Document:

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

 

Original
Issue Date:

Exchange
Date:

Initial
Conversion Price (subject to adjustment herein): $0.12

 

$_______

 

7.5%
ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE

DEBENTURE

DUE
May _____, 2018

 

THIS
7.5% ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE of ADVANCED MEDICAL ISOTOPE CORPORATION, a Delaware corporation,
(the “Company”), having its principal place of business at 719 Jadwin Avenue, Richland, WA 99352, designated
as its 7.5% Original Issue Discount Senior Secured Convertible Debenture due May ___, 2018 (the “Debenture”).
This Debenture is being issued in connection with that certain Exchange Agreement pursuant to which the Company exchanged certain
then outstanding indebtedness that was issued by the Company on November 2, 2016 for this Debenture.

 

FOR
VALUE RECEIVED, the Company promises to pay to _________, or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $_________ on May __, 2018 (the “Maturity Date”)
or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder. This Debenture is subject
to the following additional provisions:

 

Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Exchange Agreement and the following
terms shall have the following meanings:

 

    	1

    	 

    

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Agent”
shall have the meaning ascribed to such term in the Security Agreement.

 

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

 

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

 

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

 

“Base
Conversion Price” shall have the meaning set forth in Section 5(b).

 

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

 

“Board
of Directors” means the board of directors of the Company.

 

“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).

 

    	2

    	 

    

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 33% of the voting securities of the Company (other than by means of conversion of the Debenture or the debentures
issued to the Holder pursuant to a securities purchase agreement of even date herewith), (b) the Company merges into or consolidates
with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction,
the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the Company
or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another
Person and the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power
of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more
than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members
of the Board of Directors on the Exchange 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.

 

“Commission”
shall mean the Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

“Common
Stock Equivalents” means any securities of the Company (or any direct or indirect subsidiaries the Company may obtain
or form in the future) which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation,
any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock.

 

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

 

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

 

    	3

    	 

    

 

“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).

 

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

 

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

 

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

 

“Exchange
Agreement” means the Exchange Agreement, dated as of May __, 2017 among the Company and the original Holders, as amended,
modified or supplemented from time to time in accordance with its terms.

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock, Restricted Stock Units (RSUs) or options to eligible grantees
under 2015 Omnibus Incentive and Securities Plan, provided that issuances under this clause (a) shall not exceed an aggregate
of twenty percent (20%) of the total outstanding shares of Common Stock on an as converted primary basis as of the date hereof
in any 12 month period, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Exchange
Date, provided that such securities have not been amended since the Exchange Date to increase the number of such securities or
to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits
or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities, and (d) shares of Common Stock issued in
lieu of cash payment for services provided by service providers.

 

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

 

“Holding
Fee” shall have the meaning set forth in Section 9(b).

 

“Holder
Demand” shall have the meaning set forth in Section 9(d).

 

“Holder
Redemption” shall have the meaning set forth in Section 6(b).

 

    	4

    	 

    

 

“Holder
Redemption Amount” means 105% of the then outstanding principal amount of the Debenture if on or prior to December 15,
2017 and 110% of the then outstanding principal amount of the Debenture thereafter up to fifty percent (50%) of the gross proceeds
of the financing. By way of example, if the Company raises $100,000 in a financing after August 1, 2017, but prior to December
15, 2017, and the Holder requires the Company to redeem its full Holder Redemption Amount, the Company shall pay to the Holder
$50,000 and the principal amount of the Debenture shall be reduced by $47,620.

 

“Holder
Redemption Date” shall have the meaning set forth in Section 6(b).

 

“Holder
Redemption Notice” shall have the meaning set forth in Section 6(b).

 

“Holder
Redemption Notice Date” shall have the meaning set forth in Section 6(b).

 

“Holder
Redemption Period” shall have the meaning set forth in Section 6(b).

 

“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to
be capitalized in accordance with United States generally accepted accounting principles.

 

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

 

“Interest
Conversion Rate” means the Conversion Price in effect on the Interest Payment Date.

 

“Interest
Conversion Shares” shall have the meaning set forth in Section 2(a).

 

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

 

“Interest
Payment Date” shall have the meaning set forth in Section 2(a).

 

“Interest
Share Amount” shall have the meaning set forth in Section 2(a).

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

    	5

    	 

    

 

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

 

“New
York Courts” shall have the meaning set forth in Section 10(d).

 

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

 

“Optional
Redemption” shall have the meaning set forth in Section 6(a).

 

“Optional
Redemption Amount” means the sum of (a) 105% of the then outstanding principal amount of the Debenture if on or prior
to December 15, 2017 and 110% of the then outstanding principal amount of the Debenture thereafter, (b) accrued but unpaid interest
(including 12-month make-whole interest payment) and (c) all liquidated damages and other amounts due in respect of the Debenture.

 

“Optional
Redemption Date” shall have the meaning set forth in Section 6(a).

 

“Optional
Redemption Notice” shall have the meaning set forth in Section 6(a).

 

“Optional
Redemption Notice Date” shall have the meaning set forth in Section 6(a).

 

“Optional
Redemption Period” shall have the meaning set forth in Section 6(a).

 

“Original
Issue Date” means the date of the first issuance of the securities for which this Debenture was exchanged pursuant to
the Exchange Agreement, regardless of any transfers of those securities or any Debenture and regardless of the number of instruments
which may be issued to evidence those securities or such Debenture.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Required
Minimum” means, the product of 400% of the maximum aggregate number of shares of Common Stock then issued or potentially
issuable upon conversion in full of all Debentures (including Conversion Shares issuable as payment of interest on the Debentures),
ignoring any conversion or exercise limits set forth therein.

 

    	6

    	 

    

 

“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.

 

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

 

“Security
Agreement” means the Security Agreement, dated the date hereof, among the Company and the Holder.

 

“Security
Documents” shall mean the Security Agreement, and any other documents and filing required thereunder in order to grant
the Holder a first priority security interest in the assets of the Company as provided in the Security Agreement, including all
UCC-1 filing receipts.

 

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

 

“Successive
Release Amount” shall have the meaning set forth in Section 9(b).

