Document:

psws_ex1047.htm

EXHIBIT 10.47

EXCLUSIVE SALES AND MARKETING AGREEMENT

 

This Exclusive Sales and Marketing Agreement the "Agreement") is entered into as of January 25., 2013, by and between PureSafe Water Systems, Inc. ("PS"), having its principal place of business at 160 Dupont Street, Plainview, NY 11803 and Global Equipment Marketing, Inc. ("GEM"), having its principal place of business at 71 South Street, Hopkinton, MA 01748.  PS and GEM together are the parties ("Parties").

 

RECITALS:

 

A.   PS has a versatile product ("Product" or "Products") that filters contaminated water into drinkable water for a myriad of applications and uses.

 

B.   GEM is a distribution, sales and marketing company and is an independent contractor acting in its own behalf and bearing its own costs and expenses, receiving no other compensation other than outlined in this Agreement, and GEM accepts all liability for its own actions and will not serve as an Agent nor bind IS to any contract or commitment without written authorization from PS.

 

C.           Pursuant to this Agreement the Parties wish to enter into an exclusive sales and marketing agreement whereby GEM will exclusively sell and market the PS product worldwide. GEM recognizes that PS has entered into distributorship and representative agreements prior to this agreement, The Parties agree to review these agreements and make a decision concerning them.

 

Therefore the Parties enter into this Agreement.

 

AGREEMENT:

 

I.     SCOPE OF THE AGREEMENT

 

PS agrees to have GEM sell and market to end users (i.e. the final customer), including through other dealers, sub-dealers, representatives, and resellers, their product(s) exclusively worldwide. PS agrees to continuously improve, make modifications and design changes, and provide to GEM a competitively priced product and manufacture it to the highest standards necessary to fulfill the representation of PS.  PS hereby grants to GEM the exclusive right to sell and market the Product worldwide.

 

GEM will sell and market the products as a dba entitled PureSafe Water Systems Sales. All products will be sold under the PS brand name.

 

In exchange for the exclusive sales and marketing rights to the product, GEM agrees not to manufacture, promote, sell or otherwise market. directly or indirectly, any products that are directly competitive with the Product.

 

  

  

  

2.    RESPONSIBILITIES OF THE PARTIES

 

PS shall be responsible for the design and manufacture of the Products as well as all liabilities associated with its use, sale, damage to property and persons. Each sale will use the PS General Terms and Condition of Sales.

 

PS shall provide to GEM their full support for each Product including timely and prompt responses for information, warranty; all technical information and specifications, product literature, website. ownership and user manuals, decals, safety warnings, identification plates or other markings necessary to or advisable to comply with any applicable state, local, federal, or international directive.

 

PS will provide, as necessary, a demonstration and/or display unit for use in demonstrating the product and or showing the product at trade shows at no cost to GEM and participate, as when reasonably requested by GEM, in the trade shows with personnel, brochures, posters, booth paraphernalia, and if applicable, costs.

 

PS shall pass all sales, sales leads. all sales opportunities, whether received directly or indirectly, to GEM. GEM will handle all sales by PS regardless of how acquired, unless agreed to and approved in writing by an officer of GEM.

 

GEM is responsible to sell and promote the product worldwide in all applications, at its own cost and expense including personnel, advertising, trade shows, travel and expenses, etc. GEM is responsible for managing, contracting with, compensating all sub-dealers, representatives or resellers. GEM is free to set and/or adjust pricing depending upon sales circumstances including additional services, etc.

 

GEM shall use its commercially reasonable efforts to achieve an adequate and growing sales volume and market share; to grow and build a nationwide dealer network and distribution presence as necessary; to train its staff and dealer personnel in the selling and product support of the Products; to devote the necessary manpower and financial resources to promote the Products via local and national advertising, marketing, and presence at trade shows: to apply, operate, and maintain the Products and/or train the end user as machines are sold as called for by GEM; to provide PS with sales and marketing reports as requested on a monthly and then quarterly basis to include market conditions, competition, successes, failures, market share penetration by region, application, and projections for the future via an annual Business Plan, etc; protect PS's good name as it may become applicable.

