Document:

Exhibit 4.1

 

[FORM OF SENIOR SECURED CONVERTIBLE
NOTE]

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT, OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE
UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

 

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), ROBERT DENTON, A REPRESENTATIVE OF THE
COMPANY HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST
THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). HE MAY BE REACHED AT TELEPHONE NUMBER (310) 499-2410.

 

Genius
Brands International, Inc.

 

SENIOR
SECURED CONVERTIBLE NOTE

 

	Issuance Date:  March [  ], 2020	
        Original Principal Amount: U.S. $[          ]

        Initial Unrestricted Principal: U.S. $[          ][1]

 

FOR VALUE RECEIVED,
Genius Brands International, Inc., a Nevada corporation (the "Company"), hereby promises to pay to [BUYER]
or registered assigns (the "Holder") in cash and/or in shares of Common Stock (as defined below) the amount set
forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion, amortization
or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined below), on any Installment
Date with respect to the Installment Amount due on such Installment Date, acceleration, redemption or otherwise (in each case in
accordance with the terms hereof) and to pay default interest ("Interest") on any outstanding Principal at the
applicable Default Rate to the extent it accrues pursuant to Section 2 at any time from the date set out above as the Issuance
Date (the "Issuance Date") until the same becomes due and payable, whether upon an Interest Date (as defined below),
any Installment Date, the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the
terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer
or replacement hereof, this "Note") is one of an issue of Senior Secured Convertible Notes issued pursuant to
the Securities Purchase Agreement on the Closing Date (collectively, the "Notes" and such other Senior Secured
Convertible Notes, the "Other Notes"). Certain capitalized terms used herein are defined in Section 32.

 

_____________________

[1]
Insert Holder's Pro Rata Amount of NTD $12.5-$4 is $7.5.

 

 

 

    	 	1	 

     

    

 

(1)          
PAYMENTS OF PRINCIPAL; PREPAYMENT. The Company acknowledges and agrees that this Note was issued at an original issue
discount and that any Principal amount that reflects such original issue discount shall be Unrestricted Principal and Initial Unrestricted
Principal hereunder. On each Installment Date, the Company shall pay to the Holder an amount equal to the Installment Amount due
on such Installment Date in accordance with Section 8. On the Maturity Date, if any portion of this Note remains outstanding after
giving effect to any Company Conversions and Company Redemptions occurring on or prior to such date in accordance with Section
8, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest and
accrued, if any, and unpaid Late Charges (as defined in Section 26(b)), if any, on such Principal and Interest, except that any
Restricted Principal hereunder shall be satisfied on the Maturity Date (in lieu of a cash payment) by Maturity Netting (as defined
below). The "Maturity Date" shall be September [30], 2021[2]
(the "Scheduled Maturity Date"), as may be extended at the option of the Holder (i) in the event that, and for
so long as, an Event of Default (as defined in Section 4(a)) shall have occurred and be continuing on the Maturity Date (as may
be extended pursuant to this Section 1) or any event shall have occurred and be continuing on the Maturity Date (as may be extended
pursuant to this Section 1) that with the passage of time and the failure to cure would result in an Event of Default, (ii) through
the date that is ten (10) Business Days after the consummation of a Change of Control in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date and (iii)
to such date elected by the Holder pursuant to a Deferral Notice in accordance with Section 8(d) in the event the Holder elects
to submit such a Deferral Notice electing to defer the last Installment Date hereunder beyond the Scheduled Maturity Date. Other
than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid
Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

 

(a)          
Securities Contract. The Company and the Holder hereby acknowledge and agree that the Securities Purchase Agreement
and the Note Purchase Agreement (as defined in the Securities Purchase Agreement) each is a “securities contract” as
defined in 11 U.S.C. § 741 and that the Holder shall have all rights in respect of this Note, the Master Netting Agreement
(as defined in the Securities Purchase Agreement), the Investor Note, the Securities Purchase Agreement and the Note Purchase Agreement
as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation, all rights of credit, deduction,
setoff, offset, and netting (collectively, "Netting" or "Net") as are available under this Note,
the Master Netting Agreement and the Investor Note and all Netting provisions of this Note, the Investor Note and the Master Netting
Agreement, including without limitation the provisions set forth in Section 7 of the Investor Note, are hereby incorporated in
this Note and made a part hereof as if such provisions were set forth herein.

 

(b)         
Investor Prepayments; No Share Issuance or Sales until Fully Paid. Upon the consummation of any Investor Prepayment,
the aggregate outstanding Restricted Principal under this Note shall automatically become Unrestricted Principal hereunder, on
a dollar-for-dollar basis, in an amount equal to the aggregate amount of cash paid in such Investor Prepayment. Notwithstanding
anything herein to the contrary, the shares of Common Stock issuable upon conversion of Restricted Principal hereunder shall not
be required to be issued by the Company until such portion of the Investor Note equivalent to the Restricted Principal subject
to such conversion has been fully paid pursuant to an Investor Prepayment or otherwise (to the Company or to such other Persons
as directed by the Company in writing) and such Restricted Principal becomes Unrestricted Principal in accordance with the preceding
sentence.

 

(c)          
Prohibited Transfer or Severability Reduction. Upon any Prohibited Transfer (as defined in the Investor Note) of
the Investor Note, (x) the Investor Note shall be deemed paid in full and shall be null and void, and (y) 80% of the remaining
Restricted Principal of this Note shall be automatically cancelled with the remaining 20% of the Restricted Principal of this Note
automatically becoming Unrestricted Principal hereunder.

 

(d)          
Investor Netting Right Reduction. Upon any exercise by the Holder of Investor Netting Rights, the Restricted Principal
hereunder shall automatically and simultaneously be reduced, on a dollar-for-dollar basis, by such portion of the aggregate principal
of the Investor Note cancelled pursuant to such Investor Netting Rights.

 

(e)          
Single Integrated Transaction. The Company hereby acknowledges and agrees that (i) the Holder shall be entitled to
exercise the Investor Netting Rights through any means permissible under applicable law, including without limitation, Netting
and (ii) the obligations of the Holder under the Investor Note and the obligations of the Company under this Note arise in a single
integrated transaction and constitute related and interdependent obligations within such transaction.

 

_____________________

[2]
Insert date that is the last Trading Day of the calendar month on the 18 month anniversary of the Issuance Date.

 

 

 

    	 	2	 

     

    

 

(f)           
Grant of Security Interest. In addition to the security interest granted to the Collateral Agent for the benefit
of the Holder and the holders of the Other Notes pursuant to the Security Documents, the Company hereby grants and pledges to the
Holder a continuing security interest in the Investor Note of the Holder, including any and all cash, proceeds, funds, credits,
rights and other assets therein or arising therefrom, from time to time, and any additions, dividends, profits and interest in
the foregoing and any replacements or substitutions therefore (collectively, the "Investor Note Collateral") to
secure prompt repayment of any and all amounts outstanding hereunder from time to time and to secure prompt performance by the
Company of each of its covenants and duties under this Note. Such security interest constitutes a valid, first priority security
interest in the Investor Note Collateral, and will constitute a valid, first priority security interest in later-acquired Investor
Note Collateral. Notwithstanding any filings undertaken related to the Holder’s rights under the Nevada Uniform Commercial
Code, the Holder’s Lien on the Investor Note Collateral shall remain in effect for so long as any Restricted Principal remains
outstanding.

 

(g)         
Order of Conversion and/or Redemption. Notwithstanding anything herein to the contrary, at any time after no Initial
Unrestricted Principal remains outstanding, with respect to any partial conversion or redemption hereunder, as applicable, the
Company shall convert or redeem, as applicable, First, all accrued and unpaid Late Charges on any Principal and Interest
hereunder and under any other Notes held by such Holder, Second, all accrued and unpaid Interest hereunder and under any
other Notes held by such Holder, Third, all other amounts owed (other than Principal) hereunder and under any other Notes
held by such Holder and, Fourth, all Principal (other than Restricted Principal) outstanding hereunder and under any other
Notes held by such Holder, in each case, immediately prior to any such conversion or redemption, as applicable, in each case, allocated
pro rata among this Note and such other Notes held by such Holder.

 

(2)          
INTEREST. No Interest shall accrue hereunder unless and until an Event of Default has occurred. From and after the
occurrence and during the continuance of any Event of Default, Interest shall accrue hereunder at eighteen percent (18.0%) per
annum (the "Default Rate") and shall be computed on the basis of a 360-day year and twelve 30-day months and shall
be payable, if applicable, in arrears on the last Business Day of any Calendar Quarter during which Interest accrues hereunder
(an "Interest Date") to the record holder of this Note in cash by wire transfer of immediately available funds
pursuant to wire instructions provided by the Holder in writing to the Company. Accrued and unpaid Interest, if any, shall also
be payable prior to an Interest Date by way of inclusion of the Interest in the Conversion Amount (as defined in Section 3(b)(i))
on each (i) Conversion Date (as defined in Section 3(c)(i)) in accordance with Section 3(c)(i) and/or (ii) upon any redemption
hereunder occurring prior to the Maturity Date, including, without limitation, upon a Bankruptcy Event of Default redemption. In
the event that an Event of Default is subsequently cured (and no other Event of Default then exists (including, without limitation,
for the Company's failure to pay such Interest at the Default Rate on the Maturity Date)), Interest shall cease to accrue hereunder
as of the calendar day immediately following the date of such cure; provided that the Interest as calculated and unpaid
during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence
of such Event of Default through and including the date of such cure of such Event of Default; provided, further,
that for the purpose of this Section 2, such Event of Default shall not be deemed cured unless and until any accrued and unpaid
Interest shall be paid to the Holder.

 

(3)          
CONVERSION OF NOTES. At any time or times after the Issuance Date, this Note shall be convertible into shares of
Common Stock, on the terms and conditions set forth in this Section 3.

 

(a)           
Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date,
the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable
shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue
any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share
of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall
pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock
upon conversion of any Conversion Amount.

 

 

 

    	 	3	 

     

    

 

(b)          
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant
to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion
Rate").

 

(i)           
"Conversion Amount" means the sum of (A) the portion of the Principal to be converted, amortized, redeemed
or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest, if any, with respect to such
Principal and (C) accrued and unpaid Late Charges, if any, with respect to such Principal and Interest.

 

(ii)          
"Conversion Price" means, as of any Conversion Date or other date of determination, $1.375, subject to adjustment
as provided herein; provided, however, upon receipt of Nasdaq Stockholder Approval, $0.21, subject to adjustment
as provided herein.

 

(c)           
Mechanics of Conversion.

 

(i)           
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion
Date"), the Holder shall (A) transmit by facsimile or electronic mail (or otherwise deliver), for delivery on or prior
to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit
I (a "Conversion Notice") to the Company and (B) if required by Section 3(c)(iii), but without delaying the
Company's requirement to deliver shares of Common Stock on the applicable Share Delivery Date (as defined below), surrender this
Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking
with respect to this Note in the case of its loss, theft, destruction or mutilation in compliance with the procedures set forth
in Section 20(b)). Each Conversion Notice shall indicate, at the Holder's sole discretion, the portion of the Initial Unrestricted
Amount and/or the Other Unrestricted Amount of this Note being converted. Also, in lieu of indicating the portion of the Initial
Unrestricted Amount and/or the Other Unrestricted Amount that the Holder elects to convert, the Holder may indicate in a Conversion
Notice the number of shares of Common Stock it seeks to receive upon conversion of any portion of this Note (and the percentage
of such Conversion Amount that the Holder elects to allocate to the Initial Unrestricted Amount and the percentage of such Conversion
Amount that the Holder elects to allocate to the Other Unrestricted Amount) and the reduction of the Conversion Amount pursuant
to such conversion shall be determined at the end of such Conversion Date by multiplying such number of shares of Common Stock
by the applicable Conversion Price. No ink-original Conversion Notice shall be required, nor shall any medallion guarantee (or
other type of guarantee or notarization) of any Conversion Notice be required. On or before the first (1st) Business Day following
the date of delivery of a Conversion Notice, the Company shall transmit by facsimile or electronic mail a confirmation of receipt
of such Conversion Notice to the Holder and the Company's transfer agent (the "Transfer Agent"). On or before
the earlier of (i) the second (2nd) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement
Period, in each case, following the date on which the Holder has delivered a Conversion Notice to the Company (a "Share
Delivery Date"), the Company shall (x) provided that the Transfer Agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer Program and (A) the Conversion
Shares are subject to an effective resale registration statement in favor of the Holder or (B) if converted at a time when Rule
144 would be available for immediate resale of the Conversion Shares by the Holder, credit such aggregate number of Conversion
Shares to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through
its Deposit / Withdrawal At Custodian system, or (y) if (A) the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or (B) the Conversion Shares are not subject to an effective resale registration
statement in favor of the Holder and, if converted at a time when Rule 144 would not be available for immediate resale of the Conversion
Shares by the Holder, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered
in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this
Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater
than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event
later than three (3) Business Days after delivery of this Note and at its own expense, issue and deliver to the Holder a new Note
(in accordance with Section 20(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive
the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the applicable Conversion Date, irrespective of the date such Conversion Shares are credited
to the Holder's account with DTC or the date of delivery of the certificates evidencing such Conversion Shares, as the case may
be. In the event that the Holder elects to convert a portion of the Principal amount of this Note prior to any applicable Installment
Date, the Conversion Amount so converted shall be deducted in reverse order starting from the final Installment Amount to be paid
hereunder to the Holder on the final Installment Date, unless the Holder otherwise indicates and allocates among any Installment
Dates hereunder in the applicable Conversion Notice.