 

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

 

“Termination
Fee” shall have the meaning set forth in Section 9(d).

 

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

 

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

 

“Transaction
Documents” means the Debentures, the Security Agreement, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer
Agent” means American Registrar & Transfer Co., 1234 W South Jordan Pkwy Ste B3, South Jordan, UT 84095, and any
successor transfer agent of the Company.

 

“Variable
Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A)
at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices
of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B)
with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including,
but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price.

 

    	7

    	 

    

 

“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 OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by 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
Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Section
2. Interest; Prepayment.

 

a)
Payment of Interest in Cash or Kind; Notice; Interest Calculations and Late Fee.

 

i.
The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture
at the rate of 7.5% per annum, payable on each Conversion Date (as to interest accrued and payable, including pursuant to Section
2(b) below, on the principal amount subject to such conversion) and on the Maturity Date (each such date, an “Interest
Payment Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the
next succeeding Business Day), in cash or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock at the Interest Conversion Rate (the dollar amount to be paid in shares, the “Interest Share Amount”)
or a combination thereof; provided, however, that payment in shares of Common Stock may only occur if (i) there
is no existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute
an Event of Default during the 5 Trading Days immediately prior to the Interest Payment Date (the “Interest Notice Period”),
(ii) the Company shall have given the Holder notice in accordance with the notice requirements set forth below and (iii) as to
such Interest Payment Date, the Company shall have delivered to the Holder’s account with The Depository Trust Company a
number of shares of Common Stock to be applied against such Interest Share Amount equal to the quotient of (x) the applicable
Interest Share Amount divided by (y) the lesser of the (i) then Conversion Price and (ii) the Interest Conversion Rate assuming
for such purposes that the Interest Payment Date is the Trading Day immediately prior to the commencement of the Interest Notice
Period (the “Interest Conversion Shares”).

 

    	8

    	 

    

 

ii.
Company’s Election to Pay Interest in Cash or Kind. Subject to the terms and conditions herein, the decision whether
to pay interest hereunder in cash, shares of Common Stock or a combination thereof shall be at the sole discretion of the Company.
Prior to the commencement of any Interest Notice Period, the Company shall deliver to the Holder a written notice of its election
to pay interest hereunder on the applicable Interest Payment Date either in cash, shares of Common Stock or a combination thereof
and the Interest Share Amount as to the applicable Interest Payment Date, provided that the Company may indicate in such notice
that the election contained in such notice shall apply to future Interest Payment Dates until revised by a subsequent notice.
During any Interest Notice Period, the Company’s election (whether specific to an Interest Payment Date or continuous) shall
be irrevocable as to such Interest Payment Date. Subject to the aforementioned conditions, failure to timely deliver such written
notice to the Holder shall be deemed an election by the Company to pay the interest on such Interest Payment Date in cash. At
any time the Company delivers a notice to the Holder of its election to pay the interest in shares of Common Stock, the Company
shall timely file a prospectus supplement pursuant to Rule 424 disclosing such election. The aggregate number of shares of Common
Stock otherwise issuable to the Holder on an Interest Payment Date shall be reduced by the number of Interest Conversion Shares
previously issued to the Holder in connection with such Interest Payment Date.

 

iii.
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 Exchange 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
(other than the Interest Conversion Shares issued prior to an Interest Notice Period) shall otherwise occur pursuant to Section
4(c)(ii) herein and, solely for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion
Date. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding
registration and transfers of this Debenture (the “Debenture Register”).

 

    	9

    	 

    

 

iv.
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. Notwithstanding anything to
the contrary contained herein, if, on any Interest Payment Date the Company has elected to pay accrued interest in the form of
Common Stock but the Company is not permitted to pay accrued interest in Common Stock because it fails to satisfy the conditions
for payment in Common Stock set forth in Section 2(a) herein, then, at the option of the Holder, the Company, in lieu of delivering
either shares of Common Stock pursuant to this Section 2 or paying the regularly scheduled interest payment in cash, shall deliver,
within three (3) Trading Days of each applicable Interest Payment Date, an amount in cash equal to the product of (x) the number
of shares of Common Stock otherwise deliverable to the Holder in connection with the payment of interest due on such Interest
Payment Date multiplied by (y) the highest VWAP during the period commencing on the Interest Payment Date and ending on the Trading
Day prior to the date such payment is actually made. If any Interest Conversion Shares are issued to the Holder in connection
with an Interest Payment Date and are not applied against an Interest Share Amount, then the Holder shall promptly return such
excess shares to the Company.

 

b)
Interest Make Whole. In the event that this Debenture is converted or redeemed (including via An Event of Default) prior
to the Maturity Date, the Company shall pay to the Holder, in addition to any other amounts then owed, in cash upon such conversion
or redemption, an amount in interest equal to the amount of interest that would otherwise have been payable if this Debenture
had been held until the Maturity Date.

 

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

 

Section
3. Registration of Transfers and Exchanges.

 

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

 

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

 

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

 

    	10

    	 

    

 

Section
4. Conversion.

 

a)
Voluntary Conversion. At any time until this Debenture is no longer outstanding, this Debenture shall be convertible, in
whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion
limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion,
the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein
the principal amount of this Debenture to be converted, accrued but unpaid interest thereon (whether paid in cash or Interest
Conversion Shares) and the date on which such conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, 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 Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain
records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to
any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. The Holder, and any assignee
by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion
of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated
on the face hereof.

 

b)
Conversion Price; Alternate Conversion Price.

 

i.
Conversion Price. The conversion price in effect on any Conversion Date before December 15, 2017 shall be equal to $0.12,
subject to adjustment herein (the “Initial Conversion Price”). The conversion price in effect on any Conversion
Date after December 15, 2017 shall be equal to the lesser of (A) $0.20, subject to adjustment herein and (B) 60% of the lowest
trading price of the Common Stock on the Trading Market in the ten (10) Trading Days prior to the date of conversion (the “Alternate
Conversion Price”).

