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NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY

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 (WHICH COUNSEL SHALL BE 

SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT 

REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD 

PURSUANT    TO    RULE

144

OR    RULE

144A    UNDER    SAID    ACT.

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. 

Principal Amount: $48,000.00

Issue Date: June 1, 2014

Debt Settlement Price: $48,000.00 

CONVERTIBLE PROMISSORY NOTE 

Source Gold Corp.,  a  Nevada  corporation (hereinafter  called  the “Borrower”),  hereby  promises  to  pay  to  the  order  of  Syndication Capital LLC, a Nevada corporation, or registered assigns (the “Holder”) the sum of $48,000.00 together with any interest as set forth herein, on December 1, 2014 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise.  This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note, which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”).  Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed.  All payments due hereunder (to the extent not converted into Common free trading stock, $0.001par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.  All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note.  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 and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date.  As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of Las Vegas, Nevada are authorized or required by law or executive order to remain closed.  Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Debt Settlement Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Debt Settlement Agreement”). 

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

The following terms shall apply to this Note: 

ARTICLE I. CONVERSION RIGHTS 

1.1 

Conversion Right.  The Holder shall have the right from time to time, and 

at any time during the period beginning on the date, which is one hundred eighty (180) days, 

following the dates listed on the note.  The Maturity Dates for the Invoice is December 1, 2014 (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock.

For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be 

determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as 

amended  (the “Exchange Act”), and  Regulations 13D-G  thereunder,  except  as  otherwise 

provided in clause (1) of such proviso, provided, further, however, that the limitations on 

conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 

days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue 

to apply until such 61st day (or such later date, as determined by the Holder, as may be specified 

in such notice of waiver).  The number of shares of Common Stock to be issued upon each 

conversion of this Note shall be determined by dividing the Conversion Amount (as defined 

below) by the applicable Conversion Price then in effect on the date specified in the notice of 

conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to 

the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of 

Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably 

expected to result in, notice) to the Borrower before 6:00 p.m., Las Vegas, Nevada time on 

such conversion date (the “Conversion Date”).  

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The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Borrower’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Borrower’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

1.2

Conversion Price.

(a)

Calculation  of  Conversion  Price.    The  conversion  price

(the

“Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to 

equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower 

relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, 

combinations, recapitalization, reclassifications, extraordinary distributions and similar events). 

The "Conversion Price" shall mean par .001 multiplied by the number of Common Stock converted at the time. 

(b) 

Conversion Price During Major Announcements.  Notwithstanding 

anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public 

announcement that it intends to consolidate or merge with any other corporation (other than a 

merger in which the Borrower is the surviving or continuing corporation and its capital stock is 

unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any 

person, group or entity (including the Borrower) publicly announces a tender offer to Purchase 

50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the 

announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement 

Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing 

through the Adjusted Conversion Price Termination Date (as defined below), be equal to the 

lower of (x) the Conversion Price which would have been applicable for a Conversion occurring 

on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From 

and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be 

determined as set forth in this Section 1.2(a).  For purposes hereof, “Adjusted Conversion Price 

Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative. 

1.3

Authorized Shares.  The Borrower covenants that during the period the

conversion right exists, the Borrower will reserve from its authorized and unissued Common 

Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of 

Common Stock upon the full conversion of this Note issued pursuant to the Debt Settlement Agreement. 

The Borrower is required at all times to have authorized and reserved two times the number of 

shares that is actually issuable upon full conversion of the Note (based on the Conversion Price 

of the Notes in effect from time to time)(the “Reserved Amount”).  

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The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section 

4(g) of the Debt Settlement Agreement.  The Borrower represents that upon issuance, such shares will 

be duly and validly issued, fully paid and non-assessable.  In addition, if the Borrower shall issue 

any securities or make any change to its capital structure which would change the number of 

shares of Common Stock into which the Notes shall be convertible at the then current 

Conversion Price, the Borrower shall at the same time make proper provision so that thereafter 

there shall be a sufficient number of shares of Common Stock authorized and reserved, free from 

preemptive rights, for conversion of the outstanding Notes.  The Borrower (i) acknowledges that 

it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable 

upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full 

authority to its officers and agents who are charged with the duty of executing stock certificates 

to execute and issue the necessary certificates for shares of Common Stock in accordance with 

the terms and conditions of this Note. 

If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note. 

1.4

Method of Conversion.

(a)

Mechanics of Conversion.  Subject to Section 1.1, this Note may

be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower. 

(b) 

Surrender of Note Upon Conversion.  Notwithstanding anything to 

the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, 

the Holder shall not be required to physically surrender this Note to the Borrower unless the 

entire unpaid principal amount of this Note is so converted.  The Holder and the Borrower shall 

maintain records showing the principal amount so converted and the dates of such conversions or 

shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to 

require physical surrender of this Note upon each such conversion.  In the event of any dispute or 

discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in 

the absence of manifest error.  Notwithstanding the foregoing, if any portion of this Note is 

converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically 

surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver 

upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by 

the Holder of any applicable transfer taxes) may request, representing in the aggregate the 

remaining unpaid principal amount of this Note.  The Holder and any assignee, by acceptance of 

this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following 

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conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof. 

(c) 

Payment of Taxes.  The Borrower shall not be required to pay any 

tax which may be payable in respect of any transfer involved in the issue and delivery of shares 

of Common Stock or other securities or property on conversion of this Note in a name other than 

that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver 

any such shares or other securities or property unless and until the person or persons (other than 

the Holder or the custodian in whose street name such shares are to be held for the Holder’s 

account) requesting the issuance thereof shall have paid to the Borrower the amount of any such 

tax or shall have established to the satisfaction of the Borrower that such tax has been paid. 

(d) 

Delivery of Common Stock Upon Conversion.  Upon receipt by 

the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Debt Settlement Agreement. 

(e) 

Obligation of Borrower to Deliver Common Stock.  Upon receipt 

by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of 

record of the Common Stock issuable upon such conversion, the outstanding principal amount 

and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such 

conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights 

with respect to the portion of this Note being so converted shall forthwith terminate except the 

right to receive the Common Stock or other securities, cash or other assets, as herein provided, 

on such conversion.  If the Holder shall have given a Notice of Conversion as provided herein, 

the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be 

absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the 

same, any waiver or consent with respect to any provision thereof, the recovery of any judgment 

against any person or any action to enforce the same, any failure or delay in the enforcement of 

any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, 

recoupment, limitation or termination, or any breach or alleged breach by the Holder of any 

obligation to the Borrower, and irrespective of any other circumstance which might otherwise 

limit such obligation of the Borrower to the Holder in connection with such conversion.  The 

Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as 

the Notice of Conversion is received by the Borrower before 6:00 p.m., Las Vegas, Nevada 

time, on such date. 

