Document:

FIFTH AMENDMENT

TO

AMENDED AND RESTATED NOTE PURCHASE
AGREEMENT

 

This
FIFTH AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (the “Amendment”),
dated and effective as of November 30, 2012, by and between INTERLEUKIN GENETICS, INC., a Delaware corporation (the “Company”),
and PYXIS INNOVATIONS INC., a Delaware corporation (“Pyxis”).

 

WHEREAS,
the Company and Pyxis are parties to an Amended and Restated Note Purchase Agreement dated as of March 10, 2009 and amended on
August 10, 2009, February 1, 2010, September 30, 2010 and June 29, 2012 (the “Agreement”), pursuant to which Pyxis
extended the Company a credit facility (the “Credit Facility”) in an amount (following applicable adjustments) not
to exceed Fourteen Million Three Hundred Sixteen Thousand Two Hundred Fifty-Five Dollars and No/100 ($14,316,255.00) on which the
Company may draw down until June 30, 2012 (the “Credit Facility Termination Date”);

 

WHEREAS,
Pyxis purchased, and the Company sold and issued to Pyxis, (i) a promissory note in the principal amount of Four Million Dollars
and No/100 ($4,000,000.00) on June 10, 2008, (ii) a promissory note in the principal amount of One Million Dollars and No/100 ($1,000,000.00)
on May 29, 2009, (iii) a promissory note in the principal amount of Two Million Dollars and No/100 ($2,000,000.00) on November
9, 2009, (iv) a promissory note in the principal amount of Two Million Dollars and No/100 ($2,000,000.00) on February 1, 2010,
(v) a promissory note in the principal amount of Two Million Dollars and No/100 ($2,000,000.00) on September 30, 2010, (vi) a promissory
note in the principal amount of Two Million Dollars and No/100 ($2,000,000.00) on November 9, 2011 and (vii) a promissory note
in the principal amount of One Million Three Hundred and Sixteen Thousand Two Hundred and Fifty-Five Dollars and No/100 ($1,316,255.00)
on April 13, 2012, all under the terms of the Credit Facility; 

 

WHEREAS, the Company has requested
that Pyxis extend the Maturity Date of all Notes issued pursuant to the Credit Facility, and Pyxis is willing to grant such extension;

 

NOW, THEREFORE, in consideration
of the foregoing premises and the representations, warranties, covenants and agreements contained in the Agreement and this Amendment,
the parties hereto agree as follows:

 

		1.	Capitalized terms herein which are not otherwise defined in this
Amendment shall have the meanings given to them in the Agreement.

 

		2.	The Maturity Date on which the principal amount of all Notes issued
pursuant to the Credit Facility shall be payable shall be extended to March 31, 2014.

 

		3.	Except as amended hereby, all of the terms and conditions of the Agreement shall remain in full force and effect.

 

		4.	This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

    	 

    	 

    

 

IN WITNESS WHEREOF, the parties have
executed this Fourth Amendment to Amended and Restated Note Purchase Agreement as of the date first written above.

 

	 	INTERLEUKIN GENETICS, INC.
	 	 
	 	By:	/s/ Eliot M. Lurier
	 	Name: Eliot M. Lurier
	 	Title:   Chief Financial Officer and Treasurer
	 	 
	 	PYXIS INNOVATIONS INC.
	 	 
	 	By:	/s/ David J. Tuit
	 	Name: David J. Tuit
	 	Title: Assistant TreasurerEXHIBIT 10.1

 

 

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Second Amendment
(the “Second Amendment”) to the Employment Agreement (the “Agreement”) dated as of November
12, 2008 by and between Interleukin Genetics, Inc., a Delaware corporation (“Employer”) and Kenneth S. Kornman,
an individual (“Employee”), as amended by that certain First Amendment to Employment Agreement dated as of March
31, 2012 by and between Employer and Employee (the “First Amendment”), is made effective as of November 29,
2012. Capitalized terms used herein and not otherwise defined have the meaning set forth in the Agreement.

 

WHEREAS, Employer and
Employee desire to amend the Agreement to extend the Term, modify Employee’s title and duties, and reaffirm Employee’s
obligations under the Agreement (including but not limited to the obligations set forth in Section 8 thereunder).

 

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained in this Second Amendment and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                 
Amendment of Section 1 of the Agreement. Section 1 of the Agreement is hereby amended by deleting “November
30, 2012” and inserting “November 30, 2015”.

