Document:

Exhibit 10.11

 

Securities
Purchase Agreement

 

This
Securities Purchase Agreement (this “Agreement”), dated as of August 18, 2014, is entered into by and
between Blue Sphere Corporation, a Nevada corporation (“Company”),
and Iliad Research and Trading, L.P., a Utah limited partnership, its successors
and/or assigns (“Investor”).

 

A.           Company
and Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by
the rules and regulations promulgated by the United States Securities and Exchange Commission (the “SEC”) under
the Securities Act of 1933, as amended (the “1933 Act”).

 

B.           Investor
desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a Convertible
Promissory Note, in the form attached hereto as Exhibit A, in the original principal amount of $447,500.00 (the “Note”),
convertible into shares of common stock, $0.001 par value per share, of Company (the “Common Stock”), upon the
terms and subject to the limitations and conditions set forth in such Note.

 

C.           This
Agreement, the Note, and all other certificates, documents, agreements, resolutions and instruments delivered to any party under
or in connection with this Agreement, as the same may be amended from time to time, are collectively referred to herein as the
“Transaction Documents”.

 

D.           For
purposes of this Agreement: “Conversion Shares” means all shares of Common Stock issuable upon conversion of
all or any portion of the Note; and “Securities” means the Note and the Conversion Shares.

 

NOW, THEREFORE,
Company and Investor hereby agree as follows:

 

1.          Purchase
and Sale of Securities.

 

1.1.          Purchase
of Securities. Company shall issue and sell to Investor and Investor agrees to purchase from Company the Note. In consideration
thereof, Investor shall pay the Purchase Price to Company.

 

1.2.          Form
of Payment. On the Closing Date, Investor shall pay the Purchase Price to Company against delivery of the Note.

 

1.3.          Closing
Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the date
and time of the issuance and sale of the Securities pursuant to this Agreement (the “Closing Date”) shall be
5:00 p.m., Eastern Time on or about August 18, 2014, or such other mutually agreed upon time. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur on the Closing Date at the offices of Investor unless otherwise
agreed upon by the parties.

 

1.4.          Collateral
for the Note. The Note shall not be secured.

 

1.5.          Original
Issue Discount; Transaction Expenses. The Note carries an original issue discount of $40,000.00 (the “OID”).
In addition, Company agrees to pay $7,500.00 to Investor to cover Investor’s legal fees, accounting costs, due diligence,
monitoring and other transaction costs incurred in connection with the purchase and sale of the Securities (the “Transaction
Expense Amount”), all of which amount is included in the initial principal balance of this Note. The “Purchase
Price”, therefore, shall be $400,000.00, computed as follows: $447,500.00 original principal balance, less the OID, less
the Transaction Expense Amount.

 

    	 

    	 

    

 

2.          Investor’s
Representations and Warranties. Investor represents and warrants to Company that: (i) this Agreement has been duly and validly
authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance with its terms;
(iii) the Investor has reviewed the filings of the Company with the United States Securities and Exchange Commission (the “SEC”),
has been furnished by the Company with all information regarding the Company, the terms and conditions of the issuance of Securities
and any additional information that it has requested or desired to know, and has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers or other representatives of the Company concerning the Company and the terms
and conditions of the issuance of Securities, (iv) no Securities were offered or sold to the Purchaser by means of any form of
general solicitation or general advertising, (v) that it is aware that the issuance of the Securities has not been reviewed by
the SEC nor any state regulatory authority since the issuance of the Securities are intended to be exempt from the registration
requirements of Section 4(a)(2) of the Securities Act of 1933 (“Securities Act”) and Rule 506 of Regulation D, (vi)
the Purchaser is acquiring the Securities for its own account for investment and not with a view toward the resale or distribution
to others, and (vii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of
the 1933 Act.

 

3.          Representations
and Warranties of Company. Company represents and warrants to Investor that: (i) Company is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and has the requisite corporate power to own its properties
and to carry on its business as now being conducted; (ii) Company is duly qualified as a foreign corporation to do business and
is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification
necessary; (iii) Company has registered its Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), and is obligated to file reports pursuant to Section 13 or Section 15(d) of the
1934 Act; (iv) each of the Transaction Documents and the transactions contemplated hereby and thereby, have been duly and validly
authorized by Company; (v) this Agreement, the Note, and the other Transaction Documents have been duly executed and delivered
by Company and constitute the valid and binding obligations of Company enforceable in accordance with their terms, subject as to
enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting
the enforcement of creditors’ rights generally; (vi) the execution and delivery of the Transaction Documents by Company,
the issuance of Securities in accordance with the terms hereof, and the consummation by Company of the other transactions contemplated
by the Transaction Documents do not and will not conflict with or result in a breach by Company of any of the terms or provisions
of, or constitute a default under (a) Company’s formation documents or bylaws, each as currently in effect, (b) any indenture,
mortgage, deed of trust, or other material agreement or instrument to which Company is a party or by which it or any of its properties
or assets are bound, including any listing agreement for the Common Stock, or (c) to Company’s knowledge, any existing applicable
law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over Company or any of Company’s properties or assets
(except in the case of paragraphs (b) and (c) above for such conflicts, breaches, or defaults as would not, individually or in
the aggregate, have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations,
condition (financial or otherwise) or prospects of the Company and its subsidiaries, taken as a whole, or on the transactions contemplated
hereby); (vii) no further authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders or any lender of Company is required to be obtained by Company for
the issuance of the Securities to Investor; (viii) none of Company’s filings with the SEC contained, at the time they were
filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which they were made, not misleading; (ix) the Company
is current in its reporting requirements under the 1934 Act; (x) Company is not, nor has it ever been, a “Shell Company,”
as such type of “issuer” is described in Rule 144(i)(1) under the 1933 Act, or if it has been a “Shell Company”
it filed more than 12 months ago “Form 10 information” with the SEC reflecting that the Company ceased to be a “Shell
Company”; (xi) Company has taken no action which would give rise to any claim by any person or entity for a brokerage commission,
placement agent or finder’s fees or similar payments by Investor relating to the Note or the transactions contemplated hereby;
(xii) except for such fees arising as a result of any agreement or arrangement entered into by Investor without the knowledge of
Company (an “Investor’s Fee”), Investor shall have no obligation with respect to such fees or with respect
to any claims made by or on behalf of other persons for fees of a type contemplated in this subsection that may be due in connection
with the transactions contemplated hereby and Company shall indemnify and hold harmless each of Investor, Investor’s employees,
officers, directors, stockholders, managers, agents, and partners, and their respective affiliates, from and against all claims,
losses, damages, costs (including the costs of preparation and reasonable attorneys’ fees) and expenses suffered in respect
of any such claimed or existing fees (other than an Investor’s Fee, if any), and (xiii) when issued, each of the Securities
will be validly issued, fully paid for and non-assessable, free and clear of all liens, claims, charges and encumbrances.

 

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4.          Company
Covenants. Until all of Company’s obligations hereunder are paid and performed in full, or within the timeframes otherwise
specifically set forth below, Company shall comply with the following covenants: (i) from the date hereof until the date that is
six (6) months after all the Conversion Shares either have been sold by Investor, or may permanently be sold by Investor without
any restrictions pursuant to Rule 144, Company shall timely make all filings required to be made by it under the 1933 Act, the
1934 Act, Rule 144 or any United States securities laws and regulations thereof applicable to Company or by the rules and regulations
of its principal trading market, and such filings shall conform to the requirements of applicable laws, regulations and government
agencies, and, unless such filings are publicly available on the SEC’s EDGAR system (via the SEC’s web site at no additional
charge), Company shall provide a copy thereof to Investor promptly after such filings; (ii) so long as Investor beneficially owns
any of the Securities and for at least twenty (20) Trading Days (as defined in the Note) thereafter, Company shall file all reports
required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and shall take all reasonable action under
its control to ensure that adequate current public information with respect to Company, as required in accordance with Rule 144,
is publicly available, and shall not terminate its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would permit such termination; (iii) the Common Stock shall be listed or quoted
for trading on any of (a) the NYSE Amex, (b) the New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital
Market, (e) the OTC Bulletin Board, (f) the OTCQX, or (g) the OTCQB; (iv) when issued, each of the Securities (including, without
limitation, the Conversion Shares), will be validly issued, fully paid for and non-assessable, free and clear of all liens, claims,
charges and encumbrances, and (v) Company shall use the net proceeds received hereunder for working capital and general corporate
purposes only; provided, however, Company will not use such proceeds to pay fees payable (A) to any broker or finder relating
to the offer and sale of the Securities unless such broker, finder, or other party is a registered investment adviser or registered
broker-dealer and such fees are paid in full compliance with all applicable laws and regulations, or (B) to any other party relating
to any financing transaction effected prior to the date hereof.