 

 

 

    	 	4	 

     

    

 

(ii)          
Company's Failure to Timely Convert. If the Company shall fail on or prior to the applicable Share Delivery Date
to issue and deliver a certificate to the Holder, if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or if converted, at a time when the Conversion Shares are not subject to
an effective resale registration statement in favor of the Holder and Rule 144 would not be available for immediate resale of the
Conversion Shares by the Holder, or credit the Holder's balance account with DTC, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program and (a) the Conversion Shares are subject
to an effective resale registration statement in favor of the Holder or (b) if converted at a time when Rule 144 would be available
for immediate resale of the Conversion Shares by the Holder, for the number of shares of Common Stock to which the Holder
is entitled upon the Holder's conversion of any Conversion Amount (a "Conversion Failure"), then (A) the Company
shall pay damages to the Holder for each Trading Day of such Conversion Failure in an amount equal to 1.0% of the product of (1)
the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Date and to which the
Holder is entitled, and (2) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during
the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Date and (B) the Holder, upon
written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be,
any portion of this Note that has not been converted pursuant to such Conversion Notice; provided that the voiding of a
Conversion Notice shall not affect the Company's obligations to make any payments which have accrued prior to the date of such
notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if the Company shall fail on or prior to the
applicable Share Delivery Date to issue and deliver a certificate to the Holder, if the Transfer Agent is not participating in
the DTC Fast Automated Securities Transfer Program, or credit the Holder's balance account with DTC, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, for the number of shares of Common Stock to which the Holder is entitled
upon the Holder's conversion of any Conversion Amount or on any date of the Company's obligation to deliver shares of Common Stock
as contemplated pursuant to clause (y) below, and if on or after such Trading Day the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion
that the Holder is entitled to receive from the Company and has not received from the Company in connection with such Conversion
Failure (a "Buy-In"), then the Company shall, within three (3) Trading Days after the Holder's request and in
the Holder's discretion, either (x) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"),
at which point the Company's obligation to issue and deliver such certificate or credit the Holder's balance account with DTC for
the shares of Common Stock to which the Holder is entitled upon the Holder's conversion of the applicable Conversion Amount shall
terminate, or (y) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares
of Common Stock or credit the Holder's balance account with DTC for such shares of Common Stock and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B)
the price at which the sell order giving rise to such purchase obligation was executed.

 

(iii)         
Registration; Book-Entry. The Company shall maintain a register (the "Register") for the recordation
of the names and addresses of the holders of each Note and the Initial Unrestricted Principal, Other Unrestricted Principal and
Restricted Principal (and stated interest thereon) held by such holders (the "Registered Notes"). The entries
in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes
shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including, without limitation,
the right to receive payments of Principal and Interest, if any, hereunder, notwithstanding notice to the contrary. A Registered
Note may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt
of a request to assign or sell all or part of any Registered Note by the Holder, the Company shall record the information contained
therein in the Register and issue one or more new Registered Notes in the same aggregate Principal amount as the Principal amount
of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 20. Notwithstanding anything to
the contrary in this Section 3(c)(iii), the Holder may assign any Note or any portion thereof to an Affiliate of the Holder or
a Related Fund of the Holder without delivering a request to assign or sell such Note to the Company and the recordation of such
assignment or sale in the Register (a "Related Party Assignment"); provided, that (x) the Company may continue
to deal solely with such assigning or selling Holder unless and until the Holder has delivered a request to assign or sell such
Note or portion thereof to the Company for recordation in the Register; (y) the failure of such assigning or selling Holder to
deliver a request to assign or sell such Note or portion thereof to the Company shall not affect the legality, validity, or binding
effect of such assignment or sale and (z) such assigning or selling Holder shall, acting solely for this purpose as a non-fiduciary
agent of the Company, maintain a register (the "Related Party Register") comparable to the Register on behalf
of the Company, and any such assignment or sale shall be effective upon recordation of such assignment or sale in the Related Party
Register. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion
Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which
notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder
and the Company shall maintain records showing the Initial Unrestricted Principal, Other Unrestricted Principal, Interest and Late
Charges, if any, converted and/or paid (as the case may be) or Restricted Principal becoming unrestricted and the dates of such
conversions, Investor Prepayments and/or payments (as the case may be) or shall use such other method, reasonably satisfactory
to the Holder and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update
the Register to record such Principal, Interest and Late Charges converted and/or paid (as the case may be) or Restricted Principal
becoming unrestricted and the dates of such conversions, Investor Prepayment and/or payments (as the case may be) within two (2)
Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.

 

 

 

    	 	5	 

     

    

 

(iv)         
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from the Holder and one
or more holders of Other Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of
this Note and/or Other Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from the Holder and
each holder of Other Notes electing to have Notes converted on such date a pro rata amount of such holder's pro rata amount of
such holder's portion of the Note and its Other Notes submitted for conversion based on the Principal amount of this Note and the
Other Notes submitted for conversion on such date by such holder relative to the aggregate Principal amount of this Note and all
Other Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable
to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common
Stock not in dispute and resolve such dispute in accordance with Section 25.

 

(d)          
Conversion Limitations; 

 

(i)           
Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the Company shall not issue any
shares of Common Stock pursuant to the terms of this Note, and the Holder shall not have the right to any shares of Common Stock
otherwise issuable pursuant to the terms of this Note and such issuance shall be null and void and treated as if never made, to
the extent that after giving effect to such issuance, the Holder together with the other Attribution Parties collectively would
beneficially own in excess of [4.99] [9.99][3]%
(the "Maximum Percentage") of the shares of Common Stock outstanding immediately after giving effect to such issuance.
For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the
other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties
plus the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) conversion of the remaining,
nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any
convertible notes or convertible preferred stock or warrants, including the Warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d)(i).
For purposes of this Section 3(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of
the Note without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (i) the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the SEC, as the case may be, (ii) a more recent public announcement by the Company or (iii) any other written
notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the "Reported
Outstanding Share Number"). If the Company receives a Conversion Notice from the Holder at a time when the actual number
of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in
writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise
cause the Holder's beneficial ownership, as determined pursuant to this Section 3(d)(i), to exceed the Maximum Percentage, the
Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice.
For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Trading Day confirm
orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note
results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the Exchange Act), the number
of shares so issued by which the Holder's and the other Attribution Parties' aggregate beneficial ownership exceeds the Maximum
Percentage (the "Excess Shares") shall be deemed null and void and shall be cancelled ab initio, and the Holder
shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder
may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in
such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the
other Attribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be
deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the
Exchange Act. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 3(d)(i) to the extent necessary to correct this paragraph (or any portion of this paragraph) which
may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 3(d)(i) or to make
changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph
may not be waived and shall apply to a successor holder of this Note.

 

_____________________

[3]
Insert Maximum Percentage as indicated on the Buyer's signature page attached to the Securities Purchase Agreement.

 

 

 

    	 	6	 

     

    

 

(4)          
RIGHTS UPON EVENT OF DEFAULT.

 

(a)           
Event of Default. Each of the following events shall constitute an "Event of Default" and each of
the events in clauses (vi) and (vii) shall constitute a "Bankruptcy Event of Default":

 

(i)            
(A) the suspension of the Common Stock from trading on an Eligible Market for a period of two (2) consecutive Trading Days
or for more than an aggregate of ten (10) Trading Days in any 365-day period or (B) the failure of the Common Stock to be listed
on an Eligible Market;

 

(ii)          
the Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within
five (5) Business Days after the applicable Conversion Date or (B) notice, written or oral, to the Holder or any holder of the
Other Notes, including by way of public announcement or through any of its agents, at any time, of its intention not to comply
with a request for conversion of this Note or any Other Notes into shares of Common Stock that is tendered in accordance with the
provisions of this Note or the Other Notes, other than pursuant to Section 3(d) (and analogous provisions under the Other Notes);

 

(iii)         
at any time following the tenth (10th) consecutive Business Day that the Holder's Authorized Share Allocation
is less than the Holder's Pro Rata Amount of the applicable Required Reserve Amount (as defined in the Securities Purchase Agreement);

 

(iv)         
the Company's failure to pay to the Holder any amount of Principal, Interest, Late Charges, Redemption Price or other amounts
when and as due under this Note or any other Transaction Document, except, in the case of a failure to pay Interest and/or Late
Charges when and as due, in which case only if such failure continues for a period of at least an aggregate of two (2) Business
Days;

 

(v)          
the occurrence of any default (after lapse of any applicable cure periods) under, redemption of or acceleration prior to
maturity of at least an aggregate of $150,000 of Indebtedness of the Company or any of its Subsidiaries other than with respect
to this Note or any Other Notes;

 

(vi)         
the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal,
foreign or state law for the relief of debtors (collectively, "Bankruptcy Law"), (A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver,
trustee, assignee, liquidator or similar official (a "Custodian"), (D) makes a general assignment for the benefit
of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;

 

(vii)        
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the
Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or
(C) orders the liquidation of the Company or any of its Subsidiaries;

 

(viii)       
a final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company
or any of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however,
that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating
the $100,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity
provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by
insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or
indemnity within thirty (30) days of the issuance of such judgment;

 

 

 

    	 	7	 

     

    

 

(ix)        
other than as specifically set forth in another clause of this Section 4(a), the Company or any of its Subsidiaries breaches
any representation, warranty, in any material respect (other than representations or warranties subject to Material Adverse Effect
or materiality, which may not be breached in any respect), covenant or other term or condition of any Transaction Document, except,
in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable, only if such breach
remains uncured for a period of at least five (5) consecutive Business Days;

 

(x)           
any breach or failure in any material respect to comply with either Sections 8, 16 or 17 of this Note;

 

(xi)         
the Company or any Subsidiary shall materially fail to perform or comply with any covenant or agreement contained in the
Security Agreement to which it is a party;

 

(xii)        
any material provision of this Note or any Security Document shall at any time for any reason (other than pursuant to the
express terms thereof) cease to be valid and binding on or enforceable against the Company or any Subsidiary intended to be a party
thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced
by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity
or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported
to be created under any Security Document;

 

(xiii)        
this Note, any Security Document or any other security document, after delivery thereof pursuant hereto, shall for any reason
fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority
Lien (as defined in Section 16(b)) in favor of the Holder or the Collateral Agent for the benefit of the holders of the Notes on
the Investor Note Collateral and any Collateral purported to be covered hereby and thereby;

 

(xiv)        
any bank at which any deposit account, blocked account, or lockbox account of the Company or any Subsidiary is maintained
shall fail to comply with any material term of any deposit account, blocked account, lockbox account or similar agreement to which
such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody,
control or possession of any investment property of the Company or any Subsidiary shall fail to comply with any of the terms of
any investment property control agreement to which such Person is a party (it being understood that only accounts pursuant to which
the Collateral Agent has requested account control agreements should be subject to this clause (xv));

 

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

 

(xvi)       
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;

 

(xvii)       
any Material Adverse Effect occurs;

 

 

 

    	 	8	 

     

    

 

(xviii)     
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder
upon conversion or exercise (as the case may be) of any Securities and when required by such Securities or the Securities Purchase
Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at
least five (5) consecutive Trading Days; or

 

(xix)        
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

 

(b)          
Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other Note, the Company
shall within one (1) Business Day deliver written notice thereof via facsimile or electronic mail and overnight courier (an "Event
of Default Notice") to the Holder. At any time after the earlier of the Holder's receipt of an Event of Default Notice
and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (an "Event of Default
Redemption") all or any portion of this Note by delivering written notice thereof (the "Event of Default Redemption
Notice") to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is
electing to require the Company to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section
4(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal to the greater of
(x) 125% of the Conversion Amount being redeemed and (y) the product of (A) the Conversion Amount being redeemed and (B) the quotient
determined by dividing (I) the greatest Closing Price of the shares of Common Stock during the period beginning on the date immediately
preceding such Event of Default and ending on the date the Holder delivers the Event of Default Redemption Notice, by (II) the
lowest Conversion Price in effect during such period (the "Event of Default Redemption Price"). Redemptions required
by this Section 4(b) shall be made in accordance with the provisions of Section 12. To the extent redemptions required by this
Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions
shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section
3(d), until the Event of Default Redemption Price is paid in full, the Conversion Amount submitted for redemption under this Section
4(b) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption
of this Note pursuant hereto, the Principal amount redeemed shall be deducted in reverse order starting from the final Installment
Amount to be paid hereunder on the final Installment Date, unless the Holder otherwise indicates and allocates among any Installment
Dates hereunder in the applicable Event of Default Redemption Notice. The parties hereto agree that in the event of the Company's
redemption of any portion of the Note under this Section 4(b), the Holder's damages would be uncertain and difficult to estimate
because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any Event of Default redemption premium due under this Section 4(b) is intended
by the parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and
not as a penalty.

 

(c)           
Mandatory Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding
any conversion that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following
the Maturity Date, the Company shall immediately pay to the Holder an amount in cash representing 125% of all outstanding Principal,
accrued and unpaid Interest, if any, and accrued and unpaid Late Charges, if any, on such Principal and Interest, in addition to
any and all other amounts due hereunder (the "Bankruptcy Event of Default Redemption Price"), without the requirement
for any notice or demand or other action by the Holder or any other Person, except that any Restricted Principal then outstanding
hereunder shall be satisfied through Bankruptcy Event of Default Netting (as defined in the Investor Note) (in lieu of such cash
payment hereunder); provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy
Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including
any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event
of Default Redemption Price or any other Redemption Price, as applicable.

 

 

 

    	 	9	 

     

    

 

(5)          
RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

 

(a)          
Assumption. If, at any time while this Note is outstanding, a Fundamental Transaction occurs or is consummated, then,
upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each share of Common Stock that would
have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of the
Holder (without regard to any limitation in Section 3(d) on the conversion of this Note), the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the "Alternate Consideration") receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 3(d) on the conversion of this Note). For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion
Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Note following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the "Successor Entity") to assume in writing all of the
obligations of the Company under this Note in accordance with the provisions of this Section 4(a) pursuant to written agreements
in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Note a security of the
Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares
of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of
this Note) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such
shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being
for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction,
the provisions of this Note referring to the “Company” shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the obligations of the Company under this Note with the same effect
as if such Successor Entity had been named as the Company herein.