 

2.                 
Amendment of Section 2(a) of the Agreement.

 

(a)               
Section 2(a) of the Agreement is hereby amended by deleting “set forth on Exhibit A hereto” and inserting “of
Chief Executive Officer, Chief Scientific Officer, and President of Employer”.

 

(b)              
Section 2(a) of the Agreement is further hereby amended by deleting the word “office” and inserting the word
“offices”.

 

3.                 
Miscellaneous.

 

(a)               
Except as contemplated by this Second Amendment, all of the terms and conditions of the Agreement shall remain in full force
and effect.

 

(b)              
Without limiting the foregoing, in consideration of the mutual covenants contained herein and other good and valuable consideration,
and further as an express condition of Employer’s grant of stock options to Employee concomitantly herewith (as memorialized
in that certain stock option agreement between Employer and Employee executed concomitantly herewith), Employee expressly restates
and reaffirms his obligations to Employer under Section 8 of the Agreement and under the Non-Disclosure and Confidentiality Agreement
dated March 31, 2006 between the parties, and acknowledges that such Section 8 and such Non-Disclosure and Confidentiality Agreement
shall remain valid and enforceable pursuant to their respective terms.

 

(c)               
The parties hereto expressly acknowledge and agree that this Second Amendment constitutes a proper amendment of the Agreement
pursuant to Section 9(g) thereunder.

 

(d)              
This Second Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK] 

    	 

    	 

    

IN WITNESS WHEREOF,
the parties hereto have caused this Second Amendment to be duly executed by their respective authorized officers effective as of
the date first above written.

 

 

 

	 	INTERLEUKIN GENETICS, INC.
	 	 
	 	By:	/s/ James Weaver
	 	Name:	  James Weaver
	 	Title:	  Chairman, Board of Directors
	 	 	 
	 	 	 
	 	EMPLOYEE
	 	 
	 	By:	/s/ Kenneth S. Kornman
	 	Name:	  Kenneth S. Kornman, D.D.S., Ph.D.

 

 

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

 

Original
Issue Date: November 27, 2012

Original
Conversion Price (subject to adjustment herein): $0.10

 

$_______________

 

SENIOR
SECURED CONVERTIBLE DEBENTURE

DUE
November 27, 2013

 

THIS
SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued Senior Secured Convertible Debentures
of T3 Motion, Inc., a Delaware corporation, (the “Company”), having its principal place of business at 2990
Airway Avenue, Costa Mesa, California 92626, designated as its Senior Secured Convertible Debenture due November 27, 2013 (this
debenture, the “Debenture” and, collectively with the other debentures of such series, the “Debentures”).

 

FOR
VALUE RECEIVED, the Company promises to pay to ________________________ or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $_______________ on November 27, 2013 (the “Maturity
Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay
interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with
the provisions hereof. This Debenture is subject to the following additional provisions:

 

    	1

    	 

    

 

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

 

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

 

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

 

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

 

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

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.

 

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

 

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“Change
of Control Transaction” means, other than by means of conversion or exercise of the Debentures and the Securities issued
together with the Debentures, the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 33%
of the voting securities of the Company, (b) the Company merges into or consolidates with any other Person, or any Person merges
into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately
prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of such transaction,
(c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company
immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after
the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board
of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events
set forth in clauses (a) through (d) above.

 

“Closing
Price” means on any particular date (a) the last reported closing bid price per share of Common Stock on such date
on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such price on such
date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P.
at 4:15 p.m. (New York City time)), or (c)  if the Common Stock is not then listed or quoted on a Trading Market and if prices
for the Common Stock are then reported in the “pink sheets” published by Pink OTC Markets, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Issuable
Maximum” shall have the meaning set forth in Section 4(e).

 

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

 

“New
York Courts” shall have the meaning set forth in Section 9(d).

 

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

 

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

 

“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(aa) attached to the Purchase Agreement and (c) lease obligations and purchase
money indebtedness of up to $150,000, in the aggregate, incurred in connection with the acquisition of capital assets and lease
obligations with respect to newly acquired or leased assets.

 

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

 

    	4

    	 

    

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of November 26, 2012 among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration
Statement” means a registration statement covering the resale of the Underlying Shares by each Holder.

 

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

 

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

 

“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the NYSE MKT (or any successor
entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including
the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.

