date based on the number of Preferred Shares submitted for conversion on such
date by such Holder relative to the aggregate number of Preferred Shares submitted for conversion on such date. In the event of
a dispute as to the number of shares of Common Stock issuable to a Holder in connection with a conversion of Preferred Shares,
the Company shall issue to such Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance
with Section 24.

 

(d)
Limitation on Beneficial Ownership.

 

(i)
Beneficial Ownership. The Company shall not effect the conversion of any of the Preferred Shares held by a Holder, and
such Holder shall not have the right to convert any of the Preferred Shares held by such Holder pursuant to the terms and conditions
of this Certificate of Designations and any such conversion shall be null and void and treated as if never made, to the extent
that after giving effect to such conversion, such Holder together with the other Attribution Parties collectively would beneficially
own in excess of 9.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after
giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by such Holder and the other Attribution Parties shall include the number of shares of Common Stock held by such Holder
and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion of the Preferred Shares with
respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable
upon (A) conversion of the remaining, nonconverted Preferred Shares beneficially owned by such Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including,
without limitation, any convertible notes, convertible preferred stock or warrants, including the Preferred Shares, the Notes
and the Warrants) beneficially owned by such Holder or any other Attribution Party subject to a limitation on conversion or exercise
analogous to the limitation contained in this Section 4(d)(i). For purposes of this Section 4(d)(i), beneficial ownership shall
be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of
Common Stock a Holder may acquire upon the conversion of such Preferred Shares without exceeding the Maximum Percentage, such
Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case
may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent,
if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”).
If the Company receives a Conversion Notice from a Holder at a time when the actual number of outstanding shares of Common Stock
is less than the Reported Outstanding Share Number, the Company shall notify such Holder in writing of the number of shares of
Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause such Holder’s beneficial
ownership, as determined pursuant to this Section 4(d)(i), to exceed the Maximum Percentage, such Holder must notify the Company
of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at any time,
upon the written or oral request of any Holder, the Company shall within one (1) Business Day confirm orally and in writing or
by electronic mail to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
such Preferred Shares, by such Holder and any other Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of Common Stock to a Holder upon conversion of such Preferred Shares
results in such Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number
of shares so issued by which such Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds
the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and such Holder shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company,
any Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after
delivery of such notice) or decrease the Maximum Percentage of such Holder to any other percentage not in excess of 9.99% as specified
in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to such Holder and the
other Attribution Parties and not to any other Holder that is not an Attribution Party of such Holder. For purposes of clarity,
the shares of Common Stock issuable to a Holder pursuant to the terms of this Certificate of Designations in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by such Holder for any purpose including for purposes of Section 13(d)
or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert such Preferred Shares pursuant to this paragraph shall have
any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 4(d)(i) to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective
or inconsistent with the intended beneficial ownership limitation contained in this Section 4(d)(i) or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of such Preferred Shares.

 

    	6

    	 

    

 

(ii)
Principal Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of any Preferred Shares
or otherwise pursuant to the terms of this Certificate of Designations if the issuance of such shares of Common Stock (taken together
with the issuance of all other shares of Common Stock upon exercise of the Warrants or conversion of the Notes) would exceed the
aggregate number of shares of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the
Preferred Shares, the Notes and the Warrants without breaching the Company’s obligations under the rules and regulations
the listing rules of the Principal Market (the number of shares which may be issued without violating such rules and regulations,
including rules related to the aggregate offerings under NASDAQ Listing Rule 5635(d), the “Exchange Cap”),
except that such limitation shall not apply in the event that the Company (A) obtains the approval of its shareholders as required
by the applicable rules and regulations of the Principal Market for issuances of shares of Common Stock in excess of such amount
or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the Required Holders. Until such approval or such written opinion is obtained, no Holder shall be issued
in the aggregate, upon conversion or exercise (as the case may be) of any Preferred Shares, any Notes or any Warrant, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii)
the quotient of (1) the aggregate number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by (2)
the aggregate number of Preferred Shares issued to the Holders on the Initial Issuance Date (with respect to each Holder, the
“Exchange Cap Allocation”). In the event that any Holder shall sell or otherwise transfer any of such Holder’s
Preferred Shares, the transferee shall be allocated a pro rata portion of such Holder’s Exchange Cap Allocation with respect
to such portion of such Preferred Shares so transferred, and the restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon conversion in full of a holder’s
Preferred Shares, the difference (if any) between such holder’s Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such holder upon such holder’s conversion in full of such Preferred Shares shall be allocated,
to the respective Exchange Cap Allocations of the remaining holders of Preferred Shares and/or related Notes and/or Warrants on
a pro rata basis in proportion to the shares of Common Stock underlying the Preferred Shares and/or related Notes and/or Warrants
then held by each such holder of Preferred Shares and/or related Notes and/or Warrants. In the event that the Company is prohibited
from issuing any shares of Common Stock pursuant to this Section 4(d)(ii)(the “Exchange Cap Shares”) to a Holder,
the Company shall pay cash to such Holder in exchange for the redemption of such number of Preferred Shares held by such Holder
that are not convertible into such Exchange Cap Shares at a price equal to the sum of (i) the product of (x) such number of Exchange
Cap Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the
date such Holder delivers the applicable Conversion Notice with respect to such Exchange Cap Shares to the Company and ending
on the date of such issuance and payment under this Section 4(d)(ii) and (ii) to the extent of any Buy-In related thereto, any
Buy-In Payment Amount, any brokerage commissions and other out-of-pocket expenses, if any, of such Holder incurred in connection
therewith.

 

    	7

    	 

    

 

(e)
Right of Alternate Conversion.

 

(i)
General. Subject to Section 4(d), at any time, such Holder may, at such Holder’s option, by delivery of a Conversion
Notice to the Company (the date of any such Conversion Notice, each an “Alternate Conversion Date”), convert
all, or any number of Preferred Shares (such Conversion Amount of the Preferred Shares to be converted pursuant to this Section
4(e)(ii), each, an “Alternate Conversion Amount”) into shares of Common Stock at the Alternate Conversion Price
(each an “Alternate Conversion”).

 

(ii)
Mechanics of Alternate Conversion. On any Alternate Conversion Date, a Holder may voluntarily convert any Alternate Conversion
Amount of Preferred Shares pursuant to Section 4(c) (with “Alternate Conversion Price” replacing “Conversion
Price” for all purposes hereunder with respect to such Alternate Conversion and, if such Conversion Notice is delivered
during a Triggering Event Redemption Right Period (as defined below), with “Redemption Premium of the Conversion Amount”
replacing “Conversion Amount” in clause (x) of the definition of Conversion Rate above with respect to such Alternate
Conversion) by designating in the Conversion Notice delivered pursuant to this Section 4(e) of this Certificate of Designations
that such Holder is electing to use the Alternate Conversion Price for such conversion; provided that in the event of the Conversion
Floor Price Condition, on the applicable Alternate Conversion Date the Company shall also deliver to the Holder the applicable
Alternate Conversion Floor Amount. Notwithstanding anything to the contrary in this Section 4(e), but subject to Section 4(d),
until the Company delivers shares of Common Stock representing the applicable Alternate Conversion Amount of Preferred Shares
to such Holder, such Preferred Shares may be converted by such Holder into shares of Common Stock pursuant to Section 4(c) without
regard to this Section 4(e).

5.
Triggering Event Redemptions.

 

(a)
Triggering Event. Each of the following events shall constitute a “Triggering Event” and each of the
events in clauses (x), (xi) and (xii) shall constitute a “Bankruptcy Triggering Event”:

 

(i)
the failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC
on or prior to the date that is five (5) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement)
or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is five
(5) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);

 

    	8

    	 

    

 

(ii)
while the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights
Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the
issuance of a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of
Registrable Securities (as defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities
in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of
five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period (excluding days during an Allowable
Grace Period (as defined in the Registration Rights Agreement));

 

(iii)
the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for
a period of five (5) consecutive Trading Days;

 

(iv)
the Company’s (A) failure to cure a Conversion Failure (as defined herein) or a Conversion Failure (as defined in the Notes)
or a Delivery Failure (as defined in the Warrants) by delivery of the required number of shares of Common Stock within five (5)
Trading Days after the applicable Conversion Date or exercise date (as the case may be) or (B) notice, written or oral, to any
holder of Preferred Shares, Notes or Warrants, including, without limitation, by way of public announcement or through any of
its agents, at any time, of its intention not to comply, as required, with a request for exercise of any Warrants for Warrant
Shares in accordance with the provisions of the Warrants or a request for conversion of any Preferred Shares into shares of Common
Stock that is requested in accordance with the provisions of this Certificate of Designations, other than pursuant to Section
4(d) hereof or a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions
of the Notes;

 

(v)
except to the extent the Company is in compliance with Section 11(b) below, at any time following the tenth (10th)
consecutive day that a Holder’s Authorized Share Allocation (as defined in Section 11(a) below) is less than the sum of
(A) 200% of the number of shares of Common Stock that such Holder would be entitled to receive upon a conversion, in full, of
all of the Preferred Shares then held by such Holder at the Alternate Conversion Price then in effect (without regard to any limitations
on conversion set forth in this Certificate of Designations) (B) 200% of the number of shares of Common Stock that such Holder
would be entitled to receive upon a conversion, in full, of all of the Notes then held by such Holder (without regard to any limitations
on conversion set forth in the Notes) at the Alternate Conversion Price (as defined in the Notes) then in effect and (C) 100%
of the number of shares of Common Stock that such Holder would then be entitled to receive upon exercise in full of such Holder’s
Warrants (without regard to any limitations on exercise set forth in the Warrants);

 

(vi)
the Company’s failure to capitalize any Dividend on any Dividend Date (whether or not declared by the Board);

 

    	9

    	 

    

 

(vii)
the Company’s failure to pay any amount when and as due under this Certificate of Designations (including, without limitation,
the Company’s failure to pay any redemption payments or amounts hereunder), the Securities Purchase Agreement or any other
Transaction Document or any other agreement, document, certificate or other instrument delivered in connection with the transactions
contemplated hereby and thereby (in each case, whether or not permitted pursuant to the NRS), solely to the extent such failure
remains uncured for a period of at least one (1) Trading Day;

 