 

(b)          
Redemption Right. No sooner than twenty (20) days nor later than fifteen (15) days prior to the consummation of a
Change of Control, but not prior to the public announcement of such Change of Control, the Company shall deliver written notice
thereof via facsimile or electronic mail and overnight courier to the Holder (a "Change of Control Notice"). At
any time during the period beginning on the earlier to occur of (x) any oral or written agreement by the Company or any of its
Subsidiaries, upon consummation of which the transaction contemplated thereby would reasonably be expected to result in a Change
of Control, (y) the Holder becoming aware of a Change of Control if the Change of Control Notice is not delivered to the Holder
in accordance with the immediately preceding sentence (as applicable) and (z) the Holder's receipt of a Change of Control Notice
and ending twenty (20) Trading Days after the date of the consummation of such Change of Control, the Holder may require the Company
to redeem (a "Change of Control Redemption") all or any portion of this Note by delivering written notice thereof
("Change of Control Redemption Notice") to the Company, which Change of Control Redemption Notice shall indicate
the Conversion Amount the Holder is electing to require the Company to redeem. The portion of this Note subject to redemption pursuant
to this Section 5(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal
to the greater of (x) 125% of the Conversion Amount being redeemed and (y) the product of (A) the Conversion Amount being redeemed
and (B) the quotient determined by dividing (I) the greatest Closing Price of the shares of Common Stock during the period beginning
on the date immediately preceding the earlier to occur of (x) the consummation of the Change of Control and (y) the public announcement
of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption Notice, by (II) the lowest
Conversion Price in effect during such period (the "Change of Control Redemption Price"). Redemptions required
by this Section 5 shall be made in accordance with the provisions of Section 12 and shall have priority to payments to stockholders
in connection with a Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined by a court
of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption
Price is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) may be converted, in whole or in
part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant hereto,
the Principal amount redeemed shall be deducted in reverse order starting from the final Installment Amount to be paid hereunder
on the final Installment Date, unless the Holder otherwise indicates and allocates among any Installment Dates hereunder in the
applicable Change of Control Redemption Notice. The parties hereto agree that in the event of the Company's redemption of any portion
of the Note under this Section 5(b), the Holder's damages would be uncertain and difficult to estimate because of the parties'
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any Change of Control redemption premium due under this Section 5(b) is intended by the parties to
be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as a penalty.

 

 

 

    	 	10	 

     

    

 

(6)          
DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS.

 

(a)           
Distribution of Assets. If the Company shall declare or make any dividend or other distributions of its assets (or
rights to acquire its assets) to any or all 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, Options, evidence of Indebtedness or any other
assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(the "Distributions"), then the Holder will be entitled to such Distributions as if the Holder had held the number
of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions
on the convertibility of this Note) immediately prior to the date on which a record is taken for such Distribution or, if no such
record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided,
however, that to the extent that the Holder's right to participate in any such Distribution would result in the Holder and
the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution
to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution
(and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the Holder until
such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such rights (and any rights under this Section 6(a) on such initial
rights or on any subsequent such rights to be held similarly in abeyance) to the same extent as if there had been no such limitation).

 

(b)          
Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights
to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase
Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note)
immediately prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided, however, that to the extent that the Holder's right to participate in any
such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of
such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right
(and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly
in abeyance) to the same extent as if there had been no such limitation).

 

(7)          
ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price will be subject to adjustment from time to time as provided
in this Section 7.

 

(a)          
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the date Nasdaq Stockholder Approval
is obtained, the Company issues or sells, or in accordance with this Section 7(a) is deemed to have issued or sold, or the Company
publicly announces the issuance or sale of, any shares of Common Stock (including the issuance or sale of shares of Common Stock
owned or held by or for the account of the Company, but excluding shares of Common Stock issued or sold, or in accordance with
this Section 7(a) is deemed to have been issued or sold, by the Company (x) in connection with any Excluded Securities (other
than clause (vii) therein), (y) for which the Holder received a Distribution in at least an equivalent amount pursuant to Section
6(a) and (z) adjusting the Conversion Price pursuant to Section 7(b)), for a consideration per share (the "New Issuance
Price") less than a price (the "Applicable Price") equal to the Conversion Price in effect immediately
prior to such issue or sale or deemed issuance or sale (the foregoing a "Dilutive Issuance"), then immediately
after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.
For purposes of determining the adjusted Conversion Price under this Section 7(a), the following shall be applicable:

 

 

 

    	 	11	 

     

    

 

(i)           
Issuance of Options. If the Company in any manner grants or sells, or the Company publicly announces the issuance
or sale of, any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of any such Option
is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 7(a)(i),
the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon
conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to
the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of
Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any
Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to
such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise
or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall
be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise of such Convertible Securities.

 

(ii)           
Issuance of Convertible Securities. If the Company in any manner issues or sells, or the Company publicly announces
the issuance or sale of, any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable
upon the conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this Section 7(a)(ii), the "lowest price per share for which one
share of Common Stock is issuable upon the conversion or exchange or exercise thereof" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the
issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security less
any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of the
Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the
Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise
of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options
for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), no further
adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

(iii)         
Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable or exercisable for shares of Common Stock increases or decreases at any time, the
Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price,
additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or
sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the
Subscription Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if such
adjustment would result in an increase of the Conversion Price then in effect.

 

 

 

    	 	12	 

     

    

 

(iv)         
Calculation of Consideration Received. If any Option and/or Convertible Security is issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the "Primary
Security", and such Option and/or Convertible Security and/or Adjustment Right, the "Secondary Securities"
and together with the Primary Security, each a "Unit"), together comprising one integrated transaction (or one
or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least
one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under
the same plan of financing), the aggregate consideration per share of Common Stock with respect to such Primary Security shall
be deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible
Security, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion
of the Primary Security in accordance with Section 7(a)(i) or 7(a)(ii) above and (z) the lowest Weighted Average Price of the Common
Stock on any Trading Day during the three (3) Trading Day period immediately following the public announcement of such Dilutive
Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market on a
Trading Day, such Trading Day shall be the first Trading Day in such three (3) Trading Day period). If any shares of Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration other than
cash received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options
or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities,
in which case the amount of consideration received by the Company will be the Closing Sale Price of such publicly traded securities
on the date of receipt of such publicly traded securities. If any shares of Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value
of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required Holders.
If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation
Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th)
day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders.
The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses
of such appraiser shall be borne by the Company. Notwithstanding anything to the contrary contained in this Section 7(a), if the
New Issuance Price calculated pursuant to this Section 7(a) would result in a price less than $0.0001, the New Issuance Price shall
be deemed to be $0.0001.

 

(v)          
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the
case may be.

 

(vi)         
No Readjustments. For the avoidance of doubt, in the event the Conversion Price has been adjusted pursuant to this
Section 7(a) and the Dilutive Issuance that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled
after the facts for any reason whatsoever, in no event shall the Conversion Price be readjusted to the Conversion Price that would
have been in effect if such Dilutive Issuance had not occurred or been consummated.

 

(b)          
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or
after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Company at any time on or after the Subscription Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares,
the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment under this
Section 7(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

 

 

    	 	13	 

     

    

 

(c)           
Voluntary Adjustment by Company. Subject to receipt of Nasdaq Stockholder Approval, the Company may at any time during
the term of this Note, with the prior written consent of the Required Holders, reduce the then current Conversion Price to any
amount and for any period of time deemed appropriate by the Board of Directors of the Company.

 

(8)          
COMPANY CONVERSION OR REDEMPTION.

 

(a)           
General. On each applicable Installment Date provided there has been no Equity Conditions Failure and the Nasdaq
Stockholder Approval has been obtained, the Company shall pay to the Holder of this Note the applicable Installment Amount due
on such date by converting all or some of such Installment Amount into Common Stock, in accordance with this Section 8 (a "Company
Conversion"); provided, however, that the Company may, at its option following written notice to the Holder
as set forth below, pay the Installment Amount by redeeming such Installment Amount in cash (a "Company Redemption")
or by any combination of a Company Conversion and a Company Redemption so long as all of the outstanding applicable Installment
Amount due on any Installment Date shall be converted and/or redeemed by the Company on the applicable Installment Date, subject
to the provisions of this Section 8. Notwithstanding anything herein to the contrary, if on an Installment Date there has been
an Equity Conditions Failure or the Company has not obtained Nasdaq Stockholder Approval, the Company shall be required to pay
the Installment Amount in cash only. On or prior to the date which is the twenty-third (23rd) Trading Day prior to each
Installment Date (each, an "Installment Notice Due Date"), the Company shall deliver written notice (each, a "Company
Installment Notice" and the date all of the holders receive such notice is referred to as the "Company Installment
Notice Date"), to each holder of Notes which Company Installment Notice shall (i) either (A) confirm that the applicable
Installment Amount of the Holder's Note shall be converted to Common Stock in whole or in part pursuant to a Company Conversion
(such amount to be converted, the "Company Conversion Amount") or (B) (1) state that the Company elects to redeem
for cash, or is required to redeem for cash in accordance with the provisions of the Notes, in whole or in part, the applicable
Installment Amount pursuant to a Company Redemption and (2) specify the portion of such Installment Amount which the Company elects
or is required to redeem pursuant to a Company Redemption (such amount to be redeemed, the "Company Redemption Amount")
and the portion of such Installment Amount that is the Company Conversion Amount, which amounts, when added together, must equal
the applicable Installment Amount and (ii) if the Installment Amount is to be paid, in whole or in part, in Common Stock pursuant
to a Company Conversion, certify that no Equity Conditions Failure has occurred as of the applicable Company Installment Notice
Date. Each Company Installment Notice shall be irrevocable. If the Company does not timely deliver a Company Installment Notice
in accordance with this Section 8, then the Company shall be deemed to have delivered an irrevocable Company Installment Notice
confirming a Company Conversion and shall be deemed to have certified that there shall not have occurred an Equity Conditions Failure
in connection with such Company Conversion as of the applicable Company Installment Notice Date. Except as expressly provided in
this Section 8, the Company shall convert and/or redeem the applicable Installment Amount of this Note pursuant to this Section
8 and the corresponding Installment Amounts of the Other Notes pursuant to the corresponding provisions of the Other Notes in the
same ratio of the Installment Amount being converted and/or redeemed hereunder. The Company Conversion Amount (whether set forth
in the Company Installment Notice or by operation of this Section 8) shall be converted in accordance with Section 8(b) and the
Company Redemption Amount shall be redeemed in accordance with Section 8(c). Notwithstanding anything herein to the contrary, in
the event of any partial conversion or redemption of this Note, the Conversion Amount converted or redeemed shall be deducted in
reverse order starting from the final Installment Amount to be paid hereunder on the final Installment Date, unless the Holder
otherwise indicates and allocates among any Installment Dates hereunder in a written notice to the Company.

 

 

 

    	 	14	 

     

    

 

(b)          
Mechanics of Company Conversion. If the Company delivers a Company Installment Notice and confirms, or is deemed
to have confirmed, in whole or in part, a Company Conversion in accordance with Section 8(a), then (1) contemporaneously with the
delivery of the Company Installment Notice on the applicable Company Installment Notice Date, the Company shall, or shall direct
the Transfer Agent to, credit the Holder's account with DTC (or if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver to the Holder a certificate for) a number of shares of Common Stock (the "Initial
Pre-Installment Conversion Shares") equal to the quotient of (x) the Company Conversion Amount related to the applicable
Installment Date divided by (y) the Initial Company Pre-Installment Conversion Price then in effect, rounded to the nearest whole
share of Common Stock, (2) in addition, in the event the Holder delivers an Acceleration Notice (as defined in Section 8(e)) by
no later than the Trading Day immediately prior to the applicable Installment Date, on the Trading Day immediately following delivery
of such Acceleration Notice (such date, the "Additional Pre-Installment Conversion Shares Date") the Company shall,
or shall direct the Transfer Agent to, credit the Holder's account with DTC (or if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and deliver to the Holder a certificate for) a number of shares of Common
Stock (the "Additional Pre-Installment Conversion Shares" and together with the Initial Pre-Installment Conversion
Shares, the "Pre-Installment Conversion Shares") equal to the quotient of (x) the Accelerated Amount(s) (as defined
in Section 8(e)) set forth in such Acceleration Notice divided by (y) the Initial Company Pre-Installment Conversion Price then
in effect, rounded to the nearest whole share of Common Stock and (3) on the applicable Installment Date, the Company shall, or
shall direct the Transfer Agent to, credit the Holder's account with DTC (or if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and deliver to the Holder a certificate) for an additional number of shares
of Common Stock, if any, equal to the Installment Balance Conversion Shares; provided, that no Equity Conditions Failure
has occurred (or waived in writing by the Holder) on each day during the period commencing on such Company Installment Notice Date
through the applicable Installment Date. On the second (2nd) Trading Day immediately after the end of the applicable
Measuring Period, the Company shall deliver a written notice setting forth the calculation of the Installment Balance Conversion
Shares (and the calculation of the component parts of such calculation) to the Holder and the holders of the Other Notes. If an
Event of Default occurs during the period from any Company Installment Notice Date through the applicable Installment Date, the
Holder may elect an Event of Default Redemption in accordance with Section 4(b) without being required to return to the Company
any Pre-Installment Conversion Shares previously delivered to the Holder. All Pre-Installment Conversion Shares and Installment
Balance Conversion Shares shall be fully paid and nonassessable shares of Common Stock (rounded to the nearest whole share). If
an Equity Conditions Failure occurs as of the applicable Company Installment Notice Date, then unless the Company has elected to
redeem such Installment Amount, the Company Installment Notice shall indicate that unless the Holder waives the Equity Conditions
Failure, the Installment Amount shall be redeemed for cash. If the Company confirmed (or is deemed to have confirmed by operation
of Section 8(a)) the conversion of the applicable Company Conversion Amount, in whole or in part, and there was no Equity Conditions
Failure as of the applicable Company Installment Notice Date (or is deemed to have certified that there is no Equity Conditions
Failure in connection with any such conversion by operation of Section 8(a)) but an Equity Conditions Failure occurred between
the applicable Company Installment Notice Date and any time through the applicable Installment Date (the "Interim Installment
Period"), the Company shall provide the Holder a subsequent written notice to that effect. If an Equity Conditions Failure
occurs (unless waived in writing by the Holder) during such Interim Installment Period, then at the option of the Holder designated
in writing to the Company, the Holder may require the Company to do either one or both of the following: (i) the Company shall
redeem all or any part designated by the Holder of the Company Conversion Amount (such designated amount is referred to as the
"First Redemption Amount") on such Installment Date and the Company shall pay to the Holder on such Installment
Date, by wire transfer of immediately available funds, an amount in cash equal to 125% of such First Redemption Amount and/or (ii)
the Company Conversion shall be null and void with respect to all or any part designated by the Holder of the unconverted Company
Conversion Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the
Company Conversion Amount; provided, however, that the Conversion Price for such unconverted Company Conversion Amount
shall thereafter be adjusted to equal the lesser of (A) the Company Conversion Price as in effect on the date on which the Holder
voided the Company Conversion and (B) the Company Conversion Price as in effect on the date on which the Holder delivers a Conversion
Notice relating thereto. If the Company fails to redeem any First Redemption Amount on or before the applicable Installment Date
by payment of such amount on the applicable Installment Date, then the Holder shall have the rights set forth in Section 12(a)
as if the Company failed to pay the applicable Company Installment Redemption Price (as defined below) and all other rights under
this Note (including, without limitation, such failure constituting an Event of Default described in Section 4(a)(iv)). Notwithstanding
anything to the contrary in this Section 8(b), but subject to the limitations set forth in Section 3(d), until the Company credits
the Holder's account with DTC, or if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
issues and delivers to the Holder a certificate for, the shares of Common Stock representing the Company Conversion Amount to the
Holder, the Company Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3. In the event that
the Holder elects to convert the Company Conversion Amount prior to the applicable Installment Date as set forth in the immediately
preceding sentence, the Company Conversion Amount so converted shall be deducted in reverse order starting from the final Installment
Amount to be paid hereunder on the final Installment Date, unless the Holder otherwise indicates and allocates among any Installment
Dates hereunder in the applicable Conversion Notice.

