Document:

THE ISSUE AND SALE OF
THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE NOT 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, THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. THIS
NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), ANDREW HUGHES,
A REPRESENTATIVE OF THE COMPANY WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON
REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). ANDREW HUGHES MAY BE REACHED AT TELEPHONE NUMBER (925) 400
– 4366. 

 

Original Issue Date: September 15, 2022

Original Principal Amount: $

Purchase Price: $

 

SENIOR UNSECURED
CONVERTIBLE NOTE

DUE March
15, 2024

 

THIS SENIOR UNSECURED CONVERTIBLE
NOTE is one of a series of duly authorized and validly issued Senior Unsecured Convertible Notes of AEye, Inc., a Delaware corporation
(the “Company”), having its principal place of business at One Park Place, Suite 200, Dublin, California 94568 designated
as its Senior Unsecured Convertible Note due March 15, 2024 (this note, the “Note” and, collectively with the other
notes of such series, the “Notes”).

 

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 March 15, 2024 (the “Maturity Date”) or such earlier date as this Note is required
or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal
amount of this Note in accordance with the provisions hereof. This Note is subject to the following additional provisions:

 

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

 

“Acceleration”
shall have the meaning set forth in Section 6(b)(iv).

 

“Acceleration
Amount” shall have the meaning set forth in Section 6(b)(iv).

 

“Acceleration
Conversion Price” means, with respect to any given Acceleration Date, the lower of (i) the Installment Conversion Price for
such Current Installment Date related to such Acceleration Date and (ii) the greater of (x) the Floor Price and (y) 95% of the lowest
VWAP during the five (5) consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Acceleration Date.
All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction
during any such measuring period.

 

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

 

    	 	 1	 

     

    

 

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

 

“Alternate
Consideration” shall have the meaning set forth in Section 9(a).

 

“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 sixty (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 sixty (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.

  

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

 

“Business Day”
means any day other than Saturday, Sunday or other day on which the Federal Bank of New York is closed.

 

“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 50% of the voting securities
of the Company (other than by means of conversion or exercise of the Notes and the Securities issued together with the Notes), (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 (and all of its Subsidiaries, taken as a whole) 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 Original Issue Date (or by those individuals who are serving as members of
the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of
Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or
by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

    	 	 2	 

     

    

 

“Conversion
Amount” means the sum of (A) the portion of the principal of this Note to be converted, redeemed or otherwise with respect to
which this determination is being made, (B) accrued and unpaid interest with respect to such principal of this Note, (C) the Make-Whole
Amount, if any, (D) accrued and unpaid Late Fees with respect to such principal of this Note, Make-Whole Amount and interest, and (E)
any other unpaid amounts pursuant to the Transaction Documents, if any.

 

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

 

“Conversion
Floor Price Condition” means that the relevant Acceleration Conversion Price or Installment Conversion Price, as applicable,
is less than the Floor Price.

 

“Conversion
Installment Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant
to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher of
(I) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Share Delivery Date and (II)
the applicable Installment Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered
(or to be delivered) to the Holder on the applicable Share Delivery Date with respect to such Installment Conversion from (II) the quotient
obtain by dividing (x) the applicable Installment Amount subject to such Installment Conversion, by (y) the applicable Installment Conversion
Price.

 

“Conversion
Price” means, as of any Conversion Date or other date of determination, $2.50, subject to adjustment as provided herein.

 

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

 

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

 

“Current Acceleration”
shall have the meaning set forth in Section 6(b)(iv).

 

“Current Installment
Date” shall have the meaning set forth in Section 6(b)(iv).

 

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

 

“Equity Conditions”
means, during the period in question, (a) the Company shall have duly honored all conversions and redemptions scheduled to occur or occurring
by virtue of one or more Conversion Notices of the Holder, if any, (b) the Company shall have paid all amounts owing to the Holder in
respect of this Note, (c)(i) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus
thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents (and the Company believes, in good
faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant
to the Transaction Documents (and shares issuable in lieu of cash payments of interest) may be resold pursuant to Rule 144 without volume
or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Company as set forth in
a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the Holder, (d) the Common Stock is trading
on the Principal Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such
Principal Market (and the Company believes, in good faith, that trading of the Common Stock on the Principal Market will continue uninterrupted
for the foreseeable future), (e) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock
for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) 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, (g) the issuance of the
shares in question (or, in the case of a Company Optional Redemption or Installment Redemption, the shares issuable upon conversion in
full of the Company Optional Redemption Amount or Installment Redemption Amount) to the Holder would not violate the limitations set forth
in Section 3(d) herein, (h) there is no pending or proposed Fundamental Transaction or Change of Control Transaction that would be required
to be disclosed under a current report on Form 8-K and has not been publicly disclosed,

 

    	 	 3	 

     

    

 

(i) the Holder is not in possession of any information
provided by the Company, any of its Subsidiaries, or any of their officers, directors, employees, agents or Affiliates, that constitutes,
or may constitute, material non-public information, (j) the Company has timely filed (subject to any applicable grace period) all of its
SEC Reports during the time period in question, (k) the daily VWAP of the Common Stock exceeds 110% of the Floor Price on the Principal
Trading Market during each Trading Day for the twenty (20) Trading Days prior to the applicable date in question and (l) the average daily
trading volume of the Common Stock on the Principal Trading Market during each Trading Day for the twenty (20) Trading Days prior to the
applicable date in question exceeds $500,000.

 

“Equity Conditions
Failure” means that on any day during the period commencing twenty (20) Trading Days prior to the applicable Installment Notice
Date through the later of the applicable Installment Date and the date on which the applicable shares of Common Stock are actually delivered
to the Holder, the Equity Conditions have not been satisfied (or waived in writing by the Holder).

 

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

 

“Exchange Cap
Allocation” shall have the meaning set forth in Section 4(d)(i).

 

“Exempt Issuance”
shall have the meaning set forth in the Purchase Agreement.

 

“Floor Price”
means $0.30 (or such lower amount as permitted, from time to time, by the Principal Trading Market), subject to adjustment for stock splits,
stock dividends, stock combinations, recapitalizations or other similar events.

 

“Fundamental
Transaction” shall have the meaning set forth in Section 9(a).

 

“Installment
Amount”means the sum of (A) (i) with respect to any Installment Date other than the Maturity Date, the lesser of (x) $700,000
and (y) the principal amount then outstanding under this Note as of such Installment Date, and (ii) with respect to the Installment Date
that is the Maturity Date, the principal amount then outstanding under this Note as of such Installment Date (in each case, as any such
Installment Amount may be reduced pursuant to the terms of this Note, whether upon conversion or redemption), (B) any Acceleration Amount
accelerated pursuant to Section 6(b)(iv) and included in such Installment Amount in accordance therewith and (C) in each case of clauses
(A) and (B) above, the sum of any accrued and unpaid interest as of such Installment Date under this Note, if any, and accrued and unpaid
Late Fees, if any, under this Note as of such Installment Date. In the event the Holder shall sell or otherwise transfer any portion
of this Note, the transferee shall be allocated a pro rata portion of the each unpaid Installment Amount hereunder.

 

“Installment
Conversion” shall have the meaning set forth in Section 6(b)(i).

 

“Installment
Conversion Amount” shall have the meaning set forth in Section 6(b)(i).

