Document:

Exhibit 10.2

 

 

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

 

Original Issue Date: July 1, 2015

 

Original Conversion Price (subject to adjustment herein):
$0.15

 

Principal Amount: $3,000,000

 

TEN PERCENT (10%) SENIOR

SECURED COLLATERALIZED

CONVERTIBLE PROMISSORY NOTE

DUE July 1, 2016

 

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THIS TEN PERCENT (10%) SENIOR SECURED
COLLATERALIZED CONVERTIBLE PROMISSORY NOTE is a duly authorized and validly issued Ten Percent (10%) Senior Secured
Collateralized Convertible Promissory Note of Xenetic Biosciences, Inc., a Nevada corporation (the “Company” or
the “Borrower”), having its principal place of business at 99 Hayden Ave, Suite 230, Lexington, Massachusetts
02421, designated as its Ten Percent (10%) Senior Secured Collateralized Convertible Promissory Note due July 1, 2016 (the
“Note”).

 

FOR VALUE RECEIVED, the Company promises to pay to OJSC Pharmsynthez
or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of
$3,000,000 on July 1, 2016 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid
as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of
this Note in accordance with the provisions hereof. This Note is subject to the following additional provisions:

 

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

 

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

 

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

 

“Base Conversion Price” shall have the meaning
set forth in Section 5(b). “Business Day” means any day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.

 

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

 

“Change of Control Transaction” means the
occurrence after the date hereof of any of (a) an acquisition by an individual or legal entity or “group” (as described
in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of
capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than
by means of conversion or exercise of the Note and the Securities issued together with the Note), (b) the Company merges into or
consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power
of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its
assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate
voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period
of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are
members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of
Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors
who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“DTC” means the Depository Trust Company.

 

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“DTC/FAST Program” means the DTC’s
Fast Automated Securities Transfer Program.

 

“DWAC” means Deposit Withdrawal at Custodian
as defined by the DTC.

 

“DWAC Eligible” means that (a) the Common
Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including without limitation transfer
through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s underwriting department,
(c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion Shares are otherwise eligible for delivery
via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.

 

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

 

“Event of Default” shall have the meaning
set forth in Section 6(a).

 

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

 

“Late Fees” shall have the meaning set forth
in Section 2(d).

 

“Make-Whole Amount” means, with respect to
the applicable date of determination, an amount in cash equal to all of the interest that, but for the applicable conversion or
default payment, would have accrued pursuant to Section 2 with respect to the applicable principal amount being so converted or
redeemed for the period commencing on the applicable redemption date or Conversion Date or default payment date and ending on the
Maturity Date.

 

“Mandatory Default Amount” means the payment
of all outstanding principal and accrued interest, with accrued interest defined as set forth in Section 2(c).

 

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

 

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

 

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

 

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

 

“Permitted Indebtedness” means the indebtedness
evidenced by the Note.

 

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

 

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

 

“Purchase Agreement” means the Securities
Purchase Agreement, dated as of June 9, 2015 among the Company and the original Holder, as amended, modified or supplemented from
time to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 2. Interest.

 

a) Payment of Interest in Cash or Kind. The
Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the
rate of 10% per annum, payable quarterly (as to that principal amount then being converted) and on the Maturity Date in cash or,
at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock or a combination
thereof at the lesser of $0.15 or the then applicable conversion price.

 

b) Interest Calculations. Interest shall be
calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on
the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated
damages and other amounts which may become due hereunder, has been made. Payment of interest in shares of Common Stock shall otherwise
occur pursuant to Section 4(c)(ii) herein. Interest hereunder will be paid to the Person in whose name this Note is registered
on the records of the Company regarding registration and transfers of this Note (the “Note Register”). Except as otherwise
provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common Stock to the holder
of the Note, then such payment of cash shall be distributed ratably among the holders of the then-outstanding Note based on their
(or their predecessor’s) initial purchases of Note pursuant to the Purchase Agreement.

 

c) Late Fee. All overdue
accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum
or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue daily from the date such interest
is due hereunder through and including the date of actual payment in full.

 

d) Reserved.

 

e) Prepayment. Subject
to Section 7 herein, prior to the one (1) year anniversary of the Original Issue Date, but not before the six (6) month anniversary
of the Original Issue Date, upon ten (10) days written notice to the Holder, the Company may prepay any portion of the principal
amount of this Note and any accrued and unpaid interest. If the Borrower exercises its right to prepay the Note, the Borrower
shall make payment to the Holder of an amount in cash equal to the sum of the then outstanding principal amount of this Note and
interest multiplied by 115%. The Holder may continue to convert the Note from the date notice of the prepayment is given until
the date of the prepayment.