 

 

 

    	 	15	 

     

    

 

(c)          
Mechanics of Company Redemption. If the Company elects a Company Redemption in accordance with Section 8, then the
Company Redemption Amount which is to be paid to the Holder on the applicable Installment Date shall be redeemed by the Company
and the Company shall pay to the Holder on such Installment Date, by wire transfer of immediately available funds, an amount in
cash (the "Company Installment Redemption Price") equal to 100% of the Company Redemption Amount. If the Company
fails to redeem the Company Redemption Amount on the applicable Installment Date by payment of the Company Installment Redemption
Price on such date, then at the option of the Holder designated in writing to the Company (any such designation shall be deemed
a "Conversion Notice" pursuant to Section 3(c) for purposes of this Note), (i) the Holder shall have the rights
set forth in Section 12(a) as if the Company failed to pay the applicable Company Installment Redemption Price and all other rights
as a Holder of Notes (including, without limitation, such failure constituting an Event of Default described in Section 4(a)(iv))
and (ii) the Holder may require the Company to convert all or any part of the Company Redemption Amount at the Company Conversion
Price as in effect on the applicable Installment Date. Conversions required by this Section 8(c) shall be made in accordance with
the provisions of Section 3(c). Notwithstanding anything to the contrary in this Section 8(c), but subject to Section 3(d), until
the Company Installment Redemption Price is paid in full, the Company Redemption Amount may be converted, in whole or in part,
by the Holder into Common Stock pursuant to Section 3. In the event the Holder elects to convert all or any portion of the Company
Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Company Redemption
Amount so converted shall be deducted in reverse order starting from the final Installment Amount to be paid hereunder on the final
Installment Date, unless the Holder otherwise indicates and allocates among any Installment Dates hereunder in the applicable Conversion
Notice.

 

(d)          
Deferred Installment Amount. Notwithstanding any provision of this Section 8 to the contrary, the Holder may from
time to time, at its option and in its sole discretion, deliver a written notice (a "Deferral Notice") to the
Company no later than the Business Day immediately prior to the applicable Installment Date electing to have the payment of all
or any portion of an Installment Amount payable on such Installment Date deferred (such amount(s) deferred, the "Deferral
Amount") until (i) any subsequent Installment Date selected by the Holder, in its sole discretion, in which case, the
Deferral Amount shall be added to, and become part of, the Installment Amount to be paid on such subsequent Installment Date or
(ii) until the last Business Day of any calendar month following the last Installment Date occurring hereunder, which date may
be after the Scheduled Maturity Date hereunder. Any Deferral Notice delivered by the Holder pursuant to this Section 8(d) shall
set forth (i) the Deferral Amount and (ii) the date that such Deferral Amount shall now be payable.

 

(e)          
Accelerated Installment Amount. Notwithstanding any provision of this Section 8 to the contrary, the Holder may,
at its option and in its sole discretion, deliver a written notice to the Company (an "Acceleration Notice") no
later than the Trading Day immediately prior to the applicable Installment Date electing to have the payment of all or any portion
of any or all Installment Amount(s) scheduled to be paid on future Installment Dates after the applicable Installment Date accelerated
(such amount(s) accelerated, the "Accelerated Amount(s)") to be paid on the applicable Installment Date pursuant
to a Company Conversion, in which case, such Accelerated Amount(s) shall be added to, and become part of, the Installment Amount
as such Installment Amount may have been increased pursuant to the terms hereof, payable on such applicable Installment Date by
including such Accelerated Amount(s) in the Installment Amount for the applicable Installment Date and shall be payable in Common
Stock regardless of whether the Installment Amount scheduled to be paid on such applicable Installment Date in accordance with
the provisions of this Section 8 shall be paid in cash, shares of Common Stock or a combination thereof; provided, however,
that in the event that the Holder delivers one or more Acceleration Notice(s) with respect to an Installment Date, the aggregate
Accelerated Amount(s) with respect to such Installment Date shall not be greater than six (6) times the Holder's Pro Rata Amount
of $[1,041,666]. Any Acceleration Notice delivered by the Holder pursuant to this Section 8(e) shall set forth (i) the Accelerated
Amount(s) and (ii) the date that such Accelerated Amount should have been paid if not for the Holder's right to accelerate such
Installment Amount(s) pursuant to this Section 8(e).

 

 

 

    	 	16	 

     

    

 

(9)          
OPTIONAL REDEMPTION AT THE COMPANY'S ELECTION. At any time after the Issuance Date, the Company shall have the right
to redeem a portion or all of the Conversion Amount (as defined in the Notes) then remaining under this Note, the Other Notes (the
"Company Optional Redemption Amount") as designated in the Company Optional Redemption Notice on the Company Optional
Redemption Date (each as defined below) (a "Company Optional Redemption"). This Note and the Other Notes subject
to redemption pursuant to this Section 9 shall be redeemed by the Company on the Company Optional Redemption Date in cash by wire
transfer of immediately available funds pursuant to wire instructions provided by the Holder in writing to the Company at a price
equal to: (i) so long as there has been no Equity Conditions Failure during the period beginning on the Company Optional Redemption
Notice Date (as defined below) through the Company Optional Redemption Date (as defined below), 110% of the Conversion Amount to
be redeemed and (ii) if an Equity Conditions Failure occurs (which is not waived in writing by the Holder) at any time during the
period beginning on the Company Optional Redemption Notice Date through the Company Optional Redemption Date (the "Company
Optional Redemption Interim Period"), the greater of (x) 125% of the Conversion Amount to be redeemed and (y) the product
of (A) the Conversion Amount being redeemed and (B) the quotient determined by dividing (I) the greatest Closing Price of the shares
of Common Stock during the period beginning on the date immediately preceding the Company Optional Redemption Notice Date and ending
on the Company Optional Redemption Date, by (II) the lowest Conversion Price in effect during such period (the "Company
Optional Redemption Price"). The Company may exercise its right to require redemption under this Section 9 by delivering
a ten (10 Trading Days prior written notice thereof by facsimile or electronic mail and overnight courier to the Holder and all,
but not less than all, of the holders of the Other Notes (the "Company Optional Redemption Notice" and the date
all of the holders of the Notes received such notice is referred to as the "Company Optional Redemption Notice Date").
The Company Optional Redemption Notice shall be irrevocable. The Company Optional Redemption Notice shall (i) state the date on
which the Company Optional Redemption shall occur (the "Company Optional Redemption Date"), which date shall be
the tenth (10th) Trading Day immediately following the Company Optional Redemption Notice Date, (ii) state the aggregate
Conversion Amount of the Notes which the Company has elected to be subject to Company Optional Redemption from the Holder and all
of the holders of the Other Notes pursuant to this Section 9 (and analogous provisions under the Other Notes) on the Company Optional
Redemption Date, (iii) state the applicable Company Optional Redemption Price in the event: (x) no Equity Conditions Failure occurs
during the Company Optional Redemption Interim Period and (y) an Equity Conditions Failure has occurred or will occur (which is
not waived in writing by the Holder) during the Company Optional Redemption Interim Period. If the Company confirmed that there
was no such Equity Conditions Failure as of the Company Optional Redemption Notice Date but an Equity Conditions Failure occurs
at any time during the Company Optional Redemption Interim Period, the Company shall provide the Holder a subsequent written notice
to that effect. Notwithstanding anything to the contrary in this Section 9, until the Company Optional Redemption Price is paid,
in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the Holder into shares of Common Stock
pursuant to Section 3. All Conversion Amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce
the Company Optional Redemption Amount of this Note required to be redeemed on the Company Optional Redemption Date, unless the
Holder otherwise indicates in the applicable Conversion Notice. Company Optional Redemptions made pursuant to this Section 9 shall
be made in accordance with Section 12. To the extent redemptions required by this Section 9 are deemed or determined by a court
of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
The parties hereto agree that in the event of the Company's redemption of any portion of the Note under this Section 9, the Holder's
damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity for the Holder. If the Company elects to cause
a Company Optional Redemption pursuant to Section 9, then it must simultaneously take the same action in the same proportion with
respect to the Other Notes.

 

(10)        
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate
of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may
be required to protect the rights of the Holder of this Note.

 

 

 

    	 	17	 

     

    

 

(11)        
RESERVATION OF AUTHORIZED SHARES.

 

(a)           
Reservation. The Company shall initially reserve out of its authorized and unissued shares of Common Stock a number
of shares of Common Stock for each of this Note, the Other Notes and the Warrants equal to at least the Required Reserve Amount
to effect the conversion of this Note and the Other Notes and the exercise of the Warrants, without regard to any limitations on
conversion or exercise set forth herein or therein. So long as any of this Note, the Other Notes or the Warrants are outstanding,
the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of this Note and the Other Notes and the exercise of the Warrants the Required Reserve
Amount. The Required Reserve Amount of shares of Common Stock reserved for conversions of this Note and the Other Notes and for
exercise of the Warrants shall be allocated pro rata among the Holder, the holders of the Other Notes and the holders of the Warrants
based on the Principal amount of this Note and the Other Notes held by each Purchaser on the Closing Date (the "Authorized
Share Allocation"). In the event that the Holder shall sell or otherwise transfer any portion of this Note or Warrants,
the transferee shall be allocated a pro rata portion of the Holder's Authorized Share Allocation. Any shares of Common Stock reserved
and allocated to any Person which ceases to hold any Notes and Warrants shall be allocated to the holders of the remaining Notes
and Warrants, pro rata based on the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants then
held by such holders (without regard to any limitations on the conversion of the Notes and exercise of the Warrants).

 

(b)          
Insufficient Authorized Shares. Without limiting the generality of the provisions set forth in Section 4(m) of the
Securities Purchase Agreement, if at any time while any of the Notes remain outstanding the Company does not have a sufficient
number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of
the Notes at least a number of shares of Common Stock equal to the applicable Required Reserve Amount (an "Authorized Share
Failure"), then the Company shall immediately take all action necessary to increase the Company's authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the applicable Required Reserve Amount for the Notes then
outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure,
the Company shall either (x) obtain the majority written consent of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock and provide each stockholder with an information statement or (y) hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders' approval of such
increase in authorized shares of Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve
such proposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain
the written consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number
of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing
with the SEC an Information Statement on Schedule 14C. If, upon any conversion of this Note, the Company does not have sufficient
authorized shares to deliver in satisfaction of such conversion, then unless the Holder elects to rescind such attempted conversion,
the Holder may require the Company to pay to the Holder within three (3) Trading Days of the applicable attempted conversion, cash
in an amount equal to the product of (i) the number of shares of Common Stock that the Company is unable to deliver pursuant to
this Section 11, and (ii) the highest Closing Price of the Common Stock during the period beginning on the date of the applicable
Conversion Date and ending on the date the Company makes the applicable cash payment.

 

 

 

    	 	18	 

     

    

 

(12)        
REDEMPTIONS.

 

(a)          
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within three
(3) Business Days after the Company's receipt of the Holder's Event of Default Redemption Notice; provided that upon a Bankruptcy
Event of Default, the Company shall deliver the applicable Bankruptcy Event of Default Redemption Price in accordance with Section
4(c) (as applicable, the "Event of Default Redemption Date"). If the Holder has submitted a Change of Control
Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price
to the Holder (i) concurrently with the consummation of such Change of Control if such notice is received prior to the consummation
of such Change of Control and (ii) within three (3) Business Days after the Company's receipt of such notice otherwise (such date,
the "Change of Control Redemption Date"). The Company shall deliver the applicable Company Installment Redemption
Price to the Holder on the applicable Installment Date. The Company shall deliver the applicable Company Optional Redemption Price
to the Holder on the applicable Company Optional Redemption Date. The Company shall pay the applicable Redemption Price to the
Holder in cash by wire transfer of immediately available funds pursuant to wire instructions provided by the holder in writing
to the Company on the applicable due date. In the event of a redemption of less than all of the Conversion Amount of this Note,
the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 20(d)) representing
the outstanding Principal which has not been redeemed and any accrued Interest on such Principal which shall be calculated as if
no Redemption Notice has been delivered. In the event that the Company does not pay a Redemption Price to the Holder within the
time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall
have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note
representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price has not been
paid. Upon the Company's receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such
Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 20(d)) to
the Holder representing such Conversion Amount to be redeemed and (z) the Conversion Price of this Note or such new Notes shall
be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided
and (B) the lowest Closing Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is
voided. The Holder's delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not
affect the Company's obligations to make any payments of Late Charges which have accrued prior to the date of such notice with
respect to the Conversion Amount subject to such notice.