 

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

 

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

 

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

 

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

 

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Section
2.           Interest and Prepayments. No regularly scheduled
interest payments shall be made on this Debenture. Except as otherwise set forth in this Debenture, the Company may not
prepay any portion of the principal amount of this Debenture without the prior written consent of the Holder. All payments
hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding
registration and transfers of this Debenture (the “Debenture Register”).

 

Section
3.           Registration of Transfers and Exchanges.

 

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

 

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

 

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

 

Section
4.           Conversion.

 

a)
         Voluntary Conversion. At any time after the Original Issue Date until
this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into shares of Common Stock
at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d)
and Section 4(e) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of
which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal
amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “Conversion
Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such
Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Debenture to the Company unless the entire principal amount of this Debenture has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable
conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s).
The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion.
In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount
of this Debenture may be less than the amount stated on the face hereof.

 

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b)
         Conversion Price. The conversion price in effect on any Conversion
Date shall be equal to $0.10, subject to adjustment herein (the “Conversion Price”).

 

c)
         Mechanics of Conversion.

 

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

 

ii.         Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective
Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase
Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture. On or after the
earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, the Company shall use its best
efforts to deliver any certificate or certificates required to be delivered by the Company under this Section 4(c) electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.

 

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

 

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iv.         Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that
such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the
event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may
not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in
any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and
or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond
for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject to
the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and
the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the
Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any
reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being
converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated
damages begin to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds
such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant
to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.

 

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

 

vi.         Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture as herein provided,
free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders
of the Debentures), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions
set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the
conversion of the then outstanding principal amount of this Debenture. The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Registration
Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Registration
Statement.

 

    	9

    	 

    

 

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

 

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

 

    	10

    	 

    

 

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

 

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e)
         Issuance Limitations. Notwithstanding anything herein to the contrary,
if the Company has not obtained Shareholder Approval, then the Company may not issue, upon conversion of this Debenture, a number
of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and
prior to such Conversion Date (i) in connection with the conversion of any Debentures issued pursuant to the Purchase Agreement,
(ii) in connection with the exercise of any Warrants issued pursuant to the Purchase Agreement and (iii) in connection with any
warrants issued to any registered broker-dealer as a fee in connection with the issuance of the Securities pursuant to the Purchase
Agreement, would exceed 2,579,914 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations
and the like) (such number of shares, the “Issuable Maximum”). Each Holder shall be entitled to a portion of
the Issuable Maximum equal to the quotient obtained by dividing (x) the original principal amount of the Holder’s Debenture
by (y) the aggregate original principal amount of all Debentures issued on the Original Issue Date to all Holders. In addition,
each Holder may allocate its pro-rata portion of the Issuable Maximum among Debentures and Warrants held by it in its sole discretion.
Such portion shall be adjusted upward ratably in the event a Holder no longer holds any Debentures or Warrants and the amount
of shares issued to the Holder pursuant to the Holder’s Debentures and Warrants was less than the Holder’s pro-rata
share of the Issuable Maximum. For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective,
warrants issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement
as described in clause (iii) above shall provide that such warrants shall not be allocated any portion of the Issuable Maximum
and shall be unexercisable unless and until such Shareholder Approval is obtained and effective.

 

Section
5.           Certain Adjustments.

 

a)
         Stock Dividends and Stock Splits. If the Company, at any time while
this Debenture is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares
of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of the Debentures), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common
Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares
of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and
of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification. Unless waived in writing by Holders of at least 67% of the then outstanding principal amount
of Debentures, notwithstanding anything to contrary in the event that the Common Stock is no longer listed or quoted on the NYSE
MKT, and, if after such delisting, the Company effect a reverse stock split of its Common Stock, no adjustment shall be made to
the Conversion Price pursuant to this Section 5(a) as a result of such reverse stock split. 

 

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

 

    	13

    	 

    

 

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

 

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

 

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

 

    	15

    	 

    

 

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

 

g)
         Notice to the Holder.