 

Section 3. Registration of Transfers and Exchanges.

 

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

 

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

 

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

 

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Section 4. Conversion.

 

а) Voluntary Conversion. This Note shall
be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time.
The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto
as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted
and accrued interest as of the date on which such conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued
and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal
amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing
the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records
of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance
of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of
this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

 

b) Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to $0.15 (the “Conversion Price”).
All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction that proportionately decreases or increases the Common Stock during such measuring period. Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the
Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking
to enforce damages pursuant to any other Section hereof or under applicable law.

 

c) Mechanics of Conversion.

 

i. Conversion Shares Issuable
Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price.

 

ii. Delivery of Certificate
Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the Conversion
Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date,
shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement)
representing the number of Conversion Shares being acquired upon the conversion of this Note, (B) a bank check in the amount of
accrued and unpaid interest (if the Company has elected or is required to pay accrued interest in cash) and (C) a bank check in
the amount of the Make-Whole Amount. All certificate or certificates required to be delivered by the Company under this Section
4(c) shall be delivered electronically through the Depository Trust Company or another established clearing corporation performing
similar functions. If the Conversion Date is prior to the earlier of (i) the six month anniversary of the Original Issue Date
or (ii) the Effective Date, then the Conversion Shares shall bear a restrictive legend 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.”

 

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

 

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iv. Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon
conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares;
provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have
against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal
amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated
with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and
obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding
principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it
obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon
a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing
to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day
after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall
limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the
Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right
to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce
damages pursuant to any other Section hereof or under applicable law.

 

v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion.
In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate
or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required
by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder
was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by
which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal
amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or
deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with
its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price
of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of
the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion
of this Note as required pursuant to the terms hereof.

 

vi. Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to 200% of the Required
Minimum (to be adjusted quarterly) for the sole purpose of covering the Underlying Shares (subject to the terms and
conditions set forth in the Purchase Agreement). The Company covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Registration
Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such
Registration Statement (subject to such Holder’s compliance with its obligations under the Section 4.17 of the
Purchase Agreement).

 

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

 

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

 

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Section
5. Certain Adjustments.

 

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

 

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

 

c)Preemptive Rights.

 

i.From
the date hereof until the date that is the 12-month anniversary of the last Closing, upon any issuance by the Company of
Common Stock, Common Stock Equivalents or debt for cash consideration, Indebtedness or a combination of units thereof (a
“Subsequent Financing”), the Holder shall have the right to participate in an amount equal to up to 100% of the
Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the
Subsequent Financing.

 

ii.At
least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to the Holder a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Holder if it
wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request
of the Holder, and only upon a request by the Holder, for a Subsequent Financing Notice, the Company shall promptly, but no later
than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to the Holder. The Subsequent Financing Notice
shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include
a term sheet or similar document relating thereto as an attachment.

 

iii.If the Holder desires to participate in
such Subsequent Financing, the Holder must provide written notice to the Company that the Holder is willing to participate in
the Subsequent Financing, the amount of the Holder’s participation, and representing and warranting that the Holder has
such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.

 

iv.If
notifications by the Holder of its willingness to participate in the Subsequent Financing (or to cause their designees to participate)
is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion
of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

v.The
Company must provide the Holder with a second Subsequent Financing Notice, and the Holder will again have the right of participation
set forth above in this Section 5(c), if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the
initial Subsequent Financing Notice.

 

    	7

    	 

    

 

vi.The
Company and the Holder agree that if the Holder elects to participate in the Subsequent Financing, the transaction documents related
to the Subsequent Financing shall not include any term or provision whereby the Holder shall be required to agree to any restrictions
on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or
grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Holder.

 

vii.Notwithstanding
anything to the contrary in this Section 5(c) and unless otherwise agreed to by the Holder, the Company shall either confirm
in writing to the Holder that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such
Holder will not be in possession of any material, non-public information, by the tenth (10th) Trading Day following delivery
of the Subsequent Financing Notice. If by such tenth (10th) Trading Day, no public disclosure regarding a transaction
with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has
been received by the Holder, such transaction shall be deemed to have been abandoned and the Holder shall not be deemed to be
in possession of any material, non-public information with respect to the Company or any of its Subsidiaries viii.
Notwithstanding the foregoing, this Section 5(c) shall not apply in respect of an Exempt Issuance.