 

5.          Conditions
to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Securities to Investor at
the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:

 

5.1.          Investor
shall have executed this Agreement and delivered the same to Company.

 

5.2.          Investor
shall have delivered the Purchase Price in accordance with Section 1.2 above.

 

6.          Conditions
to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Securities at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions
are for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:

 

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6.1.          Company
shall have executed this Agreement and delivered the same to Investor.

 

6.2.          Company
shall have delivered to Investor the duly executed Note in accordance with Section 1.2 above.

 

6.3.          The
Irrevocable Letter of Instructions to Transfer Agent shall have been delivered to and acknowledged in writing by Company’s
transfer agent (the “Transfer Agent”) substantially in the form attached hereto as Exhibit B.

 

6.4.          Company
shall have delivered to Investor a fully executed Secretary’s Certificate evidencing Company’s approval of the Transaction
Documents substantially in the form attached hereto as Exhibit C.

 

6.5.          Company
shall have delivered to Investor a fully executed Share Issuance Resolution to be delivered to the Transfer Agent substantially
in the form attached hereto as Exhibit D.

 

6.6.          Company
shall have delivered to Investor fully executed copies of all other Transaction Documents required to be executed by Company herein
or therein.

 

7.          Reservation
of Shares. At all times during which the Note is convertible, Company will reserve from its authorized and unissued Common
Stock to provide for the issuance of Common Stock upon the full conversion of the Note. Company will at all times reserve at least
three (3) times the number of shares of Common Stock equal to the Outstanding Balance (as defined in and determined pursuant to
the Note) divided by the Conversion Price (as defined in and determined pursuant to the Note) (the “Share Reserve”),
but in any event not less than 9,000,000 shares of Common Stock shall be reserved at all times for such purpose (the “Transfer
Agent Reserve”). Company further agrees that it will cause the Transfer Agent to immediately add shares of Common Stock
to the Transfer Agent Reserve in increments of 500,000 shares as and when requested by Investor in writing from time to time, provided
that such incremental increases do not cause the Transfer Agent Reserve to exceed the Share Reserve. In furtherance thereof, from
and after the date hereof and until such time that the Note has been paid in full, Company shall require the Transfer Agent to
reserve for the purpose of issuance of Conversion Shares under the Note, a number of shares of Common Stock equal to the Transfer
Agent Reserve. Company shall further require the Transfer Agent to hold such shares of Common Stock exclusively for the benefit
of Investor and to issue such shares to Investor promptly upon Investor’s delivery of a conversion notice under the Note.

 

8.          RESERVED.

 

9.          OFAC;
Patriot Act.

 

9.1.          OFAC
Certification. Company certifies that (i) it is not acting on behalf of any person, group, entity, or nation named by any Executive
Order or the United States Treasury Department, through its Office of Foreign Assets Control (“OFAC”) or otherwise,
as a terrorist, “Specially Designated Nation”, “Blocked Person”, or other banned or blocked person, entity,
nation, or transaction pursuant to any law, order, rule or regulation that is enforced or administered by OFAC or another department
of the United States government, and (ii) Company is not engaged in this transaction on behalf of, or instigating or facilitating
this transaction on behalf of, any such person, group, entity or nation.

 

9.2.          Foreign
Corrupt Practices. Neither Company, nor any of its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of Company or any subsidiary has, in the course of his actions for, or on behalf of, Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

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9.3.          Patriot
Act. Company shall not (i) be or become subject at any time to any law, regulation, or list of any government agency (including,
without limitation, the OFAC) that prohibits or limits Investor from making any advance or extension of credit to Company or from
otherwise conducting business with Company, or (ii) fail to provide documentary and other evidence of Company’s identity
as may be requested by Investor at any time to enable Investor to verify Company’s identity or to comply with any applicable
law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318. Company shall
comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or
hereafter in effect. Upon Investor’s request from time to time, Company shall certify in writing to Investor that Company’s
representations, warranties and obligations under this Section 9.3 remain true and correct and have not been breached. Company
shall immediately notify Investor in writing if any of such representations, warranties or covenants are no longer true or have
been breached or if Company has a reasonable basis to believe that they may no longer be true or have been breached. In connection
with such an event, Company shall comply with all requirements of law and directives of governmental authorities and, at Investor’s
request, provide to Investor copies of all notices, reports and other communications exchanged with, or received from, governmental
authorities relating to such an event. Company shall also reimburse Investor any expense incurred by Investor in evaluating the
effect of such an event on the loan secured hereby, in obtaining any necessary license from governmental authorities as may be
necessary for Investor to enforce its rights under the Transaction Documents, and in complying with all requirements of law applicable
to Investor as the result of the existence of such an event and for any penalties or fines imposed upon Investor as a result thereof.

 

10.         Miscellaneous.
The provisions set forth in this Section 10 shall apply to this Agreement, as well as all other Transaction Documents as if these
terms were fully set forth therein.

 

10.1.          Original
Signature Pages. Each party agrees to deliver its original signature pages to the Transaction Documents to the other party
within five (5) Trading Days of the date hereof. Notwithstanding the foregoing, the Transaction Documents shall be fully effective
upon exchange of electronic signature pages by the parties and payment of the Purchase Price by Investor. For the avoidance of
doubt, the failure by either party to deliver its original signature pages to the other party shall not affect in any way the validity
or effectiveness of any of the Transaction Documents, provided that such failure to deliver original signatures shall be a breach
of the party’s obligations hereunder.

 

10.2.          Cross
Default. Any Event of Default (as defined in the Note) by Company under the Note shall be deemed a default under this Agreement,
and any default by Company under this Agreement will be deemed an Event of Default under the Note.

 

10.3.          Governing
Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah for contracts
to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each party
consents to and expressly agrees that venue for Arbitration (as defined in Exhibit E) of any dispute arising out of or relating
to any Transaction Document or the relationship of the parties or their affiliates shall be in Salt Lake County or Utah County,
Utah). Without modifying the parties obligations to resolve disputes hereunder pursuant to the Arbitration Provisions (as defined
below), for any litigation arising in connection with any of the Transaction Documents, each party hereto hereby (a) consents to
and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in Salt Lake County, Utah, (b)
expressly submits to the venue of any such court for the purposes hereof, and (c) waives any claim of improper venue and any claim
or objection that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding
in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper.

 

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10.4.          Arbitration
of Claims. The parties shall submit all Claims (as defined in Exhibit E) arising under this Agreement or any other Transaction
Document or other agreements between the parties and their affiliates to binding arbitration pursuant to the arbitration provisions
set forth in Exhibit E attached hereto (the “Arbitration Provisions”). The parties hereby acknowledge
and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other provisions
of this Agreement. Any capitalized term not defined in the Arbitration Provisions shall have the meaning set forth in this Agreement.
By executing this Agreement, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully,
consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions
are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations
set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company
acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration
Provisions.

 

10.5.          Counterparts.
Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another party’s executed
counterpart of a Transaction Document (or such party’s signature page thereof) will be deemed to be an executed original
thereof.

 

10.6.          Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of,
this Agreement.

 

10.7.          Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.

 

10.8.          Entire
Agreement; Amendments. This Agreement and the instruments and exhibits referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither
Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing signed by the parties hereto.

 

10.9.          Notices.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of: (a) the date delivered, if delivered by personal delivery as against written receipt therefor or by email
to an executive officer, or by facsimile (with successful transmission confirmation), (b) the earlier of the date delivered or
the third Trading Day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (c) the earlier
of the date delivered or the third Trading Day after mailing by express courier, with delivery costs and fees prepaid, in each
case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such
party may designate by five (5) calendar days’ advance written notice similarly given to each of the other parties hereto):

 

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If to Company:

 

Blue Sphere Corporation

Attn: Schlomo Palas

35 Asuta Street

Even Yehuda, Israel 40500

 

If to Investor:

 

Iliad Research and Trading, L.P.

Attn: John Fife

303 East Wacker Drive, Suite 1200

Chicago, Illinois 60601

 

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

 

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan K. Hansen

2940 West Maple Loop, Suite 103

Lehi, Utah 84043

 

10.10.         Successors
and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by
Investor hereunder may be assigned by Investor to a third party, including its financing sources, in whole or in part, without
the need to obtain Company’s consent thereto, subject only to compliance with applicable securities laws. Company may not
assign its rights or obligations under this Agreement or delegate its duties hereunder without the prior written consent of Investor.

 

10.11.         Survival.
The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall survive the Closing
hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees to indemnify and
hold harmless Investor and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result
of or related to any breach or alleged breach by Company of any of its representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

10.12.         Publicity.
Company and Investor shall have the right to review a reasonable period of time before issuance of any press releases by the other
party with respect to the transactions contemplated hereby.