(f) 

Delivery of Common Stock by Electronic Transfer.  In lieu of 

delivering physical certificates representing the Common Stock issuable upon conversion, 

provided  the  Borrower  is  participating  in  the  Depository  Trust  Company (“DTC”)  Fast 

Automated  Securities  Transfer 

(“FAST”)  program,  upon  request  of  the  Holder  and  its 

compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system. 

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(g)

Failure to Deliver Common Stock Prior to Deadline.  Without in

any way limiting the Holder’s right to pursue other remedies, including actual damages and/or 

equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion 

of this Note is not delivered by the Deadline (other than a failure due to the circumstances 

described in Section 1.3 above, which failure shall be governed by such Section) the Borrower 

shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the 

Borrower fails to deliver such Common Stock.  Such cash amount shall be paid to Holder by the 

fifth day of the month following the month in which it has accrued or, at the option of the Holder 

(by written notice to the Borrower by the first day of the month following the month in which it 

has accrued), shall be added to the principal amount of this Note, in which event interest shall 

accrue thereon in accordance with the terms of this Note and such additional principal amount 

shall be convertible into Common Stock in accordance with the terms of this Note.  The 

Borrower agrees that the right to convert is a valuable right to the Holder.  The damages resulting 

from a failure, attempt to frustrate, interference with such conversion right are difficult if not 

impossible to qualify.  Accordingly the parties acknowledge that the liquidated damages 

provision contained in this Section 1.4(g) are justified. 

1.5 

Concerning the Shares.  The shares of Common Stock issuable upon 

conversion of this Note may not be sold or transferred unless  (i) such shares are sold pursuant to 

an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall 

have been furnished with an opinion of  counsel (which opinion shall be in form, substance and 

scope customary for opinions of counsel in comparable transactions) to the effect that the shares 

to be sold or transferred may be sold or transferred pursuant to an exemption from such 

registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a 

successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in 

Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance 

with this Section 1.5 and who is an Accredited Investor (as defined in the Debt Settlement Agreement). 

Except as otherwise provided in the Debt Settlement Agreement (and subject to the removal provisions 

set forth below), until such time as the shares of Common Stock issuable upon conversion of this 

Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without 

any restriction as to the number of securities as of a particular date that can then be immediately 

sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has 

not been so included in an effective registration statement or that has not been sold pursuant to 

an effective registration statement or an exemption that permits removal of the legend, shall bear 

a legend substantially in the following form, as appropriate: 

“NEITHER    THE    ISSUANCE    AND    SALE    OF    THE    SECURITIES 

REPRESENTED  BY  THIS  CERTIFICATE  NOR  THE  SECURITIES  INTO 

WHICH    THESE    SECURITIES    ARE    EXERCISABLE    HAVE    BEEN 

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR 

APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE 

OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE 

ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE 

SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) 

AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY 

THE   HOLDER),   IN   A   GENERALLY   ACCEPTABLE   FORM,   THAT 

REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS 

SOLD  PURSUANT  TO  RULE  144  OR  RULE  144A  UNDER  SAID  ACT. 

NOTWITHSTANDING   THE   FOREGOING,   THE   SECURITIES   MAY   BE 

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PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER   LOAN   OR   FINANCING   ARRANGEMENT   SECURED   BY   THE SECURITIES.” 

The legend set forth above shall be removed and the Borrower shall issue to the 

Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer 

agent shall have received an opinion of counsel, in form, substance and scope customary for 

opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such 

Common Stock may be made without registration under the Act, which opinion shall be accepted 

by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock 

issuable upon conversion of this Note, such security is registered for sale by the Holder under an 

effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 

144 without any restriction as to the number of securities as of a particular date that can then be 

immediately sold.  In the event that the Company does not accept the opinion of counsel 

provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from 

registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of 

Default pursuant to Section 3.2 of the Note. 

1.6

Effect of Certain Events.

(a)

Effect of Merger, Consolidation, Etc.  At the option of the Holder,

the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the 

effectuation by the Borrower of a transaction or series of related transactions in which more than 

50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other 

business combination of the Borrower with or into any other Person (as defined below) or 

Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of 

Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person”  shall  mean  any  individual,  corporation,  limited  liability  company,  partnership, association, trust or other entity or organization. 

(b) 

Adjustment Due to Merger, Consolidation, Etc.  If, at any time 

when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall 

be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other 

similar event, as a result of which shares of Common Stock of the Borrower shall be changed 

into the same or a different number of shares of another class or classes of stock or securities of 

the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of 

the assets of the Borrower other than in connection with a plan of complete liquidation of the 

Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion 

of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the 

shares  of  Common  Stock  immediately  theretofore  issuable  upon  conversion,  such  stock, 

securities or assets which the Holder would have been entitled to receive in such transaction had 

this Note been converted in full immediately prior to such transaction (without regard to any 

limitations on conversion set forth herein), and in any such case appropriate provisions shall be 

made with respect to the rights and interests of the Holder of this Note to the end that the 

provisions hereof (including, without limitation, provisions for adjustment of the Conversion 

Price and of the number of shares issuable upon conversion of the Note) shall thereafter be 

applicable, as nearly as may be practicable in relation to any securities or assets thereafter 

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deliverable upon the conversion hereof.  The Borrower shall not affect any transaction described 

in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior 

written notice (but in any event at least fifteen (15) days prior written notice) of the record date 

of the special meeting of shareholders to approve, or if there is no such record date, the 

consummation   of,   such   merger,   consolidation,   exchange   of   shares,   recapitalization, 

reorganization or other similar event or sale of assets (during which time the Holder shall be 

entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the 

Borrower) assumes by written instrument the obligations of this Section 1.6(b).  The above 

provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share 

exchanges. 

(c) 

Adjustment Due to Distribution.  If the Borrower shall declare or 

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

(d) 

Adjustment Due to Dilutive Issuance.  If, at any time when any 

Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 

1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration 

or for a consideration per share (before deduction of reasonable expenses or commissions or 

underwriting discounts or allowances in connection therewith) less than the Conversion Price in 

effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a 

“Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be 

reduced to the amount of the consideration per share received by the Borrower in such Dilutive 

Issuance. 