 

d) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will
be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of
this Note (without regard to any limitations on exercise hereof) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

e)
Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Note, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to any limitations
on exercise hereof) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

 

    	8

    	 

    

 

f)Fundamental
Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this
Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common
Stock for which this Note is convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Note ad the Transaction Documents (as defined in the Purchase
Agreement) in accordance with the provisions of this Section 5(f) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall,
at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number
of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking
into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic
value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the
other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction
Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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

 

h)
Notice to the Holder.

 

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

 

    	9

    	 

    

 

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

 

Section
6. Events of Default.

 

a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and
whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order
of any court, or any order, rule or regulation of any administrative or governmental body):

 

i.
any default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing
to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date
or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above,
is not cured within 3 Trading Days;

 

ii. the Company shall
fail to observe or perform any other covenant or agreement contained in the Note (other than a breach by the Company of its obligations
to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (x) below) which failure is
not cured, if possible to cure, within the earlier to occur of (A) 20 Trading Days after notice of such failure sent by the Holder
or by any other Holder to the Company and (B) 20 Trading Days after the Company has become or should have become aware of such
failure;

 

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

 

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

 

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

 

vi. the Company
or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or
evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a)
involves an obligation greater than $50,000, whether such indebtedness now exists or shall hereafter be created, and (b)
results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become
due and payable;

 

vii. the Common Stock
shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation
for trading thereon within 20 Trading Days or the transfer of shares of Common Stock through the Depository Trust Company System
is no longer available or “chilled”;

 

viii. the Company shall
be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in excess
of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change
of Control Transaction), except, in each case, with respect to a transaction between the Company, on the one hand, and the Holder
or an Affiliate of the Holder on the other;

 

    	10

    	 

    

 

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

 

x. the Company shall
fail for any reason to deliver certificates via DWAC to a Holder prior to the 10th Trading Day after a Conversion Date pursuant
to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the
Company’s intention to not honor requests for conversions of the Note in accordance with the terms hereof;

 

xi. the Company fails
to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance
with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);

 

xii. if the Borrower
or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator
of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title
11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or a petition or an answer
seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against
it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance of or for the purpose of
effecting any of the foregoing;

 

xiii. if any
order, judgment or decree shall be entered, without the application, approval or consent of the Borrower or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the
Borrower or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Borrower or any Subsidiary, or
of all or any substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for
any period of sixty (60) days;

 

xiv.the occurrence
of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Borrower or any Subsidiary
having an aggregate fair value or repair cost (as the case may be) in excess of $500,000, and any such levy, seizure or attachment
shall not be set aside, bonded or discharged within sixty (60) days after the date thereof;

 

xv.the Company
shall fail to maintain sufficient reserved shares pursuant to Section 4.11 of the Purchase Agreement; or

 

xvi.any monetary
judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective
property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded
or unstayed for a period of 45 calendar days.

 

 

b) Remedies
Upon Event of Default. If any Event of Default occurs, the Company shall have thirty (30) days to cure such Event
of Default. If following the thirty (30) day period the Event of Default remains, then the outstanding principal amount of
this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the
date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory
Default Amount. Commencing thirty (30) days after the occurrence of any Event of Default that results in the eventual
acceleration of this Note, the interest rate on this Note shall accrue at a default rate of interest rate equal to 1.5% per
month (18% per annum). Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this
Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide,
and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately
and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full
payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

 

Section 7.Mandatory Redemption or Conversion.

 

If a public offering
is consummated while this Note is outstanding (the “Public Offering”) that results in the Company obtaining financing
of seven million dollars ($7,000,000) or greater, the Holder, at its sole option may: (a) redeem, in cash, the balance of principal
and accrued interest, multiplied by 115%, to be paid from the proceeds of the Public Offering; or (b) convert the balance of principal
and accrued interest, multiplied by 115%, into Common Stock at the Conversion Price. In such event, the Holder shall execute a
lock-upagreement, in a form reasonably satisfactory to Holder, to not sell the Common Stock commencing at the time of the
roadshow for the Public Offering and ending three (3) months after the Public Offering closes.

 

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Section
8. Miscellaneous.