 

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

 

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10.14.         Investor’s
Rights and Remedies Cumulative; Liquidated Damages. All rights, remedies, and powers conferred in this Agreement and the Transaction
Documents are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power,
and remedy that Investor may have, whether specifically granted in this Agreement or any other Transaction Document, or existing
at law, in equity, or by statute, and any and all such rights and remedies may be exercised from time to time and as often and
in such order as Investor may deem expedient. The parties acknowledge and agree that upon Company’s failure to comply with
the provisions of the Transaction Documents, Investor’s damages would be uncertain and difficult (if not impossible) to accurately
estimate because of the parties’ inability to predict future interest rates and future share prices, Investor’s increased
risk, and the uncertainty of the availability of a suitable substitute investment opportunity for Investor, among other reasons.
Accordingly, any fees, charges, and default interest due under the Note and the other Transaction Documents are intended by the
parties to be, and shall be deemed, liquidated damages (under Company’s and Investor’s expectations that any such liquidated
damages will tack back to the Closing Date for purposes of determining the holding period under Rule 144). The parties agree that
such liquidated damages are a reasonable estimate of Investor’s actual damages and not a penalty, and shall not be deemed
in any way to limit any other right or remedy Investor may have hereunder, at law or in equity. The parties acknowledge and agree
that under the circumstances existing at the time this Agreement is entered into, such liquidated damages are fair and reasonable
and are not penalties. All fees, charges, and default interest provided for in the Transaction Documents are agreed to by the parties
to be based upon the obligations and the risks assumed by the parties as of the Closing Date and are consistent with investments
of this type. The liquidated damages provisions of the Transaction Documents shall not limit or preclude a party from pursuing
any other remedy available at law or in equity; provided, however, that the liquidated damages provided for in the Transaction
Documents are intended to be in lieu of actual damages.

 

10.15.         Ownership
Limitation. Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents, if at
any time Investor shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would
cause Investor (together with its affiliates) to beneficially own a number of shares exceeding the Maximum Percentage (as defined
in the Note), then Company must not issue to Investor the shares that would cause Investor to exceed the Maximum Percentage. The
shares of Common Stock issuable to Investor that would cause the Maximum Percentage to be exceeded are referred to herein as the
“Ownership Limitation Shares”. Company will reserve the Ownership Limitation Shares for the exclusive benefit
of Investor. From time to time, Investor may notify Company in writing of the number of the Ownership Limitation Shares that may
be issued to Investor without causing Investor to exceed the Maximum Percentage. Upon receipt of such notice, Company shall be
unconditionally obligated to immediately issue such designated shares to Investor, with a corresponding reduction in the number
of the Ownership Limitation Shares. For purposes of this Section, beneficial ownership of Common Stock will be determined under
Section 13(d) of the 1934 Act.

 

10.16.         Attorneys’
Fees and Cost of Collection. In the event of any arbitration or action at law or in equity to enforce or interpret the terms
of this Agreement or any of the other Transaction Documents, the parties agree that the party who is awarded the most money shall
be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the
attorneys’ fees, deposition costs, and expenses paid by such prevailing party in connection with arbitration or litigation
without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein
shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad faith pleading.
If (a) the Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal
proceedings, or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect
amounts due under the Note or to enforce the provisions of the Note; or (b) there occurs any bankruptcy, reorganization, receivership
of Company or other proceedings affecting Company’s creditors’ rights and involving a claim under the Note; then Company
shall pay the costs incurred by Investor for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees, expenses, deposition costs, and disbursements.

 

10.17.         Waiver.
No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting
the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or
consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent
or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

 

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10.18.         Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE
TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE,
LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.

 

10.19.         Time
of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other
Transaction Documents.

 

[Remainder of page intentionally left
blank; signature page follows]

 

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IN WITNESS WHEREOF,
the undersigned Investor and Company have caused this Agreement to be duly executed as of the date first above written.

 

SUBSCRIPTION AMOUNT:

 

	Principal Amount of Note:	$447,500.00
	 	 
	Purchase Price:	$400,000.00

 

	 	INVESTOR:
	 	 
	 	Iliad Research and Trading, L.P.
	 	 
	 	By:	Iliad Management, LLC, its General Partner
	 	 
	 	 	By:	Fife Trading, Inc., its Manager
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	John M. Fife, President

 

	 	COMPANY:
	 	 
	 	Blue Sphere Corporation
	 	 
	 	By:	

 

	 	Printed Name:	 

 

	 	Title:	 

 

ATTACHED EXHIBITS:

 

	Exhibit A	Note
	Exhibit B	Irrevocable Transfer Agent Instructions
	Exhibit C	Secretary’s Certificate
	Exhibit D	Share Issuance Resolution
	Exhibit E	Arbitration Provisions

 

    	 

    	 

    

 

Exhibit
E

 

ARBITRATION PROVISIONS

 

1.     Dispute
Resolution. For purposes of this Exhibit E, the term “Claims” means any disputes, claims, demands,
causes of action, liabilities, damages, losses, or controversies whatsoever arising from related to or connected with the transactions
contemplated in the Transaction Documents and any communications between the parties related thereto, including without limitation
any claims of mutual mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel,
unconscionability, failure of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims
to void, invalidate or terminate the Agreement or any of the other Transaction Documents. The parties hereby agree that the arbitration
provisions set forth in this Exhibit E (“Arbitration Provisions”) are binding on the parties hereto and
are severable from all other provisions in the Transaction Documents. As a result, any attempt to rescind the Agreement or declare
the Agreement or any other Transaction Document invalid or unenforceable for any reason is subject to these Arbitration Provisions.
These Arbitration Provisions shall also survive any termination or expiration of the Agreement.

 

2.     Arbitration.
Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted
in Salt Lake County, Utah or Utah County, Utah and pursuant to the terms set forth in these Arbitration Provisions. The parties
agree that the award of the Arbitration Panel (as defined below) shall be final and binding upon the parties; shall be the sole
and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the Arbitration
Panel; and shall promptly be payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards).
Any costs or fees, including without limitation attorneys’ fees, incident to enforcing the Arbitration Panel’s award
shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The award shall include
Default Interest (as defined in the Note) both before and after the award. Judgment upon the award of the Arbitration Panel will
be entered and enforced by a state court sitting in Salt Lake County, Utah. The parties hereby incorporate herein the provisions
and procedures set forth in the Utah Uniform Arbitration Act, U.C.A. § 78B-11-101 et seq. (as amended or superseded
from time to time, the “Arbitration Act”). Pursuant to Section 78B-11-105 of the Arbitration Act, in the event
of conflict between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration
Provisions shall control.

 

3.     Arbitration
Proceedings. Arbitration between the parties will be subject to the following procedures:

 

3.1      Pursuant
to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving written notice to the
other party (“Arbitration Notice”) in the same manner that notice is permitted under Section 10.9 of the Agreement;
provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as
of the date that the Arbitration Notice is deemed delivered under Section 10.9 of the Agreement (the “Service Date”).
After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 10.9 of the
Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies
sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with
the Utah Rules of Civil Procedure.

 

3.2      The
final Arbitration hearing will be heard by a three (3) person arbitration panel (“Arbitration Panel”). Within
ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of five (5) arbitrators that
are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com)
(such five designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance
of doubt, each Proposed Arbitrator must be qualified as a “neutral” with Utah ADR Services. Within ten (10) calendar
days after Investor has submitted to Company the names of the Proposed Arbitrators, Company must select, by written notice to Investor,
three (3) of the Proposed Arbitrators to act as the members of the Arbitration Panel. If Company fails to select three of the Proposed
Arbitrators in writing within such 10-day period, then Investor may select such three arbitrators from the Proposed Arbitrators
by providing written notice of such selection to Company. If Investor fails to identify the Proposed Arbitrators within the time
period required above, then Company may at any time prior to Investor designating the Proposed Arbitrators, select the names of
the five (5) Proposed Arbitrators. Investor may then, within ten (10) calendar days after Company has submitted notice of its Proposed
Arbitrators to Investor, select, by written notice to Company, three (3) of the Proposed Arbitrators to serve on the Arbitration
Panel. If Investor fails to select in writing and within such 10-day period the three members of the Arbitration Panel, then Company
may select such three members of the Arbitration Panel by providing written notice of such selection to Investor. After the three
members of the Arbitration Panel are selected, Investor shall designate in writing to Company the name of one of such three arbitrators
to serve as the lead arbitrator (the “Lead Arbitrator”). Subject to Paragraph 3.12 below, the cost of the arbitrators
must be paid equally by both parties; provided, however, that if one party refuses or fails to pay its portion of the arbitrators’
fees, then the other party can advance such unpaid amounts (subject to the accrual of Default Interest thereupon), with such amount
added to or subtracted from, as applicable, the award granted by the Arbitration Panel. If Utah ADR Services ceases to exist or
to provide a list of neutrals, then the arbitrators shall be selected under the then prevailing rules of the American Arbitration
Association. The date that all three selected arbitrators agree in writing to serve as the arbitrators hereunder is referred to
herein as the “Arbitration Commencement Date”.