(viii)
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the applicable Holder
upon conversion or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired
by such Holder under the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities
Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured
for at least five (5) days;;

 

(ix)
the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $150,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Notes;

 

(x)
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted
by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not
be dismissed within thirty (30) days of their initiation;

 

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

 

    	10

    	 

    

 

(xii)
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of
a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt
or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;

 

(xiii)
a final judgment or judgments for the payment of money aggregating in excess of $150,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled
or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however,
any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the
$150,000 amount set forth above so long as the Company provides each Holder a written statement from such insurer or indemnity
provider (which written statement shall be reasonably satisfactory to each Holder) to the effect that such judgment is covered
by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance
or indemnity within thirty (30) days of the issuance of such judgment;

 

(xiv)
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable
grace period, any payment with respect to any Indebtedness in excess of $150,000 due to any third party (other than, with respect
to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by
proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with
GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $150,000, which
breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii)
suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result
in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default
would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities,
properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or
in the aggregate;

 

    	11

    	 

    

 

(xv)
other than as specifically set forth in another clause of this Section 5(a), the Company or any Subsidiary breaches any representation
or warranty in any material respect (other than the representations or warranties subject to material adverse effect on materiality
limitation, which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document,
except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured
for a period of two (2) consecutive Trading Days;

 

(xvi)
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the
Equity Conditions are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Triggering Event has
occurred;

 

(xvii)
if Michael Panosian ceases to be the chief executive officer of the Company or Jolie Kahn ceases to be an officer of the Company
and a qualified replacement, acceptable to the Holder, in its sole discretion, is not appointed in either case within fifteen
(15) Business Days;

 

(xviii)
any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 14(d) of this Certificate
of Designations;

 

(xix)
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs; or

 

(xx)
the VWAP of the Common Stock on any Trading Day following the Initial Issuance Date is less than $0.10 (as adjusted for any stock
dividend, stock split, stock combination, reclassification or similar transaction relating to the Common Stock occurring after
the Initial Issuance Date).

 

(xxi)
any provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof)
cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be
contested, directly or indirectly, by the Company or any Subsidiary, or a proceeding shall be commenced by the Company or any
Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability
thereof or the Company or any of its Subsidiaries shall deny in writing that it has any liability or obligation purported to be
created under one or more Transaction Documents; or

 

(xxii)
any Event of Default (as defined in the Notes) occurs with respect to any Notes.

 

    	12

    	 

    

 

(b)
Notice of a Triggering Event; Redemption Right. Upon the occurrence of a Triggering Event with respect to the Preferred
Shares, the Company shall within one (1) Business Day deliver written notice thereof via facsimile or electronic mail and overnight
courier (with next day delivery specified) (an “Triggering Event Notice”) to each Holder. At any time after
the earlier of a Holder’s receipt of a Triggering Event Notice and such Holder becoming aware of a Triggering Event [(such
earlier date, the “Triggering Event Right Commencement Date”) and ending (such ending date, the “Triggering
Event Right Expiration Date”, and each such period, an “Triggering Event Redemption Right Period”)
on the sixtieth (60th) Trading Day after the later of (x) the date such Triggering Event is cured and (y) such Holder’s
receipt of a Triggering Event Notice that includes (I) a reasonable description of the applicable Triggering Event, (II) a certification
as to whether, in the opinion of the Company, such Triggering Event is capable of being cured and, if applicable, a reasonable
description of any existing plans of the Company to cure such Triggering Event and (III) a certification as to the date the Triggering
Event occurred and, if cured on or prior to the date of such Triggering Event Notice, the applicable Triggering Event Right Expiration
Date], such Holder may require the Company to redeem (regardless of whether such Triggering Event has been cured on or prior to
the Triggering Event Right Expiration Date) all or any of the Preferred Shares by delivering written notice thereof (the “Triggering
Event Redemption Notice”) to the Company, which Triggering Event Redemption Notice shall indicate the number of the
Preferred Shares such Holder is electing to redeem. Each of the Preferred Shares subject to redemption by the Company pursuant
to this Section 5(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion
Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion Rate (with “Alternate
Conversion Price” replacing “Conversion Price” for all purposes hereunder with respect thereto and with “Redemption
Premium of the Conversion Amount” replacing “Conversion Amount” in clause (x) of the definition of Conversion
Rate above with respect thereto) with respect to the Conversion Amount in effect at such time as such Holder delivers a Triggering
Event Redemption Notice multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale
Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Triggering Event
and ending on the date the Company makes the entire payment required to be made under this Section 5(b) (the “Triggering
Event Redemption Price”). Redemptions required by this Section 5(b) shall be made in accordance with the provisions
of Section 12. To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction
to be prepayments of the Preferred Shares by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 5(b), but subject to Section 4(d), until the Triggering Event Redemption Price (together
with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by such Holder into Common Stock pursuant to the terms of
this Certificate of Designations. In the event of the Company’s redemption of any of the Preferred Shares under this Section
5(b), a Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict
future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for such Holder.
Accordingly, any redemption premium due under this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable
estimate of such Holder’s actual loss of its investment opportunity and not as a penalty. Any redemption upon a Triggering
Event shall not constitute an election of remedies by the applicable Holder or any other Holder, and all other rights and remedies
of each Holder shall be preserved.

 

    	13

    	 

    

 

(c)
Mandatory Redemption upon Bankruptcy Triggering Event. Notwithstanding anything to the contrary herein, and notwithstanding
any conversion that is then required or in process, upon any Bankruptcy Triggering Event, the Company shall immediately redeem,
in cash, each of the Preferred Shares then outstanding at a redemption price equal to the applicable Triggering Event Redemption
Price (calculated as if such Holder shall have delivered the Triggering Event Redemption Notice immediately prior to the occurrence
of such Bankruptcy Triggering Event), without the requirement for any notice or demand or other action by any Holder or any other
person or entity, provided that a Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Triggering
Event, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any other Holder hereunder,
including any other rights in respect of such Bankruptcy Triggering Event, any right to conversion, and any right to payment of
such Triggering Event Redemption Price or any other Redemption Price, as applicable.

 

6.
Rights Upon Fundamental Transactions.

 

(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes
in writing all of the obligations of the Company under this Certificate of Designations and the other Transaction Documents in
accordance with the provisions of this Section 6(a) pursuant to written agreements in form and substance satisfactory to the Required
Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder
of Preferred Shares in exchange for such Preferred Shares a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Certificate of Designations, including, without limitation, having a stated
value and dividend rate equal to the stated value and dividend rate of the Preferred Shares held by the Holders and having similar
ranking to the Preferred Shares, and satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent
Entity) is a publicly traded corporation whose shares of common stock are quoted on or listed for trading on an Eligible Market.
Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from
and after the date of such Fundamental Transaction, the provisions of this Certificate of Designations and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company under this Certificate of Designations and the other
Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein and therein. In addition
to the foregoing, upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to each Holder confirmation
that there shall be issued upon conversion or redemption of the Preferred Shares at any time after the consummation of such Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still
issuable under Sections 7 and 16, which shall continue to be receivable thereafter)) issuable upon the conversion or redemption
of the Preferred Shares prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent)
of the Successor Entity (including its Parent Entity) which each Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had all the Preferred Shares held by each Holder been converted immediately prior to such Fundamental
Transaction (without regard to any limitations on the conversion of the Preferred Shares contained in this Certificate of Designations),
as adjusted in accordance with the provisions of this Certificate of Designations. Notwithstanding the foregoing, such Holder
may elect, at its sole option, by delivery of written notice to the Company to waive this Section 6(a) to permit the Fundamental
Transaction without the assumption of the Preferred Shares. The provisions of this Section 6 shall apply similarly and equally
to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion or redemption
of the Preferred Shares.

 

    	14

    	 

    

 

(b)
Notice of a Change of Control Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading
Days prior to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the
public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail
and overnight courier to each Holder (a “Change of Control Notice”). At any time during the period beginning
after a Holder’s receipt of a Change of Control Notice or such Holder becoming aware of a Change of Control if a Change
of Control Notice is not delivered to such Holder in accordance with the immediately preceding sentence (as applicable) and ending
on twenty (20) Trading Days after the later of (A) the date of consummation of such Change of Control or (B) the date of receipt
of such Change of Control Notice or (C) the date of the announcement of such Change of Control, such Holder may require the Company
to redeem all or any portion of such Holder’s Preferred Shares by delivering written notice thereof (“Change of
Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the number of Preferred
Shares such Holder is electing to have the Company redeem. Each Preferred Share subject to redemption pursuant to this Section
6(b) shall be redeemed by the Company in cash at a price equal to the greatest of (i) the product of (w) the Change of Control
Redemption Premium multiplied by (y) the Conversion Amount of the Preferred Shares being redeemed, (ii) the product of (x) the
Change of Control Redemption Premium multiplied by (y) the product of (A) the Conversion Amount of the Preferred Shares being
redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock
during the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change
of Control and (2) the public announcement of such Change of Control and ending on the date such Holder delivers the Change of
Control Redemption Notice by (II) the Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption
Premium multiplied by (z) the product of (A) the Conversion Amount of the Preferred Shares being redeemed multiplied by (B) the
quotient of (I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of Common
Stock to be paid to such holders of the shares of Common Stock upon consummation of such Change of Control (any such non-cash
consideration constituting publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities
as of the Trading Day immediately prior to the consummation of such Change of Control, the Closing Sale Price of such securities
on the Trading Day immediately following the public announcement of such proposed Change of Control and the Closing Sale Price
of such securities on the Trading Day immediately prior to the public announcement of such proposed Change of Control) divided
by (II) the Conversion Price then in effect (the “Change of Control Redemption Price”). Redemptions required
by this Section 6(b) shall have priority to payments to all other shareholders of the Company in connection with such Change of
Control. To the extent redemptions required by this Section 6(b) are deemed or determined by a court of competent jurisdiction
to be prepayments of the Preferred Shares by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 6(b), but subject to Section 4(d), until the applicable Change of Control Redemption
Price (together with any Late Charges thereon) is paid in full to the applicable Holder, the Preferred Shares submitted by such
Holder for redemption under this Section 6(b) may be converted, in whole or in part, by such Holder into Common Stock pursuant
to Section 4(c) or in the event the Conversion Date is after the consummation of such Change of Control, stock or equity interests
of the Successor Entity substantially equivalent to the Company’s shares of Common Stock pursuant to Section 4(c). In the
event of the Company’s redemption of any of the Preferred Shares under this Section 6(b), such Holder’s damages would
be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty
of the availability of a suitable substitute investment opportunity for a Holder. Accordingly, any redemption premium due under
this Section 6(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of such Holder’s actual loss
of its investment opportunity and not as a penalty. The Company shall make payment of the applicable Change of Control Redemption
Price concurrently with the consummation of such Change of Control if a Change of Control Redemption Notice is received prior
to the consummation of such Change of Control and within two (2) Trading Days after the Company’s receipt of such notice
otherwise (the “Change of Control Redemption Date”). Redemptions required by this Section 6 shall be made in
accordance with the provisions of Section 12.