 

“Installment
Conversion Price” shall mean the lower of (i) the Conversion Price and (ii) 95% of the lowest VWAP in the five (5) Trading Days
immediately prior to each Conversion Date.

 

“Installment
Date” means (i) with respect to the first (1st) Installment Redemption, December 14, 2022, and (ii) with respect to all Installment
Redemptions subsequent to the first Installment Redemption, the first (1st) Trading Day of each month commencing on January
1, 2023, and terminating upon the full redemption of this Note.

 

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

 

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

 

“Installment
Notice Due Date” shall have the meaning set forth in Section 6(b)(i).

 

    	 	 4	 

     

    

 

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

 

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

 

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

 

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

 

“Interest Conversion
Price” shall mean the lesser of (x) the Conversion Price and (y) 95% of the lowest VWAP during the five (5) consecutive Trading
Days ending on the Trading Day that is immediately prior to the applicable 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).

 

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

 

“Make-Whole
Amount” means, as of any given date and as applicable, in connection with any conversion, redemption or other repayment hereunder,
an amount equal to the amount of additional interest that would accrue under this Note at the interest rate then in effect assuming for
calculation purposes that the principal of this Note as of the First Closing Date remained outstanding through and including the Maturity
Date.

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Note, plus all accrued and
unpaid interest hereon, divided by the lesser of (i) the Conversion Price, or (ii) 85% of the average of the three lowest VWAPs during
the ten (10) consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable 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 highest closing price for the Common Stock on the Trading Market during the period beginning
on the date of first occurrence of the Event of Default and ending on the date the Mandatory Default Amount is paid in full, or (ii) 130%
of the sum of the outstanding principal amount of this Note, plus accrued and unpaid interest hereon, and (b) all other amounts, costs
and expenses due in respect of this Note.

 

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

 

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

 

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

 

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

 

“Optional Redemption
Amount” means the sum of (A) 105% of the outstanding principal amount of the Note to be redeemed and (B) 100% of the sum of
(i) accrued but unpaid interest on such outstanding principal amount of the Note to be redeemed, (ii) the Make-Whole Amount, if any, and
(iii) accrued and unpaid Late Fees with respect to such principal of this Note, Make-Whole Amount and interest and other amounts due in
respect of the Note, if any.

 

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

 

    	 	 5	 

     

    

 

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

 

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

 

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

 

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

 

“Purchase Agreement”
means the Securities Purchase Agreement, dated as of September 15, 2022 among the Company and the original Holders, as amended, modified
or supplemented from time to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

“Subsequent
Financing” means any issuance by the Company or any of its Subsidiaries other than an Exempt Issuance of Common Stock or Common
Stock Equivalents for cash consideration, indebtedness or a combination of units thereof from the date hereof until this Note is no longer
outstanding.

 

“Successor
Entity” shall have the meaning set forth in Section 9(a).

 

“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 will, in accordance with the terms hereof, be listed or quoted
for trading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select
Market; or the New York Stock Exchange (or any successors to any of the foregoing).

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:00 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 on The Pink Open Market (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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.

 

Section 2. Interest.

 

    	 	 6	 

     

    

 

a) Payment of
Interest in Cash or Common Stock. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal
amount of this Note at the rate of five percent (5%) per annum, payable on (i) each Installment Date (as to that principal amount of the
applicable Installment Amount), (ii) each Acceleration Date (as to that principal amount of the applicable Installment Amount), (iii)
each Optional Redemption Date (as to that principal amount of the applicable Optional Redemption Amount), (iv) each Conversion Date (as
to that principal amount then being converted), and (v) 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 Price (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) all of the Equity Conditions have been met (unless waived by Holders owning
a majority in Original Principal Amount of the Notes in writing) during the ten (10) Trading Days immediately prior to the applicable
Interest Payment Date (the “Interest Notice Period”) and through and including the date such shares of Common Stock
are actually issued to the Holder (ii) the Company shall have given the Holder notice in accordance with the notice requirements set forth
below in Section 2(b) and (iii) as to such Interest Payment Date, prior to such Interest Notice Period (but not more than five (5) Trading
Days prior to the commencement of such Interest Notice Period), 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 Interest Conversion Price 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”).
Notwithstanding anything to the contrary contained in this Section 2(a): (i) if the Company elects to pay any interest in Interest Conversion
Shares and the Floor Price is greater than the lesser of the (a) then Conversion Price and (b) the Interest Conversion Price, then (ii)
the amount of Interest Conversion Shares to be issued to the Holder will be at the Holder’s option and (ii) in addition to the payment
of an Interest Share Amount in Interest Conversion Shares (which issuance shall be at the Floor Price) (in the event that the Holder permits
such issuance albeit subparagraph (k) of the definition of Equity Conditions not being satisfied), the Company shall pay to the Holder
cash as a true-up (the “Cash Interest True-Up Amount”). The Cash Interest True-Up Amount shall be determined by the
product of (i) the difference between (y) the Floor Price and (z) 95% of the lowest VWAP during the five (5) consecutive Trading Days
ending on the Trading Day that is immediately prior to the applicable Interest Payment Date (subject to adjustment for any stock dividend,
stock split, stock combination or other similar event affecting the Common Stock during such five (5) Trading Day period), multiplied
by (ii) the applicable number of Interest Conversion Shares. The Company and Holder agree to adjust the foregoing formula, in good-faith,
in the event that the formula does not represent the intent of the Cash Interest True-Up Amount. The intent of the Cash Interest True-Up
Amount is to compensate the Holder for its loss in value due to the condition that an Interest Share Amount cannot be converted into shares
of Common Stock at the Interest Conversion Price less than the Floor Price. Any such adjustment must be approved by the Holder.

 

b) Company’s
Election to Pay Interest in Cash or Common Stock. 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, if required
by the Securities Act and the rules and regulations promulgated thereunder. 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.

 

    	 	 7	 

     

    

 

c) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall
accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid
interest 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(b)(ii) herein and, solely
for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion Date. Interest shall cease
to accrue with respect to any principal amount converted, provided that, the Company actually delivers the Conversion Shares within the
time period required by Section 4(b)(ii) herein. Interest hereunder will be paid to the Person in whose name this Note is registered on
the records of the Company regarding registration and transfers of this Note (the “Note Register”). Except as otherwise
provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common Stock to the holders of
the Notes, then such payment of cash shall be distributed ratably among the holders of the then-outstanding Notes based on their (or their
predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.

 

d) Late Fee.
All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lower of ten percent
(10%) 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 (and such conditions are not waived by the Holder), then the Company, in lieu of delivering shares of
Common Stock pursuant to this Section 2 shall deliver, within three (3) Trading Days of each applicable Interest Payment Date, an amount
in cash equal to the interest due plus the Late Fees. 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.

 

e) Prepayment.
Except as otherwise set forth in this Note, the Company may not prepay any portion of the principal amount of this Note, accrued and unpaid
interest, accrued and unpaid Late Fees or the Make-Whole Amount without the prior written consent of the Holder.

 

Section 3. Registration
of Transfers and Exchanges.

 

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

 

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

 

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

 

Section 4. Conversion.

 

a) Voluntary
Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in
whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion
limitations set forth in Section 4(c) and 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 Conversion Amount to be converted and the date on which such conversion shall be effected (such date, the “Conversion
Date”).