The Borrower shall be deemed to have issued or sold shares of Common 

Stock if the Borrower in any manner issues or grants any warrants, rights or options (not 

including employee stock option plans), whether or not immediately exercisable, to subscribe for 

or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to Purchase Common Stock 

or Convertible Securities are hereinafter referred to as “Options”) and the price per share for 

which Common Stock is issuable upon the exercise of such Options is less than the Conversion 

Price then in effect, then the Conversion Price shall be equal to such price per share.  For 

purposes of the preceding sentence, the “price per share for which Common Stock is issuable 

upon the exercise of such Options” is determined by dividing (i) the total amount, if any, 

received or receivable by the Borrower as consideration for the issuance or granting of all such 

Options, plus the minimum aggregate amount of additional consideration, if any, payable to the 

Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities 

issuable upon the exercise of such Options, the minimum aggregate amount of additional 

consideration payable upon the conversion or exchange thereof at the time such Convertible 

Securities first become convertible or exchangeable, by (ii) the maximum total number of shares 

of Common Stock issuable upon the exercise of all such Options (assuming full conversion of 

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Convertible Securities, if applicable).  No further adjustment to the Conversion Price will be 

made upon the actual issuance of such Common Stock upon the exercise of such Options or upon 

the conversion or exchange of Convertible Securities issuable upon exercise of such Options. 

Additionally, the Borrower shall be deemed to have issued or sold shares 

of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, 

whether or not immediately convertible (other than where the same are issuable upon the 

exercise of Options), and the price per share for which Common Stock is issuable upon such 

conversion or exchange is less than the Conversion Price then in effect, then the Conversion 

Price shall be equal to such price per share.  For the purposes of the preceding sentence, the 

“price per share for which Common Stock is issuable upon such conversion or exchange” is 

determined by dividing (i) the total amount, if any, received or receivable by the Borrower as 

consideration for the issuance or sale of all such Convertible Securities, plus the minimum 

aggregate amount of additional consideration, if any, payable to the Borrower upon the 

conversion or exchange thereof at the time such Convertible Securities first become convertible 

or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon 

the conversion or exchange of all such Convertible Securities.  No further adjustment to the 

Conversion Price will be made upon the actual issuance of such Common Stock upon conversion 

or exchange of such Convertible Securities. 

(e) 

Share Purchase Rights.  If, at any time when any Notes are issued and 

outstanding, the Borrower issues any convertible securities or rights to Common stock, warrants, 

securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of 

Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms 

applicable to such Share Purchase Rights, the aggregate Share Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained 

herein) immediately before the date on which a record is taken for the grant, issuance or sale of 

such Debt Settlement Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Debt Settlement Rights. 

(f) 

Notice of Adjustments.  Upon the occurrence of each adjustment 

or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note. 

1.7 

Trading Market Limitations.  Unless permitted by the applicable rules and 

regulations of the principal securities market on which the Common Stock is then listed or 

traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this 

Note and the other Notes issued pursuant to the Debt Settlement Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum Share Amount”), which shall be 4.99% of the total shares outstanding on the Closing 

Date (as defined in the Debt Settlement Agreement), subject to equitable adjustment from time to time 

9 

for stock splits, stock dividends, combinations, capital reorganizations and similar events relating 

to the Common Stock occurring after the date hereof.  Once the Maximum Share Amount has 

been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules 

or regulations of any stock exchange, interdealer quotation system or other self-regulatory 

organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability 

to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any 

further right to convert this Note, this will be considered an Event of Default under Section 3.3 

of the Note. 

1.8 

Status as Shareholder.  Upon submission of a Notice of Conversion by a 

Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued 

because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or 

Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the 

Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, 

excepting only the right to receive certificates for such shares of Common Stock and to any 

remedies provided herein or otherwise available at law or in equity to such Holder because of a 

failure by the Borrower to comply with the terms  of this Note.  Notwithstanding the foregoing, 

if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) 

business day after the expiration of the Deadline with respect to a conversion of any portion of 

this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder 

of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of 

this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon 

as practicable, return such unconverted Note to the Holder or, if the Note has not been 

surrendered, adjust its records to reflect that such portion of this Note has not been converted.  In 

all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) 

the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required 

thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to 

have the Conversion Price with respect to subsequent conversions determined in accordance with 

Section 1.3) for the Borrower’s failure to convert this Note. 

1.9 

Prepayment.  Notwithstanding anything to the contrary contained in this 

Note, at any time during the period beginning on the Issue Date and ending on the date which is 

ninety (90) days following the issue date, the Borrower shall have the right, exercisable on not 

less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the 

outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. 

Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the 

Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising 

its right to prepay the Note, and (2) the date of prepayment which shall be not more than three 

(3) Trading Days from the date of the Optional Prepayment Notice.  On the date fixed for 

prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the 

Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified 

by the Holder in writing to the Borrower at least one (1) business day prior to the Optional 

Prepayment Date.  If the Borrower exercises its right to prepay the Note, the Borrower shall 

make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to 

140%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus 

(x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional 

Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and 

(x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.  If the 

Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment 

10 

Amount due to the Holder of the Note within two (2) business days following the Optional 

Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this 

Section 1.9. 

Notwithstanding anything to the contrary contained in this Note, at any time 

during the period beginning  on the date of the invoices listed on Exhibit B, which is ninety-one (91) days following the issue date and ending on the date of the invoices listed on Exhibit B, which is one hundred fifty (150) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9.  Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.  On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date.  If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Second Optional Prepayment Amount”) equal to 145%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.  If the Borrower delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9. 

Notwithstanding anything to the contrary contained in this Note, at any time 

during the period beginning  on the date of the invoices listed on Exhibit B, which is one hundred fifty-one (151) days following the issue date and ending on the date which is one hundred eighty (180) days following the issue date of the invoices listed on Exhibit B, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9.  Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.  On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date.  If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Third Optional Prepayment Amount”) equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.  If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9. 

11 

After the expiration of one hundred eighty (180) following the date of the Note, the Borrower shall have no right of prepayment. 

ARTICLE II.  CERTAIN COVENANTS 

2.1 

Distributions on Capital Stock.  So long as the Borrower shall have any 

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

2.2 

Restriction on Stock Repurchase.  So long as the Borrower shall have any 

obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares. 

2.3 

Borrowings.  So long as the Borrower shall have any obligation under this 

Note, the Borrower shall not, without the Holder’s written consent, create, incur, assume 

guarantee, endorse,  contingently  agree  to  purchase or otherwise become  liable  upon  the 

obligation  of  any  person,  firm,  partnership,  joint  venture  or  corporation,  except  by  the 

endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for 

borrowed money, except (a) borrowings in existence or committed on the date hereof and of 

which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to 

trade creditors or financial institutions incurred in the ordinary course of business or (c) 

borrowings, the proceeds of which shall be used to repay this Note. 

2.4 

Sale of Assets.  So long as the Borrower shall have any obligation under 

this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise 

dispose of any significant portion of its assets outside the ordinary course of business.  Any 

consent to the disposition of any assets may be conditioned on a specified use of the proceeds of 

disposition. 