 

a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including,
without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a
nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other
facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with
this Section 8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be
in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to
each Holder at the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile
number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the
Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

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

 

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

 

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

 

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

 

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

 

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

 

h) Language. This Note is made
in both the English and the Russian languages. In case of any inconsistencies between the English
and the Russian versions the English version of this Agreement shall prevail.

 

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

 

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

 

k)
Secured Obligation. The obligations of the Company under this Note are secured by all assets of the Company and each Subsidiary
pursuant to the Security Agreement, dated as of July 1, 2015 between the Company, the Subsidiaries of the Company and the Secured
Parties (as defined therein).

 

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

(Signature Pages Follow)

    	13

    	 

    

 

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

 

 

	 	XENETIC BIOSCIENCES, INC.
	 	 
	 	 
	 	By: /s/ M. S. Maguire
	 	Name: M. S. Maguire
	 	Title: _________________
	 	Facsimile o. for delivery of Notices
	 	 
	 	 
	 	 
	 	 

 

 

 

    	14

    	 

    

 

ANNEX A 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert
principal under the Ten Percent (10%) Senior Secured Collateralized Convertible Promissory Note due July 1, 2016 of Xenetic Biosciences,
Inc., a Nevada corporation (the “Company”), into shares of common stock (the “Common Stock”), of the Company
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged
to the holder for any conversion, except for such transfer taxes, if any.

 

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

 

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

 

Conversion calculations

 

Date to Effect Conversion

 

Principal Amount of Note to be Converted

 

Payment of Interest in Common Stock yes no

 

If yes, $ of Interest Accrued on Account of Conversion at Issue.

 

Number of shares of Common Stock to be issued

 

Signature:

 

Name:

 

DWAC Instructions:

 

Broker No:

 

Account No:

 

    	15

    	 

    

 

Schedule 1

 

CONVERSION SCHEDULE
/TPA

 

This Ten Percent (10%) Senior Secured Collateralized Convertible Promissory Note due on July 1, 2016 in
the original principal amount of $3,000,000 issued by Xenetic Biosciences, Inc., a Nevada corporation. This Conversion Schedule
reflects conversions made under Section 4 of the above referenced Note.

 

Dated:

 

	
        Date of Conversion

        (or for first entry,

Original Issue Date) 
	Amount
of 

Conversion	
        Aggregate Principal

        Amount Remaining

        Subsequent to

        Conversion

        (or original Principal

Amount) 
	Company Attest / 

 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

    	16

    	 

    

 

	
        Date of Conversion

        (or for first entry,

Original Issue Date) 
	Amount
of 

Conversion 	
        Aggregate Principal

        Amount Remaining

        Subsequent to

        Conversion

        (or original Principal

Amount)
	
                                                                                Company Attest/

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

 

 

 

    	17Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement
(this “Agreement”) is made and entered into as of July 1, 2015, between Xenetic Biosciences, Inc., a Nevada
corporation (the “Company”), and the purchaser signatory hereto (the “Purchaser”).

 

This Agreement is made pursuant
to the Securities Purchase Agreement, dated as of the date hereof, between the Company and the Purchaser (the “Purchase
Agreement”).

 

The Company and the Purchaser hereby
agrees as follows:

 

1. Definitions.

 

Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings:

 

“Advice” shall have the meaning set
forth in Section 6(d).

 

“Effectiveness Date”
means, with respect to the Initial Registration Statement required to be filed hereunder, the 90th calendar day following the filing
of the Initial Registration Statement with the Commission, provided, however, that in the event the Company is notified
by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth (5th) Trading Day following the
date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness
Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

 

“Effectiveness Period”
shall have the meaning set forth in Section 2(a).

 

“Event” shall have the meaning set
forth in Section 2(g).

 

“Event Date” shall have the meaning
set forth in Section 2(g).

 

“Holder” means
the holder, as the case may be, from time to time of Registrable Securities.

 

“Indemnified Party” shall have the
meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the
meaning set forth in Section 5(c).

 

“Initial Registration
Statement” means the initial Registration Statement filed pursuant to this Agreement.

 

“Losses” shall have the meaning set
forth in Section 5(a).

 

“Plan of Distribution” shall have
the meaning set forth in Section 2(a).

 

    	1

    	 

    

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.