 

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7.
Rights Upon Issuance of Purchase Rights and Other Corporate Events.

 

(a)
Purchase Rights. In addition to any adjustments pursuant to Section 8 and Section 16 below, if at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property
pro rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”),
then each Holder 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 all the Preferred Shares (without taking into account any limitations or restrictions on the convertibility of the Preferred
Shares and assuming for such purpose that all the Preferred Shares were converted at the Alternate Conversion Price as of the
applicable record date) held by such Holder immediately prior to the date on which a record is taken for the grant, issuance or
sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights, provided, however, to the extent that such Holder’s
right to participate in any such Purchase Right would result in such Holder and the other Attribution Parties exceeding the Maximum
Percentage, then such Holder shall not be entitled to participate in such Purchase Right to such extent of the Maximum Percentage
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial
ownership) to such extent of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase
Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held
in abeyance, if applicable) for the benefit of such Holder until such time or times, if ever, as its right thereto would not result
in such Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times such Holder shall be
granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase
Right held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision,
such term shall be extended by such number of days held in abeyance, if applicable)) to the same extent as if there had been no
such limitation.

 

(b)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to ensure that each Holder will thereafter have the right, at such Holder’s option, to receive upon
a conversion of all the Preferred Shares held by such Holder (i) in addition to the shares of Common Stock receivable upon such
conversion, such securities or other assets to which such Holder would have been entitled with respect to such shares of Common
Stock had such shares of Common Stock been held by such Holder upon the consummation of such Corporate Event (without taking into
account any limitations or restrictions on the convertibility of the Preferred Shares set forth in this Certificate of Designations)
or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received
by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as such Holder
would have been entitled to receive had the Preferred Shares held by such Holder initially been issued with conversion rights
for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate
with the Conversion Rate. Provision made pursuant the preceding sentence shall be in a form and substance satisfactory to the
Required Holders. The provisions of this Section 7 shall apply similarly and equally to successive Corporate Events and shall
be applied without regard to any limitations on the conversion or redemption of the Preferred Shares set forth in this Certificate
of Designations.

 

    	16

    	 

    

 

8.
Rights Upon Issuance of Other Securities.

 

(a)
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company
grants, issues or sells (or enter into any agreement to grant, issue or sell), or in accordance with this Section 8(a) is deemed
to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by
or for the account of the Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold)
for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in
effect immediately prior to such issuance or sale or deemed issuance or sale (such Conversion Price then in effect is referred
to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately
after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.
For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Price and the New Issuance
Price under this Section 8(a)), the following shall be applicable:

 

(i)
Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue
or sell) any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise
of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option
or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such
price per share. For purposes of this Section 8(a)(i), the “lowest price per share for which one share of Common Stock is
at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of
(x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share
of Common Stock upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y)
the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming
all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts
paid or payable to the holder of such Option (or any other Person) with respect to nay one share of Common Stock upon the granting,
issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration consisting
of cash, debt forgiveness, assets or any other property received or receivable by, or benefit conferred on, the holder of such
Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the
actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise
pursuant to the terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities.

 

    	17

    	 

    

 

(ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells (or enters in to any agreement to issue
or sell) any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable
(or may become issuable assuming all possible market conditions) upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price
per share. For purposes of this Section 8(a)(ii), the “lowest price per share for which one share of Common Stock is at
any time issuable (or may become issuable assuming all possible market conditions) upon the conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible
Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and
(y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may
become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to
the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person)
with respect to any one share of Common Stock upon the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable consisting of cash, debt forgiveness, assets or other property by, or benefit conferred on,
the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion
Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made
upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions
of this Section 8(a), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such
issuance or sale.

 

(iii)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred
to in Section 8(b) below), the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially
granted, issued or sold. For purposes of this Section 8(a)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the Subscription Date are increased or decreased in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 8(a) shall be
made if such adjustment would result in an increase of the Conversion Price then in effect.

 

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(iv)
Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Required Holders,
the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, each a e “Secondary
Security” and each applicable Secondary Security, together with the Primary Security,
each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common
Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such
Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of Common Stock is at
any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 8(a)(i) or 8(a)(ii)
above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the
five (5) Trading Day period (the “Adjustment Period”) immediately following the public announcement of such
Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market
on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Note is converted,
on any given Conversion Date during any such Adjustment Period, solely with respect to such portion of this Note converted on
such applicable Conversion Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading
Day immediately prior to such Conversion Date). If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued
or sold for a consideration other than cash, the amount of such consideration received by the Company, will be the fair value
of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five
(5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor, will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value
of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required
Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation
(the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days
after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by
the Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest
error and the fees and expenses of such appraiser shall be borne by the Company.

 

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(v)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the
case may be).

 

(b)
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section
6 or Section 8(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately
reduced. Without limiting any provision of Section 6 or Section 8(a), if the Company at any time on or after the Subscription
Date combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more
classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 8(b) shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section
8(b) occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall
be adjusted appropriately to reflect such event.

 

    	20

    	 

    

 

(c)
Holder’s Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this
Section 8(b), if the Company in any manner issues or sells or enters into (whether initially
or pursuant to any subsequent amendment thereof) any agreement to issue or sell, any Common Stock, Options or Convertible Securities
(any such securities, “Variable Price Securities”) after the Subscription Date that are issuable pursuant to
such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary
with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive
of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends
and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable
Price”), the Company shall provide written notice thereof via facsimile or electronic mail and overnight courier to
each Holder on the date of such agreement and/or the issuance of such shares of Common Stock, Convertible Securities or Options,
as applicable. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, each
Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion
Price upon conversion of the Preferred Shares by designating in the Conversion Notice delivered upon any conversion of Preferred
Shares that solely for purposes of such conversion such Holder is relying on the Variable Price rather than the Conversion Price
then in effect. A Holder’s election to rely on a Variable Price for a particular conversion of Preferred Shares shall not
obligate such Holder to rely on a Variable Price for any future conversions of Preferred Shares.

 

(d)
Stock Combination Event Adjustments. If at any time and from time to time on or after the Subscription Date there occurs
any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each,
a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”)
and the Event Market Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section
8(b) above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event Date, the Conversion
Price then in effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in Section 88(b) above) shall
be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately
preceding sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made.

 

(e)
Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are
not strictly applicable, or, if applicable, would not operate to protect any Holder from dilution or if any event occurs of the
type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board shall in
good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of such Holder,
provided that no such adjustment pursuant to this Section 8(b) will increase the Conversion Price as otherwise determined pursuant
to this Section 8, provided further that if such Holder does not accept such adjustments as appropriately protecting its interests
hereunder against such dilution, then the Board and such Holder shall agree, in good faith, upon an independent investment bank
of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent
manifest error and whose fees and expenses shall be borne by the Company.

 

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(f)
Calculations. All calculations under this Section 8 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

 

(g)
Voluntary Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time
any Preferred Shares remain outstanding, with the prior written consent of the Required Holders, reduce the then current Conversion
Price to any amount and for any period of time deemed appropriate by the Board.

 

9.
Redemption at the Company’s Election; Subsequent Placement Event Redemptions.

 

(a)
Company Optional Redemption. At any time after the later of (x) thirty (30) calendar days after the Applicable Date (as
defined in the Securities Purchase Agreement) and (y) the date no Equity Conditions Failure exists, the Company shall have the
right to redeem all, but not less than all, of the Preferred Shares then outstanding (the “Company Optional Redemption
Amount”) on the Company Optional Redemption Date (each as defined below) (a “Company Optional Redemption”).
The Preferred Shares subject to redemption pursuant to this Section 9(a) shall be redeemed by the Company in cash at a price (the
“Company Optional Redemption Price”) equal to 125% of the greater of (i) the Conversion Amount being redeemed
as of the Company Optional Redemption Date and (ii) the product of (1) the Conversion Rate (with “Alternate Conversion Price”
replacing “Conversion Price” for all purposes with respect thereto) with respect to the Conversion Amount being redeemed
as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading
Day during the period commencing on the date immediately preceding such Company Optional Redemption Notice Date and ending on
the Trading Day immediately prior to the date the Company makes the entire payment required to be made under this Section 9(a).
The Company may exercise its right to require redemption under this Section 9(a) by delivering a written notice thereof by facsimile
or electronic mail and overnight courier to all, but not less than all, of the Holders (the “Company Optional Redemption
Notice” and the date all of the Holders received such notice is referred to as the “Company Optional Redemption
Notice Date”). The Company may deliver only one Company Optional Redemption Notice hereunder and such Company Optional
Redemption Notice shall be irrevocable. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional
Redemption shall occur (the “Company Optional Redemption Date”) which date shall not be less than ninety (90)
Trading Days nor more than one hundred and fifty (150) Trading Days following the Company Optional Redemption Notice Date, (y)
certify that there has been no Equity Conditions Failure and (z) state the aggregate Conversion Amount of the Preferred Shares
which is being redeemed in such Company Optional Redemption from such Holder and all of the other Holders of the Preferred Shares
pursuant to this Section 9(a) on the Company Optional Redemption Date. Notwithstanding anything herein to the contrary, (i) if
no Equity Conditions Failure has occurred as of the Company Optional Redemption Notice Date but an Equity Conditions Failure occurs
at any time prior to the Company Optional Redemption Date, (A) the Company shall provide each Holder a subsequent notice to that
effect and (B) unless such Holder waives the Equity Conditions Failure, the Company Optional Redemption with respect to such Holder
shall be cancelled and the applicable Company Optional Redemption Notice shall be null and void and (ii) at any time prior to
the date the Company Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole
or in part, by any Holder into shares of Common Stock pursuant to Section 4. All Conversion Amounts converted by a Holder after
the Company Optional Redemption Notice Date shall reduce the Company Optional Redemption Amount of the Preferred Shares of such
Holder required to be redeemed on the Company Optional Redemption Date. Redemptions made pursuant to this Section 9(a) shall be
made in accordance with Section 12. In the event of the Company’s redemption of any of the Preferred Shares under this Section
9, a Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for such Holder. Accordingly,
any redemption premium due under this Section 9 is intended by the parties to be, and shall be deemed, a reasonable estimate of
such Holder’s actual loss of its investment opportunity and not as a penalty. For the avoidance of doubt, the Company shall
have no right to effect a Company Optional Redemption if any Triggering Event has occurred and continuing, but any Triggering
Event shall have no effect upon any Holder’s right to convert Preferred Shares in its discretion.