 

GEM and PS will mutually agree to a list price for the product and from time to time, will in good faith negotiate changes to the list price. GEM will receive a 30% discount from the list price on all sales from which GEM will pay its dealers, distributors, representatives. and resellers. The list price for the Products will be sold FOB Point of Manufacture. Title to the Product remains with PS until they are paid in full but the risk of loss passes to the end purchaser upon delivery from the Point of Manufacture. All prices quoted shall be net of any and all taxes, duties, customs fees. or other assessments of any kind, all of which shall be for end-user or purchaser's account, Terms of payment to the end-user shall be generally accepted as 50% down with the order and the balance due upon shipment, unless by special agreement by the Parties. The applicable price for any Products shall be that which is in effect on the date when the order is placed for such Products provided that such order is for delivery within the normal delivery periods or as otherwise agreed to by the Parties From time to time special discounts and/or adjustments may be agreed to by the Parties to promote sales and prices may be adjusted by mutual agreement.

  

  

  

GEM may purchase for itself or it's sub-dealers, representatives, and resellers, demo test or display units at a 50% discount.

 

3.    ORDERING PROCESS

 

GEM will issue an order log for all products to be ordered, manufactured, delivered, and started-up including a full description of the product sold, the application it was sold into, including duty cycles, expected contaminants, expected uses of the products. etc., and detail any and all unique specifications, accessories, etc. It will also provide PS with the name of the end user or dealer purchasing the products, its delivery location, need for start-up personnel, committed delivery dates, etc. PS has a three (3) day right to refuse any order that is deemed outside the application criteria and physical capabilities of the product, or when-PS is unable inability to meet delivery dates. or based on other commercially reasonable grounds.

 

GEM will keep PS informed as to its sales and marketing activities so that adequate pre-planning can occur for manufacturing and inventory purposes. GEM shall supply each mouth a rolling three (3) month forecast of product requirements. Such forecast shall be for planning and advisory purposes only, however, it is understood that the accuracy of this forecasting will have a hearing on PS's ability to deliver the Products sold by GEM.

 

GEM will process all orders and collect all money based on the terms of payment associated with the order. GEM will pay PS all money as received less their 30% discount. Payments shall not be subject to any offsets, claims, withholdings, or any other deductions without PS's written consent. Except for special orders, the delivery of which shall be negotiated on a case-by-case basis, PS shall make a good faith effort to ship Products within ten (10) weeks after acceptance of the order, but striving towards improving delivery on a continuous basis.

 

Each sale will have a start-up and training allotment of money included in the selling price. It is the intention to have a PS Trained Service Technician onsite to commission, start-up. test, train, and certify the units, that they are complete, functioning, and the purchaser' representatives have been trained. The budgeted money will for this man.

 

In the event that PS does not provide field start-up service with the machine, GEM and/or GEM's purchaser shall have the right for a period of seven (7) days following receipt of a delivery to destination to reject any Products as detective or non-conforming and return such Products to PS for repair or replacement of the product. Or, as an option, allow PS the ability to rectify the complaint at PS's expense

 

4.   WARRANTY AND PRODUCT SUPPORT PROGRAM

 

PS. through GEM's authorized dealers or shall themselves provide Product warranty repair and replacement services for all Products and customers under the Warranty program provided by PS and identified in Attachment I of this Agreement.

 

  

  

  

This warranty provides that the products will be free from manufacturing and assembly defects for a period of one (1) year from the date of delivery. The warranty is valid provided that the equipment or system is used, operated, and applied to its application correctly. and that the prescribed operating and maintenance procedures have been observed as instructed during the initial training and per the Maintenance and Operation Manuals. The warranty does not cover parts subject to wear or consumable, fluids, fuel, or lubrications; items that are not. Applied with the machine or by PS or items subject to abuse, neglect, improper repair or use with accessory or auxiliary equipment not provided by PS. Parts found defective, if covered by the warranty. will be repaired or replaced. free of charge, FOB Factory, unless otherwise agreed to by PS. Damaged parts must he returned to PS. if requested, at the end user's expense. On components not manufactured by PS. the warranty is that of the manufacturer of that component. Under no circumstances will a warranty he valid if PS equipment has been modified in any way without express written consent and approval from PS.