 

    	Arbitration Provisions, Page 1

    	 

    

 

3.3      An
answer and any counterclaims to the Arbitration Notice, which must be pleaded consistent with the Utah Rules of Civil Procedure,
shall be required to be delivered to the other party within twenty (20) calendar days after the Service Date. Upon request, the
Arbitration Panel is hereby instructed to render a default award, consistent with the relief requested in the Arbitration Notice,
against a party that fails to submit an answer within such time period.

 

3.4      The
party that delivers the Arbitration Notice to the other party shall have the option to also commence legal proceedings with any
state court sitting in Salt Lake County, Utah (“Litigation Proceedings”), subject to the following: (i) the
complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration Notice, provided
that an additional cause of action to compel arbitration will also be included therein, (ii) so long as the other party files an
answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings will
be stayed pending an award of the Arbitration Panel hereunder, (iii) if the other party fails to file an answer in the Litigation
Proceedings or an answer in the Arbitration Proceedings, then the party initiating Arbitration shall be entitled to a default judgment
consistent with the relief requested, to be entered in the Litigation Proceedings, and (iv) any legal or procedural issue arising
under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined in the Litigation Proceedings.
Any award of the Arbitration Panel may be entered in such Litigation Proceedings pursuant to the Arbitration Act.

 

3.5      Pursuant
to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted in accordance with the Utah Rules
of Civil Procedure; provided, however, that incorporation of such rules will in no event supersede the Arbitration Provisions
set forth herein, including without limitation the time limitation set forth in Paragraph 3.9 below, and the following:

 

(a)      The
Lead Arbitrator will be responsible for determining all issues regarding discovery.

 

(b)      Discovery
will only be allowed if the likely benefits of the proposed discovery outweigh the burden or expense, and the discovery sought
is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration.
The party seeking discovery shall always have the burden of showing that all of the standards and limitations set forth in these
Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:

 

(i)          To
facts directly connected with the transactions contemplated by the Agreement.

 

(ii)         To
facts and information that cannot be obtained from another source that is more convenient, less burdensome or less expensive.

 

(c)       No
party shall be allowed (a) more than fifteen (15) interrogatories (including discrete subparts), (b) more than fifteen (15) requests
for admission (including discrete subparts), (c) more than ten (10) document requests (including discrete subparts), or (d) more
than three depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition.

 

3.6      Any
party submitting any written discovery requests, including interrogatories, requests for production, subpoenas to a party or a
third party, or requests for admissions, must prepay the estimated attorneys’ fees and costs, as determined by the Lead Arbitrator,
before the responding party has any obligation to produce or respond.

 

    	Arbitration Provisions, Page 2

    	 

    

 

(a)       All
discovery requests must be submitted in writing to the Lead Arbitrator and the other party before issuing or serving such discovery
requests. The party issuing the written discovery requests must include with such discovery requests a detailed explanation of
how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure.
Any party will then be allowed, within ten (10) calendar days of receiving the proposed discovery requests, to submit to the Lead
Arbitrator an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests and
a written challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or
challenge(s) to one or more discovery requests, the Lead Arbitrator will make a finding as to the likely attorneys’ fees
and costs associated with responding to the discovery requests and issue an order that (A) requires the requesting party to prepay
the attorneys’ fees and costs associated with responding to the discovery requests, and (B) requires the responding party
to respond to the discovery requests as limited by the Lead Arbitrator within a certain period of time after receiving payment
from the requesting party. If a party entitled to submit an estimate of attorneys’ fees and costs and/or a challenge to discovery
requests fails to do so within such 10-day period, the Lead Arbitrator will make a finding that (A) there are no attorneys’
fees or costs associated with responding to such discovery requests, and (B) the responding party must respond to such discovery
requests (as may be limited by the Lead Arbitrator) within a certain period of time as determined by the Lead Arbitrator.

 

(b)       In
order to allow a written discovery request, the Lead Arbitrator must find that the discovery request satisfies the standards set
forth in these Arbitration Provisions and the Utah Rules of Civil Procedure. The Lead Arbitrator must strictly enforce these standards.
If a discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil
Procedure, the Lead Arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery
request in whole or in part.

 

(c)       Discovery
deadlines will be set forth in a scheduling order issued by the Lead Arbitrator. The parties hereby authorize and direct the Lead
Arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the arbitration
proceedings to be efficient and expeditious.

 

3.7      Each
party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted by the deadlines established
by the Lead Arbitrator. Expert reports must contain the following: (a) a complete statement of all opinions the expert will offer
at trial and the basis and reasons for them; (b) the expert’s name and qualifications, including a list of all publications
within the preceding 10 years, and a list of any other cases in which the expert has testified at trial or in a deposition or prepared
a report within the preceding 10 years; and (c) the compensation to be paid for the expert’s study and testimony. The parties
are entitled to depose any other party’s expert witness one time for no more than 4 hours. An expert may not testify in a
party’s case-in-chief concerning any matter not fairly disclosed in the expert report.

 

3.8      All
information disclosed by either party during the Arbitration process (including without limitation information disclosed during
the discovery process) shall be considered confidential in nature. Each party agrees not to disclose any confidential information
received from the other party during the discovery process unless (i) prior to or after the time of disclosure such information
becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party, (ii) such
information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified
the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent
jurisdiction prior to disclosure; or (iii) disclosed to the receiving party’s agents, representatives and legal counsel on
a need to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5)
of the Arbitration Act, the Lead Arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure
of privileged information and confidential information upon the written request of either party.

 

3.9      The
parties hereby authorize and direct the Arbitration Panel to take such actions and make such rulings as may be necessary to carry
out the parties’ intent for the arbitration proceedings to be efficient and expeditious. Pursuant to Section 120 of the Arbitration
Act, the parties hereby agree that an award of the Arbitration Panel must be made within 150 days after the Arbitration Commencement
Date. The Lead Arbitrator is hereby authorized and directed to hold a scheduling conference within ten (10) calendar days after
the Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert
testimony, and the submission of documents by the parties to enable the Arbitration Panel to render a decision prior to the end
of such 150-day period. The Utah Rules of Evidence will apply to any final hearing before the Arbitration Panel.

 

    	Arbitration Provisions, Page 3

    	 

    

 

3.10    The
decision of the Arbitration Panel shall be determined by majority vote of the arbitrators. The Arbitration Panel shall have the
right to award or include in the Arbitration Panel’s award any relief which the Arbitration Panel deems proper under the
circumstances, including, without limitation, specific performance and injunctive relief, provided that the Arbitration Panel may
not award exemplary or punitive damages. The Arbitration Panel shall select a single arbitrator to prepare the written decision
of the Arbitration Panel.

 

3.11    If
any part of these Arbitration Provisions is found to violate applicable law or to be illegal, then such provision shall be modified
to the minimum extent necessary to make such provision enforceable under applicable law.

 

3.12    The
Arbitration Panel is hereby directed to require the losing party to (i) pay the full amount of the costs and fees of the arbitrators,
and (ii) reimburse the prevailing party the reasonable attorneys’ fees, arbitrator costs, deposition costs, and other discovery
costs incurred by the prevailing party.

 

[Remainder of page intentionally left
blank]

 

    	Arbitration Provisions, Page 4Exhibit 10.12

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CONVERTIBLE PROMISSORY NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY LENDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. 

 

	Original Principal Amount: $447,500.00	Issue Date: August 18, 2014
	Purchase Price: $400,000.00 	 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED,
Blue Sphere Corporation, a Nevada corporation (“Borrower”),
hereby promises to pay to the order of Iliad Research and Trading, L.P., a Utah limited
partnership, or registered assigns (“Lender”), the sum of $447,500.00 (the “Original Principal
Amount”) together with any additional charges provided for herein, on the date that is twelve (12) months after the Issue
Date (the “Maturity Date”), and to pay interest on the Outstanding Balance (as defined below) at the rate of
eight percent (8%) per annum from the date hereof (the “Issue Date”) until the same is paid in full; provided
that upon the occurrence of an Event of Default (as defined below), interest shall thereafter accrue on the Outstanding Balance
both before and after judgment at the rate of twenty-two percent (22%) per annum (“Default Interest”). All interest
calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months,
shall compound daily and shall be payable in accordance with the terms of this Note. Borrower acknowledges that the Original Principal
Amount as of the Issue Date exceeds the purchase price of this Note and that such excess consists of the OID (as defined in the
Purchase Agreement (defined below)) in the amount of $40,000.00, the Transaction Expense Amount (as defined in the Purchase Agreement)
in the amount of $7,500.00 to cover Lender’s legal and other expenses incurred in the preparation of this Note, the Purchase
Agreement, Irrevocable Transfer Agent Instructions, and all other certificates, documents, agreements, resolutions and instruments
delivered to any party under or in connection with this Note, as the same may be amended from time to time (collectively, the “Transaction
Documents”), which sum shall be fully earned and charged to Borrower upon the execution of this Note and paid to Lender
as part of the outstanding principal balance as set forth in this Note. This Note may not be prepaid in whole or in part except
as otherwise provided in Section 1.6. All payments due hereunder (to the extent not converted into common stock, $0.001 par
value per share, of Borrower (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful
money of the United States of America. All payments shall be made at such address as Lender shall designate from time to time by
written notice made in accordance with the provisions of this Note. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof between Borrower and
Lender, pursuant to which this Note was originally issued (the “Purchase Agreement”). For purposes hereof, the
term “Outstanding Balance” means the Original Principal Amount, as reduced or increased, as the case may be,
pursuant to the terms hereof for conversion, breach hereof or otherwise, plus any accrued but unpaid interest (including without
limitation Default Interest), collection and enforcements costs, and any other fees or charges incurred under this Note or under
the Purchase Agreement. Certain capitalized terms used herein are defined in Section 6.