 

ii.
Alternate Conversion Price Upon an Event of Default. At any time after the occurrence of an Event of Default which has
not been cured within 10 Trading Days, the Holder may, at the Holder’s option, convert the outstanding Principal Amount
plus any liquidated damages into shares of Common Stock at price per share equal to 55% of the lowest trading price for the thirty
(30) Trading Days immediately prior to date of conversion (the “Event of Default Conversion Price”, and together
with the Initial Conversion Price and the Alternate Conversion Price, the “Conversion Price”).

 

    	11

    	 

    

 

c)
Mechanics of Conversion.

 

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

 

ii.
Delivery of Conversion Shares Upon Conversion. Not later than the earlier of (i) three (3) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares which, on or after
the six month anniversary of the Original Issue Date, shall be free of restrictive legends and trading restrictions representing
the number of Conversion Shares being acquired upon the conversion of this Debenture (including, if the Company has given continuous
notice pursuant to Section 2(b) for payment of interest in shares of Common Stock at least 20 Trading Days prior to the date on
which the Notice of Conversion is delivered to the Company, shares of Common Stock representing the payment of accrued interest
otherwise determined pursuant to Section 2(a) but assuming that the Interest Notice Period is the 20 Trading Days period immediately
prior to the date on which the Notice of Conversion is delivered to the Company and excluding for such issuance the condition
that the Company deliver Interest Conversion Shares as to such interest payment prior to the commencement of the Interest Notice
Period) and (B) a bank check in the amount of accrued and unpaid interest (if the Company has elected or is required to pay accrued
interest in cash). On or after the six month anniversary of the Original Issue Date the Company shall deliver any Conversion Shares
required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with
respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.

 

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

 

    	12

    	 

    

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In
the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company
may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety
bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject
to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute
and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction,
the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for
any reason to deliver to the Holder such 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 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.

 

    	13

    	 

    

 

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

 

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 at least a number of shares equal to the Required Minimum. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully
paid and nonassessable.

 

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

 

    	14

    	 

    

 

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

 

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

 

    	15

    	 

    

 

Section
5. Certain Adjustments.

 

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

 

b)
Subsequent Equity Sales. If, at any time while this Debenture is outstanding, the Company or any Subsidiary, as applicable,
sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces
any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower than the then Initial 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 Initial Conversion Price, such issuance shall be deemed to have occurred for less than the Initial
Conversion Price on such date of the Dilutive Issuance), then the Initial 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, 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.

 

    	16

    	 

    

 

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

 

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

 

    	17

    	 

    

 

e)
Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange
for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard
to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with
the same effect as if such Successor Entity had been named as the Company herein.

 

    	18

    	 

    

 

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

 

g)
Notice to the Holder.

 

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

 

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

 

    	19

    	 

    

 

Section
6. Redemption.

 

a)
Optional Redemption at Election of Company. Subject to the provisions of this Section 6(a), at any time after the Exchange
Date, the Company may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice
is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem
some or all of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption
Amount on the 5th Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption
Date”, such 5 Trading Day period, the “Optional Redemption Period” and such redemption, the “Optional
Redemption”). The Optional Redemption Amount is payable in full on the Optional Redemption Date. The Company may only
effect an Optional Redemption if there is no existing Event of Default and no existing event which, with the passage of time or
the giving of notice, would constitute an Event of Default, during the Optional Redemption period. If such condition shall cease
to be satisfied at any time during the Optional Redemption Period, then the Holder may elect to nullify the Optional Redemption
Notice by notice to the Company within 3 Trading Days after the first day on which any such condition has not been met in which
case the Optional Redemption Notice shall be null and void, ab initio. The Company covenants and agrees that it will honor
all Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date all amounts owing
thereon are due and paid in full.

 

b)
Optional Redemption at Election of Holder. From the date hereof until such time as this Debenture is no longer outstanding,
if the Company raises cash proceeds from an equity or debt financing, the Company shall immediately provide notice of such financing
to the Holder, including the gross proceeds of such financing. Thereafter, the Holder may deliver a notice to the Company (a “Holder
Redemption Notice” and the date such notice is deemed delivered hereunder, the “Holder Redemption Notice Date”)
of its irrevocable election to require the Company to redeem some or all of the then outstanding principal amount of this Debenture
for cash in an amount up to the Holder Redemption Amount on the 5th Trading Day following the Holder Redemption Notice
Date (such date, the “Holder Redemption Date”, such 5 Trading Day period, the “Holder Redemption Period”
and such redemption, the “Holder Redemption”). The Holder Redemption Amount is payable in full on the Holder
Redemption Date. Notwithstanding the foregoing, the Company shall be permitted to raise an aggregate of $500,000 in one or more
equity or debt financings before the Holder shall be permitted to require the Company to redeem its Debenture in accordance with
this Section 6(b).

 

c)
Redemption Procedure. The payment of cash pursuant to an Optional Redemption or Holder Redemption shall be payable on the
Optional Redemption Date or Holder Redemption Date, as applicable. If any portion of the payment pursuant to an Optional Redemption
or Holder Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest
rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding
anything herein contained to the contrary, if any portion of the Optional Redemption Amount or Holder Redemption Amount remains
unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such
Optional Redemption or Holder Redemption, ab initio, and, with respect to the Company’s failure to honor the Optional
Redemption, the Company shall have no further right to exercise such Optional Redemption. The Holder may elect to convert the
outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this
Section 6 by the delivery of a Notice of Conversion to the Company.

 

Section
7. Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the Agent shall have otherwise
given prior written consent, in the event the Agent , the Company shall not, and shall not permit any of the Subsidiaries to,
directly or indirectly:

 

a)
enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but
not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom;

 

b)
enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

    	20

    	 

    

 

c)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;

 

d)
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock or Common Stock Equivalents other than as to (i) the Conversion Shares or Warrant Shares as permitted or required under
the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors
of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors during
the term of this Debenture;

 

e)
repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debenture, other than regularly
scheduled principal and interest payments as such terms are in effect as of the Exchange Date (which shall include the debentures
issued to the Holder pursuant to a securities purchase agreement of even date herewith), provided that such payments shall not
be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur;

 

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

 

g)
issue any Common Stock or Common Stock Equivalents pursuant to Section 3(a)(9) (except such transaction exclusively with the original
purchasers of the securities being exchanged) or Section 3(a)(10) of the Securities Act;

 

h)
transfer any assets of the Company or any domestic Subsidiary to a third party (other than in the ordinary course of business);

 

i)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with
the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested
directors of the Company (even if less than a quorum otherwise required for board approval);

 

j)
authorize, create, modify or amend any now-existing or future-created class of equity, including series of common stock other
than the Common Stock or preferred stock of the Company; or

 

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

 

    	21

    	 

    

 

Section
8. Events of Default.