 

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(a)
Subsequent Placement Event Redemption. At any time from and after the occurrence of a Subsequent Placement Event, any Holder
may require the Company to redeem (a “Subsequent Placement Event Redemption”) up to the lesser of (i) the aggregate
number of Preferred Shares held by such Holder and (ii) such Holder’s Subsequent Placement Event Redemption Number of the
Preferred Shares held by such Holder, as applicable, at a purchase price equal to 125% of the Conversion Amount of such Preferred
Shares (the “Subsequent Placement Event Redemption Price”) by delivery of written notice thereof (the “Subsequent
Placement Event Redemption Notice”) to the Company. The Subsequent Placement Event Redemption Notice shall state the
date the Company is required to pay to such Holder such Subsequent Placement Event Redemption Price (the “Subsequent
Placement Event Redemption Date”), which date shall be no earlier than the later of (x) the time of consummation of
such Subsequent Placement Event and (y) five (5) Business Days following the date of delivery of such Subsequent Placement Event
Redemption Notice. Redemptions required by this Section 9(b) shall be made in accordance with the provisions of Section 12. Notwithstanding
anything to the contrary in this Section 9(b), but subject to Section 4(d), until the Holder receives the Subsequent Placement
Event Redemption Price, the Subsequent Placement Event Redemption Number may be converted, in whole or in part, by the Holder
into Common Stock pursuant to Section 4, and any such conversion shall reduce the Subsequent Placement Event Redemption Number
in the manner set forth by the Holder in the applicable Conversion Notice. Notwithstanding the foregoing, if the Holder is participating
in a Subsequent Placement Event, upon the written request of the Holder, the Company shall apply all, or any part, as set forth
in such written request, of any amounts that would otherwise be payable to the Holder in such Subsequent Placement Event Redemption,
on a dollar-for-dollar basis, against the purchase price of the securities to be purchased by the Holder in such Subsequent Placement
Event.

 

10.
Noncircumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation,
Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Certificate of Designations, and will at all times in good faith carry out all the
provisions of this Certificate of Designations and take all action as may be required to protect the rights of the Holders hereunder.
Without limiting the generality of the foregoing or any other provision of this Certificate of Designations or the other Transaction
Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the conversion of any
Preferred Shares above the Conversion Price then in effect, (b) shall take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the conversion
of Preferred Shares and (c) shall, so long as any Preferred Shares are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the
Preferred Shares, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the conversion
of the Preferred Shares then outstanding (without regard to any limitations on conversion contained herein). Notwithstanding anything
herein to the contrary, if after the sixty (60) calendar day anniversary of the Initial Issuance Date, each Holder is not permitted
to convert such Holder’s Preferred Shares in full for any reason (other than pursuant to restrictions set forth in Section
4(d)(i) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining
such consents or approvals as necessary to effect such conversion into shares of Common Stock.

 

11.
Authorized Shares.

 

(a)
Reservation. So long as any Preferred Shares remain outstanding, the Company shall at all times reserve at least 200% of
the number of shares of Common Stock as shall from time to time be necessary to effect the conversion, including without limitation,
Alternate Conversions of all of the Preferred Shares then outstanding (without regard to any limitations on conversions) (the
“Required Reserve Amount”). The Required Reserve Amount (including, without limitation, each increase in the
number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by
each Holder on the Initial Issuance Date or increase in the number of reserved shares, as the case may be (the “Authorized
Share Allocation”). In the event that a Holder shall sell or otherwise transfer any of such Holder’s Preferred
Shares, each transferee shall be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any Preferred Shares shall be allocated to the remaining
Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

    	23

    	 

    

 

(b)
Insufficient Authorized Shares. If, notwithstanding Section 11(a) and not in limitation thereof, at any time while any
of the Preferred Shares remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of
Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Preferred Shares at least a number of shares
of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for the Preferred Shares then outstanding (or deemed outstanding pursuant
to Section 11(a) above). Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase in the number of authorized
shares of Common Stock. In connection with such meeting, the Company shall provide each shareholder with a proxy statement and
shall use its best efforts to solicit its shareholders’ approval of such increase in authorized shares of Common Stock and
to cause its board of directors to recommend to the shareholders that they approve such proposal (or, if a majority of the voting
power then in effect of the capital stock of the Company consents to such increase, in lieu of such proxy statement, deliver to
the shareholders of the Company an information statement that has been filed with (and either approved by or not subject to comments
from) the SEC with respect thereto). In the event that the Company is prohibited from issuing shares of Common Stock to a Holder
upon any conversion due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized
but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorized Failure Shares”),
in lieu of delivering such Authorized Failure Shares to such Holder, the Company shall pay cash in exchange for the redemption
of such portion of the Conversion Amount of the Preferred Shares convertible into such Authorized Failure Shares at a price equal
to the sum of (i) the product of (x) such number of Authorized Failure Shares and (y) the greatest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date such Holder delivers the applicable Conversion Notice with respect
to such Authorized Failure Shares to the Company and ending on the date of such issuance and payment under this Section 11(a);
and (ii) to the extent such Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Holder of Authorized Failure Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of such Holder incurred in connection therewith. Nothing contained in Section 11(a) or this Section 11(b) shall limit
any obligations of the Company under any provision of the Securities Purchase Agreement.

 

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12.
Redemptions.

 

(a)
General. If a Holder has submitted a Triggering Event Redemption Notice in accordance with Section 5(b), the Company shall
deliver the applicable Triggering Event Redemption Price to such Holder in cash within five (5) Business Days after the Company’s
receipt of such Holder’s Triggering Event Redemption Notice. If a Holder has submitted a Change of Control Redemption Notice
in accordance with Section 6(b), the Company shall deliver the applicable Change of Control Redemption Price to such Holder in
cash concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such
Change of Control and within five (5) Business Days after the Company’s receipt of such notice otherwise. The Company shall
deliver the applicable Company Optional Redemption Price to each Holder in cash on the applicable Company Optional Redemption
Date. The Company shall deliver the applicable Subsequent Placement Event Redemption Price to each Holder in cash on the applicable
Subsequent Placement Event Redemption Date. Notwithstanding anything herein to the contrary, in connection with any redemption
hereunder at a time a Holder is entitled to receive a cash payment under any of the other Transaction Documents, at the option
of such Holder delivered in writing to the Company, the applicable Redemption Price hereunder shall be increased by the amount
of such cash payment owed to such Holder under such other Transaction Document and, upon payment in full or conversion in accordance
herewith, shall satisfy the Company’s payment obligation under such other Transaction Document. In the event of a redemption
of less than all of the Preferred Shares, the Company shall promptly cause to be issued and delivered to such Holder a new Preferred
Share Certificate (in accordance with Section 19) (or evidence of the creation of a new Book-Entry) representing the number of
Preferred Shares which have not been redeemed. In the event that the Company does not pay the applicable Redemption Price to a
Holder within the time period required for any reason (including, without limitation, to the extent such payment is prohibited
pursuant to the NRS), at any time thereafter and until the Company pays such unpaid Redemption Price in full, such Holder shall
have the option, in lieu of redemption, to require the Company to promptly return to such Holder all or any of the Preferred Shares
that were submitted for redemption and for which the applicable Redemption Price (together with any Late Charges thereon) has
not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with
respect to such Preferred Shares, (y) the Company shall immediately return the applicable Preferred Share Certificate, or issue
a new Preferred Share Certificate (in accordance with Section 19(d)), to such Holder (unless the Preferred Shares are held in
Book-Entry form, in which case the Company shall deliver evidence to such Holder that a Book-Entry for such Preferred Shares then
exists), and in each case the Additional Amount of such Preferred Shares shall be increased by an amount equal to the difference
between (1) the applicable Redemption Price (as the case may be, and as adjusted pursuant to this Section 12, if applicable) minus
(2) the Stated Value portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of such Preferred
Shares shall be automatically adjusted with respect to each conversion effected thereafter by such Holder to the lowest of (A)
the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) the greater of (x) the
Floor Price and (y) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date
on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable
Redemption Notice is voided and (C) the greater of (x) the Floor Price and (y) 75% of the quotient of (I) the sum of the five
(5) lowest VWAPs of the Common Stock during the twenty (20) consecutive Trading Day period ending and including the applicable
Conversion Date divided by (II) five (5) (it being understood and agreed that all such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during such period); provided that in the
event of the Conversion Floor Price Condition, on the applicable Conversion Date in connection herewith the Company shall also
deliver to the Holder the applicable Redemption Conversion Floor Amount in cash on the applicable Conversion Date. A Holder’s
delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Company’s
obligations to make any payments of Late Charges which have accrued prior to the date of such notice with respect to the Preferred
Shares subject to such notice.

 

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(b)
Redemption by Multiple Holders. Upon the Company’s receipt of a Redemption Notice from any Holder for redemption
or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 5(b)
or Section 6(b), the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to each
other Holder by facsimile or electronic mail a copy of such notice. If the Company receives one or more Redemption Notices, during
the seven (7) Business Day period beginning on and including the date which is two (2) Business Days prior to the Company’s
receipt of the initial Redemption Notice and ending on and including the date which is two (2) Business Days after the Company’s
receipt of the initial Redemption Notice and the Company is unable to redeem all of the Conversion Amount of such Preferred Shares
designated in such initial Redemption Notice and such other Redemption Notices received during such seven (7) Business Day period,
then the Company shall redeem a pro rata amount from each Holder based on the Stated Value of the Preferred Shares submitted for
redemption pursuant to such Redemption Notices received by the Company during such seven (7) Business Day period.