 

(b)          
Redemption by Other Holders. Upon the Company's receipt of notice from any of the holders of the Other Notes for
redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section
4(b) or Section 5(b) or pursuant to corresponding provisions set forth in the Other Notes (each, an "Other Redemption Notice"),
the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile
or electronic mail a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices,
during the seven (7) Business Day period beginning on and including the date which is three (3) Business Days prior to the Company's
receipt of the Holder's Redemption Notice and ending on and including the date which is three (3) Business Days after the Company's
receipt of the Holder's Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated
in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company
shall redeem a pro rata amount from the Holder and each holder of the Other Notes based on the Principal amount of this Note and
the Other Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company
during such seven (7) Business Day period.

 

(c)          
Insufficient Assets. If upon a Redemption Date, the assets of the Company are insufficient to pay the applicable
Redemption Price, the Company shall (i) take all appropriate action reasonably within its means to maximize the assets available
for paying the applicable Redemption Price, (ii) redeem out of all such assets available therefor on the applicable Redemption
Date the maximum possible portion of the applicable Redemption Price that it can redeem on such date, a pro rata among the Holder
and the holders of the Other Notes to be redeemed in proportion to the aggregate Principal amount of this Note and the Other Notes
outstanding on the applicable Redemption Date and (iii) following the applicable Redemption Date, at any time and from time to
time when additional assets of the Company become available to pay the balance of the applicable Redemption Price of this Note
and the Other Notes, the Company shall use such assets, at the end of the then current fiscal quarter, to pay the balance of such
Redemption Price of this Note and the Other Notes, or such portion thereof for which assets are then available, on the basis set
forth above at the applicable Redemption Price, and such assets will not be used prior to the end of such fiscal quarter for any
other purpose. Interest on the Principal amount of this Note and the Other Notes that have not been redeemed shall continue to
accrue until such time as the Company redeems this Note and the Other Notes. The Company shall pay to the Holder the applicable
Redemption Price without regard to the legal availability of funds unless expressly prohibited by applicable law or unless the
payment of the applicable Redemption Price could reasonably be expected to result in personal liability to the directors of the
Company.

 

 

 

    	 	19	 

     

    

 

(13)        
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as
expressly provided in this Note.

 

(14)        
SECURITY. This Note and the Other Notes are secured to the extent and in the manner set forth herein and in the Security
Documents.

 

(15)        
RANK. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior
to all other Indebtedness of the Company and its Subsidiaries.

 

(16)        
NEGATIVE COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in full in accordance
with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior written consent
of the Required Holders to, directly or indirectly:

 

(a)           
incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness;

 

(b)          
allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, "Liens")
other than Permitted Liens;

 

(c)           
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole
or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any
Indebtedness (other than this Note and the Other Notes), whether by way of payment in respect of principal of (or premium, if any)
or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment,
an event constituting, or that with the passage of time and without being cured would constitute, an Event of Default has occurred
and is continuing;

 

(d)          
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole
or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any
Indebtedness (including, without limitation Permitted Indebtedness other than this Note and the Other Notes), by way of payment
in respect of principal of (or premium, if any) such Indebtedness. For clarity, such restriction shall not preclude the payment
of regularly scheduled interest payments which may accrue under such Permitted Indebtedness;

 

(e)           
redeem or repurchase its Equity Interests (except on a pro rata basis among all holders thereof);

 

(f)           
declare or pay any cash dividend or distribution on any Equity Interest of the Company or of its Subsidiaries;

 

(g)          
make, any material change in the nature of its business as described in the Company's most recent Annual Report filed on
Form 10-K with the SEC or modify its corporate structure or purpose;

 

(h)          
encumber, license or otherwise allow any Liens on any Intellectual Property, including, without limitation, any claims for
damage by way of any past, present, or future infringement of any of the foregoing, in each case, other than Permitted Liens;

 

(i)           
enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation,
the purchase, sale, lease, license, transfer or exchange of property or assets of any kind or the rendering of services of any
kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice
and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to
it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate
thereof; or

 

(j)           
issue any Notes (other than as contemplated by the Securities Purchase Agreement), or issue any
other securities that would cause a breach or default under the Notes.

 

 

 

    	 	20	 

     

    

 

(17)        
AFFIRMATIVE COVENANTS. 

 

(a)          
Until all of the Notes have been converted, redeemed or otherwise satisfied in full
in accordance with their terms, the Company shall, and the Company shall, except with respect to clause (vi) below,
cause each Subsidiary to, unless otherwise agreed to by the Required Holders, directly
and indirectly:

 

(i)            
maintain and preserve its existence, rights and privileges, and become or remain duly qualified and in good standing in
each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes
such qualification necessary, except in the case that any such failure to so maintain, preserve or comply has not had and is not
reasonably likely to have, a Material Adverse Effect;

 

(ii)           
maintain and preserve all of its properties which are necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which
it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder, except
in the case that any such failure to so maintain, preserve or comply has not had, and is not reasonably likely to have, a Material
Adverse Effect;

 

(iii)          
take all action necessary or advisable to maintain all of the Intellectual Property
that is necessary or material to the conduct of its business in full force and effect;

 

(iv)         
maintain insurance with responsible and reputable insurance companies or associations
(including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect
to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as
is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with
sound business practice by companies in similar businesses similarly situated;

 

(v)          
cause such Subsidiary formed on or after the Subscription Date to execute, and deliver
to each holder of Notes a guaranty agreement substantially in the form of the Guarantee Agreement (as defined in the Securities
Purchase Agreement) and all other Security Documents as requested by Required Holders, as applicable; and

 

(vi)         
notify the Holder and the holders of the Other Notes in writing whenever an Equity Conditions Failure occurs other than
with respect to clauses (xi) and (xii) of the definition of "Equity Conditions", and simultaneously with the delivery
of such notice to the Holder and the holders of the Other Notes, file a Current Report on Form 8-K with the SEC to state such fact.

 

(b)          
Cash Burn Covenant. So long as the Notes are outstanding, the Company's net loss (calculated on an accrual basis
in accordance with GAAP and adjust by reversing any and all equity or derivative liability gains and losses) in any calendar month
shall not exceed $550,000 (the “Monthly Cash Burn Amount”).  The Monthly Cash Burn Amount shall not include
any of the following: (i) the placement agent fees in connection the sale of the Notes and Warrants, (ii) fees of the Company and
investor legal counsels in connection with the sale of the Notes and Warrants not to exceed $150,000 in the aggregate for the transaction
contemplated under the Securities Purchase Agreement and publicly marketed offerings and $100,000 for any subsequent registered
direct offerings, (iii) existing Indebtedness in the amount of $2,866,665 and (iv) outstanding fees of legal counsel not to exceed
$350,000.  On every fifteenth (15th) day of each calendar month (or if such day is not a Business Day, the next following
day that is a Business Day) the Company shall: (i) deliver a written notice to the Holder and each holder of the Other Notes certifying
whether (x) it has complied with the foregoing and (y) it reasonably expects to comply with the foregoing while this Note or the
Other Notes remain outstanding and (ii) in the event the Company is not able to certify as to clause (x) or (y) above, it shall
simultaneously with the delivery of such notice to the Holder and the holders of the Other Notes, file a Current Report on Form
8-K with the SEC to state such fact.

 

 

 

    	 	21	 

     

    

 

(18)         
VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such purpose or the
written consent without a meeting of the Required Holders shall be required for any change or amendment or waiver of any provision
to this Note or any of the Other Notes. Any change, amendment or waiver by the Company and the Required Holders shall be binding
on the Holder of this Note and all holders of the Other Notes.

 

(19)        
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned
or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(f) of the Securities
Purchase Agreement.

 

(20)        
REISSUANCE OF THIS NOTE.

 

(a)          
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 20(d) and subject to Section
3(c)(iii)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if
less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 20(d)) to the Holder representing
the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding
Principal represented by this Note may be less than the Principal stated on the face of this Note.

 

(b)           
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary form (but without any obligation to post a surety or other bond) and, in
the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new
Note (in accordance with Section 20(d)) representing the outstanding Principal.

 

(c)          
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for a new Note or Notes (in accordance with Section 20(d)) representing in the aggregate
the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is
designated by the Holder at the time of such surrender.

 

(d)          
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such
new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 20(a) or Section 20(c), the Principal designated
by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges, if any, on the
Principal and Interest of this Note, from the Issuance Date.

 

(21)       
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note
shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the Holder's right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note.
The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any
other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other
security being required.

 

 

 

    	 	22	 

     

    

 

(22)        
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors' rights and involving a claim under this Note, then the Company
shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees and disbursements.

 

(23)        
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all the Buyers and shall
not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall
not form part of, or affect the interpretation of, this Note.

 

(24)        
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

(25)        
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing Price or the Weighted Average
Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or any Redemption Price, the Company shall submit
the disputed determinations or arithmetic calculations via facsimile or electronic mail within one (1) Business Day of receipt,
or deemed receipt, of the Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within one (1) Business
Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within one
(1) Business Day submit via facsimile or electronic mail (a) the disputed determination of the Closing Price or the Weighted Average
Price to an independent, reputable investment bank selected by the Holder and approved by the Company, such approval not to be
unreasonably withheld, conditioned or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price
or any Redemption Price to an independent, outside accountant, selected by the Holder and approved by the Company, such approval
not to be unreasonably withheld, conditioned or delayed. The Company, at the Company's expense, shall cause the investment bank
or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the
results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable
error.

 

(26)        
NOTICES; PAYMENTS.

 

(a)           
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall
be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the
reason therefore. Without limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least five (5) Business Days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to
the Holder.

 

(b)          
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment
shall be made in lawful money of the United States of America via wire transfer of immediately available funds by providing the
Company with prior written notice setting out such request and the Holder's wire transfer instructions; provided, that the
Holder may elect to receive a payment of cash by a check drawn on the account of the Company and sent via overnight courier service
to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Buyers,
shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement). Whenever any amount expressed
to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding
day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when
due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the
rate of eighteen percent (18.0%) per annum from the date such amount was due until the same is paid in full ("Late Charge").

 

 

 

    	 	23	 

     

    

 

(27)        
CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid
in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be
reissued.

 

(28)        
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities
Purchase Agreement.

 

(29)        
GOVERNING LAW; JURISDICTION; JURY TRIAL. This Note shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New
York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company 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
to such party at the address set forth in Section 9(f) of the Securities Purchase Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's
obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or
other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

(30)        
Severability. If any provision of this Note is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note
so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to
the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid
or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).

 

(31)        
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless
the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose
such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to
such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or
its Subsidiaries.

 

 

 

    	 	24	 

     

    

 

(32)        
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

(a)           
"Affiliate" shall have the meaning ascribed to such term in Rule 405 of the Securities Act.

 

(b)         
"Attribution Parties" means, collectively, the following Persons: (i) any investment vehicle, including,
any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed
or advised by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder
or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Common Stock would or could be aggregated
with the Holder's and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.

 

(c)  
         "Bloomberg" means Bloomberg Financial Markets.

 

(d)          
"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain closed.

 

(e)          
"Buyers" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(f)           
"Calendar Quarter" means each of: the period beginning on and including January 1 and ending on and including
March 31; the period beginning on and including April 1 and ending on and including June 30; the period beginning on and including
July 1 and ending on and including September 30; and the period beginning on and including October 1 and ending on and including
December 31.

 

(g)          
"Change of Control" means any Fundamental Transaction other than (i) any reorganization, recapitalization
or reclassification of the Common Stock in which holders of the Company's voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly
traded securities and, directly or indirectly, are, in all material respect, the holders of the voting power of the surviving entity
(or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than
a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification or (ii) pursuant to
a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.

 

(h)         
"Closing Price" means, for any security as of any date, the last closing trade price for such security
on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and
does not designate the closing trade price, then the last trade price, respectively, of such security prior to 4:00:00 p.m., New
York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for
such security, the last closing price or last trade price of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing price or last
trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing price or last trade price, respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the Pink Open
Market (f/k/a OTC Pink) published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of
reporting prices). If the Closing Price cannot be calculated for a security on a particular date on any of the foregoing bases,
the Closing Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 25. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable calculation period.

 

 

 

    	 	25	 

     

    

 

(i)           
"Closing Date" shall have the meaning set forth in the Securities Purchase Agreement, which date is the
date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.

 

(j)           
"Collateral" has the meaning ascribed to such term in the Security Documents.

 

(k)          
"Collateral Agent" has the meaning ascribed to such term in the Security Documents.

 

(l)           
"Common Stock" means (i) the Company's shares of Common Stock, par value $0.001 per share, and (ii) any
share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such
Common Stock.

 

(m)         
"Company Conversion Price" means as of any date of determination, that price which shall be the lower of
(i) the Conversion Price then in effect and (ii) the Market Price as of such date of determination.

 

(n)         
"Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with respect thereto.

 

(o)          
"Conversion Shares" means shares of Common Stock issuable by the Company pursuant to the terms of any of
the Notes, including any related Interest and Late Charges so converted, amortized or redeemed.

 

(p)          
"Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.

 

(q)  
        "Eligible Market" means the Principal Market, The New York Stock Exchange, The Nasdaq
Global Market, The Nasdaq Global Select Market, or the NYSE American.