2.5 

Advances and Loans.  So long as the Borrower shall have any obligation 

under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $500,000. 

ARTICLE III.  EVENTS OF DEFAULT 

If any of the following events of default (each, an “Event of Default”) shall occur: 

12 

3.1

Failure to Pay Principal or Interest.  The Borrower fails to pay the

principal  hereof  or  interest  thereon  when  due  on  this  Note,  whether  at  maturity,  upon acceleration or otherwise. 

3.2 

Conversion and the Shares.  The  Borrower  fails to issue shares of 

Common Stock to the Holder (or announces or threatens in writing that it will not honor its 

obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in 

accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer 

(issue) (electronically or in certificated form) any certificate for shares of Common Stock issued 

to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this 

Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its 

transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate 

for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant 

to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not 

to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive 

legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any 

shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this 

Note as and when required by this Note (or makes any written announcement, statement or threat 

that it does not intend to honor the obligations described in this paragraph) and any such failure 

shall continue uncured (or any written announcement, statement or threat not to honor its 

obligations shall not be rescinded in writing) for three (3) business days after the Holder shall 

have delivered a Notice of Conversion.  It is an obligation of the Borrower to remain current in 

its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of 

this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer 

agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer 

agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the 

Holder within forty eight (48) hours of a demand from the Holder. 

3.3 

Breach of Covenants.  The Borrower breaches any material covenant or 

other material term or condition contained in this Note and any collateral documents including but not limited to the Debt Settlement Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder. 

3.4 

Breach  of  Representations  and  Warranties.    Any  representation  or 

warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Debt Settlement Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Debt Settlement Agreement. 

3.5 

Receiver or Trustee.  The Borrower or any subsidiary of the Borrower 

shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. 

3.6 

Judgments.  Any money judgment, writ or similar process shall be entered 

or filed against the Borrower or any subsidiary of the Borrower or any of its property or other 

assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of 

13 

twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld. 

3.7 

Bankruptcy.    Bankruptcy,  insolvency,  reorganization  or  liquidation 

proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower. 

3.8 

Delisting of Stock.  The Borrower shall fail to maintain the 

listing of the Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange. 

3.9 

Failure to Comply with the Exchange Act.  The Borrower shall fail to 

comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act. 

3.10

Liquidation.   Any dissolution, liquidation, or winding up of Borrower or

any substantial portion of its business.

3.11

Cessation of Operations.

Any cessation of operations by Borrower or

Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due. 

3.12

Maintenance of Assets.

The failure by Borrower to maintain any

material intellectual property rights, personal, real property or other assets, which are necessary to conduct its business (whether now or in the future). 

3.13 

Financial Statement Restatement. 

The  restatement  of  any  financial 

statements filed by the Borrower with the SEC for any date or period from two years prior to the 

Issue Date of this Note and until this Note is no longer outstanding, if the result of such 

restatement would, by comparison to the unrestated financial statement, have constituted a 

material adverse effect on the rights of the Holder with respect to this Note or the Debt Settlement 

Agreement. 

3.14

Reverse Splits.

The  Borrower  effectuates  a  reverse  split  of  its

Common Stock without twenty (20) days prior written notice to the Holder. 

3.15 

Replacement of Transfer Agent. In the event that the Borrower proposes to 

replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Debt Settlement Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. 

14 

3.16

Cross-Default.  Notwithstanding anything to the contrary contained in this

Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note.  Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder. 

Upon the occurrence and during the continuation of any Event of Default specified in 

Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due 

at the Maturity Date), the Note shall become immediately due and payable and the Borrower 

shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the 

Default Sum (as defined  herein).   UPON THE OCCURRENCE AND  DURING  THE 

CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE 

NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER 

SHALL PAY TO THE HOLDER,  IN  FULL SATISFACTION OF ITS OBLIGATIONS 

HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED 

HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of 

any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal 

hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event 

pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 

3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the 

“Default Notice”), and upon the occurrence of an Event of Default specified the remaining 

sections of Articles III (other than failure to pay the principal hereof or interest thereon at the 

Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and 

payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, 

an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal 

amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this 

Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, 

on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder 

pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to 

the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be 

known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where 

parity value means (a) the highest number of shares of Common Stock issuable upon conversion 

of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading 

Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for 

purposes of determining the lowest applicable Conversion Price, unless the Default Event arises 

as a result of a breach in respect of a specific Conversion Date in which case such Conversion 

Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common 

Stock during the period beginning on the date of first occurrence of the Event of Default and 

ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other 

amounts payable hereunder shall immediately become due and payable, all without demand, 

presentment or notice, all of which hereby are expressly waived, together with all costs, 

15 

including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity. 

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect. 

ARTICLE IV. MISCELLANEOUS 

4.1 

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 privileges.  All rights and 

remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies 

otherwise available. 

4.2 

Notices.  All notices, demands, requests, consents, approvals, and other 

communications required or permitted hereunder shall be in writing and, unless otherwise 

specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, 

return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with 

charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set 

forth below or to such other address as such party shall have specified most recently by written 

notice.  Any notice or other communication required or permitted to be given hereunder shall be 

deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation 

generated by the transmitting facsimile machine, at the address or number designated below (if 

delivered on a business day during normal business hours where such notice is to be received), or 

the first business day following such delivery (if delivered other than on a business day during 

normal business hours where such notice is to be received) or (b) on the second business day 

following the date of mailing by express courier service, fully prepaid, addressed to such 

address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for 

such communications shall be: 

If to the Borrower, to: 

Source Gold Corp.

1155 Camino Del Mar #162

Del Mar, California 92014

16 

If to the Holder: 

Syndication Capital LLC

1401 Camino Del Mar #202

Del Mar, California 92014

4.3 

Amendments.  This Note and any provision hereof may only be amended 

by an instrument in writing signed by the Borrower and the Holder.  The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Debt Settlement Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented. 

4.4 

Assignability.  This Note shall be binding upon the Borrower and its 

successors and assigns, and shall inure to be the benefit of the Holder and its successors and 

assigns.  Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) 

of the 1933 Act).  Notwithstanding anything in this Note to the contrary, this Note may be 

pledged  as  collateral  in  connection  with  a  bona  fide  margin  account  or  other  lending 

arrangement. 

4.5 

Cost of Collection.  If default is made in the payment of this Note, the 

Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees. 

4.6 

Governing Law.  This Note shall be governed by and construed in 

accordance with the laws of the State of Nevada without regard to principles of conflicts of 

laws.  Any action brought by either party against the other concerning the transactions 

contemplated by this Note shall be brought only in the state courts of Nevada or in the federal 

courts located in the state and county of Clark.  The parties to this Note hereby irrevocably 

waive any objection to jurisdiction and venue of any action instituted hereunder and shall not 

assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. 