 

“Registrable Securities”
means, as of any date of determination, (a) all of the shares of Common Stock then issued and issuable upon conversion in full
of the Note (assuming on such date the Note is converted in full without regard to any conversion limitations therein), (b) all
shares of Common Stock issued and issuable as interest or principal on the Note assuming all permissible interest and principal
payments are made in shares of Common Stock and the Note is held until maturity, (c) all of the shares of Common Stock then issued
and issuable upon exercise in full of the Warrants, including any Warrants issuable pursuant to Sections 2.1 and 2.5 of the Purchase
Agreement, (assuming on such date the Warrants are converted in full without regard to any conversion limitations therein), (d)
any additional shares of Common Stock issued and issuable in connection with any anti- dilution provisions in the Note or Warrants
(in each case, without giving effect to any limitations on conversion or exercise set forth in the Note or Warrants) and (e) any
securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities
(and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder
with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared
effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance
with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144,
or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information
pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer
Agent and the affected Holder (assuming that such securities and any securities issuable upon exercise, conversion or exchange
of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the
Company), as reasonably determined by the Company, upon the advice of counsel to the Company.

 

“Registration Statement”
means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements
contemplated by Section 2 or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference
or deemed to be incorporated by reference in any such registration statement.

 

“Rule 415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to
time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as
such Rule.

 

“Rule 424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to
time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as
such Rule.

 

“Selling Stockholder Questionnaire”
shall have the meaning set forth in Section 3(a).

 

“SEC Guidance”
means (i) any publicly- available written or oral guidance of the Commission staff, or any comments, requirements or requests of
the Commission staff and (ii) the Securities Act.

 

    	2

    	 

    

 

2.Registration

 

(a) Demand Registration Rights
as to Closing. The Company shall, upon written demand by the Holders of at least 20% of the then outstanding Registrable
Securities, effect the registration of Registrable Securities (for the avoidance of doubt, the Purchaser may deliver a demand for
registration under this Section 2(a) whether or not the Purchaser owns Registrable Securities at the time of such request). The
Company shall have forty-five (45) days to file the Initial Registration Statement with the Commission. The Registration Statement
filed hereunder shall be on Form S-1 and shall contain substantially the “Plan of Distribution” attached hereto
as Annex A. If Form S-1 is not available for the registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable
Securities on Form S-1 as soon as such form is available, provided that the Company shall maintain the effectiveness of
the Registration Statement then in effect until such time as a Registration Statement on Form S-1 covering the Registrable Securities
has been declared effective by the Commission. Subject to the limitations set forth in Sections 2(c), the Company shall use its
best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 3(c)) to
be declared effective under the Securities Act within ninety (90) days after the filing thereof, but in any event no later than
the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under
the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant
to Rule 144, or (ii) six (6) months after the Registrable Securities may be sold without volume or manner-of-sale restrictions
pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement
under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holder (the “Effectiveness Period”). The Company shall
telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall
immediately notify the Holder via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day
that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness
of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such
Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within
one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an
Event under Section 2(g).

 

(b) Notwithstanding the registration
obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities cannot, as
a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the
Company agrees to promptly inform the Holder thereof and use its commercially reasonable efforts to file amendments to the Initial
Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered
by the Commission, on Form S-1 or such other form available to register for resale the Registrable Securities as a secondary offering,
subject to the provisions of Section 2(g); with respect to filing on Form S-1 or other appropriate form, and subject to the provisions
of Section 2(g) with respect to the payment of liquidated damages; provided, however, that prior to filing such amendment,
the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable
Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.

 

(c)Reserved.

 

    	3

    	 

    

 

(d) Piggyback Registration.
If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S- 4
or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination
and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this
Section 2(d) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements)
promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement

 

(e) Allocation of Shares.
In connection with any offering under Section 2(d) involving an underwriting, the Company shall not be required to include any
Registrable Securities in such underwriting unless the Holder thereof accepts the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it. Further, if the managing underwriter advises the Company that, in its view, the
number of Registrable Securities requested to be included in such registration exceeds the “Maximum Offering Size”
(which shall mean the largest aggregate number of shares which can be sold without having a material adverse effect on such offering,
as determined by the managing underwriter), the Company will include in such registration, in the following priority, up to the
Maximum Offering Size: first, so many shares of Common Stock proposed to be registered by the Company as would not cause the offering
to exceed the Maximum Offering Size; and second, any Registrable Securities requested to be included in such registration by the
Purchaser, allocated, if necessary, pro rata on the basis of their relative number of Registrable Securities so held.