 

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

 

    	 

    	 

    

 

The following additional
terms shall apply to this Note:

 

1.           CONVERSION
RIGHTS.

 

1.1.         Conversion
Right. Subject to Sections 1.5 and 1.7, during the period beginning on the date that is six (6) months following the Issue
Date (the “Initial Conversion Date”) and ending when the Outstanding Balance is paid or converted in full (including
without limitation until any Optional Prepayment Date (as defined below), even if Lender has received an Optional Prepayment Notice
(as defined below), or at any time thereafter with respect to any amount that is not prepaid), Lender shall, at its option, have
the right from time to time, to convert all or any part of the Outstanding Balance of this Note into fully paid and non-assessable
shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of Borrower
into which such Common Stock shall hereafter be changed or reclassified at the Conversion Price (as defined below) determined as
provided herein (a “Conversion”). The number of shares of Common Stock to be issued upon each Conversion of
this Note (the “Conversion Shares”) shall be determined by dividing the Conversion Amount (as defined below)
by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto
as Exhibit A (the “Conversion Notice”), delivered to Borrower by Lender in accordance with Section
1.3(a) below; provided that the Conversion Notice is submitted by facsimile or e-mail (or by other means resulting in, or reasonably
expected to result in, notice) to Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion
Date”). The term “Conversion Amount” means, with respect to any Conversion of this Note, the portion
of the Outstanding Balance to be converted.

 

1.2.         Conversion
Price.

 

(a)          Calculation
of Conversion Price. The conversion price (as the same may be adjusted from time to time pursuant to the terms hereof, the
“Conversion Price”) shall mean 58% (the “Conversion Factor”) multiplied by the Market Price
(as defined herein). “Market Price” means the average of the three (3) lowest Closing Bid Prices for the Common
Stock during the ten (10) Trading Day (as defined below) period ending on the latest complete Trading Day prior to the Conversion
Date. “Trading Price” means, for the Common Stock as of any date, the closing bid price on the Principal Market
as reported by a reliable reporting service designated by Lender (e.g. Bloomberg) or, if the Principal Market is not the principal
trading market for such security, the closing bid price of such security on the principal securities exchange or trading market
where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners,
the average of the closing bid prices of any market makers for such security that are quoted in “OTC Pink” by Pink
OTC Markets Inc. (formerly Pink Sheets LLC), or any successor entity or other publisher thereof. If the Trading Price cannot be
calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually
determined by Borrower and Lender. “Trading Day” shall mean any day on which the Common Stock is traded or tradable
for any period on the Principal Market, or on the principal securities exchange or other securities market on which the Common
Stock is then being traded. “Principal Market” means the OTCQB.

 

(b)          Conversion
Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event Borrower
(i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which
Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially
all of the assets of Borrower or (ii) any person, group or entity (including Borrower) publicly announces a tender offer to purchase
50% or more of Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause
(i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective
upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to
the lower of (1) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date, and
(2) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in this Section 1.2(b). For purposes hereof, “Adjusted Conversion Price
Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which
a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination
or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

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1.3.         Method
of Conversion.

 

(a)          Mechanics
of Conversion. Subject to Section 1.5 hereof, beginning on the date specified in Section 1.1, this Note may be converted by
Lender in whole or in part at any time from time to time after the Initial Conversion Date, by submitting to Borrower a Conversion
Notice (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New
York, New York time), otherwise the Conversion Date will be the next Trading Day.

 

(b)          Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, Lender shall not be required to physically surrender this Note to Borrower unless the entire Outstanding
Balance of this Note is so converted. Lender and Borrower shall maintain records showing the amount of the Outstanding Balance
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to Lender and Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of Lender shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as aforesaid, Lender may not transfer this Note unless Lender first physically
surrenders this Note to Borrower, whereupon Borrower will forthwith issue and deliver upon the order of Lender a new Note of like
tenor, registered as Lender may request, representing in the aggregate the remaining Outstanding Balance of this Note. Lender 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 Outstanding Balance of this Note represented by this Note may
be less than the amount stated on the face hereof.

 

(c)          Payment
of Taxes. Borrower is responsible for the payment of all transfer, stamp, issuance and similar taxes, transfer agent fees,
postage, expedite fees, and other actual costs, fees and taxes necessary to cause the Conversion Shares to be issued and delivered
to Lender and cleared for trading as contemplated hereunder. Any such fees, taxes or costs paid by Lender will be promptly reimbursed
by Borrower or added to the Outstanding Balance.

 

(d)          Delivery
of Common Stock Upon Conversion. On or before the close of business on the third (3rd) Trading Day following the
date of receipt of a Conversion Notice from Lender via facsimile transmission or e-mail (or other reasonable means of communication)
(the “Delivery Date”), Borrower shall, provided that all DWAC Eligible Conditions are then satisfied, credit
the aggregate number of Conversion Shares to which Lender shall be entitled to the account specified on the Conversion Notice via
the DWAC (as defined below) system. If all DWAC Eligible Conditions are not then satisfied, Borrower shall instead issue and deliver
or cause to be issued and delivered (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate,
registered in the name of Lender or its designee, for the number of Conversion Shares to which Lender shall be entitled. For the
avoidance of doubt, Borrower has not met its obligation to deliver Conversion Shares by the Delivery Date unless Lender or its
broker, as applicable, has actually received the shares electronically into the applicable account, or if the DWAC Eligible Conditions
are not then satisfied, has actually received the certificate representing the applicable Conversion Shares, such certificate has
been cleared of any restricted legend(s), the shares evidenced by such certificate have been deposited into Lender’s brokerage
account, and such shares are freely tradable without violating any securities laws, all no later than the close of business on
the relevant Delivery Date pursuant to the terms set forth above. For purposes hereof, the term “DWAC Eligible Conditions”
means that (i) the Common Stock is eligible at DTC (as defined below) for full services pursuant to DTC’s operational arrangements,
including without limitation transfer through DTC’s DWAC system, (ii) Borrower has been approved (without revocation) by
the DTC’s underwriting department, (iii) Borrower’s transfer agent is approved as an agent in the DTC/FAST Program
(as defined below), (iv) the Conversion Shares are otherwise eligible for delivery via DWAC (including compliance with Rule 144
promulgated under the 1933 Act), and (v) Borrower’s transfer agent does not have a policy prohibiting or limiting delivery
of the Conversion Shares via DWAC. For purposes of this Note, the term “DWAC” means Deposit Withdrawal at Custodian
as defined by the DTC; the term “DTC” means the Depository Trust Company; and the term “DTC/FAST Program”
means the DTC’s Fast Automated Securities Transfer Program.

 

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(e)          Obligation
of Borrower to Deliver Common Stock. If Lender shall have given a Conversion Notice as provided herein, Borrower’s obligation
to issue and deliver the shares of Common Stock shall be absolute and unconditional, irrespective of the absence of any action
by Lender to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of Borrower to the
holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by Lender
of any obligation to Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of Borrower
to Lender in connection with such conversion. The Conversion Date specified in the Conversion Notice shall be the Conversion Date
so long as the Conversion Notice is delivered to Borrower before 6:00 p.m., New York, New York time, on such date; otherwise, the
Conversion Date shall be the next Trading Day.

 

(f)          Delivery
of Common Stock. Notwithstanding any other provision contained herein and assuming compliance with DWAC Eligible Conditions,
failure to deliver via the DWAC system any Common Stock to be delivered to Lender under this Section 1.3 shall constitute a breach
of this Agreement and an Event of Default under Section 3 hereof, including without limitation under Sections 3.1(c) and 3.1(p).