The Borrower and Holder waive trial by jury.  The prevailing party shall be entitled to recover 

from the other party its reasonable attorney's fees and costs.  In the event that any provision of 

this Note or any other agreement delivered in connection herewith is invalid or unenforceable 

under any applicable statute or rule of law, then such provision shall be deemed inoperative to 

the extent that it may conflict therewith and shall be deemed modified to conform with such 

statute or rule of law.  

17

Any such provision which may prove invalid or unenforceable under any 

law shall not affect the validity or enforceability of any other provision of any agreement.   Each 

party hereby irrevocably waives personal service of process and consents to process being served 

in any suit, action or proceeding in connection with this Agreement or any other Transaction 

Document by mailing a copy thereof via registered or certified mail or overnight delivery (with 

evidence of delivery) to such party at the address in effect for notices to it under this Agreement 

and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. 

4.7 

Certain Amounts.  Whenever pursuant to this Note the Borrower is 

required to pay an amount in excess of the outstanding principal amount (or the portion thereof 

required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such 

interest, the Borrower and the Holder agree that the actual damages to the Holder from the 

receipt of cash payment on this Note may be difficult to determine and the amount to be so paid 

by the Borrower represents stipulated damages and not a penalty and is intended to compensate 

the Holder in part for loss of the opportunity to convert this Note and to earn a return from the 

sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the 

price paid for such shares pursuant to this Note.  The Borrower and the Holder hereby agree that 

such amount of stipulated damages is not plainly disproportionate to the possible loss to the 

Holder from the receipt of a cash payment without the opportunity to convert this Note into 

shares of Common Stock. 

4.8

Debt Settlement Agreement.  By its acceptance of this Note, each party agrees to

be bound by the applicable terms of the Debt Settlement Agreement.

4.9 

Notice of Corporate Events.  Except as otherwise provided below, the 

Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the 

extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with 

prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials 

and other information sent to shareholders).  In the event of any taking by the Borrower of a 

record of its shareholders for the purpose of determining shareholders who are entitled to receive 

payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share 

of any class or any other securities or property, or to receive any other right, or for the purpose of 

determining shareholders who are entitled to vote in connection with any proposed sale, lease or 

conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, 

dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at 

least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the 

consummation of the transaction or event, whichever is earlier), of the date on which any such 

record is to be taken for the purpose of such dividend, distribution, right or other event, and a 

brief statement regarding the amount and character of such dividend, distribution, right or other 

event to the extent known at such time.  The Borrower shall make a public announcement of any 

event requiring notification to the Holder hereunder substantially simultaneously with the 

notification to the Holder in accordance with the terms of this Section 4.9. 

18

4.10 

Remedies.    The  Borrower  acknowledges  that  a  breach  by  it  of  its 

obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and 

purpose of the transaction contemplated hereby.  Accordingly, the Borrower acknowledges that 

the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in 

the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the 

Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing 

or curing any breach of this Note and to enforce specifically the terms and provisions thereof, 

without the necessity of showing economic loss and without any bond or other security being 

required. 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this date June 1, 2014

Source Gold Corp.

Signed: __Dugald Pinchin__________ 

19 

EXHIBIT A 

NOTICE OF CONVERSION 

The undersigned hereby elects to convert $_________________ principal amount 

of the Note (defined below) into that number of shares of Common Stock to be issued pursuant 

to the conversion of the Note (“Common Stock”) as set forth below, of Source Gold Corp., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of June 1, 2014 (the “Note”), as of the date written below.  No fee will be charged to the Holder for any conversion, except for transfer taxes, if any. 

Box Checked as to applicable instructions: 

[ ]

The Borrower shall electronically transmit the Common Stock issuable pursuant

to this Notice of Conversion to the account of the undersigned or its nominee with

DTC  through  its  Deposit  Withdrawal  Agent  Commission  system

(“DWAC

Transfer”).

Name of DTC Prime Broker: Account Number: 

[ 

] 

The  undersigned  hereby  requests  that  the  Borrower  issue  a  certificate  or 

certificates for the number of shares of Common Stock set forth below (which 

numbers are based on the Holder’s calculation attached hereto) in the name(s) 

specified immediately below or, if additional space is necessary, on an attachment 

hereto: 

Syndication Capital LLC 

Del Mar, CA 92014

Attention: Certificate Delivery 

Date of Conversion:

_____________

Applicable Conversion Price:

$.001

Number of Shares of Common Stock to be Issued 

Pursuant to Conversion of the Notes:

______________

Amount of Principal Balance Due remaining 

Under the Note after this conversion:

______________

By:_____________________________

Title:  President.

Date:  ______________ 

20EXHIBIT 10.1

 

CONVERTIBLE
NOTE AND WARRANT PURCHASE AGREEMENT

 

This
Convertible Note and Warrant Purchase Agreement, dated as of October [__], 2014 (this “Agreement”), is entered
into by and among Cortex Pharmaceuticals, Inc. (the “Company”), a corporation incorporated in the state of
Delaware, and each of the undersigned persons and entities listed on the schedule of investors attached hereto as Schedule
I (the “Investors”).

 

The
Company and each of the Investors hereby agree as follows:

 

1.
The Convertible Notes. 

 

(a)
Authorization of Convertible Notes and Warrants. The Company has authorized the issue and sale of up to $1,000,000.00 aggregate
principal amount (“Total Principal Amount”) of its (i) 10% Convertible Notes due September 15, 2015 in substantially
the form set out in Exhibit A hereto (as amended, restated or otherwise modified from time to time pursuant to Section
6, all such Convertible Notes, the “Convertible Notes”) and (ii) Warrants to Purchase Common Stock in substantially
the form set out in Exhibit B hereto (as amended, restated or otherwise modified from time to time pursuant to Section
6, all such Warrants to Purchase Common Stock, the “Warrants”). Each Warrant to Purchase Common Stock shall
be initially exercisable into that number of shares of Common Stock of the Company calculated as each Investor’s investment
amount divided by $0.035. References to an “Exhibit” or “Schedule” are references to an Exhibit or Schedule
attached to this Agreement unless otherwise specified. References to a “Section” are references to a Section of this
Agreement unless otherwise specified.