 

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

 

i.
any default in the payment of (A) the principal amount of the Debenture or (B) interest, liquidated damages and other amounts
owing to the Holder on the Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise) 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 Debenture, including, but not limited
to, any failure to conduct a Holder Redemption in accordance with Section 6 and any failure to remain current with respect to
Transfer Agent and legal fees relating to legal transfer and legend removal of the Securities (other than a breach by the Company
of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (xi) below),
which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure
sent by the Holder to the Company and (B) 10 Trading Days after the Company has become or should have become aware of such failure;

 

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

 

iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder 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 (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

vi.
the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured
or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $150,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

    	22

    	 

    

 

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

 

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

 

ix.
the Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the 5rd Trading Day after a
Conversion Date pursuant to Section 4(c);

 

x.
any Person shall breach any agreement delivered to the initial Holder pursuant to the Transaction Documents;

 

xi.
the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a “chill” (i.e., the Depository Trust Company announces that it
will not accept the deposit of shares of Common Stock into its participants’ street name accounts);

 

xii.
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 $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days; or

 

xiii.
The Company shall fail to maintain sufficient reserves shares equal to or above the Required Minimum.

 

b)
Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus
accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall
become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days
after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on
this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable
law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed
by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives,
any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such
acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights
as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such
rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

    	23

    	 

    

 

Section
9. [RESERVED]

 

Section
10. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by email attachment, or sent
by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other
facsimile number, email address, or address as the Company may specify for such purposes by notice to the Holder delivered in
accordance with this Section 10(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or email address or address of the Holder appearing on the books
of the Company, or if no such facsimile number or email attachment or address appears on the books of the Company, at the principal
place of business of such Holder, as set forth in the Exchange Agreement. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service
or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

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

 

    	24

    	 

    

 

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

 

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

 

e)
Waiver; Amendment. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate
as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture.
The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or
any other term of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing. Any provision
of this Debenture may be waived by the Holder, which waiver shall be binding on all successors and assigns. Any provision of this
Debenture may be amended by a written instrument executed by the Company and the Holder, which amendment shall be binding on all
successors and assigns.

 

    	25

    	 

    

 

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

 

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

 

    	26

    	 

    

 

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

 

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

 

j)
Secured Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and each
Subsidiary pursuant to the Security Agreement, dated as of May 9, 2017 between the Company, the Subsidiaries of the Company and
the Secured Parties (as defined therein).

 

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

 

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

 

(Signature
Pages Follow)

 

    	27

    	 

    

 

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

 

	 	Advanced
    medical Isotope Corporation
	 	 
	 	By:	 
	 	Name:
    	Michael
    Korenko
	 	Title:
    	CEO

 

    	28

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Original Issue Discount Senior Secured Convertible Debenture due May
__, 2018 of Advanced Medical Isotope Corporation, a Delaware corporation (the “Company”), into shares of common
stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below.
If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

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

 

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

 

Date
of Conversion:

 

Conversion
Price:

 

Principal
Amount of Debenture to be Converted:

 

Number
of shares of Common Stock to be issued:

 

Remaining
Principal Balance Due After This Conversion:

 

Signature:

 

Name:

 

DWAC
Instructions:

 

Broker
No:

Account
No:

 

    	29SECURITY
AGREEMENT

 

This
SECURITY AGREEMENT, dated as of May ____, 2017 (this “Agreement”), is among Advanced Medical Isotope Corporation,
a Delaware corporation (the “Debtor”) and each holder of the Debtor’s 7.5% Original Issue Discount Senior
Secured Convertible Debenture due twelve months following its issuance, in the original aggregate principal amount of $___________
(the “Debenture”) signatory hereto, its endorsees, transferees and assigns (collectively, the “Secured
Parties”), which Secured Parties as of the date hereof are set forth on Schedule SP attached hereto.

 

W
I T N E S S E T H:

 

WHEREAS,
pursuant to the Exchange Agreement (as defined in the Debenture), the Secured Parties have severally agreed to extend the loans
to the Debtor evidenced by the Debenture; and

 

WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the Debenture, the Debtor has agreed to execute and deliver
to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party (and also
pari passu with the holders of certain 7.5% Original Issue Discount Senior Secured Convertible Debenture issued by the Debtor
on or about May __, 2017 pursuant to a securities purchase agreement (hereinafter, referred to as “Additional Secured
Parties”)) and through the Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtor
to secure the prompt payment, performance and discharge in full of all of the Debtor’s obligations under the Debenture.

 

NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.
Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.
Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”,
“chattel paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.

 

    	 	1	 

    	 		 

    

 

(a)
“Collateral” means the collateral in which the Agent on behalf of the Secured Parties is granted a security
interest by this Agreement and which shall include the following personal property of the Debtor, whether presently owned or existing
or hereafter acquired or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the
sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith:

 

(i)
All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind
and nature and wherever situated, together with all documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items
used and useful in connection with any Debtor’s businesses and all improvements thereto; and (B) all inventory;

 

(ii)
All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by the Debtor), computer software development
rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual Property and
income tax refunds;

 

(iii)
All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;

 

(iv)
All documents, letter-of-credit rights, instruments and chattel paper;

 

(v)
All commercial tort claims;

 

(vi)
All deposit accounts and all cash (whether or not deposited in such deposit accounts);

 

(vii)
All investment property;

 

(viii)
All supporting obligations; and

 

(ix)
All files, records, books of account, business papers, and computer programs; and

 

(x)
the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.

