Document:

EX-4.1

 Exhibit 4.1 
  

 
 THE AES CORPORATION 

as Issuer 
 AND 

WELLS FARGO BANK, N.A. 
 as
Trustee 
  
  

NINETEENTH SUPPLEMENTAL INDENTURE 

Dated as of April 6, 2015 

TO 
 SENIOR INDENTURE 

Dated as of December 8, 1998 
  

 
 5.500% Senior
Notes due 2025 
  
  

 

 The NINETEENTH SUPPLEMENTAL INDENTURE, is dated as of this 6th day of April, 2015 (the
“Nineteenth Supplemental Indenture”), between THE AES CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter sometimes referred to as the “Company”), and WELLS FARGO BANK,
N.A., a national banking association, as trustee (hereinafter referred to as the “Trustee”), as successor trustee to BANK ONE, NATIONAL ASSOCIATION. 

WHEREAS, the Company entered into a Senior Indenture dated as of December 8, 1998 (the “Senior Indenture”) between the
Company and the Trustee to provide for the future issuance of its senior debentures, notes or other evidences of indebtedness (collectively, the “Securities”), said Securities to be issued from time to time in series as might be
determined by the Company pursuant to the Senior Indenture and, in an unlimited aggregate principal amount; 
 WHEREAS, the Company and the
Trustee have entered into a First Supplemental Indenture, a Second Supplemental Indenture, a Third Supplemental Indenture, a Fourth Supplemental Indenture, a Fifth Supplemental Indenture, a Sixth Supplemental Indenture, a Seventh Supplemental
Indenture, an Eighth Supplemental Indenture, a Ninth Supplemental Indenture, a Tenth Supplemental Indenture, an Eleventh Supplemental Indenture, a Twelfth Supplemental Indenture, a Thirteenth Supplemental Indenture, a Fourteenth Supplemental
Indenture, a Fifteenth Supplemental Indenture, a Sixteenth Supplemental Indenture, a Seventeenth Supplemental Indenture and an Eighteenth Supplemental Indenture providing for the creation and issuance of various series of Securities and/or
amendments to the Senior Indenture (the Senior Indenture, as so amended and supplemented by the forgoing supplemental indentures and this Nineteenth Supplemental Indenture is hereinafter referred to as, the “Indenture”); 

WHEREAS, pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be
known as its 5.500% Senior Notes due 2025, the form and substance of such Notes and the terms, provisions and conditions thereof to be set forth as provided in the Senior Indenture and this Nineteenth Supplemental Indenture; and 

WHEREAS, the Company desires and has requested the Trustee to join with it in the execution and delivery of this Nineteenth Supplemental
Indenture, and all requirements necessary to make this Nineteenth Supplemental Indenture a valid instrument, in accordance with its terms, and to make the 5.500% Senior Notes due 2025, when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company have been satisfied; 
 NOW, THEREFORE, in consideration of the purchase and acceptance of
the Notes by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form and substance of the 5.500% Senior Notes due 2025 and the terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows: 

  
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 ARTICLE ONE  

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 

SECTION 1.1 TERMS DEFINED IN THE INDENTURE. 

Each capitalized term used but not defined in this Nineteenth Supplemental Indenture shall have the meaning assigned to such term in the
Senior Indenture. 
 SECTION 1.2 CERTAIN DEFINITIONS. 

The following definitions are hereby added to the definitions contained in Section 1.1 of the Senior Indenture, but only with respect to
the 5.500% Senior Notes due 2025 issued in accordance with the provisions hereof: 
 “Additional Notes” means any notes
issued under this Nineteenth Supplemental Indenture in addition to the Initial Notes having the same terms in all respects as the Initial Notes, provided that, if Additional Notes are not fungible with the Initial Notes for U.S. federal income tax
purposes, the Additional Notes will have a separate CUSIP number. 
 “Applicable Premium” means, with respect to any Note
on any redemption date, the excess, if any, of (i) the present value on such redemption date of (A) the redemption price of such Note on April 15, 2020 (such redemption price being that set forth in the table in
Section 3.1(a)), plus (B) all required remaining scheduled interest payments due on such Note through April 15, 2020 (excluding accrued but unpaid interest, if any, to, but not including, the redemption date) computed using a
discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points, over (ii) the principal amount of such Note. 

“Attributable Debt” means the present value (discounted at the rate of 8.0% per annum compounded monthly) of the
obligations for rental payments required to be paid during the remaining term of any lease of more than 12 months. 
 “Board of
Directors” means either the Board of Directors of the Company or (except for the purposes of clause (iii) of the definition of “Change of Control”) any committee of such Board duly authorized to act under the Indenture. 

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents
(however designated, whether voting or non-voting) of, or interests in (however designated), the equity of such Person which is outstanding or issued on or after the date of the Indenture, including, without limitation, all Common Stock and
Preferred Stock and partnership and joint venture interests of such Person. 
 “Change of Control” means the occurrence of
one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company (determined on a consolidated basis) to any
Person or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of Persons, (ii) a Person or group (as so defined) of Persons shall have become the beneficial owner of more than 50% of the
outstanding Voting 

  
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Stock of the Company, or (iii) during any one-year period, individuals who at the beginning of such period constituted the Board of Directors (together with any new director whose election
or nomination was approved by a majority of the directors then in office who were either directors at the beginning of such period or who were previously so approved) cease to constitute a majority of the Board of Directors. 

“Change of Control Offer” has the meaning provided in Section 4.1. 

“Common Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of common stock of such Person which is outstanding or issued on or after the date of the Indenture, including, without limitation, all series and classes of such common stock. 

“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having
a maturity comparable to April 15, 2020 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity. 

“Comparable Treasury Price” means, with respect to any redemption date: (a) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the most recently published statistical release designated “H.15
(519)” (or any successor release) published by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States treasury securities adjusted to constant maturity under the caption “Treasury
Constant Maturities,” or (b) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the average of the Reference Treasury Dealer Quotations for such redemption date. 