 

(b)
Issuance of Convertible Notes and Warrants. At each Closing provided for in Section 1(c) in respect of a particular Investor,
on the terms and subject to the conditions hereof, the Company agrees to issue and sell to such Investor, and such Investor severally
agrees to purchase from the Company, a Convertible Note and Warrant for the investment amount set forth opposite the respective
Investor’s name on Schedule I hereto in respect of such Convertible Note and Warrant (collectively, the “Investment
Amount”). The obligations of the Investors to purchase Notes and Warrants are several and not joint obligations and
no Investor shall have any liability to any Person for the performance or non-performance of any obligation by any other Investor
hereunder. The aggregate Investment Amounts for the purchase of Convertible Notes and Warrants hereunder shall not exceed $1,000,000.00.

 

(c)
Closings; Use of Proceeds. The sale and purchase of the Convertible Notes and Warrants to be purchased by the Investors
shall take place at one or more closings (each a “Closing” and collectively with the Additional Closings (as
defined below), the “Closings”) to be held at such places and times as the Company and the applicable Investors
may determine (each a “Closing Date” and collectively “Closing Dates”). At each Closing,
the Company will deliver to each of the applicable Investors the Convertible Note and the Warrant to be purchased by such Investor
dated the date of the Closing and registered in such Investor’s name, against receipt by the Company of such Investor’s
Investment Amount for the account of the Company by wire transfer of immediately available funds in accordance with the Company’s
instructions. The Company may conduct additional Closings at the Company’s option in the Company’s sole discretion
(each, an “Additional Closing”) to be held at such places and times as the Company and the Investors participating
in such Additional Closing may determine (each, an “Additional Closing Date”). The proceeds of the Convertible
Notes and Warrants shall be used for costs and expenses of the Company in connection with research and development, general and
administrative purposes and working capital.

 

    	 

    	 

    

 

2.
Representations and Warranties of the Company. The Company represents and warrants to each Investor that, except
as set forth on Schedule II hereto:

 

(a)
Due Incorporation, Qualification. The Company (i) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization; (ii) has the power and authority to own, lease and operate its properties
and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign
corporation in each jurisdiction where such qualification or license is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing could not reasonably be expected to have a material adverse effect on
the Company and its subsidiaries taken as a whole.

 

(b)
Authority; Enforceability. The execution, delivery and performance by the Company of this Agreement and each Convertible
Note and each Warrant issued hereunder (collectively, the “Transaction Documents”) and the consummation of
the transactions contemplated hereby and thereby (i) are within the corporate power of the Company and (ii) have been duly authorized
by all necessary corporate action on the part of the Company. Each Transaction Document executed or to be executed at each Closing
by the Company has been, or will be at each Closing, duly executed and delivered by the Company and constitutes, or will constitute
as of such Closing, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting
the enforcement of creditors’ rights generally and general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

 

(c)
Non-Contravention. The execution and delivery by the Company of the Transaction Documents executed by the Company and the
performance and consummation of the transactions contemplated thereby do not (i) violate the Company’s Articles of Incorporation,
Certificate of Incorporation, Bylaws or other formation or charter documents, as applicable (as amended, the “Charter
Documents”), (ii) violate any material judgment, order, writ, decree, statute, rule or regulation applicable to the
Company; (iii) result in the breach of any material provision of or in the acceleration of, or entitle any other person to accelerate
(whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract
to which the Company is a party or by which it is bound; or (iv) result in the creation or imposition of any lien or encumbrance
upon any property, asset or revenue of the Company under any material agreement or instrument to which the Company is bound.

 

(d)
Litigation. As of the date of the initial Closing, no actions (including, without limitation, derivative actions), suits,
proceedings or investigations are pending or, to the knowledge of the Company, threatened in writing against the Company or the
Company’s subsidiaries, if any, at law or in equity in any court or before any other governmental authority.

 

(e)
Title. The Company and the Company’s subsidiaries, if any, own and have good and marketable title in fee simple absolute
to, or a valid leasehold interest in, all their respective real properties and good title to their other respective assets and
properties. Such assets and properties are subject to no liens or encumbrances.

 

(f)
Intellectual Property. The Company and the Company’s subsidiaries, if any, own or possess sufficient legal rights
to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other
intellectual property rights necessary for its business as now conducted and as proposed to be conducted, without any conflict
with, or infringement of, the rights of others. Since March 22, 2013, each employee of the Company has executed, or will execute,
a confidential information and invention assignment agreement in favor of the Company. Since March 22, 2013, the Company has entered
into, or intends to enter into, an agreement containing appropriate confidentiality and invention assignment provisions in favor
of the Company with each consultant to the Company that has had or will have access to the Company’s intellectual property.

 

    	2

    	 

    

 

(g)
Debt for Borrowed Money. As of the date of this Agreement, the Company does not have any outstanding debt for borrowed
money, other than, for the avoidance of doubt, as disclosed on Schedule II.

 

3.
Representations and Warranties of Investors. Each Investor, for that Investor alone, represents and warrants to
the Company upon the acquisition of a Convertible Note and Warrant as follows:

 

(a)
Binding Obligation. Such Investor has full legal capacity, power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. This Agreement and the Transaction Documents constitute valid and binding obligations of
such Investor, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the enforcement of creditors’ rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

(b)
Securities Law Compliance. Such Investor has been advised that the Convertible Notes and the Warrants and the underlying
securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or
any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable
state securities laws or unless an exemption from such registration requirements is available. Such Investor has not been formed
solely for the purpose of making this investment and is purchasing the Convertible Notes and Warrants to be acquired by such Investor
hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with,
the distribution thereof. Investor has no present intention of selling, granting any participation in, or otherwise distributing
the same and Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer, grant
any participation in or otherwise distribute all or any part of the Convertible Notes or Warrants. Such Investor has such knowledge
and experience in financial and business matters that such Investor is capable of evaluating the merits and risks of such investment,
is able to incur a complete loss of such investment without impairing such Investor’s financial condition and is able to
bear the economic risk of such investment for an indefinite period of time. Such Investor is an accredited investor as such term
is defined in Rule 501 of Regulation D under the Securities Act. Each Investor further represents that such Investor has had the
opportunity to ask questions of the Company and received answers concerning the terms and conditions of the sale of the Convertible
Notes and the Warrants.

 

(c)
Source of Funds. Each Investor severally represents that, as to each source of funds (each a “Source”)
to be used by such Investor to pay the purchase price of the Convertible Notes and Warrants to be purchased by such Investor hereunder,
the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of the Employee Retirement
Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time
in effect.

 

    	3

    	 

    

 

4.
Conditions to Closing of the Investors. Each Investor’s obligations at the Closing or, with respect to any
Additional Closing, each Additional Closing, are subject to the fulfillment, on or prior to the Closing Date or applicable Additional
Closing Date, as the case may be, of all of the following conditions:

 

(a)
Representations and Warranties. The representations and warranties made by the Company in Section 2 hereof, in each
case except as modified by Schedule II, shall have been true and correct when made, and shall be true and correct in all
material respects on the Closing Date or applicable Additional Closing Date.