 

(f) Notwithstanding any other provision
of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(g), if the Commission or any SEC Guidance
sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement
as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration
of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable
Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:

 

a.
First, the Company shall reduce or eliminate any securities to be included by any Person in any secondary offering other
than a Holder;

 

b. 
Second, the Company shall reduce the Registrable Securities; and

 

с. Third, the Company shall
reduce any securities set to be registered for any primary public offering.

 

In the event of a cutback hereunder,
the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s
allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will
use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company
or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register
for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.

 

    	4

    	 

    

 

(g)
If: (i) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with
Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed”
or will not be subject to further review, or (ii) prior to the effective date of a Registration Statement, the Company fails to
file a pre- effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration
Statement within ten (10) calendar days after the receipt of comments by or notice from the Commission that such amendment is required
in order for such Registration Statement to be declared effective, or (iii) a Registration Statement registering for resale all
of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration
Statement, or (iv) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities included in such Registration Statement, or the Holder is otherwise not
permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar
days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month
period (any such failure or breach being referred to as an “Event”, and for purposes of clause (i) the date
on which such five (5) Trading Day period is exceeded, and for purpose of clause (ii) the date which such ten (10) calendar day
period is exceeded, and for purpose of clause (iii) the date on which such Event occurs, and for purpose of clause (iv) the date
on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “Event Date”),
then, in addition to any other rights the Holder may have hereunder or under applicable law, on each such Event Date and on each
monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal
to the product of 2.0% multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement.
If the Initial Registration Statement is not filed on or prior to the time
periods described in Section 2(a) (if the Company files the Initial Registration Statement without affording the Holder the opportunity
to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause)
(the “Filing Event Date”), then in addition to any other rights the Holder may have hereunder or under
applicable law, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal
to the product of 2.0% multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement.
Additionally, for each monthly anniversary of such Filing Event Date until the Initial Registration Statement is filed, the Company
shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.0% multiplied
by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any partial
liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.
The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior
to the cure of an Event.

 

    	5

    	 

    

 

3. Registration Procedures.

 

In connection with the Company’s
registration obligations hereunder, the Company shall:

 

(a) Not less than five (5) Trading
Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related
Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated
therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will be subject to the review of the Holder, and (ii)
cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning
of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holder advances copies of any
universal shelf registration statement registering securities in addition to those required hereunder, or any Prospectus prepared
thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to
which the Holder of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company
is notified of such objection in writing no later than five (5) Trading Days after the Holder has been so furnished copies of a
Registration Statement or one

 

(1) Trading Day after the Holder
has been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the
Company a completed questionnaire in the form attached to this Agreement as Annex B (a “Selling Stockholder
Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the
fourth (4th) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.

 

(b) (i) Prepare and file with the
Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register
for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect
to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holder true and complete
copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall
excise any information contained therein which would constitute material non-public information regarding the Company or any of
its Subsidiaries), and

(iv) comply in all material respects
with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Holder thereof set forth in such Registration Statement as so amended or in such Prospectus
as so supplemented.

 

    	6

    	 

    

 

(c) If during the Effectiveness
Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in
a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case, within thirty

(30) days, an additional Registration
Statement covering the resale by the Holder of not less than the number of such Registrable Securities.

 

(d) Notify the Holder of Registrable
Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing
no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment
to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review”
of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect
to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission
or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or
for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial
statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement
or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company
that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or Prospectus, provided, however, in no event shall
any such notice contain any information which would constitute material, non-public information regarding the Company or any of
its Subsidiaries.

 

(e) Use its best efforts to avoid
the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest practicable moment.

 

(f) Furnish to each Holder, without
charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements
and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person,
and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or
successor thereto) need not be furnished in physical form.

 

    	7

    	 

    

 

(g) Subject to the terms of this
Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling
Holder in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto, except after the giving of any notice pursuant to Section 3(d).

 

(h) The Company shall cooperate
with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the FINRA
Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company shall pay the filing
fee required by such filing within two (2) Business Days of request therefor.

 

(i) Prior to any resale of Registrable
Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holder in
connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such jurisdiction.

 

(j) If requested by a Holder, cooperate
with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in
such names as any such Holder may request.

 

(k) Upon the occurrence of any
event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event,
prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document
so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company notifies the Holder in accordance with clauses (iii) through
(vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made,
then the Holder shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(k) to suspend
the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required
pursuant to Section 2(g), for a period not to exceed sixty (60) calendar days (which need not be consecutive days) in any 12-month
period.