 

13.
Voting Rights.

 

(a)
Each Holder, as such, shall be entitled to the whole number of votes equal to the number of shares of Common Stock equal to
the lesser of (x) the Maximum Percentage of the voting power of the Company and (y) the purchase price of the Preferred
Shares then held by such Holder (calculated as the portion of the aggregate purchase price for all of the Preferred Shares
attributable to the Preferred Shares then held by such Holder); divided by $0.18, provided, however, that such amount of
votes with respect to the Series D Preferred Stock, in the aggregate, shall not exceed 19.9% (or such greater percentage
allowed by the Principal Market without any shareholder approval requirements) of the voting power of the Company.

 

(b)
Each Holder shall be entitled to receive the same prior notice of any shareholders’ meeting as is provided to the
holders of Common Stock as well as prior notice of all shareholder actions to be taken by legally available means in lieu of
a meeting (and copies of proxy materials, consent solicitation statements and other information sent to shareholders in
connection therewith), all in accordance with the Bylaws and the NRS, and shall be entitled to vote or, if applicable,
provide consent, together with the holders of Common Stock as if they were a single class of securities upon any matter
submitted to a vote of shareholders, except as otherwise expressly required by law and except as required by the terms hereof
to be submitted to a series vote of the applicable Holders, in which case each Holder only shall vote as a separate
series.

 

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14.
Covenants.

 

(a)
Note Covenants. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
breach any covenant in Section 14 of the Notes.

 

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

 

(c)
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock
(other than as required by the Certificate of Designations).

 

(d)
Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the Required
Holders, (i) issue any Preferred Shares (other than as contemplated by the Securities Purchase Agreement and this Certificate
of Designations) or (ii) issue any other securities that would cause a breach or default under this Certificate of Designations,
the Notes or the Warrants.

 

(e)
Independent Investigation. At the request of any Holder either (x) at any time when a Triggering Event has occurred and
is continuing, (y) upon the occurrence of an event that with the passage of time or giving of notice would constitute a Triggering
Event or (z) at any time such Holder reasonably believes a Triggering Event may have occurred or be continuing, the Company shall
hire an independent, reputable investment bank selected by the Company and approved by such Holder to investigate as to whether
any breach of the Certificate of Designations has occurred (the “Independent Investigator”). If the Independent
Investigator determines that such breach of the Certificate of Designations has occurred, the Independent Investigator shall notify
the Company of such breach and the Company shall deliver written notice to each Holder of such breach. In connection with such
investigation, the Independent Investigator may, during normal business hours, inspect all contracts, books, records, personnel,
offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after
the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants’
work papers) and any books of account, records, reports and other papers not contractually required of the Company to be confidential
or secret, or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies
and inspections thereof as the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator
with such financial and operating data and other information with respect to the business and properties of the Company as the
Independent Investigator may reasonably request. The Company shall permit the Independent Investigator to discuss the affairs,
finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company’s
officers, directors, key employees and independent public accountants or any of them (and by this provision the Company authorizes
said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries),
all at such reasonable times, upon reasonable notice, and as often as may be reasonably requested.

 

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15.
Liquidation, Dissolution, Winding-Up. In the event of a Liquidation Event, the Holders shall be entitled to receive in
cash out of the assets of the Company, whether from capital or from earnings available for distribution to its shareholders (the
“Liquidation Funds”), before any amount shall be paid to the holders of any of shares of Junior Stock, but
pari passu with any Parity Stock then outstanding, an amount per Preferred Share equal to the greater of (A) 125% of the Conversion
Amount of such Preferred Share on the date of such payment and (B) the amount per share such Holder would receive if such Holder
converted such Preferred Share into Common Stock immediately prior to the date of such payment, provided that if the Liquidation
Funds are insufficient to pay the full amount due to the Holders and holders of shares of Parity Stock, then each Holder and each
holder of Parity Stock shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable
to such Holder and such holder of Parity Stock as a liquidation preference, in accordance with their respective certificate of
designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Preferred Shares
and all holders of shares of Parity Stock. To the extent necessary, the Company shall cause such actions to be taken by each of
its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event to be distributed
to the Holders in accordance with this Section 15. All the preferential amounts to be paid to the Holders under this Section 15
shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution
of any Liquidation Funds of the Company to the holders of shares of Junior Stock in connection with a Liquidation Event as to
which this Section 15 applies.

 

16.
Distribution of Assets. In addition to any adjustments pursuant to Section 7(a) and Section 8, if the Company shall declare
or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of
Common Stock, by way of return of capital or otherwise (including without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement
or other similar transaction) (the “Distributions”), then each Holder, as holders of Preferred Shares, will
be entitled to such Distributions as if such Holder had held the number of shares of Common Stock acquirable upon complete conversion
of the Preferred Shares (without taking into account any limitations or restrictions on the convertibility of the Preferred Shares
and assuming for such purpose that the Preferred Share was converted at the Alternate Conversion Price as of the applicable record
date) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date
as of which the record holders of Common Stock are to be determined for such Distributions (provided, however, that
to the extent that such Holder’s right to participate in any such Distribution would result in such Holder and the other
Attribution Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Distribution
to such extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as
a result of such Distribution (and beneficial ownership) to such extent of any such excess) and the portion of such Distribution
shall be held in abeyance for the benefit of such Holder until such time or times as its right thereto would not result in such
Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times, if any, such Holder shall be
granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution
held similarly in abeyance) to the same extent as if there had been no such limitation).

 

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17.
Vote to Change the Terms of or Issue Preferred Shares. In addition to any other rights provided by law, except where the
vote or written consent of the holders of a greater number of shares is required by law or by another provision of the Articles
of Incorporation, without first obtaining the affirmative vote at a meeting duly called for such purpose or the written consent
without a meeting of the Required Holders, voting together as a single class, the Company shall not: (a) amend or repeal any provision
of, or add any provision to, its Articles of Incorporation or bylaws, or file any certificate of designations or articles of amendment
of any series of shares of preferred stock, if such action would adversely alter or change in any respect the preferences, rights,
privileges or powers, or restrictions provided for the benefit of the Preferred Shares hereunder, regardless of whether any such
action shall be by means of amendment to the Articles of Incorporation or by merger, consolidation or otherwise; (b) increase
or decrease (other than by conversion) the authorized number of Preferred Shares; (c) without limiting any provision of Section
2, create or authorize (by reclassification or otherwise) any new class or series of Senior Preferred Stock or Parity Stock; (d)
purchase, repurchase or redeem any shares of Junior Stock (other than pursuant to the terms of the Company’s equity incentive
plans and options and other equity awards granted under such plans (that have in good faith been approved by the Board)); (e)
without limiting any provision of Section 2, pay dividends or make any other distribution on any shares of any Junior Stock; (f)
issue any Preferred Shares other than as contemplated hereby or pursuant to the Securities Purchase Agreement; or (g) without
limiting any provision of Section 9, whether or not prohibited by the terms of the Preferred Shares, circumvent a right of the
Preferred Shares hereunder.

 

18.
Transfer of Preferred Shares. A Holder may transfer some or all of its Preferred Shares without the consent of the Company.

 

19.
Reissuance of Preferred Share Certificates and Book Entries.

 

(a)
Transfer. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred
Share Certificate to the Company (or, if the Preferred Shares are held in Book-Entry form, a written instruction letter to the
Company), whereupon the Company will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate
(in accordance with Section 19(d)) (or evidence of the transfer of such Book-Entry), registered as such Holder may request, representing
the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of
Preferred Shares is being transferred, a new Preferred Share Certificate (in accordance with Section 19(d)) to such Holder representing
the outstanding number of Preferred Shares not being transferred (or evidence of such remaining Preferred Shares in a Book-Entry
for such Holder). Such Holder and any assignee, by acceptance of the Preferred Share Certificate or evidence of Book-Entry issuance,
as applicable, acknowledge and agree that, by reason of the provisions of Section 4(c)(i) following conversion or redemption of
any of the Preferred Shares, the outstanding number of Preferred Shares represented by the Preferred Shares may be less than the
number of Preferred Shares stated on the face of the Preferred Shares.

 

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(b)
Lost, Stolen or Mutilated Preferred Share Certificate. Upon receipt by the Company of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of a Preferred Share Certificate (as to which a written certification
and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of
any indemnification undertaking by the applicable Holder to the Company in customary and reasonable form and, in the case of mutilation,
upon surrender and cancellation of such Preferred Share Certificate, the Company shall execute and deliver to such Holder a new
Preferred Share Certificate (in accordance with Section 19(d)) representing the applicable outstanding number of Preferred Shares.

 

(c)
Preferred Share Certificate and Book-Entries Exchangeable for Different Denominations and Forms. Each Preferred Share Certificate
is exchangeable, upon the surrender hereof by the applicable Holder at the principal office of the Company, for a new Preferred
Share Certificate or Preferred Share Certificate(s) or new Book-Entry (in accordance with Section 19(d)) representing, in the
aggregate, the outstanding number of the Preferred Shares in the original Preferred Share Certificate, and each such new Preferred
Share Certificate and/or new Book-Entry, as applicable, will represent such portion of such outstanding number of Preferred Shares
from the original Preferred Share Certificate as is designated in writing by such Holder at the time of such surrender. Each Book-Entry
may be exchanged into one or more new Preferred Share Certificates or split by the applicable Holder by delivery of a written
notice to the Company into two or more new Book-Entries (in accordance with Section 19(d)) representing, in the aggregate, the
outstanding number of the Preferred Shares in the original Book-Entry, and each such new Book-Entry and/or new Preferred Share
Certificate, as applicable, will represent such portion of such outstanding number of Preferred Shares from the original Book-Entry
as is designated in writing by such Holder at the time of such surrender.