 

(b)
Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date or
applicable Additional Closing Date with certain federal and state securities commissions, the Company shall have obtained all
governmental approvals required in connection with the lawful sale and issuance of the Convertible Notes.

 

(c)
Legal Requirements. On the date of the Closing or the applicable Additional Closing, the sale and issuance by the Company,
and the purchase by the applicable Investors, of the Convertible Notes and Warrants shall be legally permitted by all laws and
regulations to which such Investors or the Company are subject.

 

(d)
Transaction Documents. The Company shall have duly executed and delivered to the Investors the following documents: (i)
this Agreement and (ii) each Convertible Note and Warrant issued hereunder on the date of the Closing or the applicable Additional
Closing.

 

5.
Conditions to Obligations of the Company. The Company’s obligation to issue and sell the Convertible Notes
and Warrants at the Closing or, with respect to any Additional Closing, at each Additional Closing, is subject to the fulfillment,
on or prior to the Closing Date or applicable Additional Closing Date, as the case may be, of all of the following conditions:

 

(a)
Representations and Warranties. The representations and warranties made by the applicable Investors in Section 3 hereof
shall be true and correct when made, and shall be true and correct on the Closing Date and the applicable Additional Closing Date.

 

(b)
Legal Requirements. On the date of the Closing or the applicable Additional Closing, the sale and issuance by the Company,
and the purchase by the applicable Investors, of the Convertible Notes and Warrants shall be legally permitted by all laws and
regulations to which such Investors or the Company are subject.

 

(c)
Transaction Documents. With respect to the obligation to sell and issue a Convertible Note and Warrant to any Investor,
such Investor shall have duly executed and delivered to the Company (i) this Agreement and (ii) an executed acceptance by such
Investor of the applicable Convertible Note and applicable Warrant issued hereunder to such Investor on the date of the Closing
or the applicable Additional Closing.

 

    	4

    	 

    

 

6.
Disclosures.

 

(a)
Brokers and Finder’s Fees. At the Company’s sole discretion, the Company may pay (i) a cash placement agent
fee, brokerage commission, finder’s fee or similar payment of up to 7% of the Total Principal Amount to any qualified referral
source, which may be an affiliate of the Company, to which it can legally make such payment, in the form of cash, as well as (ii)
a warrant fee in the form of a warrant or warrants (“Placement Agent Warrants”), exercisable into up to 7%
of that number of shares of Common Stock into which the applicable Convertible Notes may convert. Such Placement Agent Warrants
shall be exercisable at the same price per share of Common Stock at which the applicable Convertible Notes convert and shall expire
on September 15, 2015. The Placement Agent Warrants shall have a cashless exercise provision. Placement Agent Warrants may be
issued to designees of the qualified referral source upon request by the qualified referral source, as may be agreed by the Company
in its sole discretion. Officers, directors, managers, employees, affiliates and associated persons of the Company, and affiliates
of any of the foregoing qualified referral sources, are eligible to invest as Investors in the Convertible Notes and the Warrants,
and are eligible to, and may, receive fees, directly or indirectly (including, without limitation, fees in respect of such person
or persons’ investments in the Convertible Notes and the Warrants).

 

(b)
Conflict of Interest. Aurora Capital LLC shall be a qualified referral source pursuant to Section 6(a) above. Aurora Capital
LLC and certain of its members, managing members, officers directors, associated persons or employees either previously or by
virtue of becoming an Investor, may be or may become direct or indirect shareholders or note holders or warrant owners of the
Company or may be officers or directors of the Company. Specifically, but not by way of limitation, both Arnold S. Lippa and Jeff
Eliot Margolis are indirect owners of member interests of Aurora Capital LLC, members of the Board of Directors of the Company,
officers of the Company and direct or indirect shareholders of the Company. Aurora Capital LLC is a direct owner of Common Stock
of the Company.

 

(c)
Arm’s Length Negotiation. The Company has not set the price of the Convertible Note or the Warrant through an arms-length
negotiation with any Investor or Investor representative. The Company believes the price at which the Convertible Notes and Warrants
are being offered appropriately reflects economic realities under the Company’s current circumstances. However, there can
be no assurances that the Convertible Notes or Warrants are not worth substantially less than the price at which they are being
sold.

 

(d)
Legal Counsel. Each Investor hereby represents and warrants and that it has consulted with legal counsel of its choosing,
or has had sufficient opportunity to consult with legal counsel of its choosing, in respect of the terms and conditions of this
Agreement and the applicable Convertible Note and Warrant of such Investor.

 

(e)
Original Issue Discount. This Note is being issued with original issue discount. Each Investor hereby acknowledges and
agrees that no assignment or other transfer of the Note shall be effective unless a legend has been added to the Note in accordance
with Treasury Regulation §1.1275-3(b) stating that the Note was issued with original issue discount and specifying (i) the
dollar amount of such original issue discount, (ii) the dollar amount of the issue price of the Note, (iii) the issue date of
the Note, and (iv) the percentage constituting the yield to maturity of the Note.

 

7.
Miscellaneous.

 

(a)
Waivers; Amendments. Except as otherwise expressly provided in the Warrant (with respect to any Warrant only) and except
as otherwise expressly provided in the Convertible Note (with respect to any Convertible Note only), any provision of this Agreement
and the Convertible Notes and Warrants may be amended, waived or modified only upon the written consent of the Company and Investors
holding more than 50% of the aggregate outstanding Investment Amount of the Convertible Notes and Warrants (a “Majority
in Interest of Investors”); provided however, that no such amendment, waiver or consent shall reduce the Investment
Amount of an Investor, in each case without such Investor’s written consent. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon all of the parties hereto. Notwithstanding the foregoing, this Agreement may be amended
to add a party as an Investor hereunder in connection with Additional Closings without the consent of any other Investor.

 

    	5

    	 

    

 

(b)
Nature of Investment. For the avoidance of doubt, the parties hereto acknowledge and agree that the payment of the Investment
Amount to the Company by an Investor in respect of any Convertible Note (but not in respect of any Warrant) will be deemed to
be a loan to or indebtedness of the Company.

 

(c)
Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions of the State
of New York or of any other state.

 

(d)
Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery
of this Agreement.

 

(e)
Successors and Assigns. Subject to the restrictions on transfer described in Section 6(f) below, the rights and
obligations of the Company and the Investors shall be binding upon and benefit the successors, assigns, heirs, administrators
and transferees of the parties.

 

(f)
Assignment. The rights, interests or obligations hereunder and under the Convertible Notes and/or Warrants may not be assigned,
by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of a Majority in Interest
of Investors. The rights, interests or obligations hereunder and under the Convertible Notes and/or Warrants may not be assigned
by any Investor without the prior written consent of the Company.