 

If a Service Representative is required or requested, his service time, portal to portal. at the then posted hourly or daily rate, will he charged to the end user's expense including all costs for transportation and living, unless agreed to in writing by PS. The end user must authorize this service and agree to pay upon receipt of the PS Service invoice. In the event of payment disputes, PS reserves the right to withhold further parts, service, and support to that end-user until such time as the payment is made or agreement reached.

 

 

PS will provide a product support program that will include the t011owing:

 

a) Complete maintenance and service instructions for each Product;

 

b) An operator manual with each Product delivery;

 

c) A parts book for each Product:

 

d) A recommended list of replacement parts to be inventoried by PS to support Products in the field;

 

e)  Training of purchaser's personnel and assistance in training dealers in the sale, proper operation. maintenance and repair of Products; and

 

f)  Technical information releases as required to keep purchaser and its dealers reasonably informed of changes and improvements to Producti.

 

g)  Assistance in developing press coverage and advertising copy for dissemination to the trade and media.

 

All such information shall be provided in the English language and utilizing U.S. dimensions and specifications unless the Parties agree otherwise (should be available in Spanish also at a minimum).

 

5. PRODUCT AND PATENT LIABILITY

 

The parties agree that product safety is a goal to which each is committed. Therefore, whenever certain Products present an unreasonable safety hazard because of design, application or otherwise, and it becomes known to GEM, GEM shall notify PS in writing of the deficiency or issue and PS. upon receipt of such notification, shall initiate a product improvement program as applicable.

 

The existing standard designs of the Products are based upon currently existing generally accepted safety standards within the U.S. In some instances modifications, improvements, extras, or additions may be necessary to make the standard designs conform to existing safety or environmental standards in other countries. GEM agrees that PS has the right to charge a reasonable supplemental price for such modifications, improvements, extras, or additions. PS makes no representations concerning compliance with any laws or regulations of any countries or jurisdictions other than those of the United States or its states and territories.

 

  

  

  

 

PS shall maintain in full force and effect at all times during the Term of this Agreement adequate insurance coverage for all of its activities including Product Liability and Completed Projects coverage. GEM shall maintain General Liability insurance coverage. All such insurance shall he issued by an insurance company of recognized responsibility and qualified to do business in the jurisdiction in which the Parties are doing business and acceptable to the other Party.

 

6. CONFIDENTIAL INFORMATION

 

Confidential Information shall mean all proprietary and confidential data noted as Company Confidential or otherwise known as confidential, reports, technical documents, drawings, design information, pricing, and technology of a Party to this Agreement and which is disclosed by such Party (the "Disclosing Party") to the other Party to this Agreement (the "Receiving, Party") in connection with this Agreement. The Receiving Party will hold in confidence all Confidential Information and will neither use it nor reproduce it without prior written consent of the Disclosing Party and will use all reasonable efforts to safeguard all Confidential Information by instructing its employees and stall to use the same care and discretion with respect to the Disclosing Party's Confidential Information as it uses with respect to the Receiving Party's Confidential Information; provided, however, that the Receiving Party will not be liable, for disclosure of any information received pursuant to this Agreement if:

 

(a) The information is generally available or known to the public;

 

(b) The information was known by or disclosed to the Receiving Party prior to the date of this Agreement other than the information disclosed by the Disclosing Party; and labeled confidential prior to the signature of this Agreement;

 

(c) The information was independently developed by the Receiving Party;

 

(d) The information was disclosed to the Receiving Party or by a third party not under an obligation to keep such information confidential; or

 

(e)  Disclosure is required pursuant to a statutory or judicial requirement.

 

  

  

  

GEM shall he permitted to disclose reasonably necessary Confidential Information of PS to its dealers and purchasers for the purpose of facilitating sale and servicing of the Products; provided, however, that GEM requires such dealers to enter into agreements whereby they undertake to abide by the terms of this Section.

 

All obligations of the Receiving Party under this Section survive termination of the Agreement.

 

7. INDEMNIFICATION

 

PS shall indemnify and hold GEM harmless from and against all claims, demands, liabilities, loss, damage, costs, incurred by GEM which arise from or are in any way connected with the injury to or the death of any person or loss or damage to property resulting from any defect of design, manufacture, material, use, application of or workmanship of the Products. This indemnification shall not cover any losses or damages resulting, in whole or in part, in the event it is proven that GEM modified the product without authorization of PS.