 

    	 	 8	 

     

    

 

If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice
of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee
(or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder
shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued
and unpaid interest thereon, accrued and unpaid Late Fees and the Make-Whole Amount, if any, has been so converted in which case the Holder
shall surrender this Note as promptly as is reasonably practicable after such conversion without delaying the Company’s obligation
to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of lowering the outstanding principal amount
of this Note in an amount equal to the principal amount of the applicable conversion. The Holder and the Company shall maintain records
showing the Conversion Amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note,
acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid
and unconverted principal amount of this Note may be less than the amount stated on the face hereof. 

 

b) 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 Conversion Amount to be converted by (y) the Conversion Price.

 

ii. Delivery of
Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) 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 earlier of (i) the six (6) month
anniversary of the Original Issue Date; provided that on the Share Delivery Date the Company has satisfied the current public information
requirements under Rule 144 and the Conversion Shares may be resold without any volume or manner-of-sale restrictions under Rule 144 or
(ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by
the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note (including, if the
Company has given continuous notice pursuant to Section 2(b) for payment of interest in shares of Common Stock at least ten (10) 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 ten (10) 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 wire transfer in immediately available funds 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 earlier of (i) the six month anniversary of the Original Issue
Date; provided that on the Share Delivery Date the Company has satisfied the current public information requirements under Rule 144 and
the Conversion Shares may be resold without any volume or manner-of-sale restrictions under Rule 144 or (ii) the Effective Date, the Company
shall deliver any Conversion Shares required to be delivered by the Company under this Section 4(b) 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.

 

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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 Note delivered to the Company and the Holder shall promptly return to the Company the Conversion Shares issued to
such Holder pursuant to the rescinded Notice of Conversion.

 

iv. Obligation
Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver
or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of
any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion
Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action
the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal
amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder
has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which
bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be
payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares
or, if applicable, cash, upon a properly noticed conversion. 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.

 

v. 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 for the sole purpose of issuance upon conversion of this Note and payment of interest on this Note,
each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and
the other holders of the Notes), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and
conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the
conversion of the then outstanding principal amount of this Note and payment of interest hereunder. The Company covenants that all shares
of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if
the Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Registration
Statement (subject to such Holder’s compliance with its obligations under the Registration Rights Agreement).

 

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

 

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vii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such 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 Note 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.

 

c) Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert
any portion of this Note, 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 other Persons acting as a group together with the Holder or any of the Holder’s
Affiliates (such Persons, “Attribution Parties”)) 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 and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note 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 Note beneficially owned by the Holder or any of its Affiliates or Attribution Parties
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 Notes or the Warrants)
beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes
of this Section 4(c), 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(c) applies, the determination of whether
this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and
of which principal amount of this Note 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 Note may be converted (in relation to other securities
owned by the Holder together with any Affiliates or Attribution Parties) and which principal amount of this Note 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(c), 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 one Trading Day 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 Note, 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 9.99% 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 Note held by the Holder. 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(c)
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 Note.

 

    	 	 11	 

     

    

 

d) Compliance
with Rules of Trading Market.

 

i. Exchange Cap.
Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval, then the Company may not issue,
upon conversion of this Note, a number of shares of Common Stock, which, when aggregated with any shares of Common Stock issued on or
after the Original Issue Date and prior to such Conversion Date (i) in connection with the conversion of any Notes issued pursuant to
the Purchase Agreement, (ii) in connection with the exercise of any Warrants issued pursuant to the Purchase Agreement and (iii) in connection
with any warrants issued to any registered broker-dealer as a fee in connection with the issuance of the Securities pursuant to the Purchase
Agreement, would exceed the Exchange Cap. Each Purchaser shall be entitled to a portion of the Exchange Cap equal to the quotient obtained
by dividing (x) the Purchaser’s original Subscription Amount by (y) the aggregate original Subscription Amount of all Purchasers
pursuant to the Purchase Agreement (with respect to each Purchaser, the “Exchange Cap Allocation”). In addition, each
Purchaser may allocate its pro-rata portion of the Exchange Cap Allocation among Notes and Warrants held by it in its sole discretion.
In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser’s Notes or Warrants, the transferee shall
be allocated a pro-rata portion of such Purchaser’s Exchange Cap Allocation with respect to such portion of such Notes or Warrants
so transferred. Upon conversion and exercise in full of a holder’s Notes and Warrants, the difference (if any) between such holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder’s conversion and
exercise in full of such Notes and Warrants shall be allocated, to the respective Exchange Cap Allocations of the remaining holders of
Notes and Warrants on a pro-rata basis in proportion to the shares of Common Stock underlying the Notes and Warrants then held by each
such holder of Notes and Warrants. For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective,
warrants issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement as
described in clause (iii) above shall provide that such warrants shall not be allocated any portion of the Exchange Cap and shall be unexercisable
unless and until such Shareholder Approval is obtained and effective.

 

ii. Shareholder Approval.
In the event the Company is prohibited from issuing any shares of Common Stock pursuant to Section 4(d) (an “Exchange Cap Share
Failure” and such number of shares of Common Stock that is determined to be unavailable for issuance upon the conversion of
this Note, the “Exchange Cap Excess Shares”), then the Company shall, at the first regularly scheduled annual meeting
of its stockholders (for which no definitive proxy statement has been filed as of such Exchange Cap Share Failure) following the date
of occurrence of such Exchange Cap Share Failure, but in no event later than one hundred twenty (120) calendar days thereafter, seek the
Shareholder Approval; provided that, if the next regularly scheduled annual meeting is not within one hundred twenty (120) calendar days
from such Exchange Cap Share Failure, the Company shall hold a meeting of its stockholders as needed to seek the Shareholder Approval.
In connection with such meeting and any subsequent stockholder meetings, the Company shall provide each stockholder with a proxy statement
in compliance with applicable Commission rules and regulations and shall use commercially reasonable efforts to solicit the approval of
its stockholders of the Shareholder Approval and to cause its Board of Directors to recommend to the stockholders that they approve such
proposal. If, despite the Company’s commercially reasonable efforts, the Shareholder Approval is not obtained at the first stockholder
meeting, the Company shall cause an additional stockholder meeting to be held semi-annually thereafter to seek Shareholder Approval until
the earlier of (i) the date such Shareholder Approval is obtained and (ii) the date on which none of the Notes and the Warrants are outstanding.
For the avoidance of doubt, if the Company is required to and fails to obtain Shareholder Approval, the Exchange Cap shall be applicable
for all purposes of this Note.

 

 

Section 5. Certain Adjustments.

 

    	 	 12	 

     

    

 

a) Stock Dividends
and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Notes), (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 5 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 Rights
Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells any Common
Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares
of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise hereof, 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, that, 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).

 

c) Pro Rata
Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion
of this Note (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,
that, 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).

 

d) 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.

 

e) Notice to
the Holder.

 

    	 	 13	 

     

    

 

i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall deliver
to each Holder within one (1) Trading Day 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 (and all of its Subsidiaries, taken as a whole) 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 delivered to the Holder at its last address
as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders
of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form
8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

f) Voluntary Adjustment
by Company. Subject to the rules and regulations of the Principal Trading Market, the Company may at any time during the term of this
Note, with the prior written consent of the Required Holders (as defined in the Purchase Agreement), reduce the then current Conversion
Price of each of the Notes to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

Section 6. Redemption;
Installment Conversion.