“Consolidated Net Assets” means the aggregate amount of assets (less reserves and other deductible items) after deducting
current liabilities, as shown on the consolidated balance sheet of the Company and its Subsidiaries contained in the latest annual report to the stockholders of the Company and prepared in accordance with GAAP. 

“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business with
respect to this Supplemental Indenture shall be administered, which office at the date of execution of this Supplemental Indenture is located at Wells Fargo Bank, N.A., 150 East 42nd Street, 40th Floor, New York, New York 10017, Attn: Corporate,
Municipal and Escrow Solutions, and for purposes of Section 2.5 and 4.2 of the Senior Indenture, shall also mean the office or agency of the Trustee located at 608 Second Avenue South, N9303-121, Minneapolis, MN 55479, Attn: Corporate Trust
Operations. 
 “Disqualified Capital Stock” means that portion of any Capital Stock that, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control) on or prior to the date 91 days after the final maturity
date of the Notes. 

  
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 “DTC” has the meaning provided in Section 2.1. 

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital Stock). 
 “Equity Offering” means a public or private
sale of Equity Interests of the Company (other than Disqualified Capital Stock and other than to a Subsidiary of the Company) by the Company. 

“Funded Debt” means indebtedness for borrowed money having a maturity of, or by its terms extendible or renewable for, a
period of more than 12 months after the date of the determination of the amount thereof. 
 “Global Securities” has the
meaning provided in Section 2.1. 
 “Independent Investment Banker” means one of the Reference Treasury Dealers
appointed by the Company. 
 “Initial Notes” means the 5.500% Senior Notes due 2025 of the Company issued on April 6,
2015 and delivered under this Nineteenth Supplemental Indenture. 
 “Issue Date” means April 6, 2015, the date of the
original issuance of the Initial Notes. 
 “Notes” means the Initial Notes and any Additional Notes issued on or after the
Issue Date in accordance with clause (ii) of Section 2.2(a) treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture. 

“Physical Securities” has the meaning provided in Section 2.1. 

“Preferred Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents
(however designated, whether voting or non-voting) of preferred or preference stock of such Person which is outstanding or issued on or after the date of the Indenture. 

“Principal Property” means any building, structure or other facility (together with the land on which it is erected and
fixtures comprising a part thereof) used primarily for manufacturing, processing, research, warehousing or distribution, owned or leased by the Company and having a net book value in excess of 2% of Consolidated Net Assets, other than any such
building, structure or other facility or portion thereof which is a pollution control facility financed by state or local governmental obligations or which the principal executive officer, president and principal financial officer of the Company
determine in good faith is not of material importance to the total business conducted or assets owned by the Company and its Subsidiaries as an entirety. 

  
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 “Reference Treasury Dealer” means Goldman, Sachs & Co. and two other
Primary Treasury Dealers (as defined below) selected by the Company; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury
Dealer”), the Company shall substitute therefor another Primary Treasury Dealer. 
 “Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption date. 

“Repurchase Date” shall have the meaning provided in Section 4.1 hereof. 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the yield to maturity of the
Comparable Treasury Issue, compounded semi-annually, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. 

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for
the election of directors of such Person or other Persons performing similar functions. 
 ARTICLE TWO 

THE NOTES 

SECTION 2.1 FORM AND DATING. 

(a) The Notes shall be substantially in the form of Exhibit A hereto, which is a part of this Nineteenth Supplemental Indenture, with such
appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Senior Indenture and this Nineteenth Supplemental Indenture, and may have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the Officers of the Company executing such Notes, as evidenced by their execution of the
Notes. The Notes will initially be issued as Global Securities. The Company initially appoints The Depository Trust Company (“DTC”) and the Trustee to act as Depositary and custodian, respectively, with respect to the Notes. The
Company initially appoints the Trustee to act as Paying Agent and Registrar with respect to the Notes. The Notes shall be issued initially in the form of one or more permanent global Notes in registered form, substantially in the form set forth in
Exhibit A (the “Global Securities”), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter
provided, and shall bear the legend set 

  
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forth in Section 2.5. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary, as hereinafter provided. 
 (b) Securities issued in exchange for interests in the Global Securities pursuant
to Section 2.6 may be issued in the form of Physical Securities (“Physical Securities”). 
 SECTION 2.2
EXECUTION AND AUTHENTICATION. 
 (a) The Trustee shall authenticate (i) Initial Notes for original issue on the Issue Date in the
aggregate principal amount of $575,000,000 and (ii) any Additional Notes, (such Notes to be substantially in the form of Exhibit A) in an unlimited amount, in each case, upon written orders of the Company signed by two Officers. Each such
Officers’ Certificate shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes or Additional Notes issued under clause (i) or (ii), respectively,
of the preceding sentence, and the aggregate principal amount of Notes outstanding on the date of authentication, and shall further specify the amount of such Notes to be issued as a Global Security or Physical Securities. Such Notes shall initially
be in the form of one or more Global Securities, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Notes to be issued, (ii) shall be registered in the name of the Depositary
for such Global Security or Securities or its nominee and (iii) shall be held by the Trustee as custodian for the Depositary or pursuant to the Depositary’s instruction. 

(b) The Notes shall be issuable only in registered form without coupons in the principal amount of at least $2,000 and integral multiples of
$1,000 thereafter. 
 SECTION 2.3 INTEREST. 

Interest on the Notes shall be payable in the amount, on the dates and in the manner provided for in the form of the Note attached hereto as
Exhibit A. 
 SECTION 2.4 PLACE OF PAYMENT. 

(a) The place of payment for the Notes shall be the at the Trustee’s Corporate Trust Office as Paying Agent . So long as the Notes are in
the form of Registered Global Securities, the Company agrees that payments of interest on, and any portion of the Principal of, the Notes shall be made by the Paying Agent, upon receipt from the Company of immediately available funds, directly to
the Depositary (by Federal funds wire transfer). 
 SECTION 2.5 RESTRICTIVE LEGEND. 