 

(g)          Failure
to Deliver Common Stock Prior to Delivery Date. The parties agree that if delivery of the Common Stock issuable upon conversion
of this Note is not delivered as required by Section 1.3(d) by the Delivery Date, a late fee equal to the greater of (i) $500.00
per day and (ii) 2% of the applicable Conversion Share Value rounded to the nearest multiple of $100.00 (but in any event the cumulative
amount of such late fees for each Conversion shall not exceed 200% of the applicable Conversion Share Value) will be assessed for
each day after the Delivery Date until Conversion Share delivery is made; and such late fee will be added to the Outstanding Balance
(such fees, the “Conversion Delay Late Fees”). For illustration purposes only, if Lender delivers a Conversion
Notice to Borrower pursuant to which Borrower is required to deliver 100,000 Conversion Shares to Lender and on the Delivery Date
such Conversion Shares have a Conversion Share Value of $20,000.00 (assuming a Closing Sale Price on the Delivery Date of $0.20
per share of Common Stock), then in such event a Conversion Delay Late Fee in the amount of $500.00 per day (the greater of $500.00
per day and $20,000.00 multiplied by 2%, which is $400.00) would be added to the Outstanding Balance of this Note until such Conversion
Shares are delivered to Lender. For purposes of this example, if the Conversion Shares are delivered to Lender twenty (20) days
after the applicable Delivery Date, the total Conversion Delay Late Fees that would be added to the Outstanding Balance would be
$10,000.00 (20 days multiplied by $500.00 per day). If the Conversion Shares are delivered to Lender one hundred (100) days after
the applicable Delivery Date, the total Conversion Delay Late Fees that would be added to the Outstanding Balance would be $40,000.00
(100 days multiplied by $500.00 per day, but capped at 200% of the Conversion Share Value).

 

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1.4.         Effect
of Certain Events.

 

(a)          Fundamental
Transaction Consent Right. Borrower shall not enter into or be party to a Fundamental Transaction (as defined below), unless
Borrower obtains the prior written consent of Lender to enter into such Fundamental Transaction. For purposes of this Note, “Fundamental
Transaction” means that (i) any “person” or “group” (as these terms are used for purposes
of Sections 13(d) and 14(d) of the 1934 Act (as defined in the Purchase Agreement) and the rules and regulations promulgated thereunder)
is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly,
of 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of Borrower, or (ii) (1) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into
(whether or not Borrower or any of its subsidiaries is the surviving corporation) any other individual, corporation, limited liability
company, partnership, association, trust or other entity or organization (collectively, “Person”), or (2) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer,
convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other Person to make a
purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of
Borrower (not including any shares of voting stock of Borrower held by the Person or Persons making or party to, or associated
or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other Person whereby such other Person acquires more than 50% of the outstanding shares of voting stock of Borrower (not
including any shares of voting stock of Borrower 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), or
(5) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize
or reclassify the Common Stock, other than an increase in the number of authorized shares of Borrower’s Common Stock. The
provisions of this Section 1.4(a) shall apply similarly and equally to successive Fundamental Transactions and shall be applied
without regard to any limitations on the conversion of this Note. As a condition to pre-approving any Fundamental Transaction in
writing, which approval may be withheld in Lender’s sole discretion, Lender may require the resulting successor or acquiring
entity (if not Borrower) to assume by written instrument all of the obligations of Borrower under this Note and all the other Transaction
Documents with the same effect as if such successor or acquirer had been named as Borrower hereto and thereto.

 

(b)          Adjustment
Due to Fundamental Transactions. If, at any time when this Note is issued and outstanding and prior to conversion of all of
this Note, there shall be any Fundamental Transaction that is pre-approved in writing by Lender pursuant to Section 1.4(a) above,
as a result of which shares of Common Stock of Borrower shall be changed into the same or a different number of shares of another
class or classes of stock or securities of Borrower or another entity, or in case of any sale or conveyance of all or substantially
all of the assets of Borrower other than in connection with a plan of complete liquidation of Borrower, then Lender shall thereafter
have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which Lender
would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction
(without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with
respect to the rights and interests of Lender to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares issuable upon conversion of this Note) shall thereafter be applicable,
as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The
above provisions shall similarly apply to successive Fundamental Transactions.

 

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

 

(d)          Reserved.

 

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

 

(f)          Reserved.

 

(g)          Adjustment
Due to Late Clearing of DWAC Eligible Shares. If, at any time when this Note is issued and outstanding, Lender delivers a Conversion
Notice and at such time the Common Stock is DWAC Eligible and the applicable DWAC Eligible Conversion Shares are delivered to Lender
or its broker, but it takes longer than five (5) business days after such delivery for such Conversion Shares to be electronically
cleared for trading in Lender’s brokerage account, then the Late Clearing Adjustment Amount (as defined below) shall be added
to the Outstanding Balance of this Note, without limiting any other rights of Lender under this Note or the other Transaction Documents.
The “Late Clearing Adjustment Amount” is the amount equal to the number of applicable Conversion Shares multiplied
by the excess, if any, of (1) the Trading Price of the Common Stock on the Conversion Date, over (2) the Trading Price of the Common
Stock on the date the certificated DWAC Eligible Conversion Shares are electronically cleared for trading in Lender’s brokerage
account. In any such case, and without limiting any other provision hereof, each of Lender and Borrower agrees to take all action
reasonably necessary on its part to help ensure that the applicable Conversion Shares are electronically cleared for trading in
Lender’s brokerage account within the five-day period described above.

 

(h)          Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price or the addition of the Late
Clearing Adjustment Amount to the Outstanding Balance as a result of the events described in this Section 1.4, Borrower, at its
expense, shall promptly compute such adjustment or readjustment and prepare and furnish to Lender a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. Borrower shall,
upon the written request at any time of Lender, furnish to Lender a like certificate setting forth (i) such adjustment or readjustment,
(ii) the Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of this Note.

 

(i)          Adjustments
for Stock Split. Notwithstanding anything herein to the contrary, any references to share numbers or share prices shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction.

 

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1.5.          Ownership
Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, if at any time
Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause Lender
(together with its Affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding
on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “Maximum Percentage”),
then Borrower must not issue to Lender shares of the Common Stock which would exceed the Maximum Percentage. For purposes of this
Section, beneficial ownership of Common Stock will be determined under the 1934 Act. The shares of Common Stock issuable to Lender
that would cause the Maximum Percentage to be exceeded are referred to herein as the “Ownership Limitation
Shares”. Borrower will reserve the Ownership Limitation Shares for the exclusive benefit of Lender. From time to time,
Lender may notify Borrower in writing of the number of the Ownership Limitation Shares that may be issued to Lender without causing
Lender to exceed the Maximum Percentage. Upon receipt of such notice, Borrower shall be unconditionally obligated to immediately
issue such designated shares to Lender, with a corresponding reduction in the number of the Ownership Limitation Shares. Notwithstanding
the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization
of the Common Stock is less than $10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%”
is replaced with “9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall remain at 9.99%
until increased, decreased or waived by Lender as set forth below. For purposes of this Note, the term “Market Capitalization
of the Common Stock” shall mean the product equal to (A) the average VWAP of the Common Stock for the immediately preceding
fifteen (15) Trading Days, multiplied by (B) the aggregate number of outstanding shares of Common Stock as reported on Borrower’s
most recently filed Form 10-Q or Form 10-K. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage
as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement
is enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of Lender.

 

1.6.          Prepayment.
So long as Borrower has not received a Conversion Notice from Lender where the applicable Conversion Shares have not yet been delivered
and so long as no Event of Default has occurred since the Issue Date (whether declared by Lender or undeclared), then Borrower
shall have the right, exercisable on not less than five (5) Trading Days prior written notice to Lender to prepay the Outstanding
Balance of this Note, in full, in accordance with this Section 1.6. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to Lender at its registered addresses and shall state: (a) that Borrower is exercising its
right to prepay this Note, and (b) the date of prepayment, which shall be not less than five (5) Trading Days from the date of
the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), Borrower
shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of Lender as may be specified by Lender
in writing to Borrower. If Borrower exercises its right to prepay this Note, Borrower shall make payment to Lender of an amount
in cash (the “Optional Prepayment Amount”) equal to 125%, multiplied by the then Outstanding Balance of this
Note. In the event Borrower delivers the Optional Prepayment Amount to Lender prior to the Optional Prepayment Date or without
delivering an Optional Prepayment Notice to Lender as set forth herein without Lender’s prior written consent, the Optional
Prepayment Amount shall not be deemed to have been paid to Lender until the Optional Prepayment Date. Moreover, in such event the
Optional Prepayment Liquidated Damages Amount will automatically be added to the Outstanding Balance of this Note on the day Borrower
delivers the Optional Prepayment Amount to Lender. In the event Borrower delivers the Optional Prepayment Amount without an Optional
Prepayment Notice, then the Optional Prepayment Date will be deemed to be the date that is five (5) Trading Days from the date
that the Optional Prepayment Amount was delivered to Lender. In addition, if Borrower delivers an Optional Prepayment Notice and
fails to pay the Optional Prepayment Amount due to Lender within two (2) Trading Days following the Optional Prepayment Date, Borrower
shall forever forfeit its right to prepay this Note pursuant to this Section 1.6.