 

a) Optional
Redemption at Election of Company. Subject to the provisions of this Section 6(a), at any time after the applicable Closing 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 Note for cash in an amount equal to the applicable Optional Redemption Amount on the tenth (10th)
Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date”, such ten (10)
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 period commencing on the Optional Redemption Notice Date through to the Optional Redemption Date and through
and including the date payment of the Optional Redemption Amount is actually made in full. If this 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 three (3) Trading Days after the first day on which such condition has not been met (provided that if, by a provision of
the Transaction Documents, the Company is obligated to notify the Holder of the existence of such event, such notice period shall be extended
to the third (3rd) Trading Day after proper notice from the Company), in which case the
Optional Redemption Notice shall be null and void, ab initio.

 

    	 	 14	 

     

    

 

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. The Company’s determination to pay an Optional Redemption in cash shall be applied ratably to all of the holders
of the then outstanding Notes based on their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.
The payment of cash pursuant to an Optional Redemption shall be payable on the Optional Redemption Date. If any portion of the payment
pursuant to an Optional Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest
rate equal to 15% per annum until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion
of the Optional 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, ab initio, and the Company shall have no further right to exercise such
Optional Redemption. 

 

b) Installment Conversion
or Redemption.

 

i) General. On
each applicable Installment Date, provided there has been no Equity Conditions Failure, the Company shall pay to the Holder of this Note
the applicable Installment Amount due on such date by converting such Installment Amount in accordance with this Section 6(b) (an “Installment
Conversion”); provided, however, that the Company may, at its option following notice to the Holder as set forth
below, pay the Installment Amount by redeeming such Installment Amount in cash (a “Installment Redemption”) or by any
combination of an Installment Conversion and an Installment Redemption so long as all of the outstanding applicable Installment Amount
due on any Installment Date shall be converted and/or redeemed by the Company on the applicable Installment Date, subject to the provisions
of this Section 6(b). On the date which is the sixth (6th) Trading Day prior to each Installment Date (each, an “Installment
Notice Due Date”), the Company shall deliver written notice (each, an “Installment Notice” and the date all
of the Holders receive such notice is referred to as the “Installment Notice Date”), to each Holder of Notes and such
Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of such Holder’s Note shall be converted
in whole pursuant to an Installment Conversion or (B) (1) state that the Company elects to redeem for cash, or is required to redeem for
cash in accordance with the provisions of the Notes, in whole or in part, the applicable Installment Amount pursuant to an Installment
Redemption and (2) specify the portion of such Installment Amount which the Company elects or is required to redeem pursuant to an Installment
Redemption (such amount to be redeemed in cash, the “Installment Redemption Amount”) and the portion of the applicable
Installment Amount, if any, with respect to which the Company will, and is permitted to, effect an Installment Conversion (such amount
of the applicable Installment Amount so specified to be so converted pursuant to this Section 6(b) is referred to herein as the “Installment
Conversion Amount”), which amounts when added together, must at least equal the entire applicable Installment Amount and (ii)
if the applicable Installment Amount is to be paid, in whole or in part, pursuant to an Installment Conversion, certify that there is
not then an Equity Conditions Failure as of the applicable Installment Notice Date. Each Installment Notice shall be irrevocable. If the
Company does not timely deliver an Installment Notice in accordance with this Section 6(b) with respect to a particular Installment Date,
then the Company shall be deemed to have delivered an irrevocable Installment Notice confirming an Installment Conversion of the entire
Installment Amount and shall be deemed to have certified that there is not then an Equity Conditions Failure in connection with such Installment
Amount. Except as expressly provided in this Section 6(b), an Installment Notice shall apply to each outstanding Note and the Company
shall convert and/or redeem the applicable Installment Amount of each outstanding Note pursuant to this Section 6(b) in the same ratio
of cash and shares. The applicable Installment Conversion Amount (whether set forth in the applicable Installment Notice or by operation
of this Section 6(b)) shall be converted in accordance with Section 6(b)(ii) and the applicable Installment Redemption Amount shall be
redeemed in accordance with Section 6(b)(iii).

 

    	 	 15	 

     

    

 

ii) Mechanics of
Installment Conversion. Subject to Section 4(c) and Section 4(d), if the Company delivers an Installment Notice or is deemed to have
delivered an Installment Notice certifying that such Installment Amount is being paid, in whole or in part, in an Installment Conversion
in accordance with Section 6(b)(i), then the Holder may, at any time thereafter within 30 calendar days, convert such Installment Conversion
Amount at the Installment Conversion Price in accordance with the conversion procedures set forth in Section 4 hereunder (with “Installment
Conversion Price” replacing “Conversion Price” for all purposes therein), mutatis mutandis; provided, however,
that the Equity Conditions are satisfied (or waived in writing by the Holder) on such Installment Date and an Installment Conversion is
not otherwise prohibited under any other provision of this Note; provided further, that if a Conversion Floor Price Condition exists with
respect to such Conversion Date, the Company shall also deliver to the Holder the Conversion Installment Floor Amount on the applicable
Share Delivery Date. If the Company confirmed (or is deemed to have confirmed by operation of Section 6(b)(i)) the conversion of the applicable
Installment Conversion Amount, in whole or in part, and there was no Equity Conditions Failure as of the applicable Installment Notice
Date (or is deemed to have certified that the Equity Conditions in connection with any such conversion have been satisfied by operation
of Section 6(b)(i)) but an Equity Conditions Failure occurred between the applicable Installment Notice Date and any time through the
applicable Installment Date (the “Interim Installment Period”), the Company shall provide the Holder a subsequent notice
to that effect. If there is an Equity Conditions Failure (which is not waived in writing by the Holder) during such Interim Installment
Period or an Installment Conversion is not otherwise permitted under any other provision of this Note, then, at the option of the Holder
designated in writing to the Company, the Company shall redeem all or any part designated by the Holder of the unconverted Installment
Conversion Amount (such designated amount is referred to as the “Designated Redemption Amount”) and the Company shall
pay to the Holder within two (2) days of such Installment Date, by wire transfer of immediately available funds, an amount in cash equal
to 105% of such Designated Redemption Amount. If the Company fails to redeem any Designated Redemption Amount by the second (2nd) day
following the applicable Installment Date by payment of such amount by such date, then the Holder shall have the rights set forth in Section
8(b) as if the Company failed to pay the applicable Installment Redemption Price (as defined below) and all other rights under this Note
(including, without limitation, such failure constituting an Event of Default described in Section 8(a)(i)). The Company shall pay any
and all taxes that may be payable with respect to the issuance and delivery of any shares of Common Stock in any Installment Conversion
hereunder. Each Installment Conversion Amount shall be applied first to the Installment Amount due on the Installment Date nearest to
the Maturity Date.

iii) Mechanics of
Installment Redemption. If the Company elects or is required to effect an Installment Redemption, in whole or in part, in accordance
with Section 6(b)(i), then the Installment Redemption Amount, if any, shall be redeemed by the Company in cash on the applicable Installment
Date by wire transfer to the Holder of immediately available funds in an amount equal to 105% of the applicable Installment Redemption
Amount (the “Installment Redemption Price”). If the Company fails to redeem such Installment Redemption Amount on such
Installment Date by payment of the Installment Redemption Price, then, at the option of the Holder designated in writing to the Company
(any such designation shall be a “Notice of Conversion” for purposes of this Note), the Holder may require the Company to
convert all or any part of the Installment Redemption Amount at the Installment Conversion Price (determined as of the date of such designation).
Conversions required by this Section 6(b)(iii) shall be made in accordance with the provisions of Section 4(b)Error! Reference source
not found.. Notwithstanding anything to the contrary in this Section 6(b)(iii), but subject to Section 4(c) and Section 4(d), until
the Installment Redemption Price (together with any Late Fees thereon) is paid in full, the Installment Redemption Amount (together with
any Late Fees thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 4. In the event the
Holder elects to convert all or any portion of the Installment Redemption Amount prior to the applicable Installment Date as set forth
in the immediately preceding sentence, the Installment Redemption Amount so converted shall be deducted from the Installment Amounts relating
to the applicable Installment Date(s) as set forth in the applicable Notice of Conversion.