 

PS shall promptly assume control of and diligently undertake in reasonable consultation with GEM) the defense of such claim, at its own cost. GEM shall cooperate with PS in providing all reasonably necessary information in GEM's possession related to such claim and reasonable assistance in the defense of such claim.

 

PS shall hold GEM harmless and indemnify them, including all costs of defense, against all claims for patent infringement wherever the source may come from.

 

8. TERM AND TERMINATION

 

(a) Except as otherwise provided in this Agreement, this Agreement shall remain in effect for five (5) years beginning on the Agreement date and thereafter shall continue in effect for subsequent terms of one (1) year each, provided however, that either Party may terminate this Agreement, effective as of the end of the then applicable five (5) year term, by giving written notice to the other Party given not less than ninety (90) days before the expiration date of such term.

 

(b) If either Party becomes insolvent, bankrupt or consents to the appointment of a trustee or receiver, or any trustee or receiver is appointed for the greater part of either Party's properties without the consent of that Party and such trustee or receiver is not discharged within sixty (60) days, or if any bankruptcy, reorganization, arrangement or liquidation proceedings are instituted by either Party or if instituted against either Party are consented to by it or permitted to remain un-dismissed for sixty (60) days, the other Party may terminate this Agreement immediately upon written notice to such Party.

 

(c) Neither party may assign all or any portion of its rights or delegate all or any portion of its responsibilities under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Any such assignment shall not relieve the assigning party of any of its obligations under this Agreement unless specifically released from such obligations. If either Party (i) assigns its rights or obligations under this agreement (by operation of law or otherwise) or (ii) sells all or substantially all of its assets or more than 50% of its equity ownership interests, without the prior consent of the other Part). such other Party may terminate this Agreement immediately upon written notice, such notice to be given not more than thirty (30) days after the Party with the right of termination has been informed by the other Party of the event creating the right of termination under this Agreement.

 

  

  

  

(d) PS may terminate this Agreement for cause at any time by written notice to Buyer in the event:

 

	
(i)  

	
GEM fails to make any payment to PS when due, provided, however, that GEM can cure such a payment default if payment is made within ten (10) days after receipt of written notice of such default from PS: or

 

	
(ii)  

	
GEM is in breach of any material obligation or undertaking under this Agreement and fails to cure such material default with an acceptable and agreed upon plan by the Parties within 30 days after receipt of written notice of such default from PS: or

 

	
(iii)  

	
GEM fails to use his commercially reasonable efforts in selling, promoting, or marketing to customers, has not reasonably achieved brand identity, and is generally below reasonable expectations for success of both parties.( need to know a number for reasonable expectations and some time frame for achieving sales)

 

	
(iv)  

	
GEM fails to cure such a default with a sufficient and timely plan within 30 days after receipt of written notice of termination from PS .

 

(e) GEM may terminate this Agreement for cause at any time by written notice in the event:

 

	
(i)  

	
PS does not meet a reasonable delivery schedule nor produce a product as represented: or

 

	
(ii)  

	
PS is in breach of any material obligation or undertaking under this Agreement and fails to cure such material default within 30 days after receipt of written notice of such default from GEM.

 

	
(iii)  

	
PS fails to use commercially reasonable efforts in providing a competitive, quality manufactured product, utilizing the latest technologies, protects the reputation and interests of GEM, and functions generally below reasonable expectations for success of GEM.

 

	
(iv)  

	
PS  fails to cure a default with a sufficient and timely plan within 30 days after receipt  of written notice of termination from PS .

 

(f)In the event of termination by PS. for any reason including cause, a run-out compensation will be provided to GEM in exchange for its prior efforts, for assignment of any and all sub-dealer, representative or reseller agreements front GEM to PS as requested, to allow for the re-hiring of GEM employees if desired, and to complete sales opportunities there and in effect at the time of termination. GEM will provide to PS a list of all current sales opportunities they were working on prior to termination and PS agrees to pay GEM the equivalent of a minimum of 15% of the selling price of each unit sold among this group as compensation. the remaining discount going to any sub-dealers, Representatives, resellers, or, if there is no applicable sub-dealer, Representative, reseller to PS for a period of one year after termination. For sales made by PS, directly or indirectly, to end-users not on the list, PS will compensate GEM the equivalent of a minimum of 7.5% of the selling price of each unit sold for the remaining years of the original term. All payments will become due within ten (10) days after shipment of each unit sold in either category.