 

Without
limiting the generality of the foregoing, the “Collateral” shall include any shares of capital stock
and/or other equity interests of any other direct or indirect subsidiary, whether now in existence or formed in the future,
of the Debtor, and all certificates representing such shares and/or equity interests and all rights, options, warrants,
stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or
exchanged for, any of the foregoing and all rights arising under or in connection with the such securities, including, but
not limited to, all dividends, interest and cash.

 

    	 	2	 

    	 		 

    

 

Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the
extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in
the proceeds of such asset.

 

(b)
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to
intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation,
(i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright
Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and
extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations
and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto,
(iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v)
all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii)
all causes of action for infringement of the foregoing.

 

(c)
“Majority in Interest” means, at any time of determination, the majority in interest (based on then-outstanding
principal amount of the Debenture at the time of such determination) of the Secured Parties.

 

(d)
“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment
duly executed and such other instruments or documents as the Agent (as that term is defined below) may reasonably request.

 

    	 	3	 

    	 		 

    

 

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

 

(f)
“Organizational Documents” means with respect to the Debtor, the documents by which the Debtor was organized
(such as a certificate of incorporation, certificate of limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal
governance of the Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).

 

(g)
“Pledged Interests” shall have the meaning ascribed to such term in Section 4(i).

 

(h)
“UCC” means the Uniform Commercial Code of the State of New York and or any other applicable law of any state
or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time.
It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral”
will be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that
broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.

 

    	 	4	 

    	 		 

    

 

2. Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the
Debenture and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the
Obligations, the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Agent, on behalf
of the Secured Parties, a security interest in and to, a lien upon and a right of set-off against all of their respective
right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security Interest”
and, collectively, the “Security Interests”).

 

3.
Delivery of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, the Debtor shall deliver
or cause to be delivered to the Agent any and all certificates and other instruments or documents representing any of the other
Collateral, in each case, together with all Necessary Endorsements.

 

4.
Representations, Warranties, Covenants and Agreements of the Debtor. Except as set forth under the corresponding section
of the disclosure schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:

 

(a)
The Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Debtor of this
Agreement and the filings contemplated therein have been duly authorized by all necessary corporate action on the part of the
Debtor and no further action is required by the Debtor. This Agreement has been duly executed by the Debtor. This Agreement constitutes
the legal, valid and binding obligation of the Debtor, enforceable against the Debtor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating
to or affecting the rights and remedies of creditors and by general principles of equity.

 

(b)
The Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, the Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens
(as defined in the Debenture). Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee,
bailee, warehouseman, agent or processor.

 

(c)
Except for Permitted Liens (as defined in the Debenture) and except as set forth on Schedule B attached hereto, the
Debtor is the sole owner of the Collateral (except for non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights or claims, and are fully authorized to grant
the Security Interests. Except as set forth on Schedule C attached hereto, there is not on file in any governmental or
regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or
any notice of any of the foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this
Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached hereto and except
pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtor shall not execute and shall not
knowingly permit to be on file in any such office or agency any other financing statement or other document or instrument
(except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).

 

    	 	5	 

    	 		 

    

 

(d)
No written claim has been received that any Collateral or the Debtor’s use of any Collateral violates the rights of any
third party. There has been no adverse decision to the Debtor’s claim of ownership rights in or exclusive rights to use
the Collateral in any jurisdiction or to the Debtor’s right to keep and maintain such Collateral in full force and effect,
and there is no proceeding involving said rights pending or, to the best knowledge of the Debtor, threatened before any court,
judicial body, administrative or regulatory agency, arbitrator or other governmental authority.

 

(e)
The Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account
and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken
to perfect the Security Interests to create in favor of the Agent, on behalf of the Secured Parties, a valid, perfected and continuing
perfected first priority lien in the Collateral.

 

(f)
This Agreement creates in favor of the Agent, on behalf of the Secured Parties, a valid security interest in the Collateral, subject
only to Permitted Liens (as defined in the Debenture) securing the payment and performance of the Obligations. Upon making the
filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may
be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected. Except for the filing of the
Uniform Commercial Code financing statements referred to in the immediately following paragraph, the recordation of the Intellectual
Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and copyright applications in the United
States Copyright Office referred to in paragraph (mm), the execution by all applicable parties and delivery of deposit account
control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtor,
and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or
protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance
of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the
enforcement of the rights of the Agent and the Secured Parties hereunder.

 

    	 	6	 

    	 		 

    

 

(g)
The Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests,
with the proper filing and recording agencies in any jurisdiction deemed proper by it.

 

(h)
The execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational
Documents of the Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to the Debtor or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
the Debtor’s debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset
of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors
of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.

 

(i)
The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the
“Pledged Interests”) by their express terms do not provide that they are securities governed by Article 8 of
the UCC and are not held in a securities account or by any financial intermediary.

 

(j)
Except for Permitted Liens (as defined in the Debenture), the Debtor shall at all times maintain the liens and Security Interests
provided for hereunder as valid and perfected first priority liens and security interests in the Collateral in favor of the Agent,
on behalf of the Secured Parties, until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section
14 hereof. The Debtor hereby agrees to defend the same against the claims of any and all persons and entities. The Debtor shall
safeguard and protect all Collateral for the account of the Agent, on behalf of the Secured Parties. At the request of the Agent,
the Debtor will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time one or more financing
statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided
for herein. Without limiting the generality of the foregoing, the Debtor shall pay all fees, taxes and other amounts necessary
to maintain the Collateral and the Security Interests hereunder, and the Debtor shall obtain and furnish to the Agent from time
to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of
the Security Interests hereunder.

 

(k)
The Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except
for non-exclusive licenses granted by the Debtor in its ordinary course of business and sales of inventory by the Debtor in its
ordinary course of business) without the prior written consent of the Agent.