    	 	 16	 

     

    

 

iv) Acceleration
of Installment Amounts. Notwithstanding anything herein to the contrary, during the period commencing on an Installment Date (a “Current
Installment Date”) and ending on the Trading Day immediately prior to the next Installment Date (each, an “Installment
Period”), at the option of the Holder, at one or more times, but not exceeding four (4) times during any calendar month (unless
otherwise agreed to between the Holder and the Company), the Holder may convert other Installment Amounts (each, an “Acceleration”,
and each such amount, an “Acceleration Amount”, and the Conversion Date of any such Acceleration, each an “Acceleration
Date”), in whole or in part, at the Acceleration Conversion Price of such Acceleration Date in accordance with the conversion
procedures set forth in Section 4 hereunder (with “Acceleration Conversion Price” replacing “Conversion Price”
for all purposes therein), mutatis mutandis; provided, that if a Conversion Floor Price Condition exists with respect to such Acceleration
Date, with each Acceleration the Company shall also deliver to the Holder the Acceleration Floor Amount on the applicable Share Delivery
Date. Notwithstanding the foregoing, with respect to any given Installment Period, the Holder may not (unless otherwise agreed to between
the Holder and the Company) elect to effect any Acceleration (a “Current Acceleration”) during such Installment Period
if the sum of (x) the Acceleration Amounts with respect to Accelerations previously consummated by the Holder during the applicable Installment
Period and (y) the Acceleration Amount of such Current Acceleration, collectively, exceeds four (4) times the Installment Amount with
respect to such Current Installment Date. Each Acceleration Amount shall be applied first to the Installment Amount due on the Installment
Date nearest to the Maturity Date.

c) Mandatory Redemption
at Election of Holder. Subject to the provisions of this Section 6, if, at any time while this Note is outstanding, the Company shall
carry out one or more Subsequent Financings in excess of $5,000,000 in gross proceeds each, the Holder shall have the right to require
the Company to first use up to 30% of the gross proceeds of such Subsequent Financing (such dollar amount, the “Mandatory Redemption
Proceeds”) to redeem all or a portion of this Note for an amount in cash (such amount, the “Mandatory Redemption Amount”)
to equal to the sum of (A) 1.05 multiplied by the sum of the principal amount subject to the Mandatory Redemption and accrued but unpaid
interest thereon and (B) 1.00 multiplied by the sum of the Make-Whole Amount, if any, and any other amounts, if any, then owing to the
Holder in respect of this Note (a “Mandatory Redemption”). The Company shall deliver notice to the Holder of the Subsequent
Financing at least five (5) Trading Days prior to the closing of the Subsequent Financing (“Pre-Notice”), which Pre-Notice
shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a “Mandatory Redemption
Notice” and the date such Mandatory Redemption Notice is deemed delivered hereunder, the “Mandatory Redemption Notice
Date”). If the Holder exercises its right herein to require a Mandatory Redemption by delivering written notice to the Company
within five (5) Trading Days of the Mandatory Redemption Notice Date (“Mandatory Redemption Exercise Notice”), the
Company shall effect the Mandatory Redemption and pay the Mandatory Redemption Amount to the Holder on or prior to the fifth (5th) Trading
Day following the consummation of the Subsequent Financing (“Mandatory Redemption Date”). The Company’s payment
of the Mandatory Redemption Proceeds shall be applied ratably to all of the holders of the then outstanding Notes which exercise the right
to require a Mandatory Redemption on the basis of their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase
Agreement. Notwithstanding the foregoing, this Section 6(c) shall not apply with respect to an Exempt Issuance, except that no Variable
Rate Transaction shall be an Exempt Issuance unless otherwise expressly stated in the Transaction Documents.

Section 7. Negative Covenants.
As long as any portion of this Note remains outstanding, unless Holders of at least 50.1% in principal amount of the then outstanding
Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly
or indirectly (except to the extent permitted by the terms of the Purchase Agreement):

 

a) 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;

 

b) 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, pursuant to any equity
incentive approved by the disinterested members of the Board of Directors, provided that such repurchases shall not exceed an aggregate
of $50,000 for all officers and directors during the term of this Note;

 

    	 	 17	 

     

    

  

c) repay,
repurchase or offer to repay, repurchase or otherwise acquire any indebtedness (other than the Notes if on a pro-rata basis);
provided, that the foregoing shall not limit the ability to make regular amortization payments pursuant to the terms of one or more
credit facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financings
or letters of credit, obtained by the Company in the ordinary course of business if at the time such payments, after giving effect
to such payments, neither (i) an event constituting an Event of Default has occurred and is continuing nor (ii) an event that with
the passage of time and without being cured would constitute an Event of Default has occurred and is continuing;

 

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

 

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

 

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 any Note or (B) interest, Late Fees, Make-Whole
Amount and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date
or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under
clause (B) above, is not cured within three (3) Trading Days;

 

ii)    
the Company shall fail to observe or perform any other covenant or agreement contained in the Notes
(other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is
addressed in clause (x) below) or in any Transaction Document (other than a breach by the Company of its obligations to deliver shares
of Common Stock to the Holder upon exercise of the Warrants, which breach is addressed in clause (x) below), which failure is not cured,
if possible to cure, within the earlier to occur of (A) five (5) Trading Days after notice of such failure sent by the Holder or by any
other Holder to the Company and (B) ten (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) with a cure period of ten (10) Trading
Days of the date of the occurrence;

 

iv)   
any representation or warranty made in this Note, any other Transaction Documents, any written statement
pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder
shall be untrue or incorrect in any material respect as of the date when made or deemed made, which if curable, has not been cured within
ten (10) Trading Days of date of the occurrence;

 

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;

 

 

    	 	 18	 

     

    

 

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 $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results
in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

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

 

viii) the Initial Registration
Statement (as defined in the Registration Rights Agreement) shall not have been declared effective by the Commission on or prior to the
95th calendar day after the Closing Date or the Company does not meet the current public information requirements under Rule 144
in respect of the Registrable Securities (as defined in the Registration Rights Agreement);

 

ix)   
if, during the Effectiveness Period (as defined in the Registration Rights Agreement), either (a)
the effectiveness of the Registration Statement lapses for any reason or (b) the Holder shall not be permitted to resell Registrable Securities
(as defined in the Registration Rights Agreement) under the Registration Statement for a period of more than twenty (20) consecutive Trading
Days or sixty (60) non-consecutive Trading Days during any 365 day period; provided, however, that if in the written opinion
of counsel to the Company, the Registration Statement would be required to be amended to include information concerning such pending transaction(s)
or the parties thereto which information is not available or may not be publicly disclosed at the time, the Company shall be permitted
an additional ten (10) consecutive Trading Days during any twelve (12) month period pursuant to this Section 8(a)(ix);