 

  

  

  

(g)In the event of termination or expiration of this Agreement. PS agrees to continue to sell or arrange for the sale to GEM, in accordance with the terms and conditions mutually agreed by the Parties, parts required by end users, service Products sold by GEM pursuant to this Agreement prior to expiration or termination of this Agreement. This commitment to sell shall continue for a period of five (5) years after the expiration or termination of this Agreement.

 

Unless otherwise provided, or the context otherwise requires, the provisions of this Agreement shall survive the expiration or termination of this Agreement to the extent required for their full observance and performance. Termination of this Agreement for any cause shall not relieve either Party from paying any amount that may then he owed to the other Party or from any obligation to pay for any Products which may be ordered from PS before or after termination or from any obligation to fulfill any Product orders submitted by GFM and accepted by PS before the termination.

 

9. LIMITATION OF LIABILITY

 

Except as may be required pursuant to the indemnification provisions of this Agreement, the parties shall not he liable to each other for any indirect, special, consequential, exemplary, punitive damages, or lost profits in connection with this Agreement, including, without limitation, to any breach or termination thereof. Each Party hereby waives any right to any claim for compensation, reimbursement, or damages covered by the preceding sentence and unless mentioned in the terms herein.

 

10. FORCE MAJEURE

 

No failure or omission by either Party in the performance of any of its obligations under this Agreement shall he deemed a breach of this Agreement, not, create any liability, or give rise to any rights to terminate this Agreement, if the same shall arise from or is a consequence of a general strike, labour dispute, lockout, industrial disturbance, curtailment of fuel or electrical power shortage, accident, judicial decision, fire, flood, severe weather or other act of God. war (declared or undeclared), insurrection, riot, civil disturbance, blockage, embargoes of goods by any government, or any other governmental action or legislation. Any other cause beyond the reasonable control of' such Party, whether similar to or different from the causes above enumerated, and any such cause shall absolve the affected Party from responsibility for such failure to perform said obligation during the time such cause exists, subject to the rights and limitations set forth in this Section 10 below.

 

Each Party shall notify the other of any material change in conditions or the occurrence of any event which interferes or threatens to interfere with the performance of any of its obligations under this Agreement.

 

  

  

  

Upon such notice, the Parties shall consult and co-operate as to measures which may be taken to overcome the interference or as to any alternative measures which may be undertaken by the Parties with a view to the continued performance of this Agreement. Such measures may include the suspension of the condition or obligation, the modification of this Agreement or of any orders placed pursuant thereto, and the assumption by any Party of any costs incurred or to be incurred as a result of the interference which has arisen or in giving effect to said measures.

 

11. NOTICES

 

All notices which are required or permitted to he, given by any Party to the other shall be sent by registered or certified mail, postage prepaid, by fax. or by electronic mail (read receipt requested) properly addressed to the other Party at the addresses below or such other addresses as any Party may, from time to time, specify to the other Party by similar notice.

 

If to PS, at:

 

PURESAFE WATER SYSTEMS, INC.

160 Dupont Street

Plainview, NY 11803

ATTENTION: Leslie Kessler

Telephone: 516-208-8250

Fax: 516-208 -8252

Email: lkessler@puresafewatersystems.corn

 

If to GEM. at:

 

GLOBAL EQUIPMENT MARKETING, INC.

71 South Street

Hopkinton, MA 01748

Attention: Les L. Bebchick

Telephone: 508 435-9400

Fax: 508 435-1919

Email: lesb@ci2equipmentsystems.com

 

12. MISCELLANEOUS

 

(a) The Parties hereto are independent contractors and nothing herein contained shall be deemed to create an agency, joint venture, partnership or fiduciary relationship among the Parties hereto.

 

(b) No term or provision hereof shall be deemed waived and no breach excused, unless such waiver shall be in writing and signed by the Party against whom the waiver is sought to be enforced. Any such waiver shall not constitute a waiver of any other different or subsequent breach.

 

  

  

  

(c) This Agreement embodies the entire understanding among the Parties concerning the subject matter hereof and all prior representations, warranties, or agreements between the Parties relating hereto are merged herein and superseded hereby. No modification of this Agreement or any of its provisions shall be binding unless it is in writing and executed by both Parties.