(a) Each Global Security shall bear the following legend on the face thereof: 

UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE 

  
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DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
 TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.6 OF THE SUPPLEMENTAL INDENTURE GOVERNING THIS NOTE. 

SECTION 2.6 SPECIAL TRANSFER PROVISIONS. 

(a) The following provisions shall apply with respect to the registration of any proposed transfer of a Note: 

(i) If the proposed transferor is a member of, or participant in, the Depositary (an “Agent Member”) holding a
beneficial interest in a Global Security, upon receipt by the Registrar of instructions given in accordance with the Depositary’s and the Registrar’s procedures, whereupon the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the applicable Global Security in an amount equal to the principal amount of the beneficial interest in such Global Security to be transferred, and an increase in the applicable Global Security to which the
beneficial interest is to be transferred or shall authenticate and deliver one or more Physical Securities of like tenor and amount. 

  
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 ARTICLE THREE 

OPTIONAL REDEMPTION OF THE NOTES 

SECTION 3.1 OPTIONAL REDEMPTION. 

(a) On or after April 15, 2020, the Company may redeem all or a part of the Notes, on any one or more occasions, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption date, if redeemed during the twelve-month period beginning on April 15th of the
years indicated below: 
  

					
	 Year
	  	Percentage	 
	 2020
	  	 	102.750	% 
	 2021
	  	 	101.833	% 
	 2022
	  	 	100.917	% 
	 2023 and thereafter
	  	 	100.000	% 

 (b) At any time prior to April 15, 2020, the Company may also redeem all or a part of the Notes, on any
one or more occasions, at a redemption price equal to 100% of the principal amount of Notes to be redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but not including, the redemption date, subject to the rights
of holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date. Calculation of the Applicable Premium is the responsibility of the Company and
the Trustee shall have no duty to calculate or verify the calculation of the Applicable Premium. 
 (c) At any time prior to April 15,
2018, the Company may, on any one or more occasions, use the net cash proceeds from one or more Equity Offerings, to redeem in the aggregate for all such redemptions up to 35.0% of the aggregate principal amount of Notes issued (including the
aggregate principal amount of any Additional Notes) at a redemption price equal to 105.500% of the aggregate principal amount of the Notes redeemed, plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption
date (subject to the right of Holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date), provided that: (A) at least 65.0% of the
aggregate principal amount of Notes originally issued (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption and (B) each such redemption occurs within 90 days of the date of, and may be
conditioned on, the closing of each such Equity Offering. 
 (d) A redemption pursuant to Section 3.1(c) may, at the
Company’s discretion, be subject to one or more conditions precedent. The Company will provide prompt written notice to the Trustee in the event that any such condition precedent shall not have occurred, and such redemption shall be rescinded
and of no force or effect, if specified in such notice. Upon receipt of such notice from the Company rescinding such redemption, the Trustee will promptly send a copy of such notice to the Holders of the Notes to be redeemed in the same manner
in which the original notice of redemption was given. 

  
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 ARTICLE FOUR 

REPURCHASE OF NOTES UPON CHANGE OF CONTROL 

SECTION 4.1 REPURCHASE OF NOTES UPON A CHANGE OF CONTROL. 

(a) Upon a Change of Control, each holder of the Notes shall have the right to require that the Company repurchase such holder’s Notes at
a repurchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. 

(b) Within 30 days following any Change of Control, the Company shall send a notice to each Holder of the Notes with a copy to the Trustee
stating: 
 (i) that a Change of Control has occurred and that such Holder has the right to require the Company to repurchase
such Holder’s Notes at a repurchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of repurchase (the “Change of Control Offer”), 

(ii) the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect to such Change of Control), 
 (iii) the repurchase date
(which shall be not earlier than 30 days or later than 60 days from the date such notice is sent) (the “Repurchase Date”), 

(iv) that any Notes not tendered shall continue to accrue interest, 

(v) that any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the
Repurchase Date, unless the Company defaults in depositing the purchase amount, 
 (vi) that Holders electing to have a Note
purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Repurchase Date, 
 (vii) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on the third Business Day (or such shorter periods as may be required by applicable law) preceding the Repurchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes the Holder delivered for purchase, and a statement that such Holder is withdrawing his election to have such Notes purchased, and 

(viii) that Holders which elect to have their Notes purchased only in part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered. 

  
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 (c) On the Repurchase Date, the Company shall (i) accept for payment Notes or portions
thereof tendered pursuant to the Change of Control Offer; (ii) deposit with the Trustee money sufficient to pay the purchase price of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee Notes
so accepted together with an Officers’ Certificate identifying the Notes or portions thereof tendered to the Company. 
 (d) The
Trustee shall promptly deliver to the Holders of the Notes so accepted payment in an amount equal to the purchase price, and promptly authenticate and deliver to such Holders a new Note in a principal amount equal to any unpurchased portion of the
Notes surrendered (or through book-entry transfer for global Notes). The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Repurchase Date. 

(e) The Company shall comply with all applicable tender offer rules, including without limitation Rule 14e-1 under the Exchange Act, in
connection with a Change of Control Offer. 
 ARTICLE FIVE 

ADDITIONAL COVENANTS APPLICABLE TO THE NOTES  

SECTION 5.1 RESTRICTIONS ON SECURED DEBT. 