 

    	 	7	 

    	 		 

    

 

(l)
The Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order
and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

 

(m)
The Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including
Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities
of established reputation having similar properties similarly situated and in such amounts as are customarily carried under
similar circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in
any event sufficient to cover the full replacement cost thereof. The Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named
as lender loss payee and additional insured under each such insurance policy; (b) if such insurance be proposed to be
cancelled or materially changed for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation
or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent of such notice,
unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the right
(but no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from
the insurer of such default. If no Event of Default (as defined in the Debenture) exists and if the proceeds arising out of
any claim or series of related claims do not exceed $100,000, loss payments in each instance will be applied by the Debtor to
the repair and/or replacement of property with respect to which the loss was incurred to the extent reasonably feasible, and
any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to the Debtor; provided, however,
that payments received by the Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any
occurrence or series of related occurrences shall be paid to the Agent on behalf of the Secured Parties and, if received by
the Debtor, shall be held in trust for the Secured Parties and immediately paid over to the Agent unless otherwise directed
in writing by the Agent. Copies of such policies or the related certificates, in each case, naming the Agent as lender loss
payee and additional insured shall be delivered to the Agent at least annually and at the time any new policy of insurance is
issued.

 

(n)
The Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail,
of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect
on the value of the Collateral or on the Secured Parties’ security interest, through the Agent, therein.

 

(o)
The Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and assurances and take such further action as the Agent
may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Agent’s
security interest in the Collateral including, without limitation, if applicable, the execution and delivery of a separate
security agreement with respect to the Debtor’s Intellectual Property (“Intellectual Property Security
Agreement”) in which the Agent, on behalf of the Secured Parties, has been granted a security interest hereunder,
substantially in a form reasonably acceptable to the Agent, which Intellectual Property Security Agreement, other than as
stated therein, shall be subject to all of the terms and conditions hereof.

 

    	 	8	 

    	 		 

    

 

(p)
The Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and
upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the
Agent from time to time.

 

(q)
The Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the Collateral.

 

(r)
The Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any other information received by the Debtor that may materially
affect the value of the Collateral, the Security Interest or the rights and remedies of the Agent or the Secured Parties hereunder.

 

(s)
All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of the Debtor with respect to
the Collateral is accurate and complete in all material respects as of the date furnished.

 

(t)
The Debtor shall at all times preserve and keep in full force and effect their respective valid existence and good standing and
any rights and franchises material to its business.

 

(u)
The Debtor will not change its name, type of organization, jurisdiction of organization, organizational identification number
(if it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days
prior written notice to the Secured Parties of such change and, at the time of such written notification, the Debtor provides
any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted
and evidenced by this Agreement.

 

(v)
Except in the ordinary course of business, the Debtor may not consign any of its inventory or sell any of its inventory on bill
and hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not
be unreasonably withheld.

 

    	 	9	 

    	 		 

    

 

(w)
The Debtor may not relocate its chief executive office to a new location without providing 30 days prior written notification
thereof to the Agent and each of the Secured Parties and so long as, at the time of such written notification, the Debtor provides
any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted
and evidenced by this Agreement.

 

(x)
The Debtor was organized and remains organized solely under the laws of the state set forth next to the Debtor’s name in
Schedule D attached hereto, which Schedule D sets forth the Debtor’s organizational identification number
or, if the Debtor does not have one, states that one does not exist.

 

(y)
(i) The actual name of the Debtor is the name set forth in Schedule D attached hereto; (ii) the Debtor does not have any
trade names except as set forth on Schedule E attached hereto; (iii) the Debtor has not used any name other than that stated
in the preamble hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into the
Debtor or been acquired by the Debtor within the past five years except as set forth on Schedule E.

 

(z)
At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the Debtor shall deliver such Collateral
to the Agent.

 

(aa)
The Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the
Pledged Interests consistent with the terms of this Agreement without the further consent of the Debtor as contemplated by Section
8-106 (or any successor section) of the UCC. Further, the Debtor agrees that it shall not enter into a similar agreement (or one
that would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.

 

(bb)
The Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is
not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest
created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the Debtor shall cause the
underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

 

(cc)
If there is any investment property or deposit account included as Collateral that can be perfected by “control” through
a deposit account control agreement, the Debtor shall cause such a deposit account control agreement, in form and substance in
each case satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties as of
the Closing Date or such later date as the Agent may direct the Debtor.

 

    	 	10	 

    	 		 

    

 

(dd)
To the extent that any Collateral consists of letter-of-credit rights, the Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.

 

(ee)
To the extent that any Collateral is in the possession of any third party, the Debtor shall join with the Agent in notifying such
third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

 

(ff)
If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor shall promptly notify the Agent and other
Secured Parties in a writing signed by the Debtor of the particulars thereof and grant to the Agent, on behalf of the Secured
Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance satisfactory to the Agent.

 

(gg)
The Debtor shall immediately provide written notice to the Agent and other Secured Parties of any and all accounts which arise
out of contracts with any governmental authority and, to the extent necessary to perfect or continue the perfected status of the
Security Interests in such accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such
accounts and cooperate with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims
Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof.

 

(hh)
The Debtor does not currently have any direct or indirect subsidiaries. Each Debtor shall cause each subsidiary of such Debtor
formed after the date hereof to immediately become a party hereto (an “Additional Debtor”), by executing and delivering
an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the provisions hereof
applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and
documentation as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the Additional Debtor shall be
and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and
to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references
herein to the “Debtors” shall be deemed to include each Additional Debtor.

 

    	 	11	 

    	 		 

    

 

(ii)
Without limiting the generality of the other obligations of the Debtor hereunder, the Debtor shall promptly (i) cause to be
registered at the United States Copyright Office all of its material copyrights, (ii) cause the security interest
contemplated hereby with respect to all Intellectual Property registered at the United States Copyright Office or United
States Patent and Trademark Office to be duly recorded at the applicable office, and (iii) give the Agent notice whenever it
acquires (whether absolutely or by license) or creates any additional material Intellectual Property.

 

(jj)
The Debtor will from time to time, promptly execute and deliver all such further instruments and documents, and take all such
further action as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent, on behalf of the Secured Parties, to exercise and enforce
the rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

 

(kk)
Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by the Debtor as of the date hereof. Schedule F lists all material licenses in favor
of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents
and trademarks of the Debtor have been duly recorded at the United States Patent and Trademark Office and all material copyrights
of the Debtor have been duly recorded at the United States Copyright Office.

 

(ll)
Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on
any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state
or local statute or rule in respect of such Collateral.