 

 

 

    	 	26	 

     

    

 

(r)           
"Equity Conditions" means each of the following conditions: (i) on each day during Equity Conditions Measuring
Period, either (x) one or more registration statements filed shall be effective and available for the resale of all remaining shares
of Common Stock issuable pursuant to the Notes and upon exercise of the Warrants (in each case, without giving effect to any limitation
on conversion or exercise set forth herein and therein), including the shares of Common Stock issuable upon conversion of the Conversion
Amount that is subject to the applicable Company Conversion or Company Optional Redemption, as applicable, requiring the satisfaction
of the Equity Conditions, and there shall not have been any suspension of such registration statement(s) or (y) all shares of Common
Stock issuable pursuant to the terms of this Note and the Other Notes and upon exercise of the Warrants (in each case, without
giving effect to any limitation on conversion or exercise set forth herein and therein), including the shares of Common Stock issuable
upon conversion of the Conversion Amount that is subject to the applicable Company Conversion or Company Optional Redemption, as
applicable, requiring the satisfaction of the Equity Conditions, shall be eligible for sale without restriction pursuant to Rule
144 (other than with respect to Rule 144(i)) (assuming that all Warrants were exercised pursuant to a Cashless Exercise (as defined
in the Warrants), provided that no Public Information Failure has occurred, and without the need for registration under any applicable
federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated
for quotation on the Principal Market or any other Eligible Market and shall not have been suspended from trading on such exchange
or market nor shall delisting or suspension by such exchange or market been threatened (with delisting reasonably likely to occur
after giving effect to all applicable notice, appeal, cure, compliance and hearing periods), commenced or pending either (A) in
writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such
exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered shares of Common Stock
pursuant to the terms of this Note and the Other Notes and shares of Common Stock upon exercise of the Warrants to the holders
on a timely basis as set forth in Section 3(c) hereof (and analogous provisions under the Other Notes) and Section 1(a) of the
Warrants; (iv) the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Company
Conversion or Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions may be issued in
full without violating Section 3(d) hereof and the rules or regulations of the Principal Market or any other applicable Eligible
Market; (v) during the Equity Conditions Measuring Period, the Company shall not have failed to timely make any payments within
five (5) Business Days of when such payment is due pursuant to any Transaction Document; (vi) during the Equity Conditions Measuring
Period, there shall not have occurred either (A) the public announcement of a pending, proposed or intended Fundamental Transaction
which has not been abandoned, terminated or consummated, (B) an Event of Default or (C) an event that with the passage of time
or giving of notice would constitute an Event of Default or Triggering Event; (vii) the Company shall have no knowledge of any
fact that would cause (x) one or more registration statement(s) not to be effective and available for the resale of all remaining
shares of Common Stock issuable pursuant to the terms of the Notes and upon exercise of the Warrants (in each case, without giving
effect to any limitation on conversion or exercise set forth herein and therein), including the shares of Common Stock issuable
upon conversion of the Conversion Amount that is subject to the applicable Company Conversion or Company Optional Redemption, as
applicable, requiring the satisfaction of the Equity Conditions, or (y) any shares of Common Stock issuable pursuant to the terms
of this Note and the Other Notes and upon exercise of the Warrants (in each case, without giving effect to any limitation on conversion
or exercise set forth herein and therein), including the shares of Common Stock issuable upon conversion of the Conversion Amount
that is subject to the applicable Company Conversion or Company Optional Redemption, as applicable, requiring the satisfaction
of the Equity Conditions, not to be eligible for sale without restriction pursuant to Rule 144 (other than with respect to Rule
144(i)) (or any successor thereto) promulgated under the Securities Act, provided that no Public Information Failure has occurred,
and any applicable state securities laws; (viii) during the Equity Conditions Measuring Period, the Company otherwise shall have
been in compliance with and shall not have breached any provision, covenant, representation or warranty of any Transaction Document
in any material respect (other than representations or warranties subject to Material Adverse Effect or materiality, which may
not be breached in any respect); (ix) during the Equity Conditions Measuring Period, the Holder shall not have been in possession
of any material, nonpublic information received from the Company, any Subsidiary or its respective agent or affiliates; (x) the
shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Company Conversion or
Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions are duly authorized and listed
and eligible for trading without restriction on an Eligible Market; (xi) the average daily dollar trading volume of the Common
Stock as reported by Bloomberg during the twenty (20) Trading Days immediately prior to the applicable date of determination shall
be at least $100,000; and (xii) on each Trading Day during the Equity Conditions Measuring Period, the Closing Price of the Common
Stock equals or exceeds $0.05 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar
transaction occurring after the Subscription Date).

 

 

 

    	 	27	 

     

    

 

(s)          
"Equity Conditions Failure" means that on any applicable date of determination, the Equity Conditions have
not each been satisfied or waived in writing by the Holder; provided, however, that the Equity Condition set forth
in clause (iv) of such definition is not waivable by the Holder.

 

(t)           
"Equity Conditions Measuring Period" means each day during the period beginning thirty (30) Trading Days
immediately prior to the applicable date of determination and ending on and including the applicable date of determination.

 

(u)          
"Equity Interests" means (a) all shares of capital stock (whether denominated as common capital stock or
preferred capital stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations
or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual),
whether voting or non-voting and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants,
Options or other rights to purchase, subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible,
exchangeable or exercisable.

 

(v)          
"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

(w)         
"Fundamental Transaction" means (A) that the Company shall, directly or indirectly, including through Subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be
subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more Subject Entities whereby such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the
outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common
Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock
purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the
Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of
the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall,
directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions allow any
Subject Entity individually or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of
the stockholders of the Company or (C) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates
or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct
this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument
or transaction.

 

 

 

    	 	28	 

     

    

 

(x)           
"GAAP" means United States generally accepted accounting principles, consistently applied.

 

(y)          
"Group" means a "group" as that term is used in Section 13(d) of the Exchange Act and as defined
in Rule 13d-5 thereunder.

 

(z)           
"Indebtedness" of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all
obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation)
"capital leases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent
with past practice), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar
instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement
in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing
or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a
capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, lien, pledge, charge,
security interest or other encumbrance of any nature whatsoever in or upon any property or assets (including accounts and contract
rights) with respect to any asset or property owned by any Person, even though the Person which owns such assets or property has
not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (i) through (vii) above.

 

(aa)        
"Initial Company Pre-Installment Conversion Price" means, with respect to any Company Installment Notice
Date, that price which shall be the lower of (i) the then Conversion Price then in effect and (ii) the Market Price as of the applicable
Company Installment Notice Date.

 

(bb)        
"Initial Unrestricted Principal" means any Principal outstanding under this Note that is not Restricted
Principal outstanding under this Note as of the Issuance Date.

 

(cc)        
"Installment Amount" means with respect to each Installment Date, an amount equal to the sum of the (i)
the lesser of (A) $[__________][4]
and (B) the Principal amount of this Note outstanding on such Installment Date, (ii) any Deferral Amount deferred pursuant to Section
8(d) and included in such Installment Amount, (iii) any Accelerated Amount accelerated pursuant to Section 8(e) and included in
such Installment Amount and (iv) accrued and unpaid Interest with respect to such Principal and accrued and unpaid Late Charges,
if any, with respect to such Principal and Interest, as any such Installment Amount for each Holder may be reduced pursuant to
the terms hereof, whether upon conversion, redemption or otherwise. provided, however, that any Installment Amount
payable hereunder shall first be allocated to the Initial Unrestricted Amounts until all of the Initial Unrestricted Amounts have
been amortized and only after the Initial Unrestricted Amounts shall be amortized in full shall any Installment Amounts be allocated
to the Other Unrestricted Amounts. In the event the Holder shall sell or otherwise transfer or assign any portion of this Note,
the transferee shall be allocated a pro rata portion of each unpaid Installment Amount hereunder

 

(dd)       
"Installment Balance Conversion Shares" means, for any Installment Date, a number of shares of Common Stock
equal to (i) the Post-Installment Conversion Shares for such date minus (ii) the amount of any Pre-Installment Conversion Shares
delivered in respect of the applicable Installment Date; provided, that in the event that the amount of Pre-Installment
Conversion Shares exceeds the amount of Post-Installment Conversion Shares for such Installment Date (such excess, the "Installment
Conversion Shares Excess"), the applicable Installment Balance Conversion Shares shall equal zero (0) for such Installment
Date and any Installment Conversion Shares Excess shall reduce the number of Pre- Installment Conversion Shares payable on the
immediately following Company Installment Notice Date or Additional Pre-Installment Conversion Shares Date, if any, on a share
for share basis.

 

_____________________

[4]
       Holders’ Pro-Rata portion of [$1,041,666] assuming fully subscribed at $12.5 million
principal amount.

 

 

 

    	 	29	 

     

    

 

(ee)        
"Installment Date" means each of October 31, 2020[5]
and the last Business Day of every calendar month anniversary thereafter through and including the Maturity Date.

 

(ff)          
"Intellectual Property" has the meaning ascribed to such term in the Security Agreement.

 

(gg)        
"Investor Netting Rights" means the rights of Investor Optional Netting and Automatic Netting (each as
defined in the Investor Note).

 

(hh)        
"Investor Note" means that certain promissory note of the Holder issued to the Company at the Closing Date,
pursuant to the Securities Purchase Agreement, with an aggregate principal amount outstanding equal to the Restricted Principal
outstanding hereunder and secured by a cash amount set forth in a bank account of the Holder (or its affiliates) at least equal
to the Restricted Principal outstanding hereunder.

 

(ii)          
"Investor Notes" means those certain promissory notes of the holders of Notes issued to the Company at
the Closing Date, pursuant to the Securities Purchase Agreement.

 

(jj)           
"Investor Prepayment" means any Prepayment (as defined in the Investor Note) of the Investor Note.

 

(kk)        
"Lead Investor" means Anson Investment Master Fund LP.

 

(ll)          
"Market Price" means 85% of the arithmetic average of the five (5) lowest daily Weighted Average Prices
of the Common Stock during the Measuring Period. All such determinations to be appropriately adjusted for any stock split, stock
dividend, stock combination, reclassification or other similar transaction during such Measuring Period.

 

(mm)       
"Material Adverse Effect" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(nn)        
"Maturity Netting" has the meaning ascribed to such term in the Investor Notes.

 

(oo)        
"Measuring Period" means the twenty (20) consecutive Trading Day period ending on the Trading Day immediately
preceding the applicable date of determination.

 

(pp)        
"Nasdaq Stockholder Approval" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(qq)        
"Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.

 

_____________________

[5]
NTD –7 months following the closing date.

 

 

 

    	 	30	 

     

    

 

(rr)          
"Permitted Indebtedness" means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) trade
payables incurred in the ordinary course of business consistent with past practice, (iii) unsecured Indebtedness incurred by the
Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written
agreement acceptable to the Required Holders and approved by the Required Holders in writing, and which Indebtedness does not provide
at any time for (a) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium,
if any, thereon until ninety-one (91) days after the Maturity Date or later and (b) total interest and fees at a rate in excess
of eight percent (8.0%) per annum, (iv) the Indebtedness existing on the Issuance Date and set forth on Schedule 3(ss) attached
to the Securities Purchase Agreement, and (v) Indebtedness secured by Permitted Liens described in clauses (iv) of the definition
of Permitted Liens.

 

(ss)        
"Permitted Liens" means (i) any Lien for taxes not yet due or delinquent or being contested in good faith
by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any
Lien created by operation of law, such as materialmen's liens, mechanics' liens and other similar liens, arising in the ordinary
course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate
proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase
price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment,
or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal
or refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal
or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others
in the ordinary course of the Company's business, not interfering in any material respect with the business of the Company and
its Subsidiaries taken as a whole, (vii) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of goods and (viii) Liens incurred in connection with Permitted Indebtedness
and (ix) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section
4(a)(viii) and (ix).

 

(tt)          
"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(uu)       
"Post-Installment Conversion Shares" means, for any Installment Date and without taking into account the
delivery of any Pre-Installment Conversion Shares, that number of shares of Common Stock equal to the applicable Company Conversion
Amount (including, without limitation, the addition of any Accelerated Amounts to such Company Conversion Amount in accordance
with Section 8(e)) on such Installment Date divided by the Company Conversion Price as in effect on the applicable Installment
Date, rounded up to the nearest whole share of Common Stock.

 

(vv)        
"Principal Market" means The Nasdaq Capital Market.

 

(ww)      
"Pro Rata Amount" means a fraction (i) the numerator of which is the original principal amount of the Holder's
Note issued to the Holder pursuant to the Securities Purchase Agreement and (ii) the denominator of which is the aggregate original
principal amount of all Notes issued to the Buyers pursuant to the Securities Purchase Agreement.

 

(xx)          
"Public Information Failure" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(yy)       
"Redemption Dates" means, collectively, the Event of Default Redemption Dates, the Change of Control Redemption
Dates, the Installment Dates and the Company Optional Redemption Date, as applicable,
each of the foregoing, individually, a Redemption Date.

 

 

 

    	 	31	 

     

    

 

(zz)         
"Redemption Notices" means, collectively, the Event of Default Redemption Notices, the Change of Control
Redemption Notices, the Company Installment Notices and the Company Optional Redemption Notice, each of the foregoing, individually,
a Redemption Notice.

 

(aaa)     
"Redemption Prices" means, collectively, the Event of Default Redemption Prices, the Change of Control
Redemption Prices, the Company Installment Redemption Prices and the Company Optional Redemption Price, each of the foregoing,
individually, a Redemption Price.

 

(bbb)     
"Related Fund" means, with respect to any Person, a fund or account managed by such Person or an Affiliate
of such Person.

 

(ccc)      
"Required Holders" means the holders of Notes representing at least 66% of the aggregate principal amount
of the Notes then outstanding and shall include the Lead Investor so long as the Lead Investor or any of its Affiliates holds any
Notes.

 

(ddd)     
"Restricted Principal" means, initially Principal outstanding in
the amount of $4,000,000, subject to reduction as provided herein, including, without limitation, pursuant to Investor Prepayments,
Maturity Netting or Investor Netting Rights.

 

(eee)       
"SEC" means the United States Securities and Exchange Commission.

 

(fff)         
"Securities Act" means the Securities Act of 1933, as amended.

 

(ggg)      
"Securities Purchase Agreement" means that certain securities purchase agreement dated as of the Subscription
Date by and among the Company and the investors listed on the signature pages attached thereto pursuant to which the Company issued
the Notes and Warrants, as amended from time to time.