(a) If the Company shall incur, issue, assume or guarantee any indebtedness for borrowed money represented by notes, bonds, debentures or other
similar evidences of indebtedness, secured by a mortgage, pledge or other lien on any Principal Property or any capital stock or indebtedness held directly by the Company of any Subsidiary of the Company, the Company shall secure the Notes equally
and ratably with (or prior to) such indebtedness, so long as such indebtedness shall be so secured, unless after giving effect thereto the aggregate amount of all such indebtedness so secured, together with all Attributable Debt in respect of sale
and leaseback transactions involving Principal Properties, would not exceed 15% of the Consolidated Net Assets of the Company. 
 (b) The
foregoing restriction shall not apply to, and there shall be excluded in computing secured indebtedness for the purpose of such restriction, indebtedness secured by (a) property of any Subsidiary of the Company, (b) liens on property of,
or on any shares of stock or debt of, any corporation existing at the time such corporation becomes a Subsidiary, (c) liens in favor of the Company or any Subsidiary, (d) liens in favor of U.S. or foreign governmental bodies to secure
partial, progress, advance or other payments, (e) liens on property, shares of stock or debt existing at the time of acquisition thereof (including acquisition through merger or consolidation), purchase money mortgages and construction cost
mortgages existing at or 

  
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incurred within 180 days of the time of acquisition thereof, (f) liens existing on the first date on which any Note is authenticated by the Trustee, (g) liens under one or more credit
facilities for indebtedness in an aggregate principal amount not to exceed $900,000,000 at any time outstanding, (h) liens incurred in connection with pollution control, industrial revenue or similar financings, and (i) any extension,
renewal or replacement of any debt secured by any liens referred to in the foregoing clauses (a) through (h), inclusive. 

SECTION 5.2 RESTRICTIONS ON SALES AND LEASEBACKS. 

(a) The Company shall not enter into any sale and leaseback transaction involving any Principal Property, the acquisition or completion of
construction and commencement of full operation of which has occurred more than 180 days prior thereto, unless (a) the Company could incur a lien on such property under the restrictions described in Section 5.1 hereof in an amount
equal to the Attributable Debt with respect to the sale and leaseback transaction without equally and ratably securing the Notes or (b) the Company, within 180 days after the sale or transfer by the Company, applies to the retirement of its
Funded Debt an amount equal to the greater of (i) the net proceeds of the sale of the Principal Property sold and leased pursuant to such arrangement or (ii) the fair market value of the Principal Property so sold and leased as determined
by the board of directors of the Company; provided that the amount to be applied to the retirement of Funded Debt of the Company shall be reduced by (A) the principal amount of any Notes delivered within 180 days after such sale or
transfer to the Trustee for retirement and cancellation, and (B) the principal amount of Funded Debt, other than Notes, voluntarily retired by the Company within 180 days after such sale or transfer; provided further that no retirement referred
to in this clause (b) may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision. 

ARTICLE SIX 
 ADDITIONAL EVENTS
OF DEFAULT APPLICABLE TO THE NOTE 
 SECTION 6.1 ADDITIONAL EVENTS OF DEFAULT. 

(a) Pursuant to Section 6.1 (f) of the Senior Indenture, an “Event of Default” shall be deemed to occur with respect to the
Notes if an event of default, as defined in any indenture or instrument evidencing or under which the Company has as of the date of this Nineteenth Supplemental Indenture or shall thereafter have outstanding any indebtedness, shall happen and be
continuing and either (i) such default results from the failure to pay the principal of such indebtedness in excess of $50 million at final maturity of such indebtedness or (ii) as a result of such default the maturity of such indebtedness
shall have been accelerated so that the same shall be or become due and payable prior to the date on which the same would otherwise have become due and payable, and such acceleration shall not be rescinded or annulled within 60 days and the
principal amount of such indebtedness, together with the principal amount of any other indebtedness of the Company in default, or the maturity of which has been accelerated, aggregates $50 million or more; provided that the Trustee shall not
be charged with knowledge of any such default unless written notice thereof shall have been given to the Trustee by the Company, by the holder or an agent of the holder of any such indebtedness, by the trustee then acting under any indenture or
other instrument under which such default shall have occurred, or 

  
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by the holders of not less than 25% in the aggregate principal amount of the Notes at the time outstanding; and provided further that if such default shall be remedied or cured by
the Company or waived by the requisite number of percentage of holder of such indebtedness as provided in such indenture or instrument, then the Event of Default described under this Nineteenth Supplemental Indenture shall be deemed likewise to have
been remedied, cured or waived without further action on the part of the Trustee, any Holder of Notes or any other person. 
 ARTICLE SEVEN

 MISCELLANEOUS PROVISIONS 

SECTION 7.1 RATIFICATION. 

(a) The Senior Indenture, as supplemented by this Nineteenth Supplemental Indenture, is in all respects ratified and confirmed. This Nineteenth
Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent provided herein and therein. 

SECTION 7.2 COUNTERPARTS. 

(a) This Nineteenth Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument. The exchange of copies of this Nineteenth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of
this Indenture as to the parties hereto and may be used in lieu of the original Nineteenth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for
all purposes. 
 SECTION 7.3 NOTICE TO HOLDERS. 

(a) Notwithstanding any other provision of the Senior Indenture, this Nineteenth Supplemental Indenture, or any Note, where the Senior
Indenture, this Nineteenth Supplemental Indenture or any Note provides for notice of any event (including any notice of redemption or repurchase) to a Holder of a global Note (whether by mail or otherwise), such notice shall be sufficiently given if
given to DTC (or its designee) pursuant to the standing instructions from DTC or its designee, including by electronic mail in accordance with DTC operational arrangements or other applicable DTC requirements. 

SECTION 7.4 REPORTS 

(a) In connection with Section 4.5 of the Senior Indenture, the Company shall be deemed to have furnished such information, documents or
reports to the Trustee, the Holders and/or prospective purchasers of the notes, if the Company has filed such information, documents or reports with the Commission via the EDGAR filing system (or any successor system) and/or posted such information,
documents or reports on the Company’s website and such information, documents or reports are publicly available; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or not such materials
have been filed pursuant to the EDGAR system (or its successor) or posted on any website. Delivery 

  
 13 

 
of such information to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s compliance with any of their covenants under the Senior Indenture (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates). 