 

(d)
Issuance of New Preferred Share Certificate or Book-Entry. Whenever the Company is required to issue a new Preferred Share
Certificate or a new Book-Entry pursuant to the terms of this Certificate of Designations, such new Preferred Share Certificate
or new Book-Entry (i) shall represent, as indicated on the face of such Preferred Share Certificate or in such Book-Entry, as
applicable, the number of Preferred Shares remaining outstanding (or in the case of a new Preferred Share Certificate or new Book-Entry
being issued pursuant to Section 19(a) or Section 19(c), the number of Preferred Shares designated by such Holder) which, when
added to the number of Preferred Shares represented by the other new Preferred Share Certificates or other new Book-Entry, as
applicable, issued in connection with such issuance, does not exceed the number of Preferred Shares remaining outstanding under
the original Preferred Share Certificate or original Book-Entry, as applicable, immediately prior to such issuance of new Preferred
Share Certificate or new Book-Entry, as applicable, and (ii) shall have an issuance date, as indicated on the face of such new
Preferred Share Certificate or in such new Book-Entry, as applicable, which is the same as the issuance date of the original Preferred
Share Certificate or in such original Book-Entry, as applicable.

 

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20.
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate
of Designations shall be cumulative and in addition to all other remedies available under this Certificate of Designations and
any of the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit any Holder’s right to pursue actual and consequential damages for any failure by
the Company to comply with the terms of this Certificate of Designations. The Company covenants to each Holder that there shall
be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein
with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by a Holder
and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).
No failure on the part of a Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by such Holder of any right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy
of any Holder at law or equity or under Preferred Shares or any of the documents shall not be deemed to be an election of such
Holder’s rights or remedies under such documents or at law or equity. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, each Holder shall be entitled, in addition
to all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable
relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting
a bond or other security. The Company shall provide all information and documentation to a Holder that is requested by such Holder
to enable such Holder to confirm the Company’s compliance with the terms and conditions of this Certificate of Designations.

 

21.
Payment of Collection, Enforcement and Other Costs. If (a) any Preferred Shares are placed in the hands of an attorney
for collection or enforcement or is collected or enforced through any legal proceeding or a Holder otherwise takes action to collect
amounts due under this Certificate of Designations with respect to the Preferred Shares or to enforce the provisions of this Certificate
of Designations or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting
Company creditors’ rights and involving a claim under this Certificate of Designations, then the Company shall pay the costs
incurred by such Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership
or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges
and agrees that no amounts due under this Certificate of Designations with respect to any Preferred Shares shall be affected,
or limited, by the fact that the purchase price paid for each Preferred Share was less than the original Stated Value thereof.

 

22.
Construction; Headings. This Certificate of Designations shall be deemed to be jointly drafted by the Company and the Holders
and shall not be construed against any such Person as the drafter hereof. The headings of this Certificate of Designations are
for convenience of reference and shall not form part of, or affect the interpretation of, this Certificate of Designations. Unless
the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular
and plural forms thereof. The terms “including,” “includes,” “include” and words of like import
shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Certificate of Designations instead of just the provision in
which they are found. Unless expressly indicated otherwise, all section references are to sections of this Certificate of Designations.
Terms used in this Certificate of Designations and not otherwise defined herein, but defined in the other Transaction Documents,
shall have the meanings ascribed to such terms on the Initial Issuance Date in such other Transaction Documents unless otherwise
consented to in writing by the Required Holders.

 

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23.
Failure or Indulgence Not Waiver. No failure or delay on the part of a Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party. This Certificate of Designations shall be deemed to be jointly
drafted by the Company and all Holders and shall not be construed against any Person as the drafter hereof. Notwithstanding the
foregoing, nothing contained in this Section 23 shall permit any waiver of any provision of Section 4(d).

 

24.
Dispute Resolution.

 

(a)
Submission to Dispute Resolution. 

 

(i)
In the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Alternate Conversion Price,
an Alternate Conversion Floor Price Amount, a Redemption Conversion Floor Price Amount, a VWAP or a fair market value or the arithmetic
calculation of a Conversion Rate, or the applicable Redemption Price (as the case may be) (including, without limitation, a dispute
relating to the determination of any of the foregoing), the Company or the applicable Holder (as the case may be) shall submit
the dispute to the other party via facsimile or electronic mail (A) if by the Company, within two (2) Business Days after the
occurrence of the circumstances giving rise to such dispute or (B) if by such Holder at any time after such Holder learned of
the circumstances giving rise to such dispute. If such Holder and the Company are unable to promptly resolve such dispute relating
to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Alternate Conversion Price, such Alternate Conversion
Floor Price Amount, such Redemption Conversion Floor Price Amount, such VWAP or such fair market value, or the arithmetic calculation
of such Conversion Rate or such applicable Redemption Price (as the case may be), at any time after the second (2nd)
Business Day following such initial notice by the Company or such Holder (as the case may be) of such dispute to the Company or
such Holder (as the case may be), then such Holder may, at its sole option, select an independent, reputable investment bank to
resolve such dispute.

 

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(ii)
Such Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 24 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which such Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either such Holder or the Company fails to so deliver all of
the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required
Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and such Holder or otherwise requested by such investment bank, neither
the Company nor such Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).

 

(iii)
The Company and such Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company
and such Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.

 

(b)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 24 constitutes an agreement to arbitrate
between the Company and each Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil
Practice Law and Rules (“CPLR”) and that any Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 24, (ii) a dispute relating to a Conversion Price
includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred
under Section 8(a), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E)
whether a Dilutive Issuance occurred, (iii) the terms of this Certificate of Designations and each other applicable Transaction
Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment
bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment
bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving
such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Certificate of Designations
and any other applicable Transaction Documents, (iv) the applicable Holder (and only such Holder with respect to disputes solely
relating to such Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 24 to any
state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in
this Section 24 and (v) nothing in this Section 24 shall limit such Holder from obtaining any injunctive relief or other equitable
remedies (including, without limitation, with respect to any matters described in this Section 24).

 

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25.
Notices; Currency; Payments.

 

(a)
Notices. The Company shall provide each Holder of Preferred Shares with prompt written notice of all actions taken pursuant
to the terms of this Certificate of Designations, including in reasonable detail a description of such action and the reason therefor.
Whenever notice is required to be given under this Certificate of Designations, unless otherwise provided herein, such notice
must be in writing and shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall
provide each Holder with prompt written notice of all actions taken pursuant to this Certificate of Designations, including in
reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the
Company shall give written notice to each Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in
reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B)
with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities
or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to such Holder.

 

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

 

(c)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Certificate of Designations,
unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by wire
transfer of immediately available funds pursuant to wire transfer instructions that Holder shall provide to the Company in writing
from time to time. Whenever any amount expressed to be due by the terms of this Certificate of Designations is due on any day
which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount due
under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company
in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due
until the same is paid in full (“Late Charge”).

 

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26.
Waiver of Notice. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Certificate
of Designations and the Securities Purchase Agreement.

 

27.
Governing Law. This Certificate of Designations shall be construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Certificate of Designations shall be governed by, the internal
laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State
of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of
Nevada. Except as otherwise required by Section 24 above, the Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein (i) shall be deemed or operate to preclude any Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s obligations to such Holder, to realize
on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of such
Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 24 above. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS CERTIFICATE OF DESIGNATIONS OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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28.
Judgment Currency.

 

(a)
If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary
to convert into any other currency (such other currency being hereinafter in this Section 28 referred to as the “Judgment
Currency”) an amount due in U.S. dollars under this Certificate of Designations, the conversion shall be made at the
Exchange Rate prevailing on the Trading Day immediately preceding:

 

(i)
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date: or

 

(ii)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date
as of which such conversion is made pursuant to this Section 28(a)(ii) being hereinafter referred to as the “Judgment
Conversion Date”).

 

(b)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 28(a)(ii) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date. 

 

(c)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Certificate of Designations. 

 

29.
Severability. If any provision of this Certificate of Designations is prohibited by law or otherwise determined to be invalid
or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable
shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of this Certificate of Designations so long as this
Certificate of Designations as so modified continues to express, without material change, the original intentions of the parties
as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does
not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of
the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace
the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible
to that of the prohibited, invalid or unenforceable provision(s).

 

30.
Maximum Payments. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be
deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such
law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the applicable Holder and
thus refunded to the Company.

 

31.
Stockholder Matters; Amendment.

 

(a)
Stockholder Matters. Any shareholder action, approval or consent required, desired or otherwise sought by the Company pursuant
to the NRS, the Articles of Incorporation, this Certificate of Designations or otherwise with respect to the issuance of Preferred
Shares may be effected by written consent of the Company’s shareholders or at a duly called meeting of the Company’s
shareholders, all in accordance with the applicable rules and regulations of the NRS. This provision is intended to comply with
the applicable sections of the NRS permitting shareholder action, approval and consent affected by written consent in lieu of
a meeting.

 

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(b)
Amendment. Except for Section 4(d)(i), which may not be amended or waived hereunder, this Certificate of Designations or
any provision hereof may be amended by obtaining the affirmative vote at a meeting duly called for such purpose, or written consent
without a meeting in accordance with the NRS, of the Required Holders, voting separate as a single class, and with such other
shareholder approval, if any, as may then be required pursuant to the NRS and the Articles of Incorporation.

 

32.
Certain Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings:

 

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

 

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

 

(c)
“Additional Amount” means, as of the applicable date of determination, with respect to each Preferred Share,
all declared and unpaid Dividends on such Preferred Share and any other unpaid amounts then due and payable hereunder with respect
to such Preferred Share.

 

(d)
“Adjustment Percentage” means (i) from the Initial Issuance Date, through but not including June 30, 2020,
100% and (ii) on each six month anniversary thereafter, the Adjustment Percentage shall increase by 5%.

 

(e)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 8(a)) of shares of Common Stock (other
than rights of the type described in Section 7(a) hereof) that could result in a decrease in the net consideration received by
the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights,
cash adjustment or other similar rights).

 

(f)
“Affiliate” or “Affiliated” means, with respect to any Person, any other Person that directly
or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this
definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock
having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.

 

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(g)
“Alternate Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately
available funds pursuant to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained
by multiplying (A) the higher of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding
the relevant Alternate Conversion Date and (II) the applicable Alternate Conversion Price and (B) the difference obtained by subtracting
(I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery Deadline
with respect to such Alternate Conversion from (II) the quotient obtain by dividing (x) the applicable Conversion Amount that
the Holder has elected to be the subject of the applicable Alternate Conversion, by (y) the applicable Alternate Conversion Price
without giving effect to clause (x) of such definition.