 

(d) The parties to this Agreement acknowledge that they have negotiated this Agreement at arms-length, that they have each contributed to the drafting of this agreement, and that the provisions of the Agreement shall not be construed against either party as the drafter of the Agreement.

 

(e) PS acknowledges that GEM is a separate legal entity and that in entering this Agreement.

PS intends to contract solely with GEM and that no other party is responsible for or liable for the obligations of GEM hereunder or arising out of or related to this Agreement.

 

(f) PS acknowledges that GEM serves as a distributor or sales and marketing agent for other companies that do not directly compete with PS. PS agrees that GEM's activities for such other manufacturers does not and shall not constitute a breach of this Agreement.

 

(g)Trademarks: PS trademarks or trademarks of whom PS is a licensee, the use of which is granted to GEM.

 

13. GOVERNING LAW AND ARBITRATION

 

Any dispute arising out of or relating to this Agreement shall be submitted to arbitration before the American Arbitration Association, ("AAA") and any proceeding before the AAA shall be governed by the procedures and rules of the AAA.

 

The arbitration shall be conducted in the offices of the AAA in New York City, NY or Boston, MA unless otherwise agreed to by the parties in writing.

 

This Agreement, and any dispute arising out of or relating to this Agreement, shall be interpreted and construed in accordance with the laws of the state in which any arbitration is conducted.

 

Any court action to enforce an award of the AAA shall be brought in the state in which the arbitration is conducted, and if brought in Massachusetts, shall be brought in Middlesex or Suffolk County.

 

The Parties hereto have executed this Agreement in duplicate as of the date first written above.

 

  

  

  

IN WITNESS WHEREOF, the undersigned duly authorized representative of each party executed this Agreement as of the date first set forth above.

 

	PURESAFE WATER SYSTEMS, INC.   	 	 	GLOBAL EQUIPMENT MARKETING, INC.	 
	 	 	 	 	 
	

	 	 	

	 
	
Name: Leslie Kessler

	 	 	
Name: Les Bebchick

	 
	
Title: President

	 	 	
Title: President

	 
	 Date:  1/24/2013	 	 	Date:  1/31/2013Exhibit 4.1

 

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

 

 

	Principal Amount: $108,500.00	 	Issue
    Date:   April 2, 2013

   Purchase Price: $108,500.00

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED,
GREENESTONE HEALTHCARE CORPORATION, a Colorado corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the “Holder”),
the sum of $108,500.00, together with any interest as set forth herein, on December 20, 2013 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”)
per annum from the date hereof (the “Issue Date”), until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. This Note (as defined herein) may not be prepaid in whole or in part except as otherwise
explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at
the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”).
Interest shall commence accruing on the date that the Note is fully paid and shall be computed
on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into
common stock, $0.01 par value per share (the “Common Stock”), in accordance with the terms hereof) shall be made in
lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to
the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day
which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full,
the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on
such

 

    	 

    	 

    

 

date. As used in this Note, the term “business
day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York
are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in that certain Securities Purchase Agreement, dated the date hereof, pursuant to which
this Note was originally issued (the “Purchase Agreement”).

 

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

 

The following terms shall
apply to this Note:

 

Article
I. CONVERSION RIGHTS

 

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

 

 

 

 

 

    	2

    	 

    

 

of this Note, the sum of
(1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued
and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus
(3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1)
and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

1.2  Conversion Price.

 

(a)   Calculation
of Conversion Price. The conversion price (the “Conversion Price”) shall equal the
Variable Conversion Price (as defined herein)(subject to equitable adjustments for stock splits, stock dividends or rights offerings
by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price”
shall mean 61% multiplied by the Market Price (as defined herein) (representing a discount rate of 39%). 
“Market Price” means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during
the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price”
means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market
(the “OTCBB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security
on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of
such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such
security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If the Trading Price cannot be
calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually
determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of
the Trading Price is required in order to determine the Conversion Price of such Notes. For purposes herein,
“Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the principal
securities exchange or other securities market on which the Common Stock is then being traded.

 

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

 

 

 

 

 

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and after the Adjusted Conversion
Price Termination Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes herein, “Adjusted
Conversion Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme)
for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the
case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the
termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to
become operative.