SECTION 7.5 PATRIOT ACT 

(a) The Company acknowledges that in accordance with Section 326 of the U.S.A. PATRIOT Act, the Trustee, like all financial institutions
and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The
parties to this Supplemental Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. PATRIOT Act. 

  
 14 

 IN WITNESS WHEREOF, the parties hereto have caused this Nineteenth Supplemental Indenture to be
duly executed and attested, on the date or dates indicated in the acknowledgments and as of the day and year first above written. 
  

					
	THE AES CORPORATION, as the Issuer
		
	By:		 /s/ Daniel Stadelmann

			Name:		Daniel Stadelmann
			Title:		Vice President and Treasurer

  

					
	Attest:
		
	 By:
		 /s/ Thomas M. O’Flynn

			 Name:
		 Thomas M. O’Flynn

			 Title:
		Executive Vice President and Chief Financial Officer

  

					
	WELLS FARGO BANK, N.A., as Trustee
		
	By:		 /s/ Gregory S. Clarke

			Name:		Gregory S. Clarke
			Title:		Vice President

  

					
	Attest:
		
	 By:
		 /s/ Scott Hagwell

			 Name:
		 Scott Hagwell

			 Title:
		 Vice President

 [Signature Page to the Nineteenth Supplemental Indenture] 

 Exhibit A 

[FORM OF NOTE]* 
 [FACE OF NOTE]

 THE AES CORPORATION. 
 5.500%
Senior Note due 2025 
  

			
	 CUSIP No.
 ISIN No.

No.
		Principal Amount $        

 THE AES CORPORATION, a Delaware corporation (the “Company”), for value received promises to
pay to              or registered assigns, the principal sum of          Dollars ($        ) on
April 15, 2025. 
 Interest Payment Dates: April 15, and October 15; commencing October 15, 2015. 

Record Dates: Each April 1 and October 1 immediately preceding each Interest Payment Date. 

Reference is made to the further provisions of this Note contained herein, which shall for all purposes have the same effect as if set forth
at this place. 
  

	*	If applicable, add Global Security Legend. 

  
 A-1 

 
			
	By:		  

			Authorized Signature
		
	By:		  

			Authorized Signature

 Dated: 
 Certificate of
Authentication 
 This is one of the 5.500% Senior Notes due 2025 referred to in the within-mentioned Indenture. 

 

			
	WELLS FARGO BANK, N.A.,
	as Trustee
		
	By:		  

			Authorized Signatory

  
 A-2 

 [REVERSE OF FORM OF NOTE] 

THE AES CORPORATION 
 5.500%
SENIOR NOTE DUE 2025 
 1. Interest. THE AES CORPORATION, a Delaware corporation (the “Company,” which definition
shall include any successor thereto in accordance with the Indenture (as defined below)), promises to pay, until the principal hereof is paid or made available for payment, interest on the principal amount set forth on the reverse side hereof at a
rate of 5.500% per annum. Interest on the Notes will accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from April 6, 2015 through but excluding the date on which
interest is paid. Interest shall be payable in arrears on April 15, and October 15 of each year (each an “Interest Payment Date”), commencing October 15, 2015. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as
if made on such date. 
 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons
who are registered Holders of Notes at the close of business on each April 1 and October 1 immediately preceding each Interest Payment Date (each, a “Regular Record Date”). Holders must surrender Notes to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. At the Company’s option, interest may be paid by check
sent to the registered address of the Holder of this Note. 
 3. Paying Agent and Registrar. Initially, Wells Fargo Bank, N.A. (the
“Trustee”) will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice. 

4. Indenture. The Company issued the Notes under an Indenture dated as of December 8, 1998 between the Company and the Trustee as
supplemented by the Ninth Supplemental Indenture dated as of April 3, 2003 and the Nineteenth Supplemental Indenture dated as of April 6, 2015 between the Company and the Trustee (said Indenture, as so supplemented, the
“Indenture”). This Note is one of an issue of Securities of the Company issued under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as amended from time to time. The Notes are subject to all such terms, and Holders of the Notes are referred to the Indenture and such Act for a statement of them. Capitalized terms used
herein and not otherwise defined have the meanings set forth in the Indenture. The Notes are general unsecured and unsubordinated obligations of the Company ranking pari passu with all of the Company’s unsecured and unsubordinated obligations.
The Company may, subject to the terms of the Indenture and applicable law, issue Additional Notes 

  
 A-3 

 
under the Nineteenth Supplemental Indenture. The Notes issued on April 6, 2015 and any Additional Notes subsequently issued shall be treated as a single class for all purposes of the
Nineteenth Supplemental Indenture. The Indenture limits the ability of the Company to incur certain secured indebtedness and to enter into certain sale and leaseback transactions. 

5. Optional Redemption. 

(a) On or after April 15, 2020, the Company may redeem all or a part of the Notes, on any one or more occasions, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption date, if redeemed during the twelve-month period beginning on April 15th of the
years indicated below: 
  

					
	 Year
	  	Percentage	 
	 2020
	  	 	102.750	% 
	 2021
	  	 	101.833	% 
	 2022
	  	 	100.917	% 
	 2023 and thereafter
	  	 	100.000	% 