 

5.
Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership
interests upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock
or assets of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the
enforcement of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion
rights notwithstanding any provisions in the Organizational Documents or agreements to which the Debtor is subject or to which
the Debtor is party.

 

6.
Defaults. The following events shall be “Events of Default”:

 

(a)
The occurrence of an Event of Default (as defined in the Debenture) under the Debenture;

 

(b)
Any representation or warranty of the Debtor in this Agreement shall prove to have been incorrect in any material respect when
made;

 

    	 	12	 

    	 		 

    

 

(c)
The failure by the Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to the Debtor
of notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within
such time frame and the Debtor is using best efforts to cure same in a timely fashion; or

 

(d)
If any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having
jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that the
Debtor has any liability or obligation purported to be created under this Agreement.

 

7.
Duty To Hold In Trust. Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt
of any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Debenture
or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Agent for the benefit of the Secured Parties and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Agent for the benefit of the Secured Parties pro-rata in proportion to their respective then-currently
outstanding principal amount of Debenture for application to the satisfaction of the Obligations.

 

8.
Rights and Remedies Upon Default.

 

(a)
Upon the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have
the right to exercise all of the remedies conferred hereunder and under the Debenture, and the Agent shall have all the rights
and remedies of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have
the following rights and powers:

 

(i)
The Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor
shall assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at
the Debtor’s premises or elsewhere, and make available to the Agent, without rent, all of the Debtor’s respective
premises and facilities for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable
form.

 

(ii)
Upon notice to the Debtor by the Agent, all rights of the Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise
be authorized to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of
the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise
in such Agent’s discretion all voting rights pertaining thereto.

 

    	 	13	 

    	 		 

    

 

Without
limiting the generality of the foregoing, Agent shall have the right (but not the obligation) to exercise all rights with respect
to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to vote and/or to exchange, at
its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization
or other readjustment concerning or involving the Collateral or the Debtor or any of its direct or indirect subsidiaries.

 

(iii)
The Agent shall have the right to operate the business of the Debtor using the Collateral and shall have the right to assign,
sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either
with or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and
at such time or times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
the Debtor or right of redemption of the Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or
other transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of the Debtor, which are hereby waived and released.

 

(iv)
The Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtor’s rights against such
account debtors and obligors.

 

(v)
The Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other
person or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.

 

(vi)
The Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Debtor at the
United States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any
purchaser of any Collateral.

 

    	 	14	 

    	 		 

    

 

(b)
The Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not
be considered adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the
Collateral without giving any warranties and may specifically disclaim such warranties. If the Agent sells any of the
Collateral on credit, the Debtor will only be credited with payments actually made by the purchaser. In addition, the Debtor
waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s
rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights and remedies with respect thereto.

 

(c)
For the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, the Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to the Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter acquired by the Debtor, and wherever the same
may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof.

 

9.
Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from
payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes,
fees and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses
incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties and Additional Secured
Parties (based on then- outstanding principal amounts of Debenture at the time of any such determination), and to the payment
of any other amounts required by applicable law, after which the Secured Parties and Additional Secured Parties shall pay to the
Debtor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient
to pay all amounts to which the Secured Parties and Additional Secured Parties are legally entitled, the Debtor will be liable
for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable
law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties and Additional
Secured Parties to collect such deficiency. To the extent permitted by applicable law, the Debtor waives all claims, damages and
demands against the Secured Parties and Additional Secured Parties arising out of the repossession, removal, retention or sale
of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties and Additional Secured
Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

 

    	 	15	 

    	 		 

    

 

10. Costs
and Expenses. The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with
any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably
required by the Agent. The Debtor shall also pay all other claims and charges which in the reasonable opinion of the Agent is
reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor will
also, upon demand, pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, may incur in
connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security
Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts
and agents, which the Agent, for the benefit of the Secured Parties, and the Secured Parties may incur in connection with (i)
the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization
upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the
Debenture. Until so paid, any fees payable hereunder shall be added to the principal amount of the Debenture and shall bear
interest at the Default Rate.

 

11.
Responsibility for Collateral. The Debtor assume all liabilities and responsibility in connection with all Collateral,
and the Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any
Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral
or to preserve any rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral
for sale, and (b) the Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to
be observed or performed by the Debtor thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability
under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured
Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent or any
Secured Party may be entitled at any time or times.

 

12. Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtor hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debenture or any
agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Debenture or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or
consent to departure from any other collateral for, or any guarantee, or any other security, for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance
claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to the Debtor, or a discharge of all or any part of the Security
Interests granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties
shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute
of limitations or bankruptcy. The Debtor expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received
by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable
preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Parties, then, in any such event, the Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or
cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and
provisions hereof. The Debtor waives all right to require the Secured Parties to proceed against any other person or
entity or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any
other remedy. The Debtor waives any defense arising by reason of the application of the statute of limitations to any
obligation secured hereby.

 

    	 	16	 

    	 		 

    

 

13.
Term of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the
Debenture have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that
all indemnities of the Debtor contained in this Agreement (including, without limitation, Annex A hereto) shall survive and remain
operative and in full force and effect regardless of the termination of this Agreement.

 

14.
Power of Attorney; Further Assurances.

 

(a)
The Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors
or assigns with full power of substitution, as the Debtor’s true and lawful attorney-in-fact, with power, in the name
of the Agent or the Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note,
checks, drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing
statement pursuant to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on
or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in
respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual
Property; and (vi) generally, at the option of the Agent, and at the expense of the Debtor, at any time, or from time to
time, to execute and deliver any and all documents and instruments and to do all acts and things which the Agent deems
necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect
the intent of this Agreement and the Debenture all as fully and effectually as the Debtor might or could do, including,
without limitation, the filing, in its sole discretion, of one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral, which financing statements may (but need not) describe the Collateral as
“all assets” or “all personal property” or words of like import; and the Debtor hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be
outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the
Organizational Documents or other documents or agreements to which the Debtor is subject or to which the Debtor is a party.
Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default,
each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and
assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark
Office and the United States Copyright Office.