 

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

 

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

 

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Section
6.           [RESERVED]

 

Section
7.          Negative Covenants. As long as any portion of this Debenture
remains outstanding, unless the holders of at least 51% in principal amount of the then outstanding Debentures shall have otherwise
given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

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

 

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

 

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

 

d)
         repay, repurchase or offer to repay, repurchase or otherwise acquire more
than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to the Conversion
Shares or Warrant Shares as permitted or required under the Transaction Documents;

 

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e)     
     redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash
or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or
otherwise), all or any portion of any Indebtedness (other than the Debentures if on a pro-rata basis), whether by way of
payment in respect of principal of (or premium, if any) or interest on, such Indebtedness;

 

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

 

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

 

h)
         any provision of any Transaction Document (including, without limitation,
the Security Documents and the Subsidiary Guaranties) shall at any time for any reason (other than pursuant to the express terms
thereof) cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof
shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental
authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company
or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Transaction
Document (including, without limitation, the Security Documents and the Subsidiary Guaranties);

 

i)      
   the Security Documents shall for any reason fail or cease to create a separate valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority Lien on the Collateral (as defined in the
Security Agreement) in favor of the Collateral Agent;

 

j)     
    any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or
any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for
more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any
facility of the Company or any Subsidiary, if any such event or circumstance could have a Material Adverse Effect;
or

 

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

 

Section
8.             Events of Default.

 

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

 

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

 

ii.         the
Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (other than a breach by the
Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause
(x) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading
Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company
has become or should have become aware of such failure;

 

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

 

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

 

v.           the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

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

 

    	19

    	 

    

 

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

 

viii.        the
Company does not meet the current public information requirements under Rule 144;

 

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

 

x.       
 any Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase
Agreement; or

 

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

 

b)
         Remedies Upon Event of Default. If any Event of Default occurs, the
outstanding principal amount of this Debenture, liquidated damages and other amounts owing in respect thereof through the date
of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount.
Commencing 5 days after the occurrence of any Event of Default interest on this Debenture shall accrue at an interest rate equal
to the lesser of 24% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default
Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection with such acceleration
described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice
of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder
at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any,
as the Holder receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

 

    	20

    	 

    

 

Section
9.           Miscellaneous.

 

a)
         Notices. Any and all notices or other communications or deliveries
to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, e-mail or sent by a nationally recognized overnight courier service, addressed to the Company, at the
address set forth above, or such other facsimile number or address as the Company may specify for such purposes by notice to the
Holder delivered in accordance with this Section 9(a). Any and all notices or other communications or deliveries to be provided
by the Company hereunder shall be in writing and delivered personally, by facsimile, e-mail or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile number, e-mail or address of the Holder appearing on the books
of the Company, or if no such facsimile number, e-mail address or address appears on the books of the Company, at the principal
place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered
via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by
the party to whom such notice is required to be given.

 

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

 

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

 

    	21

    	 

    

 

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

 

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

 

f)         Severability.
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons
and circumstances.

 

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

 

    	22

    	 

    

 

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

 

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

 

j)         Amendment.
Unless otherwise provided for hereunder, this Debenture may not be modified or amended or the provisions hereof waived without
the written consent of the Company and the Holder.

 

k)
       Secured Obligation. The obligations of the Company under this Debenture are secured
by all assets of the Company and each Subsidiary pursuant to the Security Agreement, dated as of November 26, 2012 between the
Company, the Subsidiaries of the Company and the Secured Parties (as defined therein).

 

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

 

(Signature
Pages Follow)

 

    	23

    	 

    

 

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

 

 

	 	t3
    motion, inc.
	 	 	 
	 	By:	 
	 	 	Name:  Rod Keller
	 	 	Title: Chief Executive Officer
	 	Facsimile No. for delivery of Notices: (714) 619-3616

 

    	24

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Senior Secured Convertible Debenture due November 27, 2013 of T3 Motion,
Inc., a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”),
of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in
the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and
is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will
be charged to the holder for any conversion, except for such transfer taxes, if any.

 

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

 

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

 

Conversion
calculations:

	 	Date to Effect Conversion:
	 	 
	 	Principal Amount of Debenture to be Converted:
	 	 
	 	Number of shares of Common Stock to be issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Address for Delivery of Common Stock
    Certificates:
	 	 
	 	Or
	 	 
	 	DWAC Instructions:
	 	 
	 	Broker No:_____________
	 	Account No: ___________

 

    	25

    	 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

The
Senior Secured Convertible Debentures due on November 27, 2013 in the aggregate principal amount of $____________ are issued by
T3 Motion, Inc., a Delaware corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

 

Dated:

 

	Date of Conversion

    (or for first entry,
 Original Issue Date)	 	Amount of

    Conversion	 	Aggregate

    Principal
 Amount
 Remaining
 Subsequent to
 Conversion
 (or original
 Principal
 Amount)	 	Company Attest
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

    	26

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