 (b) At any time prior to April 15, 2020, the Company may also redeem all or a part of the Notes, on any
one or more occasions, at a redemption price equal to 100% of the principal amount of Notes to be redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but not including, the redemption date, subject to the rights
of holders of record of the Notes on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the redemption date. Calculation of the Applicable Premium is the responsibility of the
Company and the Trustee shall have no duty to calculate or verify the calculation of the Applicable Premium. 
 (c) At any time prior to
April 15, 2018, the Company may, on any one or more occasions, use the net cash proceeds from one or more Equity Offerings, to redeem in the aggregate for all such redemptions up to 35.0% of the aggregate principal amount of Notes issued
(including the aggregate principal amount of any Additional Notes) at a redemption price equal to 105.500% of the aggregate principal amount of the Notes redeemed, plus accrued and unpaid interest thereon, if any, to, but not including, the
applicable redemption date (subject to the right of Holders of record of the Notes on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the redemption date), provided that:
(A) at least 65.0% of the aggregate principal amount of Notes originally issued (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption and (B) each such redemption occurs within 90 days of
the date of, and may be conditioned on, the closing of each such Equity Offering. 
 (d) A redemption pursuant to Section 5(c)
may, at the Company’s discretion, be subject to one or more conditions precedent. 
 “Applicable Premium” means, with
respect to any Note on any redemption date, the excess, if any, of (i) the present value on such redemption date of (A) the redemption price of such Note on April 15, 2020 (such redemption price being that set forth in the table
above), plus 

  
 A-4 

 
(B) all required remaining scheduled interest payments due on such Note through April 15, 2020 (excluding accrued but unpaid interest, if any, to, but not including, the redemption date)
computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points, over (ii) the principal amount of such Note. 

“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having
a maturity comparable to April 15, 2020 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity. 

“Comparable Treasury Price” means, with respect to any redemption date: (a) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the most recently published statistical release designated “H.15
(519)” (or any successor release) published by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States treasury securities adjusted to constant maturity under the caption “Treasury
Constant Maturities,” or (b) if such release (or any successor release) is not published or does not contain such prices on such Business Day, the average of the Reference Treasury Dealer Quotations for such redemption date. 

“Disqualified Capital Stock” means that portion of any Capital Stock that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control) on or prior to the date 91 days after the final maturity date of the Notes. 

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital Stock). 
 “Equity Offering” means a public or private
sale of Equity Interests of the Company (other than Disqualified Capital Stock and other than to a Subsidiary of the Company) by the Company. 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company. 

“Reference Treasury Dealer” means Goldman, Sachs & Co. and two other Primary Treasury Dealers (as defined below)
selected by the Company; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute
therefor another Primary Treasury Dealer. 
 “Reference Treasury Dealer Quotations” means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in 

  
 A-5 

 
each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date. 
 “Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the yield to
maturity of the Comparable Treasury Issue, compounded semi-annually, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. 

6. Change of Control Offer. Upon the occurrence of a Change of Control, the Company shall be required, as and to the extent set forth
in the Indenture, to offer to purchase all of the outstanding Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to, but not including, the date of repurchase (subject to the
right of the Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the repurchase date). 

7. Sinking Fund. No sinking fund is provided for the Notes. 

8. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $2,000 and integral
multiples of $1,000 thereafter. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay to it any taxes
and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Notes or portion of a Note selected for redemption, or transfer or exchange any Notes for a period of 15 days before selection of such Notes to
be redeemed. 
 9. Persons Deemed Owners. The registered holder of a Note may be treated as the owner of it for all purposes. 

10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent
will pay the money back to the Company at its written request. After that, Holders entitled to the money must look to the Company for payment as general creditors unless an “abandoned property” law designates another Person. 

11. Amendment, Supplement, Waiver. The Company and the Trustee may, without the consent of the holders of any outstanding Notes, amend,
waive or supplement the Indenture or the Notes for certain specified purposes, including, among other things, curing ambiguities, defects or inconsistencies, maintaining the qualification of the Indenture under the Trust Indenture Act of 1939 or
making any other change that does not adversely affect the rights of any Holder in any material respect. Other amendments and modifications of the Indenture or the Notes may be made by the Company and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of the outstanding Securities of all series affected, subject to certain exceptions requiring the consent of the Holders of the particular Securities. 

  
 A-6 

 12. Successor Corporation. When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and the transaction complies with the terms of Article 5 of the Senior Indenture, the predecessor corporation, subject to certain exceptions, will be released from those obligations. 

13. Defaults and Remedies. Events of Default are set forth in the Indenture. Subject to certain limitations in the Indenture, if an
Event of Default (other than an Event of Default specified in Section 6.1(d) or (e) of the Senior Indenture with respect to the Company) occurs and is continuing, then the holders of not less than 25% in aggregate principal amount of the
outstanding Notes may, or the Trustee may, by written notice to the Company, and the Trustee at the request of not less than 25% in aggregate principal amount of the outstanding Notes will, declare the principal of, plus accrued interest, if any, to
be due and payable immediately. If an Event of Default specified in Section 6.1(d) or (e) of the Senior Indenture with respect to the Company occurs and is continuing, the Principal of and accrued interest on all of the Notes shall ipso
facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity reasonably satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Securities of all series issued under the Indenture that
are affected may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing default (except a default in payment of principal or interest) if it determines in good faith that
withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 
 14. Trustee
Dealing with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were
not Trustee. 
 15. No Recourse Against Others. A director, officer, employee, stockholder or beneficiary, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 
 16. Defeasance. The
Indenture contains provisions (which provisions apply to this Note) for defeasance at any time of (a) the entire indebtedness of the Company in respect of this Note and (b) certain restrictive covenants and Defaults and Events of Default,
in each case upon compliance by the Company with certain conditions set forth therein. 
 17. Authentication. This Note shall not be
valid until the Trustee signs the certificate of authentication on the other side of this Note. 
 18. Abbreviations. Customary
abbreviations may be used in the name of a Holder of Notes or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 
 19. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 

  
 A-7 

 The Company will furnish to any Holder of Notes upon written request and without charge a copy of
the Indenture. Requests may be made to: 
 THE AES CORPORATION 

4300 Wilson Boulevard 
 Arlington,
Virginia 22203 
 Telephone: (703) 522-1315 

Telecopy: (703) 528-4510 

Attention: Legal Department 

  
 A-8 

 ASSIGNMENT FORM 

If you the holder want to assign this Note, fill in the form below and have your signature guaranteed: 

 

			
	 I or we assign and transfer this Note to
		  

  

			
	(Insert assignee’s social security or tax ID number)		  

	  
  

	(Print or type assignee’s name, address and zip code) and irrevocably appoint                      agent to
transfer this Note on the books of the Company. The agent may substitute another to act for him.