 

    	 	17	 

    	 		 

    

 

(b)
On a continuing basis, the Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C
attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as
reasonably requested by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Agent the grant or perfection of a perfected security interest
in all the Collateral under the UCC.

 

(c)
The Debtor hereby irrevocably appoints the Agent as the Debtor’s attorney- in-fact, with full authority in the place and
instead of the Debtor and in the name of the Debtor, from time to time in the Agent’s discretion, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any
of the Collateral without the signature of the Debtor where permitted by law, which financing statements may (but need not) describe
the Collateral as “all assets” or “all personal property” or words of like import, and ratifies all such
actions taken by the Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.

 

15.
Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of
the Exchange Agreement (as such term is defined in the Debenture).

 

16.
Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or
by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the
right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without
in any way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.

 

17. Appointment
of Agent. The Secured Parties hereby appoint Magna Equities II, LLC to act as their agent
(“Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. The
Agent shall have the rights, responsibilities and immunities set forth in Annex A hereto.

 

    	 	18	 

    	 		 

    

 

18.
Miscellaneous.

 

(a)
No course of dealing between the Debtor and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on
the part of the Secured Parties, any right, power or privilege hereunder or under the Debenture shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

 

(b)
All of the rights and remedies of the Agent, on behalf of the Secured Parties, with respect to the Collateral, whether established
hereby or by the Debenture or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.

 

(c)
This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment,
by the Debtor and the Agent (or, in the event that the Agent no longer holds the Debenture, in a written instrument signed by
the Debtor and the Majority in Interest), or, in the case of a waiver, by the party against whom enforcement of any such waived
provision is sought.

 

(d)
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.

 

(e)
No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

    	 	19	 

    	 		 

    

 

(f)
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtor
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other
than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Exchange
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”

 

(g)
Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.

 

(h)
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning
the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor agrees that all proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Debentures
(whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees
or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan.
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party 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 Agreement or the transactions contemplated hereby.

 

    	 	20	 

    	 		 

    

 

(i)
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the
original thereof.

 

(j)
The Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise
from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses
which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision
of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in the Debentures, the Exchange Agreement (as such term is defined in the Debentures) or any other agreement, instrument
or other document executed or delivered in connection herewith or therewith.

 

(k)
Nothing in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in the Debtor or
any if its direct or indirect subsidiaries that is a partnership or as a member in the Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations
under any partnership agreement or limited liability company agreement, as applicable, of the Debtor or any of its direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for the Debtor as a partner
or member, as applicable, pursuant hereto.

 

(l)
To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of the Debtor or any direct or indirect subsidiary of the Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtor hereby grants such consent and approval and
waive any such noncompliance with the terms of said documents.

 

[SIGNATURE
PAGES FOLLOW]

 

    	 	21	 

    	 		 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above
written.

 

ADVANCED
MEDICAL ISOTOPE CORPORATION

 

	By:	 	 
	Name: 	Michael Korenko	 
	Title: 	CEO	 

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	 	22	 

    	 		 

    

 

[SIGNATURE
PAGE OF HOLDERS TO ADMD SA]

 

Name
of Investing Entity: _________________________

 

Signature
of Authorized Signatory of Investing entity: _________________________

 

Name
of Authorized Signatory: _________________________

 

Title
of Authorized Signatory: __________________________

 

Signature
of Authorized Signatory of Investing entity: _________________________

 

Name
of Authorized Signatory: _________________________

 

Title
of Authorized Signatory: __________________________

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	 	23	 

    	 		 

    

 

ANNEX
A

to

SECURITY

AGREEMENT

 

THE AGENT

 

1.
Appointment. The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective
meanings provided in the Security Agreement to which this Annex A is attached (the “Agreement”)), by their
acceptance of the benefits of the Agreement, hereby designate Magna Equities II, LLC (“Agent”) as the Agent
to act as specified herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take
such action on its behalf under the provisions of the Agreement and any other Transaction Document (as such term is defined in
the Exchange Agreement) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated
to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.

 

2.
Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.
Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for
any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible
for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross
negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement
or any other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured Party; and nothing in the Agreement
or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of the Agreement or any other Transaction Document except as expressly set forth herein and therein.

 

3. Lack
of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and
affairs of the Debtor in connection with such Secured Party’s investment in the Debtor, the creation and continuance of
the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in
connection therewith, and (ii) its own appraisal of the creditworthiness of the Debtor, and of the value of the Collateral
from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide
any Secured Party with any credit, market or other information with respect thereto, whether coming into its possession
before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtor or
any Secured Party for any recitals, statements, information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of the Agreement or any other Transaction Document, or
for the financial condition of the Debtor or the value of any of the Collateral, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions or conditions of the Agreement or any other
Transaction Document, or the financial condition of the Debtor, or the value of any of the Collateral, or the existence or
possible existence of any default or Event of Default under the Agreement, the Debentures or any of the other Transaction
Documents.

 

    	 

    	 

    

 

4.
Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf
of all of the Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect
to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such
action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions
to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without
limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and
the Debtor shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to
the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected
to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.

 

5.
Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the
other Transaction Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining
to this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it.
Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the
Collateral exists or is owned by the Debtor or is cared for, protected or insured or that the liens granted pursuant to the Agreement
have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.

 

6. Indemnification. To
the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Debentures,
from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or under the Agreement or any other Transaction Document, or in any way relating to
or arising out of the Agreement or any other Transaction Document except for those determined by a final judgment (not
subject to further appeal) of a court of competent jurisdiction to have resulted solely from the Agent’s own gross
negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to
deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses
associated with taking such action.

 

    	 

    	 

    

 

7.
Resignation by the Agent.

 

(a)
The Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents
at any time by giving 30 days’ prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties.
Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.

 

(b)
Upon any such notice of resignation, the Secured Parties, acting by a Majority in Interest, shall appoint a successor Agent hereunder.

 

(c)
If a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtor and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable
by the Debtor on demand.

 

8.
Rights with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that
it shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant
to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent
or any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from
the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as
set forth in this Agreement and the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. After
any retiring Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex A shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00271-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00271-of-00352.parquet"}]]