 

x)     
the Company shall fail for any reason to deliver Conversion Shares or Warrant Shares to a Holder
prior to the third (3rd) Trading Day after a Conversion Date pursuant to Section 4(b) or exercise date pursuant to Section 2(d) of the
Warrants, or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s
intention to not honor requests for conversions of any Notes in accordance with the terms hereof or requests for exercise of any Warrants
in accordance with the terms thereof;

 

xi)   
any Person shall materially breach any agreement delivered to the initial Holders pursuant to Section
2.2 of the Purchase Agreement;

 

xii)  
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” for a period of five Trading
Days;

 

xiii) 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 $250,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period
of 45 calendar days;

 

		xiv)	the Company shall fail to maintain the Required Minimum;

 

xv)  
the Company shall fail to timely make any filings required under the Exchange Act; or

 

		xvi)	following the occurrence of an Exchange Cap Share Failure, the Company fails to obtain Shareholder Approval
at its first regularly scheduled meeting of its stockholders after such Exchange Cap Share Failure (which in no event shall be later than
one hundred twenty (120) calendar days after such Exchange Cap Share Failure).

 

 

    	 	 19	 

     

    

 

b) Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid interest,
Late Fees, Make-Whole Amount, if any, and other amounts owing in respect thereof through the date of acceleration, shall become, at the
Holder’s election, immediately due and payable, at the Holder’s election in cash at the Mandatory Default Amount or in shares
of Common Stock at the Mandatory Default Amount at a conversion price equal to 85% of the average of the three lowest VWAPs during the
ten (10) consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable date the Mandatory Default Amount
is demanded or otherwise due. Commencing five (5) days after the occurrence of any Event of Default that results in the eventual acceleration
of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 10% 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 Note
to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of
any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.
Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights
as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such rescission
or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

Section 9. Fundamental
Transaction.

 

a) Assumption. If, at any
time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the Company (and all of its Subsidiaries, taken as a whole), 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 fifty percent (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 fifty percent (50%) of the outstanding shares
of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a
“Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction
(without regard to any limitation in Section 4(c) and Section 4(d) on the conversion of this Note), the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares
of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation
in Section 4(c) and Section 4(d) on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion
Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Note and the other Transaction
Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 9(a) pursuant to written agreements
in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the holder of this Note,

 

    	 	 20	 

     

    

 

deliver to the Holder in exchange for this Note a security of the Successor
Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this
Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance
to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein. Notwithstanding the preceding, if it is a condition of the buyer, which condition the Holders
of a majority in interest of the Original Principal Amount of the Notes have agreed to, that the Notes and/or Warrants not be assumed
and must be converted in such Fundamental Transaction into the equity and/or cash paid in such Fundamental Transaction, then this Note
and/or the Warrants may be cancelled upon payment in full therefor.

 

b) Notice of a Change of Control
Transaction; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation
of a Change of Control Transaction (the “Change of Control Date”), but not prior to the public announcement of such
Change of Control Transaction, the Company shall deliver written notice thereof via electronic mail and overnight courier to the Holder
(a “Change of Control Notice”). At any time during the period beginning after the Holder’s receipt of a Change
of Control Notice or the Holder becoming aware of a Change of Control Transaction if a Change of Control Notice is not delivered to the
Holder in accordance with the immediately preceding sentence (as applicable) and ending on twenty (20) Trading Days after the later of
(A) the date of consummation of such Change of Control Transaction or (B) the date of receipt of such Change of Control Notice
or (C) the date of the announcement of such Change of Control Transaction, the Holder may require the Company to redeem all or any
portion of this Note by delivering written notice thereof (“Change of Control Redemption Notice”) to the Company, which
Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this Note subject
to redemption pursuant to this Section 9 shall be redeemed by the Company in cash at a price equal to the sum of (i) 105% of the
outstanding principal amount of the Note to be redeemed and (ii) 100% of the sum of (A) accrued but unpaid interest on such outstanding
principal amount of the Note to be redeemed, (B) the Make-Whole Amount, if any, and (C) accrued and unpaid Late Fees with respect to such
principal of this Note, Make-Whole Amount and interest and other amounts due in respect of the Note, if any (the “Change of Control
Redemption Price”). Redemptions required by this Section 9 shall be made in accordance with the provisions of Section 6
and shall have priority to payments to stockholders in connection with such Change of Control Transaction. To the extent redemptions required
by this Section 9(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company,
such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 9, but subject
to Section 4(c) and Section 4(d), until the Change of Control Redemption Price (together with any Late Fees thereon) is paid in full,
the Conversion Amount submitted for redemption under this Section 9(b) (together with any Late Fees thereon) may be converted,
in whole or in part, by the Holder into Common Stock pursuant to Section 4. In the event of the Company’s redemption of any
portion of this Note under this Section 9(b), the Holder’s damages would be uncertain and difficult to estimate because of
the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment
opportunity for the Holder. Accordingly, any redemption premium due under this Section 9(b) is intended by the parties to be,
and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.

 

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 email attachment, or sent by a nationally recognized overnight courier
service, addressed to the Company, at the address set forth above, 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).

 

    	 	 21	 

     

    

 

Any and all notices or other communications or deliveries to
be provided by the Company hereunder shall be in writing and delivered personally, by email attachment, or sent by a nationally recognized
overnight courier service addressed to each Holder at the email address or address of the Holder appearing on the books of the Company,
or if no such 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 Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is delivered via 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 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 Note shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and accrued interest, as applicable, on this Note at the time, place, and rate,
and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks pari passu with
all other Notes now or hereafter issued under the terms set forth herein.

 

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

 

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

 

e) Amendments.
Except as otherwise permitted herein and except for Section 4(d), which may not be amended, modified or waived by the parties hereto,
the prior written consent of the Holder shall be required for any change, waiver or amendment to this Note.

 

    	 	 22	 

     

    

 

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

 

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

 

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

 

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

 

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

 

k) Equitable
Adjustment. Trading volume amounts, price/volume amounts, the amount of Warrants, the amount of shares of Common Stock identified
in the Purchase Agreement, Conversion Price, exercise price, shares of Common Stock underlying the Notes and the Warrants, and similar
figures in the Transaction Documents shall be equitably adjusted (but without duplication) to offset the effect of stock splits, similar
events and as otherwise described in the Purchase Agreement, Notes and Warrants.

 

Section 11. Disclosure.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, 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.

 

    	 	 23	 

     

    

 

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 Page Follows)

 

 

 

 

 

    	 	 24	 

     

    

 

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

 

AEYE, INC.

 

	By:	 	 
	Name:	 	 
	Title	 	 

 

	 	 	 

 

 

 

 

 

    	 	 25	 

     

    

 

ANNEX A

 

NOTICE OF
CONVERSION

 

The undersigned hereby elects
to convert principal under the Senior Unsecured Convertible Note due March 15, 2024 of AEye, Inc., 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 Note, as determined in accordance with Section 13(d) of the Exchange Act.