  
  

 

							
	Date:		  
		Your signature:		  

							(Sign exactly as your name appears on the other side of this Note)

					
			
			Signature Guarantee:		  

 Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the
Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 

  
 A-9 

 OPTION OF HOLDER TO ELECT TO PURCHASE 

[Date] 
 Wells Fargo Bank, N.A. 

Corporate, Municipal and Escrow Solutions 
 150 East 42nd Street,
40th Floor 
 New York, New York 10017 
 Attention: AES
Corporate Trust Administrator 
  

	 	Re:	The AES Corporation 

 5.500% Senior Notes due 2025 (the “Notes”) 

The undersigned hereby elects to have [all] [a portion of] its Notes purchased by the Company pursuant to Section 4.1 of the Nineteenth
Supplemental Indenture. 
 If the undersigned elects to have only part of its Notes purchased by the Company pursuant to Section 4.1 of
the Nineteenth Supplemental Indenture, state the principal amount (minimum amount of $2,000; multiples of $1,000 in excess of $2,000): 
  

									
							$        
					
	Dated:		  
				Signed:		  

									(Sign exactly as name appears on the other side of this Security)
			
	Signature Guarantee:				  
 Participant in a recognized Signature
Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee)

  
 A-10Exhibit 4.1

 

EXHIBIT
A

 

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

 

Original
Issue Date: April 3, 2015

Original
Conversion Price (subject to adjustment herein): $0.50

 

$_______________

 

6%
SENIOR CONVERTIBLE DEBENTURE

DUE
september ___, 2016

 

THIS
6% SENIOR CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 6% Senior Convertible Debentures of Vapir
Enterprises, Inc., a Nevada corporation, (the “Company”), having its principal place of business at 2365 Paragon
Dr., Suite B, San Jose, California 95131, designated as its 6% Senior Convertible Debenture due September ___, 2016 (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 September ___, 2016 (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:

 

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).

 

    	1

    	 

    

 

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

 

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

 

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

 

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

 

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

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 33% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and
the Securities issued together with the Debentures), (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.

 

    	2

    	 

    

 

“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).

 

“Equity
Conditions” means, during the period in question, (a) the Company shall have duly honored all conversions and redemptions
scheduled to occur or occurring by virtue of one or more Notices of Conversion of the Holder, if any, (b) the Company shall have
paid all liquidated damages and other amounts owing to the Holder in respect of this Debenture, (c)(i) there is an effective registration
statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the shares of Common
Stock issuable pursuant to the Transaction Documents (and the Company believes, in good faith, that such effectiveness will continue
uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents
(and shares issuable in lieu of cash payments of interest) may be resold pursuant to Rule 144 without volume or manner-of-sale
restrictions or current public information requirements as determined by the counsel to the Company as set forth in a written
opinion letter to such effect, addressed and acceptable to the Transfer Agent and the Holder, (d) the Common Stock is trading
on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such
Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted
for the foreseeable future), (e) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common
Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) there is no existing Event
of Default and no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default,
(g) the issuance of the shares in question to the Holder would not violate the limitations set forth in Section 4(d) herein, (h)
there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has
not been consummated, (i) the applicable Holder is not in possession of any information provided by the Company that constitutes,
or may constitute, material non-public information and (j) for each Trading Day in a period of 20 consecutive Trading Days prior
to the applicable date in question, the daily dollar trading volume for the Common Stock on the principal Trading Market exceeds
$100,000 per Trading Day.

 

    	3

    	 

    

 

“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).

 

“Interest
Conversion Rate” means the lesser of (a) the Conversion Price or (b) 90% of the lesser of (i) the average of the VWAPs
for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Interest Payment Date
or (ii) the average of the VWAPs for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the
date the applicable Interest Conversion Shares are issued and delivered if such delivery is after the Interest Payment Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

    	4

    	 

    

 

“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 and (b) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(bb) attached to the Purchase Agreement.

 

“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 clause (a) thereunder.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of April 3, 2015 among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

    	5

    	 

    

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTCQB (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 OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the
Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Section
2.Interest.

 

a)       
Payment of Interest in Cash or Kind. The Company shall pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture at the rate of 6% per annum, payable quarterly on January 1, April 1, July 1 and
October 1, beginning on the first such date after the Original Issue Date, on each Conversion Date (as to that principal amount
then being converted), and on the Maturity Date (each such date, an “Interest Payment Date”) (if any Interest
Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), in cash or,
at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock at the
Interest Conversion Rate (the dollar amount to be paid in shares, the “Interest Share Amount”) or a combination
thereof; provided, however, that payment in shares of Common Stock may only occur if (i) all of the Equity Conditions
have been met (unless waived by the Holder in writing) during the 20 Trading Days immediately prior to the applicable Interest
Payment Date (the “Interest Notice Period”) and through and including the date such shares of Common Stock
are actually issued to the Holder, (ii) the Company shall have given the Holder notice in accordance with the notice requirements
set forth below and (iii) as to such Interest Payment Date, prior to such Interest Notice Period (but not more than five (5) Trading
Days prior to the commencement of such Interest Notice Period), the Company shall have delivered to the Holder’s account
with The Depository Trust Company a number of shares of Common Stock to be applied against such Interest Share Amount equal to
the quotient of (x) the applicable Interest Share Amount divided by (y) the lesser of the (i) then Conversion Price and (ii) the
Interest Conversion Rate assuming for such purposes that the Interest Payment Date is the Trading Day immediately prior to the
commencement of the Interest Notice Period (the “Interest Conversion Shares”).