 

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1.7.         Redemption
Right. Notwithstanding anything to the contrary in this Section 1, upon its receipt of a Conversion Notice pursuant to Section
1.1 above, Borrower may elect to pay to Lender all of the Conversion Amount set forth in any Conversion Notice in cash by delivering
cash in the amount of the Cash Redemption Amount (as defined below) to Lender by wire transfer of immediately available funds on
or before the Delivery Date applicable to such Conversion Notice. In the event Borrower fails to deliver such Cash Redemption Amount
to Lender on or before any applicable Delivery Date, it shall be deemed to have waived its right to pay such Conversion Amount
in cash and shall be obligated to deliver Conversion Shares for the full Conversion Amount in the manner prescribed in this Section
1. For purposes hereof, “Cash Redemption Amount” means an amount of cash equal to the product of the closing
price of the Common Stock on its Principal Market on the Trading Day immediately prior to the date of the applicable Conversion
Notice multiplied by the number of Conversion Shares to be delivered pursuant to the applicable Conversion Notice.

 

2.           CERTAIN
COVENANTS.

 

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

 

2.2.         Restriction
on Stock Repurchases. So long as Borrower shall have any obligation under this Note, Borrower shall not without Lender’s
written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise)
in any one transaction or series of related transactions any shares of capital stock of Borrower or any warrants, rights or options
to purchase or acquire any such shares, provided that no consent of Lender shall be required for Borrower to repurchase, redeem
or repay any of its convertible debt securities.

 

2.3.         Reserved.

 

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

 

2.5.         Reserved.

 

3.           EVENTS
OF DEFAULT.

 

3.1.         Events
of Default. The occurrence of any of the following events of default shall be an event of default hereunder as of the date
such event first occurred (each, an “Event of Default”):

 

(a)          Failure
to Pay Amounts Due. Borrower fails to pay any amount when due on this Note, whether at maturity, upon acceleration or otherwise.

 

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(b)          Conversion
and the Shares. Borrower (i) fails to issue Conversion Shares to Lender or Lender’s broker (as set forth in the applicable
Conversion Notice) on or before the Delivery Date, (ii) fails to transfer or cause its transfer agent to transfer (issue) any shares
of Common Stock issued to Lender upon conversion of or otherwise pursuant to this Note as and when required by this Note or any
of the other Transaction Documents, (iii) Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders
its transfer agent in transferring (or issuing) any shares of Common Stock to be issued to Lender upon conversion of or otherwise
pursuant to this Note as and when required by this Note or any of the other Transaction Documents, or (iv) fails to remove (or
directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend
(or to withdraw any stop transfer instructions in respect thereof) on any shares of Common Stock issued to Lender upon conversion
of or otherwise pursuant to this Note as and when required by this Note or any of the other Transaction Documents.

 

(c)          Breach
of Covenants and Obligations. Borrower breaches any covenant or obligation or other term or condition contained in this Note,
in the Purchase Agreement or any document entered into in conjunction therewith, including but not limited to the other Transaction
Documents.

 

(d)          Breach
of Representations and Warranties. Any representation or warranty of Borrower made herein or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement and
any other Transaction Documents), shall be false or misleading in any material respect when made.

 

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

 

(f)          Judgments.
Any money judgment, writ or similar process shall be entered or filed against Borrower or any subsidiary of Borrower or any of
its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20)
calendar days unless otherwise consented to by Lender, which consent will not be unreasonably withheld.

 

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

 

(h)          Delisting
of Common Stock. Borrower shall fail to maintain the listing and/or quotation, as applicable, of the Common Stock on the Principal
Market.

 

(i)          Failures
Under the 1934 Act. Borrower shall fail to be current in or in material compliance with its reporting requirements under the
1934 Act; and/or Borrower shall cease to be subject to the reporting requirements of the 1934 Act.

 

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

 

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

 

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

 

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

 

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(n)          Reserved.

 

(o)          Replacement
of Transfer Agent. In the event that Borrower proposes to replace its transfer agent, Borrower fails to provide, prior to the
effective date of such replacement, a fully executed Irrevocable Transfer Agent Instruction Letter in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in
the Share Reserve (as defined in the Purchase Agreement) and the Transfer Agent Reserve (as defined in the Purchase Agreement))
signed by the successor transfer agent to Lender and Borrower.

 

(p)          DWAC
Eligibility. Provided that the Common Stock may be issued via DWAC without violating applicable securities laws, the failure
of any of the DWAC Eligible Conditions to be satisfied at any time during which Borrower has obligations under this Note.

 

(q)          Share
Reserve. Borrower shall fail to maintain the Share Reserve as required under the Purchase Agreement.

 

3.2.         Cross
Default. A breach or default by Borrower of any covenant or other term or condition contained in any Other Agreements (as defined
below) shall, at the option of Lender, be considered an Event of Default under this Note, in which event Lender shall be entitled
(but in no event required) to apply all rights and remedies of Lender under the terms of this Note. “Other Agreements”
means, collectively, (a) all existing and future agreements and instruments between, among or by Borrower (or an affiliate), on
the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement or a material agreement that affects
Borrower’s ongoing business operations and pursuant to which Borrower is obligated to pay or repay $100,000.00 or more. For
the avoidance of doubt, all existing and future loan transactions between Borrower and Lender and their respective affiliates will
be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to Lender.

 

3.3.         Remedies.
Upon the occurrence of any Event of Default, Borrower shall within one (1) Trading Day deliver written notice thereof via facsimile,
email or reputable overnight courier (with next day delivery specified) (an “Event of Default Notice”) to Lender.
At any time and from time to time after the earlier of Lender’s receipt of an Event of Default Notice and Lender becoming
aware of the occurrence of any Event of Default, Lender may accelerate this Note by written notice to Borrower, with the Outstanding
Balance becoming immediately due and payable in cash at the Mandatory Default Amount. Notwithstanding the foregoing, at any time
following the occurrence of any Event of Default, Lender may, at its option, elect to increase the Outstanding Balance by applying
the Default Effect (subject to the limitation set forth below) via written notice to Borrower without accelerating the Outstanding
Balance, in which event the Outstanding Balance shall be increased as of the date of the occurrence of the applicable Event of
Default pursuant to the Default Effect, but the Outstanding Balance shall not be immediately due and payable unless so declared
by Lender (for the avoidance of doubt, if Lender elects to apply the Default Effect pursuant to this sentence, it shall reserve
the right to declare the Outstanding Balance immediately due and payable at any time and no such election by Lender shall be deemed
to be a waiver of its right to declare the Outstanding Balance immediately due and payable as set forth herein unless otherwise
agreed to by Lender in writing). Notwithstanding the foregoing, upon the occurrence of any Event of Default described in Sections
3.1(e), 3.1(g), 3.1(j), or 3.1(k), the Outstanding Balance as of the date of acceleration shall become immediately and automatically
due and payable in cash at the Mandatory Default Amount, without any written notice required by Lender. Additionally, following
the occurrence of any Event of Default, Borrower may, at its option, pay any Conversion in cash instead of Conversion Shares by
paying to Lender on or before the applicable Delivery Date a cash amount equal to the number of Conversion Shares set forth in
the applicable Conversion Notice multiplied by the highest intra-day trading price of the Common Stock that occurs during the period
beginning on the date the applicable Event of Default occurred and ending on the date of the applicable Conversion Notice. In connection
with acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand, protest or other
notice of any kind, and Lender 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 Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any,
as Lender receives full payment pursuant to this Section 3.3. No such rescission or annulment shall affect any subsequent Event
of Default or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any other remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with
respect to Borrower’s failure to timely deliver Conversion Shares upon Conversion of the Notes as required pursuant to the
terms hereof.

 

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4.           SECURITY.
This Note is unsecured.

 

5.           MISCELLANEOUS.

 

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

 

5.2.          Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with the subsection of the Purchase Agreement titled “Notices.”

 

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

 

5.4.          Assignability.
This Note shall be binding upon Borrower and its successors and assigns, and shall inure to be the benefit of Lender and its successors
and assigns; provided, however, that this Note may not be transferred, assigned or conveyed by Borrower without the prior
written consent of Lender. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the Securities Act of 1933, as amended) and any such assignment by the Lender shall comply with applicable securities laws.
Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement.

 

5.5.          Cost
of Collection; Attorneys’ Fees. Upon the occurrence of any Event of Default, Borrower shall pay to Lender hereof all
costs and reasonable attorneys’ fees incurred by Lender in connection with such Event of Default. In the event of any action
at law or in equity to enforce or interpret the terms of this Note or any of the other Transaction Documents, the parties agree
that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled
to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection
with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving
rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for
frivolous or bad faith pleading.