 

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

 

	Conversion calculations:	 
	 	Date to Effect Conversion:
	 	 
	 	Principal Amount of Note to be Converted:
	 	 
	 	Payment of Interest in Common Stock __ yes __ no
	 	If yes, $_____ of Interest Accrued on Account of Conversion at Issue.
	 	 
	 	
    Installment Amount(s) to be reduced

    (and corresponding Installment Date(s))

    and amount of reduction: __________________________

	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Address for Delivery of Common Stock Certificates:
	 	 
	 	Or
	 	 
	 	DWAC Instructions:
	 	 	Broker No.: ____________________________
	 	 	Account No.: __________________________

 

 

 

 

26THE ISSUANCE AND SALE OF THIS SECURITY AND THE SECURITIES
FOR WHICH THIS SECURITY IS EXERCISABLE HAVE NOT 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, THIS SECURITY AND THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISEABLE 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 EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED
BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

AEYE, INC.

 

 

Warrant No.: ______

 

Date of Issuance: September 15, 2022 (“Issuance
Date”)

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, ______ or its assigns (the “Holder”) is entitled, upon the terms and subject to
the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issuance Date and on or prior to 5:00
p.m. (New York City time) on the date that is the four-year anniversary of the Issuance Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from AEye, Inc., a Delaware corporation (the “Company”), up to ______
shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.  Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated September 15, 2022, among the Company and the purchasers signatory thereto.

 

Section 2.  Exercise.

 

a) Exercise of Warrant.
Subject to the provisions of Section 2(e) herein, exercise of the purchase rights represented by this Warrant may be made, in whole or
in part, at any time or times on or after the Issuance Date and on or before the Termination Date by delivery to the Company of a duly
executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form attached hereto as Exhibit A (the “Notice
of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement
Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise
Price for the shares specified in the applicable Notice of Exercise by wire transfer of immediately available funds or cashier’s
check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and
the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the
Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount
stated on the face hereof.

 

    	 	1 	 

     

    

 

b) Exercise Price.
The exercise price per share of Common Stock under this Warrant shall be $3.50, subject to adjustment hereunder (the “Exercise
Price”).

 

c) Cashless Exercise. From
and after 95 days following the Issuance Date, at the time of exercise hereof, if there has been no effective registration statement registering,
or the prospectus contained therein has not been available for, the resale of the Warrant Shares by the Holder for twenty (20) consecutive
Trading Days preceding such exercise, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

 

	 	(A) =	as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the Principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
	 	 	 
	 	(B) =	the Exercise Price of this Warrant, as adjusted hereunder; and

 

	(X)

                                                                     
 
	 =the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in
such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant
Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may
be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).

 

  “Bid Price”
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 bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg (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 on The Pink Open Market (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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

“Floor Price”
means $0.30 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after
the date of the Securities Purchase Agreement).

 

    	 	2 	 

     

    

 

“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 (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 Open Market (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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

d) Mechanics of Exercise.

 

i. Delivery
of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system
(or a successor system) and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or
resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered
in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the
aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery
to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice
of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the
number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. The Company agrees to maintain
a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. 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 Exercise. From the Issuance
Date through and including the Expiration Date, the Company shall use commercially reasonable efforts to maintain a transfer agent that
participates in DWAC (or a successor system).

 

ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.

 

iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that
the Holder shall be required to return any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to
Holder of the aggregate Exercise Price paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire
such Warrant Shares pursuant to this Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

    	 	3 	 

     

    

 

iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker 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 Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery obligations hereunder. 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 exercise of shares of Common Stock with
an aggregate sale price giving rise to such purchase obligation 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 shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms hereof.   

 

v. No Fractional
Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As
to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, 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 Exercise Price or
round up to the next whole share.

 

vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in
the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto as Exhibit B duly executed by the Holder and the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

 

e) Holder’s Exercise
Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion
of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth
on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group
together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), 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 and Attribution Parties shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties.

 

    	 	4 	 

     

    

 

Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder
that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, 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 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the 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
one Trading Day 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 Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this
Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained 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 Warrant.

 

f) Compliance with Rules
of Trading Market.

 

i. Exchange Cap.
If the Company has not obtained Shareholder Approval, then the Company may not issue upon exercise of this Warrant a number of shares
of Common Stock, which, when aggregated with any shares of Common Stock issued (a) pursuant to the conversion of any Notes issued pursuant
to the Purchase Agreement, (b) upon prior exercise of this or any other Warrant issued pursuant to the Purchase Agreement and (c) pursuant
to any warrants issued to any registered broker-dealer as a fee in connection with the issuance of Securities pursuant to the Purchase
Agreement, would exceed the Exchange Cap. Each Purchaser shall be entitled to a portion of the Exchange Cap equal to the quotient obtained
by dividing (x) the Purchaser’s original Subscription Amount by (y) the aggregate original Subscription Amount of all Purchasers
pursuant to the Purchase Agreement (with respect to each Purchaser, the “Exchange Cap Allocation”). In addition, each
Purchaser may allocate its pro-rata portion of the Exchange Cap among Notes and Warrants held by it in its sole discretion. In the event
that any Purchaser shall sell or otherwise transfer any of such Purchaser’s Notes or Warrants, the transferee shall be allocated
a pro-rata portion of such Purchaser’s Exchange Cap Allocation with respect to such portion of such Notes or Warrants so transferred.
Upon conversion and exercise in full of a holder’s Notes and Warrants, the difference (if any) between such holder’s Exchange
Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder’s conversion and exercise
in full of such Notes and Warrants shall be allocated, to the respective Exchange Cap Allocations of the remaining holders of Notes and
Warrants on a pro-rata basis in proportion to the shares of Common Stock underlying the Notes and Warrants then held by each such holder
of Notes and Warrants. For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective, warrants
issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement as described
in clause (c) above shall provide that such warrants shall not be allocated any portion of the Exchange Cap and shall be unexercisable
unless and until such Shareholder Approval is obtained and effective.

 

    	 	5 	 

     

    

 

ii. Shareholder Approval.
In the event the Company is prohibited from issuing any shares of Common Stock pursuant to Section 2(f)(i) (an “Exchange Cap
Share Failure” and such number of shares of Common Stock that is determined to be unavailable for issuance upon the exercise
of this Warrant, the “Exchange Cap Excess Shares”), then the Company shall, at the first regularly scheduled annual
meeting of its stockholders (for which no definitive proxy statement has been filed as of such Exchange Cap Share Failure) following the
date of occurrence of such Exchange Cap Share Failure, but in no event later than one hundred twenty (120) calendar days thereafter, seek
the Shareholder Approval; provided that, if the next regularly scheduled annual meeting is not within one hundred twenty (120) calendar
days from such Exchange Cap Share Failure, the Company shall hold a meeting of its stockholders as needed to seek the Shareholder Approval.
In connection with such meeting and any subsequent stockholder meetings, the Company shall provide each stockholder with a proxy statement
in compliance with applicable Commission rules and regulations and shall use commercially reasonable efforts to solicit the approval of
its stockholders of the Shareholder Approval and to cause its board of directors to recommend to the stockholders that they approve such
proposal. If, despite the Company’s commercially reasonable efforts, the Shareholder Approval is not obtained at the first stockholder
meeting, the Company shall cause an additional stockholder meeting to be held semi-annually thereafter to seek Shareholder Approval until
the earlier of (i) the date such Shareholder Approval is obtained and (ii) the date on which none of the Notes and the Warrants are outstanding.
For the avoidance of doubt, if the Company is required to and fails to obtain Shareholder Approval, the Exchange Cap shall be applicable
for all purposes of this Warrant.