 

(hhh)      
"Security Agreement" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(iii)          
"Security Documents" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(jjj)          
"Standard Settlement Period" means the standard settlement period, expressed in a number of Trading Days,
on the principal securities exchange or securities market on which the Common Stock is then traded as in effect on the date of
delivery of the applicable Conversion Notice.

 

(kkk)      
"Subject Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.

 

(lll)          
"Subscription Date" means March [  ], 2020.

 

(mmm)   
"Subsidiary" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(nnn)     
"Trading Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock on such day, then on the principal securities exchange or securities
market on which the Common Stock is then traded.

 

 

 

    	 	32	 

     

    

 

(ooo)     
"Transaction Documents" has the meaning ascribed to such term in the Securities Purchase Agreement.

 

(ppp)     
"Warrants" has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include
all warrants issued in exchange therefor or replacement thereof.

 

(qqq)     
"Weighted Average Price" means, for any security as of any date, the dollar volume-weighted average price
for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as the
Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other
time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its "Volume
at Price" function, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York
Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York
Time (or such other time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing
price and the lowest closing ask price of any of the market makers for such security as reported in the OTC Link or Pink Open Market
(f/k/a OTC Pink) published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting
prices). If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases,
the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved pursuant to Section 25. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or other similar transaction during the applicable calculation period.

 

(rrr)         
"Unrestricted Date" means any date on which all or any portion of the Restricted Principal becomes Unrestricted
Principal.

 

(sss)      
"Unrestricted Principal" means any Principal outstanding under this Note that is not Restricted Principal
outstanding under this Note.

 

[Signature Page Follows]

 

 

 

    	 	33	 

     

    

 

IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed as of the Issuance Date set out above.

 

	 	Genius Brands International, Inc.
	 	By:_________________________________
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	34	 

     

    

 

EXHIBIT I

Genius Brands International, Inc.

 

CONVERSION NOTICE

 

Reference is made to the Senior Secured
Convertible Note (the "Note") issued to the undersigned by Genius Brands International, Inc., a Nevada corporation
(the "Company"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.001 per share (the "Common
Stock") of the Company, as of the date specified below.

 

	Date of Conversion:	 
	 	 
	Aggregate Conversion Amount to be converted or number of Conversion Shares to be issued upon conversion:	 
	 	 
	Please confirm the following information:
	 
	Conversion of Initial Unrestricted Amount:  ̈	Conversion of Other Unrestricted Amount:  ̈
	 	 
	Conversion Price:	 
	 	 
	If Aggregate Conversion Amount is provided above, number of shares of Common Stock to be issued:	 
	 	 
	Percentage of conversion to constitute Initial Unrestricted Amount:	 
	 	 
	Percentage of conversion to constitute Other Unrestricted Amount:	 
	 	 
	Please issue the Common Stock into which the Note is being converted to the Holder, or for its benefit, as follows:
	 
	£     Check here if requesting delivery as a certificate to the following name and to the following address:
	 
	Issue to:	 
	 	 
	 	 
	 	 
	Address:	 
	 	 
	Facsimile Number and Electronic Mail:	 
	 	 	 	 	 	 	 	 	 	 

 

 

 

    	 	35	 

     

    

 

	£     Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
	 
	DTC Participant:	 
	 	 
	DTC Number:	 
	 	 
	Account Number:	 
	 	 
	By its delivery of this Conversion
Notice, the undersigned represents and warrants to the Company that in giving effect to the conversion evidenced hereby the undersigned
will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended) permitted to be owned under Section 3(d)(i) of this Note.

	 
	Authorization:	 
	 	 
	By:	 
	 	 
	Title:	 
	 	 
	Dated:	 
	 	 
	

                                                                     Account Number:
	 
	  (if electronic book entry transfer)	 
	 

                                                                     Transaction Code Number:
	 
	  (if electronic book entry transfer)	 
	 	 
	Installment Amounts to be reduced and amount of reduction: 	 
	 	 	 	 	 	 	 	 	 	 

 

 

 

    	 	36	 

     

    

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges
this Conversion Notice and hereby directs VStock Transfer, LLC to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated March __, 2020 from the Company and acknowledged and agreed to by VStock
Transfer, LLC.

 

 

	 	Genius Brands International, Inc.
	 	By:_________________________________
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	37Exhibit 4.2

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION
THEREUNDER, IN EACH CASE, TO THE EXTENT APPLICABLE HERETO.

 

SECURED PROMISSORY NOTE

 

 

	 	New York, New York
	$[        ]	March __, 2020

 

FOR VALUE
RECEIVED, [INVESTOR] (the "Investor") hereby promises to pay to Genius Brands International, Inc., a Nevada
corporation (the "Company"), on the date set forth below, (i) the principal amount of [ ] Dollars ($[ ]) and
(ii) interest on the unpaid principal balance hereof at the rate set forth herein (collectively, the
"Obligations"). This Promissory Note (this "Note") has been issued pursuant to the Note
Purchase Agreement, dated as of March [●], 2020 (the "Subscription Date"), by and among the Company
and the Investor (as amended, modified, supplemented, extended, renewed, restated or replaced from time to time, the
"Note Purchase Agreement") as payment in part of the purchase price of that certain Senior Secured
Convertible Note of the Company, with an initial aggregate principal amount of $[ ] (as such note may be amended, modified,
supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, the
"Note"), issued pursuant to that certain Securities Purchase Agreement, dated as of March 11, 2020, by and
among the Company and the investors party thereto (as amended, modified, supplemented, extended, renewed, restated or
replaced from time to time, the "Securities Purchase Agreement"). Capitalized terms not defined herein shall
have the meaning as set forth in the Note. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED, WHETHER BY THE COMPANY, OPERATION OF LAW, COURT ORDER OR OTHERWISE, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF
THE INVESTOR. ANY SUCH PURPORTED ASSIGNMENT OR TRANSFER WITHOUT SUCH CONSENT SHALL BE NULL AND VOID.

 

1.                 
Payment of Principal. The principal amount of this Note (the "Principal"), together with all unpaid
interest accrued thereon and any other Obligations payable hereunder, shall be due and payable in full upon March __, 2060 (the
"Maturity Date"); provided, that the Maturity Date shall be automatically extended by one (1) calendar day for
each calendar day after March __, 2021 (the "Scheduled Note Maturity Date"), if any, that all, or any part, of
the Note remains outstanding.

 

2.                 
Payment of Interest. The unpaid Principal balance due hereunder shall bear interest (the "Interest")
at an annual rate equal to 0% (the "Interest Rate"). Subject to Sections 3 and 7 below, Interest shall be payable
and due upon the Maturity Date. All interest shall be computed on the basis of a year of 365 or 366 days, as the case may be, for
the actual number of days (including the first day but excluding the last day) elapsed.

 

 

 

 

    	 	1	 

     

    

 

3.                 
Prepayment Prior to the Maturity Date.

 

(a)              
Optional Prepayment. The Investor may, at its option at any time on or after the date hereof, prepay, in whole or
in part, without premium or penalty, the Obligations under this Note (each, an "Optional Prepayment").

 

(b)              
Mandatory Prepayment. Upon any Mandatory Prepayment Event (as defined below), the Investor shall promptly prepay
such aggregate outstanding Principal of this Note equal to the applicable Mandatory Prepayment Amount (as defined below) with respect
to such Mandatory Prepayment Event (each, a "Mandatory Prepayment", and together with each Optional Prepayment,
each a "Prepayment"). Notwithstanding the foregoing, the Investor (or its designee) shall not effect the conversion
of any Restricted Principal unless and until the Investor shall have either (x) delivered such Mandatory Prepayment Amount to the
Company or (y) delivered irrevocable instructions to the Investor's bank, broker or other financial institution to wire such Mandatory
Prepayment Amount to the Company from an account with at least an amount of cash or other Eligible Assets (as defined below) equal
to such Mandatory Prepayment Amount.

 

(c)              
Forced Mandatory Prepayment. If, on or after the date that the shares issuable upon the conversion in full of the
Notes (ignoring for such purpose any conversion limitations therein) can be sold, assigned or transferred pursuant to Rule 144
and prior to the eighteen-month anniversary of the Closing Date, the Company certifies in writing to the Investor, and simultaneously
files such certification with the SEC as an exhibit attached to a Current Report on Form 8-K, (i) the Cash Burn Certification set
forth in Section 17(b) of the Note indicating compliance with the initial Cash Burn Milestones (as defined in the Securities Purchase
Agreement), (ii) the Company has obtained the Nasdaq Stockholder Approval (as defined in the Securities Purchase Agreement) (the
covenants referenced in clauses (i) and (ii), the “Mandatory Covenants”) and (iii) that no Event of Default,
or event that with the passage of time or giving of notice would constitute an Event of Default, then exists (clauses (i), (ii)
and (iii), collectively, the "Forced Mandatory Prepayment Conditions"), then the Company may require a Forced
Mandatory Prepayment hereunder by delivery of written notice to the Investor (the "Forced Mandatory Prepayment Notice",
and the date the Forced Mandatory Prepayment Notice is delivered to the Investor, the "Forced Mandatory Prepayment Notice
Date"). The Forced Mandatory Prepayment Notice shall (i) state the date on which the Forced Mandatory Prepayment
shall occur (the "Forced Mandatory Prepayment Date"), which Forced Mandatory Prepayment Date shall be the second
(2nd) Trading Day immediately after the Forced Mandatory Prepayment Notice Date (or such other date as mutually determined by the
Company and the Investor), (ii) certify that each of the Forced Mandatory Prepayment Conditions is satisfied (or specify if
any such Forced Mandatory Prepayment Condition is not satisfied, with an acknowledgement that unless each of such Forced Mandatory
Prepayment Conditions is waived in writing by the Investor, in its sole discretion, such Forced Mandatory Prepayment Notice will
be invalid) and (iii) state the amount of such Forced Mandatory Prepayment (the "Forced Mandatory Prepayment Amount"),
which Forced Mandatory Prepayment Amount shall not exceed the lesser of (x) the Investor's Pro Rata Amount of $4,000,000 and (y)
any remaining Principal outstanding hereunder on such Forced Mandatory Prepayment Date; provided, that, in no event, may the Company
effect more than one (1) Forced Mandatory Prepayment hereunder. Notwithstanding the foregoing, the Company shall not deliver a
Forced Mandatory Prepayment Notice hereunder unless it simultaneously (i) delivers a Forced Mandatory Prepayment Notice (as defined
in each other Investor Note), pro rata, to each other Investor (as defined in each other Investor Note) and (ii) files the Forced
Mandatory Prepayment Notice with the SEC as an exhibit attached to a Current Report on Form 8-K.

 

 

    	 	2	 

     

    

 

(d)              
Mechanics of Prepayments. All Prepayments hereunder shall be made in cash, by wire transfer, in U.S. dollars and
immediately available funds, in accordance with the wire instructions delivered to the Investor by the Company on or prior to such
date of such Prepayment. At the option of the Company, prepayments may be made directly to the Company or to such other Persons
as the Company may direct in its wire instructions.

 

(e)              
Cancellation of Interest upon Prepayment. Notwithstanding anything herein to the contrary, upon any Prepayment prior
to the Maturity Date (including, without limitation, any Mandatory Prepayment), the aggregate cash amount in such Prepayment shall
be applied entirely to and against any outstanding Principal under this Note, and any accrued and unpaid Interest with respect
to the Principal prepaid shall be automatically cancelled as of the date of such prepayment.

 

(f)               
Definitions. For the purpose of this Note, the following definitions shall apply:

 

(i) "Forced
Mandatory Prepayment" means, as applicable, the Mandatory Prepayment required to be made by an Investor hereunder on a
Forced Mandatory Prepayment Date pursuant to a Forced Mandatory Prepayment Notice.

 

(ii) "Mandatory
Prepayment Amount" means, as applicable, any Mandatory Prepayment Conversion Amount (as defined below) or the Forced Mandatory
Prepayment Amount (as defined below).

 

(iii) "Mandatory
Prepayment Event" means, as applicable:

 

(x) with
respect to any Restricted Principal of the Note designated to be converted in a Conversion Notice (such aggregate amount of Principal
then outstanding hereunder equal to such Restricted Principal of the Note designated to be converted in such Conversion Notice,
each, a "Mandatory Prepayment Conversion Amount"), both (A) the Company's receipt of such Conversion Notice thereunder
executed by the Investor in which all, or any part, of the principal of the Note to be converted includes any Restricted Principal
and (B) the Investor's receipt from the Company of written confirmation that the Company's transfer agent (the "Transfer
Agent") has been irrevocably instructed by the Company to deliver to the Investor (or its designee) the shares of Common
Stock to be issued pursuant to such Conversion Notice in accordance with Section 3(c) of the Note (in each case, as adjusted, if
applicable, to reflect the withdrawal of any Conversion Notice, in whole or in part, by the Investor, whether pursuant to Section
3(c)(ii) of the Note or otherwise); or

 

 

 

    	 	3	 

     

    

 

(y) with
respect to the Forced Mandatory Prepayment Notice delivered to the Investor in compliance with Section 3(c) above, the occurrence
of the Forced Mandatory Prepayment Date; provided, that if on the Forced Mandatory Prepayment Date a Forced Mandatory Prepayment
Condition is not satisfied, unless such Forced Mandatory Prepayment Condition is waived in writing by the Investor, the Forced
Mandatory Prepayment Date shall not occur and the Forced Mandatory Prepayment Notice shall be automatically cancelled and shall
be null and void.

 

(iv) "Pro
Rata Amount" means a fraction (i) the numerator of which is the original principal amount of the Note of the Investor
and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers pursuant
to the Securities Purchase Agreement.

 

4.                 
Defaults.

 

(a)              
the Investor shall be deemed in default hereunder upon the occurrence of any of the following (a "Default"):

 

(i)               Failure to Pay Principal or Interest. The failure of the Investor to pay, when due, all or any part of any Principal
or Interest, if any, required to be made hereunder; or

 

(ii)             
Bankruptcy, etc. The Investor shall have entered against it by a court having jurisdiction thereof a decree or order
for relief in respect to the Investor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official shall be
appointed for the Investor or for any substantial part of the Investor's property, or the winding up or liquidation of the Investor's
affairs shall have been ordered; or the Investor shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or the Investor shall consent to the entry of an order for such relief in an involuntary
case under any such law, or any such involuntary case shall commence, and not be dismissed within sixty (60) days; or the Investor
shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for the Investor or for any substantial part of the Investor's property, or make any general assignment
for the benefit of creditors.