 

    	8

    	 

    

 

(l)Comply with all applicable rules and regulations
of the Commission.

 

(m) The Company shall use its best
efforts to maintain eligibility for use of Form S-1 (or any successor form thereto) for the registration of the resale of Registrable
Securities.

 

(n) The Company may require each
selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by
such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares.
During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable
Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request,
any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

 

4. Registration Expenses.
All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation,

 

(i) all registration and filing
fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants)

 

(A) with respect to filings made
with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications
or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing,
with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable
Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission
in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions
of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holder.

 

    	9

    	 

    

 

5.Indemnification.

 

(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge
or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each
of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each
such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration
Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act
or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under
this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent
that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or
in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii)
in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated,
defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in
Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to
such Loss would have been corrected. The Company shall notify the Holder promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person
and shall survive the transfer of any Registrable Securities by any of the Holder in accordance with Section 6(g).

 

(b) Indemnification by Holder.
The Holder shall indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses,
as incurred, to the extent arising out of or based solely upon:

 

    	10

    	 

    

 

 

(x) the Holder’s failure
to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or (y) any
untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly
for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information
relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex
A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of
an event of the type specified in Section 3(d)(iii)-(vi), to the extent, but only to the extent, related to
the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice
the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling
Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have
materially and adversely prejudiced the Indemnifying Party.

 

    	11

    	 

    

 

An Indemnified Party shall have
the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties unless:

 

(1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

 

An Indemnified Party shall have
the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties unless:

 

(1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

 

Subject to the terms of this Agreement,
all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that, the
Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such
actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) not to be entitled to indemnification hereunder.

 

    	12

    	 

    

 

(d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.

 

The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section
5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

The indemnity and contribution
agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified
Parties.

 

6.Miscellaneous.

 

(a) Remedies. In the event
of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, the Holder or the Company,
as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees
that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of
such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

    	13

    	 

    

 

(b) Prohibition on Filing Other
Registration Statements. The Company shall not file any other registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b),
(i) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement
and (ii) shall not prohibit the Company from filing a registration statement on Form S-1 for a primary offering by the Company,
provided that the Company makes no offering of securities pursuant to such shelf registration statement prior to the effective
date of the Registration Statement required hereunder that includes all of the Registrable Securities.

 

(c) Compliance. The Holder
covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless
an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration Statement.

 

(d) Discontinued Disposition.
By its acquisition of Registrable Securities, the Holder agrees that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company
that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its
best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.

 

(e) Amendments and Waivers.
The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by
the Company and the Holder of 67% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes
any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does not register
all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number
of Registrable Securities to be registered for the Holder shall be reduced pro rata the Holder shall have the right to designate
which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Holder may
be given only by the Holder of all of the Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of
the first sentence of this

 

Section 6(e). No consideration
shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.

 

(f) Notices. Any and all
notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in
the Purchase Agreement.

 

    	14

    	 

    

 

(g) Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without
the prior written consent of the Holder of the then outstanding Registrable Securities. The Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.

 

(h) No Inconsistent Agreements.
Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries,
on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holder in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth
on Schedule 6(h), neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

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

 

(j) Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with
the provisions of the Purchase Agreement.

 

(k) Language. This Agreement
is made in both the English and the Russian languages. In case of any inconsistencies between the English and the Russian versions
the English version of this Agreement shall prevail

 

(l) Cumulative Remedies.
The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

 

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

 

    	15

    	 

    

 

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

 

(o)
Independent Nature of Holder’s Obligations and Rights. The obligations of each Holder hereunder are several and not
joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of
the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holder as a partnership,
an association, a joint venture or any other kind of group or entity, or create a presumption that the Holder is in any way acting
in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Holder is not acting in concert or as a group, and the Company shall not asset any
such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations
of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done
solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly
understood and agreed that each provision contained in this Agreement is between the Company and the Holder, solely.

 

 

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

 

(Signature Pages Follow)

 

 

 

 

 

 

 

 

    	16

    	 

    

 

IN WITNESS WHEREOF
, the parties have executed this Registration Rights Agreement as of the date first written above

 

 

	 	XENETIC BIOSCIENCES , INC.
	 	 	 