 

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

 

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

 

1.4  Method of Conversion.

 

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

 

(b)   Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the

 

 

 

 

 

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

 

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

 

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

 

(e)   
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder
shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount
and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower
defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall
forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided,
on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to
issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action
by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of

 

 

 

 

 

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any other obligation of the
Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit
such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of
Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York,
New York time, on such date.

 

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

 

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

 

1.5  Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Act”)
or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred
pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate”
(as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section
1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in

 

 

 

 

 

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the Purchase Agreement (and
subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this
Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number
of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon
conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant
to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in
the following form, as appropriate:

 

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

 

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

 

1.6  Effect
of Certain Events.

 

(a)   Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all
of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more
than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the
Borrower with or into any other Person (as defined below) or

 

 

 

 

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Persons when the Borrower
is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower
shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default
Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual,
corporation, limited liability company, partnership, association, trust or other entity or organization.

 

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

 

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

 

 

 

 

 

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

 

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

 

Additionally, with
the exception of Exempted Issuances, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower
in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are
issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange
is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes
of the preceding sentence, the “price per share for which Common Stock is issuable upon such conversion or exchange”
is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance
or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the
Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable,
by (ii) the maximum total number of shares of Common

 

 

 

 

 

 

    	9

    	 

    

 

Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon
the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

Notwithstanding
the foregoing, the issuances of securities described on Schedule 1.6(d) shall be deemed to be “Exempted Issuances”,
and shall not be considered a Dilutive Issuance for purposes herein.

 

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

 

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

 

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

 

 

 

 

 

    	10

    	 

    

 

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

 

1.9  Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time
during the period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date, the Borrower
shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay
the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder
(an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall
state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more
than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional
Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order
of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment
Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash
(the “Optional Prepayment Amount”) equal to 110%, multiplied by the sum of: (w) the then outstanding principal amount
of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment
Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay
the Optional Prepayment Amount due to the Holder of the Note within three (3) business days following the Optional Prepayment Date,
the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

 

 

 

 

 

 

 

    	11

    	 

    

 

Notwithstanding anything
to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one (31) days following
the Issue Date and ending on the date which is sixty (60) days following the Issue Date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder
of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and
(2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.
On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to
or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the
Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the “Second Optional Prepayment Amount”) equal to 118%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within three (3) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding anything
to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days following
the Issue Date and ending on the date which is ninety (90) days following the Issue Date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder
of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and
(2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.
On the Optional Prepayment Date, the Borrower shall make payment of the ThirdOptional Prepayment Amount (as defined below) to or
upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional
Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount
in cash (the “Third Optional Prepayment Amount”) equal to 127%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional
Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and
fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within three (3) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

 

 

 

 

 

 

    	12

    	 

    

 

Notwithstanding any
to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) days from
the Issue Date and ending one hundred twenty (120) days following the Issue Date, the Borrower shall
have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the
outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice
shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the
Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the FourthOptional Prepayment Amount
(as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business
day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment
to the Holder of an amount in cash (the “Fourth Optional Prepayment Amount”) equal to 137%, multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount
of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w)
and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an
Optional Prepayment Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within three (3)
business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant
to this Section 1.9.

Notwithstanding any to the
contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one (121) days
from the Issue Date and ending one hundred eighty (180) days following the Issue Date, the Borrower
shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay
the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice
shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the
Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount
(as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business
day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment
to the Holder of an amount in cash (the “Fifth Optional Prepayment Amount”) equal to 140%, multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount
of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w)
and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an
Optional Prepayment Notice and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within three (3)
business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant
to this Section 1.9.

 

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

 

 

 

 

    	13

    	 

    

 

Article
II. CERTAIN COVENANTS

 

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

 

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

 

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

 

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

 

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

 

Article
III. EVENTS OF DEFAULT

 

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

 

 

 

 

 

 

    	14

    	 

    

 

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

 

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

 

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

 

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

 

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

 

 

 

 

 

 

    	15

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.15  Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such

 

 

 

 

 

 

    	16

    	 

    

 

replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not
limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer
agent to Borrower and the Borrower.