 

g) Forced Exercise.

 

i. General. Subject
to Section 2(e) and Section 2(f), if at any time after the Issuance Date (x) the VWAP of the Company’s Common Stock on the primary
Trading Market exceeds $4.00 (the “Forced Exercise Minimum Price”) for ten (10) consecutive Trading Days (the “Forced
Exercise Measuring Period”), (y) the average daily trading volume of the Common Stock on each Trading Day during the Forced
Exercise Measuring Period exceeds $5,000,000 (collectively, the “Forced Exercise Conditions”) and (z) there is an effective
registration statement permitting the resale of the Warrant Shares by the Holder, the Company shall have the right, at its option, to
require the Holder to exercise all, but not less than all, of the then-outstanding Warrants pursuant to this Section 2.

 

ii. Mechanics.
The Company may exercise its right to require a Forced Exercise under this Section 2(g) within three (3) Trading Days following any Forced
Exercise Measuring Period by delivering a written notice thereof, by electronic mail to all, but not less than all, of the holders of
the Warrants (each, a “Forced Exercise Notice”, and the date thereof, each a “Forced Exercise Notice Date”).
For purposes of Section 2(d) hereof, “Forced Exercise Notice” shall be deemed to replace “Notice of Exercise”
for all purposes thereunder as if the Holder delivered a Notice of Exercise to the Company on the Forced Exercise Notice Date, mutatis
mutandis. Each Forced Exercise Notice shall be irrevocable. Each Forced Exercise Notice shall (x) state that the Company is electing
to effect a Forced Exercise on the second (2nd) Trading Day following the applicable Forced Exercise Notice Date (the “Forced
Exercise Date”), (y) state the aggregate number of Warrant Shares to be exercised by the Holder and all of the holders of the
Warrants on the Forced Exercise Date (subject to any adjustments thereto pursuant to Section 2 that may occur prior to the Forced Exercise
Date), and (z) contain a certification from an officer or director of the Company that the Forced Exercise Conditions shall have been
satisfied as of the Forced Exercise Notice Date.

 

iii. Pro Rata Exercise
Requirement. If the Company elects to cause a Forced Exercise of this Warrant pursuant to this Section 2(g), then it must simultaneously
take the same action in the same proportion with respect to all of the Warrants.

 

Section 3.  Certain
Adjustments.

 

a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares,

 

    	 	6 	 

     

    

 

(iii) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise
of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment
made pursuant to this Section 3(a) 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
Rights Offerings. In addition to any adjustments pursuant to Section 3(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 all (or substantially all)
of 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 exercise of this Warrant (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, that, 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).

c) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to all (or substantially all) of 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 Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise 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,
that, 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).

 

d) Fundamental
Transaction. Subject to Section 5(e) of the Note, if, at any time while this Warrant 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 (or any Subsidiary), 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 (approved or recommended by the Board of Directors or a committee thereof) 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

    	 	7 	 

     

    

 

(including, without
limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than fifty percent (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 exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without
regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant), 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 Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e)
or Section 2(f) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of
one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise 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 exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below)
shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental
Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from
the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised
portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that,
if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors,
Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration (and in the same
proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common
Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination
thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection
with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company are not offered
or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received common stock of
the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black
Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting
(A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such
calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement
of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction and (D) a
remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the
Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available
funds (or such other consideration) within the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation
of the 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 Warrant
and the other Transaction Documents in accordance with the provisions of this Section 3(d) 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, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of
shares of capital stock of such Successor Entity

    	 	8 	 

     

    

 

(or its parent entity) equivalent to the shares of Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise 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 exercise price being for the purpose of protecting the economic value of this Warrant 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 Warrant 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 Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein.

 

e) Calculations. All
calculations under this Section 3 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 3, 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 treasury shares, if any) issued and outstanding.

 

f) Notice to Holder.

 

i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number
of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to
Allow Exercise 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 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 (or any of its Subsidiaries) is a party, any sale or transfer of all or
substantially all of its assets, 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 delivered by email to the Holder at its email address as it shall appear upon
the Warrant Register of the Company, at least ten (10) 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 in this Warrant 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 exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.

 

g) Voluntary Adjustment
By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant,
subject to the prior written consent of the Required Holders, reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the board of directors of the Company.

 

    	 	9 	 

     

    

 

Section 4.  Transfer
of Warrant.

 

a) Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of
Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent
or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable,
and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full,
in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers
an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised
by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with
a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as
to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register.
The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.

 

d) Transfer Restrictions.
If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not
be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities
or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements
pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant,
as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

e) Representation by the
Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof,
will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to
sales registered or exempted under the Securities Act.

 

Section 5.  Miscellaneous.

 

a) No Rights as Stockholder
Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as
a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to
on a receive cash payments pursuant to Section 2(d)(i) or Section 2(d)(iv) herein, in no event shall the Company be required to net cash
settle an exercise of this Warrant.

 

 

    	 	10 	 

     

    

 

b) Loss, Theft, Destruction
or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting
of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver
a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares.

 

The Company covenants that, during
the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or
of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived
or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation
or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights
of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not
increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the
Company to perform its obligations under this Warrant.

 

Before taking any action which
would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.

 

e) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with
the provisions of the Purchase Agreement.

 

f) Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Non Waiver and Expenses.
No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase
Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages
to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

    	 	11 	 

     

    

 

h) Notices. Any notice,
request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance
with the notice provisions of the Purchase Agreement.

 

i) Limitation of Liability.
No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j) Remedies. The Holder,
in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance
of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns.
Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and
be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder
or holder of Warrant Shares.

 

l) Amendment. Except
as otherwise permitted herein and except for Section 2(f), which may not be amended, modified or waived by the parties hereto, this Warrant
may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if
any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings
used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

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

 

(Signature Page Follows)

 

 

    	 	12 	 

     

    

 

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

 

	 	AEYE, INC.
	 	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 

 

 

 

 

 

 

 

 

 

 

    	 	13 	 

     

    

 

EXHIBIT A

 

 

NOTICE OF EXERCISE

 

TO: AEye, Inc.,

 

(1) The undersigned hereby elects
to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders
herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form
of (check applicable box):

 

☐
in lawful money of the United States.

 

☐
if permitted the cancellation of such number of Warrant Shares as is necessary,
in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

  

(3) Please issue said Warrant Shares
in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following
DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4) Accredited Investor. The undersigned
is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________

Signature of Authorized Signatory of Investing Entity:
_________________________________

Name of Authorized Signatory: ___________________________________________________

Title of Authorized Signatory: ____________________________________________________

Date: ________________________________________________________________________

 

 

 

 

    	 	14 	 

     

    

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to

 

	Name:	__________________________________________

 

	 	(Please Print)

 

	Address:	__________________________________________

 

	 	(Please Print)

 

	Phone:	__________________________________________

 

	Email Address:	__________________________________________

 

Dated: ______________ ___, _______

 

Holder’s Signature: _____________________

 

Holder’s Signature: _____________________

 

 

 

 

 

 

15

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