	 	 	 
	 	By:	/s/ M. S. Maguire
	 	 	Name: M.S. Maguire
	 	 	Title:

 

 

 

[SIGNATURE PAGE OF HOLDER TO RRA]

 

 

 

Name of Holder: OJSC Parmasynthez

 

Signature of Authorized Signatory of Holder:

 

/s/ Peter Kruglyakov                     

 Peter Kruglyakov

Title

 

 

 

  

 

    	17

    	 

    

Annex A

 

Plan of Distribution

 

Each Selling Stockholder (the “Selling
Stockholders”) of the securities and any of their pledgees, assignees and successors-in- interest may, from time to time,
sell any or all of their securities covered hereby on the OTC Bulletin Board or any other stock exchange, market or trading facility
on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder
may use any one or more of the following methods when selling securities:

 

		·	ordinary brokerage transactions and transactions
in which the broker dealer solicits purchasers;

		·	block trades in which the broker dealer
will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the
transaction;

		·	purchases by a broker dealer as principal
and resale by the broker dealer for its account;

		·	an exchange distribution in accordance
with the rules of the applicable exchange;

		·	privately negotiated transactions;

		·	settlement of short sales;

		·	in transactions through broker dealers
that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

		·	through the writing or settlement of options
or other hedging transactions, whether through an options exchange or otherwise;

		·	a combination of any such methods of sale;
or

		·	any other method permitted pursuant to
applicable law.

 

The Selling Stockholders may also
sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.

Broker dealers engaged by the Selling

 

 

    	18

    	 

    

 

Stockholders may arrange for other
brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the Selling Stockholders (or,
if any broker dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except
as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-
2440.

 

In connection with the sale of
the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker- dealers or other
financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume.
The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or
create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities
offered by this prospectus, which securities such broker- dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).

 

The Selling Stockholders and any
broker- dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities.

 

The Company is required to pay
certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

Because Selling Stockholders may
be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The
Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed
sale of the resale securities by the Selling Stockholders.

 

We agreed to keep this prospectus
effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration
and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to
be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect
or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule
of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they
have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.

 

Under applicable rules and regulations
under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the
commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities
of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time
of the sale (including by compliance with Rule 172 under the Securities Act).

 

 

    	19

    	 

    

XENETIC BIOSCIENCES, INC.

 

Selling Stockholder Notice and
Questionnaire

 

The undersigned beneficial owner
of common stock (the “Registrable Securities”) of XENETIC BIOSCIENCES, INC. (the

 

“Company”),
understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”)
a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the
terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document
is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below.
All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise
from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial
owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named
or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner
(the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned
by it in the Registration Statement.

 

The undersigned hereby provides
the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.Name.

(a)               
Full Legal Name of Selling Stockholder:

 

_________________________________________________

_________________________________________________

 

 

(b)              
Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

 

_________________________________________________

 

(c)               
Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others
has power to vote or dispose of the securities covered by this Questionnaire):

 

_________________________________________________

 

2.Address for Notices to Selling Stockholder:

 

_________________________________________________

_________________________________________________

_________________________________________________

 

 

	Telephone: Fax:	 	 
	Contact Person:	 	 

 

    	20

    	 

    

 

 

3.     
Broker-Dealer Status:

 

(a)Are you a broker-dealer?

 

Yes
 ̈ No  ̈

 

(b)If “yes”
to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes
 ̈ No  ̈

 

Note: If “no” to Section
3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

(c)Are you
an affiliate of a broker-dealer?

 

Yes
 ̈ No  ̈

 

(d) If you are
an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business,
and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable Securities?

 

Yes
 ̈ No  ̈

 

Note: If “no” to Section
3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4.    
Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

 

Except as set forth below in
this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

 

(a)               
Type and Amount of other securities beneficially owned by the Selling Stockholder:

 

_________________________________________________

_________________________________________________

_________________________________________________

 

5. Relationships with the
Company:

 

Except as set forth below, neither
the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or
its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

_________________________________________________

_________________________________________________

_________________________________________________

 

 

    	21

    	 

    

 

The undersigned agrees to promptly
notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

 

By signing below, the undersigned
consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information
in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands
that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement
and the related prospectus and any amendments or supplements thereto.

 

IN WITNESS WHEREOF the undersigned,
by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

 

 

	Date:___________	Beneficial Owner	 
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

PLEASE FAX A COPY (OR EMAIL
A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

 

 

    	22

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