 

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

 

Upon the occurrence and
during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof
or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay
to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON
THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY
DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO:
(Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) 175%. Upon the occurrence and during the continuation of any Event of
Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this
Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12,
3.13, 3.14, and/or 3.15 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default
Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure
to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately
due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to
the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued
and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”)
plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment
plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or
(ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares
of Common Stock issuable upon conversion

 

 

 

 

 

    	17

    	 

    

 

of or otherwise pursuant to such Default Sum
in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion
Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of
a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied
by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event
of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable
hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly
waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at law or in equity.

 

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

 

Article
IV. MISCELLANEOUS

 

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

 

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

 

 

 

 

 

 

 

    	18

    	 

    

 

If to the Borrower, to:

 

GREENESTONE HEALTHCARE CORPORATION

5734 Yonge Street, Suite 300

North York, Ontario, Canada M2M 4E7

Attn:
Shawn E. Leon, Chief Executive Officer

facsimile: (416) 222-1932

 

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

 

JSBarkats, PLLC

Attn: Sunny J.
Barkats, Esq.

18. E. 41st
Street, 19th Floor

New York, NY
10010

facsimile:
(646) 607-5544

 

If to the Holder, to:

 

ASHER ENTERPRISES, INC.

1 Linden Pl.,
Suite 207

Great Neck, NY
11021

Attn:
Curt Kramer, President

facsimile:
516-498-9894

 

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

 

Naidich Wurman
Birnbaum & Maday, LLP

80 Cuttermill
Road, Suite 410

Great Neck, NY
11021

facsimile: 516-466-3555

 

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

 

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

 

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

 

 

 

 

 

    	19

    	 

    

 

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

 

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

 

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

 

4.9 
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a
Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the
Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive

 

 

 

 

 

 

    	20

    	 

    

 

payment of any dividend or
other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification
or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose
of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially
all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail
a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the
consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose
of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event
requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with
the terms of this Section 4.9.

 

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

 

[-signature page follows-]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	21

    	 

    

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer as of the date first written above

 

 

	 	 	 	GREENESTONE HEALTHCARE CORPORATION
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	By:	 /s/ Shawn E. Leon	 
	 	 	 	 	Name: Shawn E. Leon	 
	 	 	 	 	Title: Chief Executive Officer	 
	 	 	 	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	22

    	 

    

EXHIBIT A --- NOTICE OF CONVERSION

 

The undersigned hereby elects
to convert $_________________principal amount of the Note (defined below) into that number
of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth
below, of GREENESTONE HEALTHCARE CORPORATION, a Colorado corporation (the “Borrower”) according to the conditions of
the convertible note of the Borrower dated as of March 25, 2013 (the “Note”), as of the date written below. No fee
will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable
instructions:

 

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

 

Name of DTC Prime Broker:

Account Number:

 

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

 

ASHER ENTERPRISES, INC.

1 Linden Pl.,
Suite 207

Great Neck, NY.
11021

Attention: Certificate
Delivery

(516) 498-9890

 

Date of Conversion:  _____________

Applicable Conversion Price: $____________

Number of Shares of Common Stock to
be Issued

Pursuant to Conversion
of the Notes: ______________

Amount of Principal Balance Due remaining

Under the Note
after this conversion: ______________

 

ASHER ENTERPRISES, INC.

 

By: _____________________________
Date: ______________

Name: Curt Kramer

Title: President

1 Linden Pl.,
Suite 207

Great Neck, NY
11021

 

 

 

 

 

 

    	23

    	 

    

 

Schedule
1.6(d)

 

Exempted
Issuances

 

(1) Up to 5,000,000 shares
of common stock issued pursuant to the Company’s contemplated stock option plan;

 

(2) Up to 500,000 shares
of the Company’s Series B Preferred Stock, issuable to officer or directors of the Company pursuant to the Company’s
contemplated stock option plan;

 

(3) Up to 1,500,000 shares
issuable to the Company’s outside securities counsel for services rendered;

 

(4) Up to 300,000 shares
of common stock underlying common stock purchase warrants issuable to the Company’s current investor relations campaign at
an exercise price of $0.12 per share; and

 

(5) Up to 2,000,000 shares
of common stock issuable to the Company’s executive officers for outstanding loans payable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	24

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