 

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5.6.          Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Utah without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of Utah or in the federal courts located in Salt Lake County, Utah. The parties to this
Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any
defense based on lack of jurisdiction or venue or based upon forum non conveniens. In the event that any provision of this
Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other
related or companion documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR
ANY TRANSACTION CONTEMPLATED HEREBY.

 

5.7.          Fees
and Charges. The parties acknowledge and agree that upon Borrower’s failure to comply with the provisions of this Note,
Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’
inability to predict future interest rates, Lender’s increased risk, and the uncertainty of the availability of a suitable
substitute investment opportunity for Lender, among other reasons. Accordingly, any fees, charges, and interest due under this
Note are intended by the parties to be, and shall be deemed, a reasonable estimate of Lender’s actual loss of its investment
opportunity and not a penalty, and shall not be deemed in any way to limit any other right or remedy Lender may have hereunder,
at law or in equity.

 

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

 

5.9.          Purchase
Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement
and the other Transaction Documents, including without limitation the arbitration provisions attached as an Exhibit to the Purchase
Agreement.

 

    	12

    	 

    

 

5.10.         Notice
of Corporate Events. Except as otherwise provided herein, Lender shall have no rights as a holder of Common Stock unless and
only to the extent that it converts this Note into Common Stock. Borrower shall provide Lender with prior notification of any meeting
of Borrower’s stockholders (and copies of proxy materials and other information sent to stockholders). In the event of any
taking by Borrower of a record of its stockholders for the purpose of determining stockholders who are entitled to receive payment
of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation,
reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right,
or for the purpose of determining stockholders who are entitled to vote in connection with any proposed sale, lease or conveyance
of all or substantially all of the assets of Borrower or any proposed liquidation, dissolution or winding up of Borrower, Borrower
shall mail a notice to Lender, at least twenty (20) calendar days prior to the record date specified therein (or thirty (30) calendar
days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be
taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character
of such dividend, distribution, right or other event to the extent known at such time. Borrower shall make a public announcement
of any event requiring notification to Lender hereunder substantially simultaneously with the notification to Lender in accordance
with the terms of this Section 5.10.

 

5.11.         Pronouns.
All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may permit
or require.

 

5.12.         Time
of the Essence. Time is expressly made of the essence of each and every provision of this Note. If the last day of any time
period stated herein shall fall on a Saturday, Sunday or non-Trading Day, then such time period shall be extended to the next succeeding
day Trading Day.

 

5.13.         Liquidated
Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of any Note,
Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’
inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly,
Lender and Borrower agree that any fees, balance adjustments, Default Interest, or other charges assessed under any Note are not
penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Lender’s and Borrower’s
expectations that any such liquidated damages will tack back to the applicable Purchase Price Date for purposes of determining
the holding period under Rule 144).

 

6.           DEFINITIONS.

 

6.1.          “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if its principal market is not the principal securities exchange or trading market for such
security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing
bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in “OTC Pink” by Pink OTC Markets Inc. (formerly Pink Sheets LLC), and any successor thereto. If the Closing Bid Price
or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined
by Lender and Borrower.

 

6.2.          “Conversion
Share Value” means the product of the number of Conversion Shares deliverable pursuant to any Conversion multiplied by
the Closing Sale Price of the Common Stock on the Delivery Date for such Conversion.

 

    	13

    	 

    

 

6.3.          “Default
Effect” means a calculation obtained by multiplying the Outstanding Balance as of the date the applicable Event of Default
occurred by (a) 15% for each occurrence of any Major Default, or (b) 5% for each occurrence of any Minor Default, and then adding
the resulting product to the Outstanding Balance as of the date the applicable Event of Default occurred, with the sum of the foregoing
then becoming the Outstanding Balance under this Note as of the date the applicable Event of Default occurred; provided that the
Default Effect may only be applied three (3) times hereunder with respect to Major Defaults and three (3) times hereunder with
respect to Minor Defaults; and provided further that the Default Effect shall not apply to any Event of Default pursuant to Section
3.1(b) hereof.

 

6.4.          “Major
Default” means any Event of Default occurring under Sections 3.1(a), 3.1(h), 3.1(i), or 3.1(q) of this Note.

 

6.5.          “Mandatory
Default Amount” means the greater of (i) the Outstanding Balance divided by the Conversion Price on the date the Mandatory
Default Amount is demanded, multiplied by the VWAP on the date the Mandatory Default Amount is demanded, or (ii) the Default Effect.

 

6.6.          “Minor
Default” means any Event of Default that is not a Major Default.

 

6.7.          “Optional
Prepayment Liquidated Damages Amount” means an amount equal to the difference between (a) the product of (i) the number
of shares of Common Stock obtained by dividing (1) the applicable Optional Prepayment Amount by (2) the Conversion Price as of
the date Borrower delivered the applicable Optional Prepayment Amount to Lender, multiplied by (ii) the Closing Sale Price of the
Common Stock on the date Borrower delivered the applicable Optional Prepayment Amount to Lender, and (b) the applicable Optional
Prepayment Amount paid by Borrower to Lender. For illustration purposes only, if the applicable Optional Prepayment Amount were
$50,000.00, the Conversion Price as of the date the Optional Prepayment Amount was paid to Lender was equal to $0.75 per share
of Common Stock, and the Closing Sale Price of a share of Common Stock as of such date was equal to $1.00, then the Optional Prepayment
Liquidated Damages Amount would equal $16,666.67 computed as follows: (a) $66,666.67 (calculated as (i)(1) $50,000.00 divided by
(2) $0.75 multiplied by (ii) $1.00) minus (b) $50,000.00.

 

6.8.          “VWAP”
means volume weighted average price.

 

[Remainder of page
intentionally left blank; signature page to follow]

 

    	14

    	 

    

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer as of the Issue Date set forth above.

  

	 	BORROWER:
	 	 
	 	Blue Sphere Corporation
	 	 	 
	 	By: 	 
	 	Name: 	 
	 	Title: 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

LENDER:

 

Iliad Research and
Trading, L.P.

 

	By:	Iliad Management, LLC, its General Partner	 
	 	 	 	 	 
	 	By:	Fife Trading, Inc., its Manager	 
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	John M. Fife, President	 

 

[Signature page to Convertible Promissory
Note]

 

    	 

    	 

    

 

EXHIBIT A

 

Iliad
Research and Trading, L.P.

303 EAST WACKER DRIVE, SUITE 1200

CHICAGO, ILLINOIS 60601

 

Date:                            

BLUE SPHERE CORPORATION

35 Asuta Street

Even Yehuda, Israel 40500

Attn: Schlomo Palas

 

CONVERSION NOTICE

 

The above-captioned
Lender hereby gives notice to BLUE SPHERE CORPORATION, a Nevada corporation (the “Borrower”), pursuant to that
certain Convertible Promissory Note made by Borrower in favor of Lender on August 18, 2014 (the “Note”), that
Lender elects to convert the portion of the Outstanding Balance of the Note set forth below into fully paid and non-assessable
shares of Common Stock of Borrower as of the date of conversion specified below. Such conversion shall be based on the Conversion
Price set forth below. In the event of a conflict between this Conversion Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may provide a new form of Conversion Notice to conform to
the Note.

 

A.           Date
of conversion: ____________

B.           Conversion
#: ____________

C.           Conversion
Amount: ____________

D.           Market
Price_____ (Average of 3 lowest Closing Bid Prices of last 10 Trading Days as per Exhibit A-1)

E.           Conversion
Factor: 58%

F.           Conversion
Price: _______________ (D multiplied by E)

G.           Conversion
Shares: _______________ (C divided by F)

H.           Remaining
Outstanding Balance of Note: ____________*

 

* Subject to adjustments for corrections,
defaults, and other adjustments permitted by the Transaction Documents, the terms of which shall control in the event of any dispute
between the terms of this Conversion Notice and such Transaction Documents.

Please transfer the Conversion Shares
electronically (via DWAC) to the following account:

 

	Broker:  _______________	 	Address:	 	 
	DTC#: ________________	 	 	 	 
	Account #:  ____________	 	 	 	 
	Account Name:  ________	 	 	 	 

 

To the extent the Conversion Shares are
not able to be delivered to Lender electronically via the DWAC system, please deliver a certificate representing all such shares
to Lender via reputable overnight courier after receipt of this Conversion Notice (by facsimile transmission or otherwise) to:

 

	 	 	 
	 	 	 
	 	 	 

 

	 	Sincerely,
	 	Iliad Research and Trading, L.P.
	 	 
	 	By: Iliad Management, LLC, its General Partner
	 	 	 	 
	 	 	By:	Fife Trading, Inc., its Manager
	 	 	 	 	 
	 	 	 	By: 	 
	 	 	 	 	John M. Fife, President

  

    	 

    	 

    

 

EXHIBIT A-1

 

CONVERSION WORKSHEET

 

	Trading Day	Closing Bid Price	Lowest 3 (Yes or No)
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Average

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