 

    	6

    	 

    

 

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

 

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

 

    	7

    	 

    

 

d)       
Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal
to the lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall
accrue daily from the date such interest is due hereunder through and including the date of actual payment in full. Notwithstanding
anything to the contrary contained herein, if, on any Interest Payment Date the Company has elected to pay accrued interest in
the form of Common Stock but the Company is not permitted to pay accrued interest in Common Stock because it fails to satisfy
the conditions for payment in Common Stock set forth in Section 2(a) herein, then, at the option of the Holder, the Company, in
lieu of delivering either shares of Common Stock pursuant to this Section 2 or paying the regularly scheduled interest payment
in cash, shall deliver, within three (3) Trading Days of each applicable Interest Payment Date, an amount in cash equal to the
product of (x) the number of shares of Common Stock otherwise deliverable to the Holder in connection with the payment of interest
due on such Interest Payment Date multiplied by (y) the highest VWAP during the period commencing on the Interest Payment Date
and ending on the Trading Day prior to the date such payment is actually made. If any Interest Conversion Shares are issued to
the Holder in connection with an Interest Payment Date and are not applied against an Interest Share Amount, then the Holder shall
promptly return such excess shares to the Company.

 

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

 

Section
3.Registration of Transfers and Exchanges.

 

a)       
Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of 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.

 

    	8

    	 

    

 

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) 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. No ink-original
Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any
Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest
thereon, has been so converted in which case the Holder shall surrender this Debenture as promptly as is reasonably practicable
after such conversion without delaying the Company’s obligation to deliver the shares on the Share Delivery Date. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of this 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.

 

b)       
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $0.50, 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.

 

    	9

    	 

    

 

ii.       Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing
the Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the effective
date of a registration statement covering the resale of the Conversion Shares, 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 (including, if the Company has given continuous notice pursuant to Section
2(b) for payment of interest in shares of Common Stock at least 20 Trading Days prior to the date on which the Notice of Conversion
is delivered to the Company, shares of Common Stock representing the payment of accrued interest otherwise determined pursuant
to Section 2(a) but assuming that the Interest Notice Period is the 20 Trading Days period immediately prior to the date on which
the Notice of Conversion is delivered to the Company and excluding for such issuance the condition that the Company deliver Interest
Conversion Shares as to such interest payment prior to the commencement of the Interest Notice Period) and (B) a bank check in
the amount of accrued and unpaid interest (if the Company has elected or is required to pay accrued interest in cash). On or after
the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the effective date of a registration statement
covering the resale of the Conversion Shares, the Company shall 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.

 

    	10

    	 

    

 

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.

 

    	11

    	 

    

 

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 and payment
of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights
of Persons other than the Holder (and the other holders of the 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
and payment of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and nonassessable.

 

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 and all fees to the Depository Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic delivery of the Conversion Shares.

 

    	12

    	 

    

 

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. 

 

    	13

    	 

    

 

Section
5.Certain Adjustments.

 

a)       
Stock Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the 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.

 

    	14

    	 

    

 

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,
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.

 

    	15

    	 

    

 

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).

 

    	16

    	 

    

 

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) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents (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.

 

    	17

    	 

    

 

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.

 

    	18

    	 

    

 

Section
6.[RESERVED]

 

Section
7.Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of at least
67% 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 (i) the Conversion Shares or Warrant Shares as permitted or required under
the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors
of the Company, provided that such repurchases shall not exceed an aggregate of $1,000 for all officers and directors during the
term of this Debenture;

 

    	19

    	 

    

 

e)       
repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata
basis;

 

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); or

 

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

 

Section
8.Events of Default.

 

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

 

i.        any
default in the payment of (A) the principal amount of any Debenture or (B) interest, 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 an interest payment or other default under clause (B)
above, is not cured within 4 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
(xi) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 6 Trading Days after notice of
such failure sent by the Holder or by any other Holder to the Company and (B) 11 Trading Days after the Company has become or
should have become aware of such failure;

 

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

 

    	20

    	 

    

 

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;

 

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

 

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

 

ix.       the
Company shall fail for any reason to deliver 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.        the
electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a “chill”;

 

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

 

    	21

    	 

    

 

xii.      a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions
are satisfied or that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred; or

 

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

 

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

 

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, by email attachment, or sent
by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other
facsimile number, email address, or address as the Company may specify for such purposes by notice to the Holder delivered in
accordance with this Section 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, by email attachment, or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile number or email address or address of the Holder appearing
on the books of the Company, or if no such facsimile number or email attachment or address appears on the books of the Company,
at the principal place of business of such Holder, as set forth in the Purchase Agreement.  Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature
pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set
forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on
any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier
service or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

    	22

    	 

    

 

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.

 

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.

 

    	23

    	 

    

 

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. 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.

 

    	24

    	 

    

 

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

 

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.

 

 

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

(Signature
Pages Follow)

 

    	25

    	 

    

 

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.

 

	 	VAPIR ENTERPRISES, INC.
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Facsimile No. for delivery
    of Notices: _______________

 

    	26

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the 6% Senior Convertible Debenture due September        , 2016 of Vapir Enterprises.
Inc., a Nevada corporation (the “Company”), into shares of common stock (the “Common Stock”),
of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in
the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and
is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will
be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By
the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common
Stock does not exceed the amounts specified under Section 4 of this 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:

 

Payment
of Interest in Common Stock          yes        no

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

 

Number
of shares of Common Stock to be issued:

 

Signature:

 

Name:

 

Address
for Delivery of Common Stock Certificates:

 

Or

 

DWAC
Instructions:

 

Broker
No:                                    

 

Account
No:                                

 

    	27

    	 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

The
6% Senior Convertible Debentures due on September       , 2016 in the aggregate original principal amount of $               is issued
by Vapir Enterprises, Inc., a Nevada 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

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

        
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

	 

         

         
	 

         
	 

         
	 

         

 

 

  

28

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