 

(h)
“Alternate Conversion Price” with respect to any Alternate Conversion
that price which shall be the lower of (i) the applicable Conversion Price as in effect on the applicable Conversion Date of the
applicable Alternate Conversion and (ii) the greater of (x) the Floor Price and (y) the lowest of (A) 80% of the VWAP of the Common
Stock as of the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice, (B) 80%
of the VWAP of the Common Stock as of the Trading Day of the delivery or deemed delivery of the applicable Conversion Notice and
(C) 80% of the price computed as the quotient of (I) the sum of the VWAP of the Common Stock for each of the three (3) Trading
Days with the lowest VWAP of the Common Stock during the twenty (20) consecutive Trading Day period ending and including the Trading
Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice, divided by (II) three (3) (such
period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases
or increases the Common Stock during such Alternate Conversion Measuring Period.

 

(i)
“Approved Stock Plan” means any employee benefit plan which has been approved by the Board prior to or subsequent
to the Subscription Date pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued
to any employee, officer, consultant or director for services provided to the Company in their capacity as such.

 

(j)
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Initial Issuance Date, directly
or indirectly managed or advised by a Holder’s investment manager or any of its Affiliates or principals, (ii) any direct
or indirect Affiliates of such Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as
a Group together with such Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s
Common Stock would or could be aggregated with such Holder’s and the other Attribution Parties for purposes of Section 13(d)
of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively such Holder and all other Attribution Parties
to the Maximum Percentage.

 

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(k)
“Bloomberg” means Bloomberg, L.P.

 

(l)
“Book-Entry” means each entry on the Register evidencing one or more Preferred Shares held by a Holder in lieu
of a Preferred Share Certificate issuable hereunder.

 

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

 

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

 

(o)
“Change of Control Redemption Premium” means 125%.

 

(p)
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg,
or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid
Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing
Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually
determined by the Company and the Required Holder. If the Company and the Required Holders are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in accordance with the procedures in Section 24. All such determinations
shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar
transactions during such period.

 

    	39

    	 

    

 

(q)
“Closing Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date
the Company initially issued the Preferred Shares and the Warrants pursuant to the terms of the Securities Purchase Agreement.

 

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

 

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

 

(t)
“Conversion Floor Price Condition” means that the relevant Alternate Conversion Price or other conversion price
determined pursuant to Section 12(a) hereof, as applicable, is being determined based on clause (x) of such definition or section,
as applicable.

 

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

 

(v)
“Current Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly,
(i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates
all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Current
Subsidiaries”.

 

(w)
“Dividend Date” means, with respect to any given calendar month, the first Trading Day of such calendar month.

 

(x)
“Dividend Rate” means (i) from the Initial Issuance Date through, but no including, June 30, 2020 eight percent
(8%) per annum and (ii) from and after June 30, 2020, twelve percent (12%) per annum, in each case, as may be adjusted from time
to time in accordance with Section 3(b).

 

(y)
“Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the
Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market.

 

    	40

    	 

    

 

(z)
“Equity Conditions” means, with respect to an given date of determination: (i) on each day during the period
beginning thirty calendar days prior to such applicable date of determination and ending on and including such applicable date
of determination either (x) one or more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective
and the prospectus contained therein shall be available on such applicable date of determination (with, for the avoidance of doubt,
any shares of Common Stock previously sold pursuant to such prospectus deemed unavailable) for the resale of all shares of Common
Stock to be issued in connection with the event requiring this determination, as applicable, in the event requiring this determination
at the Alternate Conversion Price then in effect (without regard to any limitations on conversion set forth herein) (each, a “Required
Minimum Securities Amount”), in each case, in accordance with the terms of the Registration Rights Agreement and there
shall not have been during such period any Grace Periods (as defined in the Registration Rights Agreement) or (y) all Registrable
Securities shall be eligible for sale pursuant to Rule 144 (as defined in the Securities Purchase Agreement) without the need
for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion
of the Preferred Shares, the Notes, other issuance of securities with respect to this Certificate of Designations or the Notes
and exercise of the Warrants) and no Current Information Failure (as defined in the Registration Rights Agreement) exists or is
continuing; (ii) on each day during the period beginning thirty Trading Days prior to the applicable date of determination and
ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”), the
Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Preferred Shares and the Notes and
exercise of the Warrants) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been
suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to the
applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by an Eligible
Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal,
compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market
or (B) the Company falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock
is then listed or designated for quotation, as applicable; (iii) during the Equity Conditions Measuring Period, the Company shall
have delivered all shares of Common Stock issuable upon conversion of the Preferred Shares on a timely basis as set forth in Section
4 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other
Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination (or issuable
upon conversion of the Conversion Amount being redeemed in the event requiring this determination) may be issued in full without
violating Section 4(d) hereof; (v) any shares of Common Stock to be issued in connection with the event requiring determination
(or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards
to any limitations on conversion set forth herein)) may be issued in full without violating the rules or regulations of the Eligible
Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity
Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred
which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably
be expected to cause (1) any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not
be effective or the prospectus contained therein to not be available for the resale of the applicable Required Minimum Securities
Amount of Registrable Securities in accordance with the terms of the Registration Rights Agreement or (2) any Registrable Securities
to not be eligible for sale pursuant to Rule 144 without the need for registration under any applicable federal or state securities
laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Preferred
Shares and exercise of the Warrants) and no Current Information Failure exists or is continuing, (viii) none of the Holders shall
be in possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any
of their respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions
Measuring Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation
or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality,
which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, including, without
limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document; (x) on each Trading
Day during the Equity Conditions Measuring Period, there shall not have occurred any Volume Failure or Price Failure as of such
applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share Failure shall exist or
be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are available under the articles
of incorporation of the Company and reserved by the Company to be issued pursuant to this Certificate of Designations, the Notes
and the Warrants and (B) all shares of Common Stock to be issued in connection with the event requiring this determination (or
issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards to
any limitations on conversion set forth herein)) may be issued in full without resulting in an Authorized Share Failure; (xii)
on each day during the Equity Conditions Measuring Period, there shall not have occurred and there shall not exist a Triggering
Event or an event that with the passage of time or giving of notice would constitute a Triggering Event; (xiii) no bone fide dispute
shall exist, by and between any of holder of Notes or Warrants, the Company, the Principal Market (or such applicable Eligible
Market in which the Common Stock of the Company is then principally trading) and/or FINRA with respect to any term or provision
of any Note or any other Transaction Document or (xiv) the shares of Common Stock issuable pursuant to the event requiring the
satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction on an Eligible
Market.

 

    	41

    	 

    

 

(aa)
“Equity Conditions Failure” means that on any day during the period commencing twenty (20) Trading Days prior
to the applicable Company Optional Redemption Notice Date through the applicable Company Optional Redemption Date, the Equity
Conditions have not been satisfied (or waived in writing by the applicable Holder).

 

(bb)
“Event Market Price” means, with respect to any Stock Combination Event
Date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five (5) Trading Days with
the lowest VWAP of the Common Stock during the fifteen (15) consecutive Trading Day period ending and including the Trading Day
immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date, divided by (y) five (5).

 

(cc)
“Exchange Agreements” means those certain Exchange and Amendment Agreement, dated December __, 2019, each by
and between the Company and a holder of one or more Notes, pursuant to which such Holder exchanged all, or any part, of such Notes
into Preferred Shares issued hereunder.

 

(dd)
“Excluded Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued
to directors, officers or employees of the Company for services rendered to the Company in their capacity as such pursuant to
an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares of Common Stock
issuable upon exercise of such options) after the Subscription Date pursuant to this clause (i) do not, in the aggregate, exceed
more than either (x) with respect to Michael Panosian and Josh Keeler, not to exceed 15% of the Common Stock issued and outstanding
immediately prior to the Subscription Date, in the aggregate and (y) with respect to any other employee, officer or director of
the Company, not to exceed 5% of the Common Stock issued and outstanding immediately prior to the Subscription Date, in the aggregate
and (B) the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that
adversely affects any of the Holders; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) issued prior to the Subscription Date, provided that the conversion price of any such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not
lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of
the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely
affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Preferred Shares or otherwise pursuant
to the terms of this Certificate of Designations; provided, that the terms of this Certificate of Designations are not amended,
modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect
as of the Subscription Date), and (iv) the shares of Common Stock issuable upon exercise of the Warrants; provided, that the terms
of the Warrants are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant
to the terms thereof in effect as of the Subscription Date).

 

    	42

    	 

    

 

(ee)
“Floor Price” means $0.10.

 

(ff)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number
of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common
Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Certificate of Designations calculated as if any shares of
Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such
Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender
their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument
or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent
necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended
treatment of such instrument or transaction.

 

    	43

    	 

    

 

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

 

(hh)
“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in
Rule 13d-5 thereunder.

 

(ii)
“Holder Pro Rata Amount” means, with respect to any Holder, a fraction (i) the numerator of which is the number
of Preferred Shares issued to such Holder pursuant to the Securities Purchase Agreement on the Initial Issuance Date and (ii)
the denominator of which is the number of Preferred Shares issued to all Holders pursuant to the Securities Purchase Agreement
on the Initial Issuance Date.

 

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

 

    	44

    	 

    

 

(kk)
“Liquidation Event” means, whether in a single transaction or series of transactions, the voluntary or involuntary
liquidation, dissolution or winding up of the Company or such Subsidiaries the assets of which constitute all or substantially
all of the assets of the business of the Company and its Subsidiaries, taken as a whole.

 

(ll)
“Material Adverse Effect” means any material adverse effect on the business, properties, assets, liabilities,
operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, if any,
individually or taken as a whole, or on the transactions contemplated hereby or on the other Transaction Documents (as defined
below), or by the agreements and instruments to be entered into in connection therewith or on the authority or ability of the
Company to perform its obligations under the Transaction Documents.

 

(mm)
“New Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription
Date, directly or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest
of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “New Subsidiaries.”

 

(nn)
“Notes” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all notes
issued in exchange therefor or replacement thereof.