 

(b)              
Consequence of Default. Upon the occurrence of a Default, the outstanding Obligations hereunder shall, at the option
of the Company, become immediately due and payable (each, an "Investor Note Acceleration"). Notwithstanding the
foregoing, if there shall occur a Default under Section 4(a)(ii) above, the entire outstanding Obligations hereunder shall automatically
become immediately due and payable without any action on the part of the Company and the Investor shall be deemed to have elected
Default Netting with respect to the maximum amount of its Obligations outstanding hereunder as permitted pursuant to Section 7(f)
below. Upon the occurrence of a Default, the Company shall also have all the rights and remedies of a secured party on default
under Article 9 of the Uniform Commercial Code of the State of New York with respect to the Collateral (as hereinafter defined).

 

 

 

    	 	4	 

     

    

 

5.                 
Representations and Warranties of the Investor. The Investor represents and warrants to the Company as follows as
of the date hereof: (a) the Investor has the power and authority to execute, deliver and perform all obligations in accordance
herewith; (b) the execution, delivery and performance by the Investor of this Note are within the Investor's legal powers, and
do not contravene any law or any contractual restriction binding on or affecting the Investor; (c) no authorization or approval
or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution,
delivery and performance by the Investor of this Note; (d) this Note constitutes the legal, valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms, except to the extent enforceability is limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium and other laws for the protection of creditors generally and by general equitable
principles; and (e) there is no pending or, to the Investor's knowledge, threatened action or proceeding affecting the Investor
before any governmental agency or arbitrator with respect to the transactions contemplated by this Note or which may materially
adversely affect the property, assets or condition (financial or otherwise) of the Investor.

 

6.                 
Security.

 

(a)              
Grant of Security Interest. As security for the due and prompt payment and performance of all payment obligations
under this Note and any modifications, replacements and extensions hereof (collectively, "Secured Obligations"),
the Investor hereby pledges and grants a security interest to the Company in all of the Investor's right, title, and interest in
and to, initially at least $[ ], in the aggregate, (i) in cash, (ii) cash equivalents and/or (iii) any Group of Ten ("G10")
currency and any notes or other securities issued by any G10 country (collectively, the "Eligible Assets"), in
each case, held by the Investor in the bank or brokerage accounts described on Schedule I attached hereto (the "Collateral",
and such account or accounts, as applicable, collectively, the "Collateral Account"), subject to reduction upon
any reduction, offset or cancellation of this Note. So long as any Restricted Principal (as defined in the Note) remains outstanding
under the Note, the Investor shall keep Collateral in the Collateral Account with a fair market value of at least the amount of
Restricted Principal then outstanding.

 

(b)              
Change in Collateral Account. The Investor may, with at least five (5) Trading Days' notice to the Company, move
the Collateral from an account or accounts of the Investor to a new account or accounts (the "New Collateral Account")
at a financial institution selected by the Investor, (but if such financial institution is not listed as a permitted financial
institution on Schedule II attached hereto, subject to the consent of the Company, not to be unreasonably withheld), and
upon such move, such New Collateral Account shall be the Collateral Account for all purposes hereunder.

 

 

 

    	 	5	 

     

    

 

7.                 
Netting Rights.

 

(a)              
Securities Contract. The Company and the Investor hereby acknowledge and agree that the Securities Purchase Agreement
and the Note Purchase Agreement each is a "securities contract" as defined in 11 U.S.C. § 741 and that Investor
shall have all rights in respect of the Investor Note, the Note, the Master Netting Agreement, the Securities Purchase Agreement
and the Note Purchase Agreement as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation,
all rights of credit, deduction, setoff, offset, recoupment, and netting (collectively, "Netting" or "Net")
as are available under this Note, the Note and the Master Netting Agreement.

 

(b)              
Investor Optional Netting. Notwithstanding anything herein to the contrary, the Investor may, (I) at any time after
the date hereof, if the Company has not satisfied the Mandatory Covenants in accordance with their terms or (II) at any time on
or after the occurrence of an Event of Default (as defined in the Note), a Change of Control (as defined in the Note) or a Company
Optional Redemption (as defined in the Note) (in each case, whether or not a Redemption Notice (as defined in the Note) has been
delivered by the Investor to the Company with respect thereto), the Investor, at its sole discretion, by written notice (each,
a "Investor Optional Netting Election Notice") to the Company, Net, in whole or in part, any Unpaid Amount (as
defined in the Master Netting Agreement) owed by the Investor to the Company under this Note or any other Underlying Agreement
(as defined in the Master Netting Agreement) against (across or within each or all of the Underlying Agreements) (x) any Unpaid
Amounts owed by the Company to the Investor under the Notes or (y) any Unpaid Amounts owed by the Company to the Investor under
any other Underlying Agreement, as set forth in such written notice (each, an "Investor Optional Netting"); provided,
that no Investor Optional Netting shall occur hereunder with respect to any Mandatory Prepayment Amount that the Investor fails
to properly prepay hereunder in violation of this Note. Each Investor Optional Netting shall occur on such applicable date as set
forth by the Investor in the applicable Investor Optional Netting Election Notice. Upon any Investor Optional Netting, (x) such
portion of Principal subject to such Investor Optional Netting shall be deemed surrendered and concurrently cancelled as of the
date of such Investor Optional Netting and (y) any accrued and unpaid Interest hereunder with respect to such portion of Principal
subject to such Investor Optional Netting shall be automatically cancelled as of the date of such Investor Optional Netting. Each
Investor Optional Netting shall be effective upon the date the Investor delivers written notice to the Company of the Investor's
election to effect such Investor Optional Netting. Upon any Investor Optional Netting, any accrued and unpaid Interest hereunder
with respect to such portion of Principal being satisfied in such Investor Optional Netting shall be automatically cancelled as
of the date of such Investor Optional Netting.

 

(c)              
Automatic Netting at Maturity. Notwithstanding anything herein to the contrary, at the Maturity Date (as defined
in the Note), if any amounts remain outstanding under the Note and hereunder, the Investor shall automatically Net such part of
the outstanding obligations under the Note equal to the aggregate Principal then outstanding hereunder (the "Remaining
Principal Amount") by the cancellation of the Remaining Principal Amount of the outstanding obligations under the Note
in exchange for the surrender and concurrent cancellation of the aggregate Principal then outstanding hereunder (the "Maturity
Netting"). Upon any Maturity Netting, any accrued and unpaid Interest hereunder with respect to such portion of Principal
being cancelled in such Maturity Netting shall be automatically cancelled as of the date of such Maturity Netting and, thereafter,
this Note shall be deemed to be paid in full and shall be null and void. The Maturity Netting shall automatically occur on the
Maturity Date (as defined in the Note).

 

 

 

    	 	6	 

     

    

 

(d)              
Automatic Netting Upon any Bankruptcy Event of Default. Notwithstanding anything herein to the contrary, upon any
Bankruptcy Event of Default under the Note, the Investor shall automatically Net such part of the outstanding obligations under
the Note equal to the Remaining Principal Amount by the cancellation of the Remaining Principal Amount of the outstanding obligations
under the Note in exchange for the surrender and concurrent cancellation of the aggregate Principal then outstanding hereunder
(each, a "Bankruptcy Event of Default Netting"). Upon any Bankruptcy Event of Default Netting, any accrued and
unpaid Interest hereunder with respect to such portion of Principal being satisfied in such Bankruptcy Event of Default Netting
shall be automatically cancelled as of the date of such Bankruptcy Event of Default Netting and, thereafter, this Note shall be
deemed to be paid in full and shall be null and void. Each Bankruptcy Event of Default Netting shall be effective upon the date
of the earliest occurrence of a Bankruptcy Event (as defined in the Note) under the Note.

 

(e)              
Automatic Netting Upon Prohibited Transfers of this Note. If for any reason, this Note or any interest herein is
pledged, assigned or transferred to any Person other than the Company without the prior written consent of the Investor, whether
by contract, operation of law, court order or otherwise (each, a "Prohibited Transfer"), the Investor shall automatically
Net such part of the outstanding obligations under the Note equal to 75% of the remaining Restricted Principal then outstanding
under the Note with the remaining 25% of the Restricted Principal of the Note automatically becoming unrestricted principal thereunder
in exchange for the surrender and concurrent cancellation of the aggregate Principal then outstanding hereunder (each, a "Prohibited
Transfer Netting", and together with each Bankruptcy Event of Default Netting and each Maturity Netting, each an "Automatic
Netting"). Upon any Prohibited Transfer, any accrued and unpaid Interest hereunder shall be automatically cancelled as
of the date of such Prohibited Transfer and, thereafter, this Note shall be deemed to be paid in full and shall be null and void.

 

(f)               
Default Netting. Notwithstanding anything herein to the contrary, Investor may, at any time on or after the occurrence
of any Investor Note Acceleration, at its sole discretion, by written notice to the Company (each, a “Default Netting
Electing Notice”), in lieu of making any payment under this Note in cash, Net all, or any part, of the outstanding obligations
under the Note by the cancellation of such portion of the outstanding obligations under the Note as set forth in such written notice
in exchange for the surrender and concurrent cancellation of an equal amount of Principal hereunder (each, a “Default
Netting”) provided, that, solely with respect to any Investor Note Acceleration arising pursuant to a default under Section
4(a)(i) above, no Default Netting shall occur hereunder with respect to any Mandatory Prepayment Amount that the Investor fails
to properly prepay hereunder in violation of this Note. Each Default Netting shall occur on such applicable date as set forth by
the Investor in the Default Netting Election Notice. Upon any Default Netting, any accrued and unpaid Interest hereunder shall
be automatically cancelled as of the date of such Default Netting. Each Default Netting shall be effective upon the date the Investor
delivers notice to the Company of the Investor’s election to effect such Netting.

 

 

 

    	 	7	 

     

    

 

(g)              
Investor Netting Rights; Single Integrated Transaction. The Company hereby acknowledges and agrees that (i) the Investor
shall be entitled to exercise its rights of Investor Optional Netting, Automatic Netting and Default Netting through any means
permissible under applicable law, including without limitation, set-off and Netting and (ii) the Obligations of the Investor
hereunder and the obligations of the Company under the Note issued pursuant to the Securities Purchase Agreement arise in a single
integrated transaction and constitute related and interdependent obligations within such transaction.

 

8.                 
Miscellaneous.

 

(a)               
Full Recourse. The parties hereby acknowledge and agree that this Note is a full recourse obligation of the Investor.

 

(b)              
No Oral Waivers or Modifications. No provision of this Note may be waived or modified orally, but only in a writing
signed by the Company and the Investor.

 

(c)              
Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the Borough of Manhattan in the City of New York,
New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(d)              
No Severability. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction or other similar authority (a "Severability Event"), this entire Note shall
be automatically terminated and shall thereafter be null and void and all remaining payment obligations hereunder of the Investor
to the Company shall be automatically cancelled, ab initio.

 

 

 

 

    	 	8	 

     

    

 

(e)              
Currency. Principal and interest due hereunder shall be payable in lawful money of the United States of America and
shall be payable to the Company at the address of the Company, or at such other address as may be specified in a written notice
to the Investor given by the Company. The Company has provided the Investor with wire transfer instructions pursuant to which payments
may be made under this Note and such wire transfer instruction shall be valid for the entire period of this Note.

 

(f)               
Weekend; Holidays.If any payment on this Note shall become due on a Saturday, Sunday or a bank or legal holiday
in the State of New York, such payment shall be made on the next succeeding business day in the State of New York.

 

(g)              
Usury. If interest payable under this Note is in excess of the maximum permitted by law, the interest chargeable
hereunder shall be reduced to the maximum amount permitted by law and any excess over the maximum amount permitted by law shall
be credited to the Principal balance of this Note and applied to the same and not to the payment of Interest.

 

(h)              
Remedies.

 

(i)                
No failure on the part of the Company to exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the Company of any right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or
remedy of the Company at law or equity or under this Note shall not be deemed to be an election of Company's rights or remedies
under this Note or at law or equity.

 

(ii)             
No failure on the part of the Investor to exercise, and no delay in exercising, any right, power or remedy hereunder (including,
without limitation, any Netting permitted hereunder) shall operate as a waiver thereof; nor shall any single or partial exercise
by the Investor of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law. In addition,
the exercise of any right or remedy of the Investor at law or equity or under this Note shall not be deemed to be an election of
Investor's rights or remedies under this Note or at law or equity.

 

(i)                
Waiver of Presentment. The Investor hereby waives presentment, diligence, protest and demand, notice of protest,
demand and dishonor and nonpayment of this Note.

 

[Signature Page Follows]

 

 

 

 

    	 	9	 

     

    

 

IN WITNESS WHEREOF,
this Note has been executed as of the date first written above.

 

 

	 	[INVESTOR]
	 	 
	 	 
	 	By: ___________________________
	 	Name:
	 	Title:
	 	 

 

 

Agreed and accepted as of

this ____ day of March, 2020 by:

 

GENIUS BRANDS INTERNATIONAL,
INC.

 

By:_________________________________

Name:

Title:

 

 

 

 

 

    	 	10	 

     

    

 

 

Schedule I

 

Collateral Account

 

Financial Institution:

Address of Financial Institution:

 

 

Account Number:

Account Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	11	 

     

    

 

Schedule II

 

Permitted Financial Institutions

 

Pershing LLC or any of their affiliates

HSBC NA, or any of their affiliates

BNP Paribas, or any of their affiliates

UBS AG or any of their affiliates

Citibank NA or any of their affiliates

Bank of America Merrill Lynch or any of their affiliates

Deutsche Bank, AG or any of their affiliates

Fidelity Investments, FMR LLC or any of their affiliates

Morgan Stanley or any of their affiliates

First Republic Bank or any of their affiliates

 

 

 

 

 

 

 

 

 

    	 	12

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