 

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

 

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

 

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

 

(rr)
“Price Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock on
any Trading Day during any five (5) Trading Days during the twenty (20) Trading Day period ending on the Trading Day immediately
preceding such date of determination fails to exceed $0.20 (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately
adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during any
such measuring period.

 

(ss)
“Principal Market” means the Nasdaq Capital Market.

 

    	45

    	 

    

 

(tt)
“Redemption Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately
available funds pursuant to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained
by multiplying (A) the higher of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding
the relevant Conversion Date and (II) the applicable conversion price determined in accordance with Section 12(a) above and (B)
the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on
the applicable Share Delivery Deadline with respect to such conversion from (II) the quotient obtain by dividing (x) the applicable
Conversion Amount that the Holder has elected to be the subject of the applicable conversion, by (y) the applicable conversion
price determined in accordance with Section 12(a) above without giving effect to clause (x) of such definition.

 

(uu)
“Redemption Notices” means, collectively, the Triggering Events Redemption Notices, the Company Optional Redemption
Notices, the Subsequent Placement Event Redemption Notices and the Change of Control Redemption Notices, and each of the foregoing,
individually, a “Redemption Notice.”

 

(vv)
“Redemption Premium” means 125%.

 

(ww)
“Redemption Prices” means, collectively, any Triggering Event Redemption Price, Change of Control Redemption
Price, Subsequent Placement Event Redemption Price, Company Optional Redemption Price, and each of the foregoing, individually,
a “Redemption Price.”

 

(xx)
“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date,
by and among the Company and the initial holders of the Preferred Shares relating to, among other things, the registration of
the resale of the Common Stock issuable upon conversion of the Preferred Shares or otherwise pursuant to the terms of this Certificate
of Designations and exercise of the Warrants, as may be amended from time to time.

 

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

 

(zz)
“Securities Purchase Agreement” means that certain securities purchase agreement by and among the Company and
the initial holders of Preferred Shares, dated as of the Subscription Date, as may be amended from time in accordance with the
terms thereof.

 

(aaa)
“Stated Value” shall mean, with respect to any given Preferred Share, the product of (i) the sum of (x) $1,000
per Preferred Share, and (y) the aggregate amount of any Capitalized Dividends per such Preferred Share, in each case, subject
to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions
or other similar events occurring after the Initial Issuance Date with respect to the Preferred Shares and (ii) the Adjustment
Percentage.

 

    	46

    	 

    

 

(bbb)
“Subscription Date” means August 19, 2019.

 

(ccc)
“Subsequent Placement Event Redemption Number” means, with respect to any given Subsequent Placement Event,
the Holder Pro Rata Amount of the applicable Subsequent Placement Event Redemption Percentage of the quotient (rounded to the
nearest whole number) of (x) the gross proceeds (less any reasonable placement agent, underwriter and/or legal fees and expenses)
of such Subsequent Placement Event, divided by (y) the Stated Value of one (1) Preferred Share.

 

(ddd)
“Subsequent Placement Event Redemption Percentage” means, with respect to any given Subsequent Placement Event,
(i) if the date of consummation of such Subsequent Placement Event is prior to April 1, 2020, 35% or (ii) if the date of consummation
of such Subsequent Placement Event is from and after April 1, 2020, 50%.

 

(eee)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.

 

(b)
“Subsequent Placement Event” means any, direct or indirect, issue, offer, sale, grant of any option or right
to purchase, or otherwise dispose of any equity security or any equity-linked or related security (including, without limitation,
any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities,
any Options, any debt, any preferred stock or any purchase rights) conducted by the Company or any of its Subsidiaries (other
than any Excluded Securities).

 

(fff)
“Subsidiaries” means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries,
and each of the foregoing, individually, a “Subsidiary.”

 

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

 

(hhh)
“Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating
to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during
the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the applicable Holder or (y) with respect to all determinations other than price determinations
relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.

 

    	47

    	 

    

 

(iii)
“Transaction Documents” means the Securities Purchase Agreement, this Certificate of Designations, the Warrants
and each of the other agreements and instruments entered into or delivered by the Company or any of the Holders in connection
with the transactions contemplated by the Securities Purchase Agreement, all as may be amended from time to time in accordance
with the terms thereof.

 

(jjj)
“Volume Failure” means, with respect to a particular date of determination, (i) solely with respect to a determination
as to whether an Equity Conditions Failure exists, the daily aggregate dollar trading volume (as reported on Bloomberg) of the
Common Stock on the Principal Market on any Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately
preceding such date of determination (such period, the “Volume Failure Measuring Period”), is less than $1,000,000
(as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring
after the Subscription Date) or (ii) with respect to any other determination hereunder or pursuant to any other Transaction Document
(other than with respect to a determination as to whether an Equity Conditions Failure exists), either (A) the daily aggregate
dollar trading volume (as reported on Bloomberg) of the Common Stock on the Principal Market on any Trading Day during the Volume
Failure Measuring Period, is less than $375,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions occurring after the Subscription Date), (B) the daily aggregate dollar trading volume (as reported
on Bloomberg) of the Common Stock on the Principal Market on any two Trading Days during the Volume Failure Measuring Period,
is less than $600,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar
transactions occurring after the Subscription Date) or (C) the quotient of (x) the sum of the daily aggregate dollar trading volume
(as reported on Bloomberg) of the Common Stock on the Principal Market of each Trading Day during the Volume Failure Measuring
Period, divided by (y) twenty (20), is less than $1,100,000 (as adjusted for any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately
adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such
Volume Failure Measuring Period.

 

(kkk)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New
York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30
start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security
in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New
York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask
price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly
Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such
security on such date shall be the fair market value as mutually determined by the Company and the Required Holders. If the Company
and the Required Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 24. All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, recapitalization or other similar transaction during such period.

 

    	48

    	 

    

 

(lll)
“Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all
warrants issued in exchange therefor or replacement thereof.

 

(mmm)
“Warrant Shares” means, collectively, the shares of Common Stock issuable upon exercise of the Warrants.

 

33.
Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Certificate of Designations,
unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public
information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day of such receipt
or prior to (or simultaneous with) such delivery, as applicable, publicly disclose such material, non-public information on a
Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information
relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder explicitly in writing in such
notice (or immediately upon receipt of notice from such Holder, as applicable), and in the absence of any such written indication
in such notice (or notification from the Company immediately upon receipt of notice from such Holder), such Holder shall be allowed
to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company
or any of its Subsidiaries. If the Company or any of its Subsidiaries provides material non-public information to a Holder that
is not simultaneously filed in a Current Report on Form 8-K and such Holder has not agreed to receive such material non-public
information, the Company hereby covenants and agrees that such Holder shall not have any duty of confidentiality to the Company,
any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a
duty to any of the foregoing not to trade on the basis of, such material non-public information. Nothing contained in this Section
33 shall limit any obligations of the Company, or any rights of any Holder, under Section 4(i) of the Securities Purchase Agreement.

 

34.
Exchange Right. Notwithstanding anything herein to the contrary, at any time, at the option of the Company, the Company
may, by delivery of written notice to each Holder (each, an “Exchange Notice”), in compliance with the exemption
provided by Section 3(a)(9) of the 1933 Act, exchange all of the Preferred Shares outstanding hereunder into additional Notes
(each, an “Exchange Note”), with an aggregate principal amount of such Exchange Notes as of the date of such
exchange, equal to the Conversion Amount of such Preferred Shares in such exchange. Each such exchange shall be effective immediately
upon such Holder’s receipt of such Exchange Notice and the Holder shall be automatically be deemed to hold such Exchange
Note as of such time, regardless of the time the Company delivers the actual Exchange Note to such Holder (including, without
limitation, with all rights and remedies set forth therein).

 

*
* * * *

 

    	49

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Certificate of Designations of Series D Convertible Preferred Stock of Toughbuilt
Industries, Inc to be signed by its __________ on this ___ day of December, 2019.

 

	 	TOUGHBUILT
    INDUSTRIES, INC.
	 	 	              
	 	By:
    	 
	 	Name:	 
	 	Title:	 

 

    	 

    	 

    

 

EXHIBIT
I

 

TOUGHBUILT
INDUSTRIES, INC.

CONVERSION
NOTICE

 

Reference
is made to the Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of Toughbuilt Industries,
Inc (the “Certificate of Designations”). In accordance with and pursuant to the Certificate of Designations,
the undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock, $[ ] par value per share
(the “Preferred Shares”), of Toughbuilt Industries, Inc a Nevada corporation (the “Company”),
indicated below into shares of common stock, $0.001 value per share (the “Common Stock”), of the Company, as
of the date specified below.

 

	Date of Conversion:	 

 

	Aggregate number of Preferred Shares to be converted	 
	 	 
	Aggregate Stated Value of such Preferred Shares to be converted:	 
	 	 
	Aggregate accrued and unpaid Dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such Aggregate Dividends to be converted:	 
	 	 
	AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:	 

 

Please confirm the following information:

 

	Conversion Price:	 
	 	 
	Number of shares of Common Stock to be issued:	 

 

	
        [  ] If this Conversion Notice is
        being delivered with respect to an Alternate Conversion, check here if Holder is electing to use the following Alternate Conversion
        Price:____________

         

        Please issue the Common Stock into which the
        applicable Preferred Shares are being converted to Holder, or for its benefit, as follows:

         

        [  ]
        Check here if requesting delivery as a certificate to the following name and to the following address:

	 
	Issue to:	 
	 	 
	 	 
	 	 
	[  ] Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: 

 

	DTC Participant:	 
	 	 
	DTC Number:	 
	 	 
	Account Number:	 

 

Date:
__________ __, ________________

 

__________________________________

Name
of Registered Holder

 

	By:	 	 
	Name:
    	 	 
	Title:	 	 

 

Tax
ID:___________________________

 

		Facsimile:_________________________	

 

E-mail
Address:

 

    	 

    	 

    

 

EXHIBIT
II

 

ACKNOWLEDGMENT

 

The
Company hereby (a) acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock
[are][are not] eligible to be resold by the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and
delivery to the Company of a customary 144 representation letter) or (ii) an effective and available registration statement and
(c) hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer
Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.

 

	 	TOUGHBUILT
    INDUSTRIES, INC.
	 	 	             
	 	By:  	 
	 	Name:
    	 
	 	Title:

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