 

(g)
Entire Agreement. This Agreement together with the other Transaction Documents constitute and contain the entire agreement
among the Company and Investors and supersede any and all prior agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter hereof.

 

(h)
Notices. All notices, demands, consents, or other communications hereunder shall in writing and faxed, mailed or delivered
to each party as follows: (i) if to a Investor, at such Investor’s address or facsimile number set forth in the Schedule
of Investors attached as Schedule I, or at such other address as such Investor shall have furnished the Company in writing
in accordance with this paragraph, or (ii) if to the Company, at such address or fax number set forth on the signature pages hereto,
or at such other address or facsimile number as the Company shall have furnished to the Investors in writing in accordance with
this paragraph. All such communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered
personally, (iii) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one business
day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the
U.S. mail, first class with postage prepaid.

 

(i)
Expenses. Each of the Company and the Investors will bear their own respective expenses associated with the negotiation,
execution and delivery of this Agreement and the Convertible Notes.

 

(j)
Only Company Liable. In no event shall any stockholder, officer, director or employee of the Company be liable for any
amounts due or payable pursuant to any Transaction Document.

 

    	6

    	 

    

 

(k)
Severability. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(l)
Headings. Headings used in this Note have been included for convenience and ease of reference only, and will not in any
manner influence the construction or interpretation of any provision of this Note.

 

(m)
Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same agreement. Facsimile copies of signed signature pages will be deemed binding
originals.

 

(Signature
Page Follows)

 

    	7

    	 

    

 

The
parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date
and year first written above.

 

	COMPANY:
    	 
	 	 	 
	CORTEX
    PHARMACEUTICALS, INC.	 
	a
    Delaware corporation 	 
	 	 	 
	By:	 	 
	Name:	Arnold
    S. Lippa	 
	Title:	Executive
    Chairman and Chief Executive Officer	 

 

Address
for notices:

Cortex
Pharmaceuticals, Inc.

Attention:
Arnold S. Lippa

Executive
Chairman & CEO

126
Valley Road, Suite C

Glen
Rock, NJ 07452

(phone):
201-906-2466

(fax):
415-887-7814

 

(Signature
Page to Convertible Note and Warrant Purchase Agreement)

 

    	 

    	 

    

 

	INVESTORS:
    	 
	 	 	 
	[INVESTOR
    NAME] 	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 

 

(Signature
Page to Convertible Note and Warrant Purchase Agreement)

 

    	 

    	 

    

 

SCHEDULE
I

SCHEDULE
OF INVESTORS

 

	Investor
    Name, Contact Name, Address, Phone, Fax	 	Convertible
    Note

    Investment Amount	 	Warrant
    Investment Amount	 	Investment
    Amount (Total)	 	Closing
    Date
	[_________]	 	$[_______]	 	$[_______]	 	$[_______]	 	[_____], 2014
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

    	 

    	 

    

 

SCHEDULE
II

EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

 

Transaction
Documents

 

The Convertible
Notes

 

The Warrants

 

SEC
Filings

 

The Company
has not filed all required periodic filings with the Securities and Exchange Commission.

Samyang Documents

 

Permitted
liens include the liens granted to Samyang Optics Co., Ltd. (now known as SY Corporation, Co., Ltd.) (“Samyang”)
and its successors and assigns under that certain Securities Purchase Agreement, dated as of June 25, 2012, between the Company
and Samyang and any documents delivered in connection therewith (as amended, restated or otherwise modified from time to time,
collectively, the “Samyang Documents”). The indebtedness pursuant to the Samyang Documents and all transactions
contemplated in connection with the Samyang Documents are permitted hereunder. The Company is in default of certain of the Samyang
Documents.

 

Trade
Accounts

 

From time
to time, the Company has obligations in respect of trade accounts payable.

 

The
Company has certain obligations in respect of claims by one prior employee and certain prior advisors.

 

    	 

    	 

    

 

EXHIBIT
A

 

FORM
OF CONVERTIBLE NOTE

 

[see
attached]

 

    	 

    	 

    

 

EXHIBIT
A

FORM
OF CONVERTIBLE NOTE

 

NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAW, AND NO INTEREST HEREIN OR THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS COVERING ANY SUCH TRANSACTION, (B) THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES (CONCURRED
IN BY COUNSEL FOR THE COMPANY) THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF
THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.

 

CORTEX
PHARMACEUTICALS, INC.

 

10%
CONVERTIBLE NOTE DUE SEPTEMBER 15, 2015

 

	$[_________]	Glen
    Rock, NJ

 

October
[__], 2014

 

FOR
VALUE RECEIVED, Cortex Pharmaceuticals, Inc., a Delaware corporation (the “Company”), promises to pay
to [__________] (the “Holder”) the aggregate principal amount of $[________] (the “Principal
Amount”) plus accrued interest upon the terms and subject to the conditions set forth in this Convertible
Note (such Convertible Note referred to herein as the “Note”). Capitalized terms used herein
and not otherwise defined herein shall have the meanings given to them in the Convertible Note and Warrant Purchase Agreement,
dated as of October [__], 2014, by and among the Company, the Holder, and the other investors party thereto (as amended or otherwise
modified as of the date hereof, the “Purchase Agreement”). This Note is one of a series of the Company’s
Convertible Notes, is being purchased by the Holder along with a Warrant, and the Holder is entitled to the benefits of the Purchase
Agreement.

 

1.Interest.
Interest shall accrue on the outstanding Principal Amount, from the date hereof until the date this Note is converted or paid
in full, at the rate of ten percent (10%) per annum, which shall be compounded annually on a 360 day basis (the “Interest
Rate”). All accrued interest shall be due and payable in full at maturity (whether
on the Maturity Date (as defined below) or the Extended Maturity Date (as defined below), as applicable), conversion or
payment in full of this Note, as provided herein. All cash payments received by the Holder in respect of this Note shall be applied
first to accrued interest and thereafter to the repayment of the outstanding Principal Amount. If converted, all accrued interest
shall be paid in the securities into which this Note shall convert.

 

2.Maturity
Date and Extended Maturity Date.

 

(a)Unless
paid in full in cash or converted in accordance with the terms of this Note prior to such date, the outstanding Principal Amount
plus all accrued and unpaid interest thereon shall be due and payable in full on September 15, 2015 (the “Maturity
Date”). Notwithstanding the foregoing, the Company may elect, at its option and in its sole discretion, to extend
the Maturity Date (“Extended Maturity Date”) to September 15, 2016 upon thirty (30) days’ notice to the
Holder delivered prior to the Maturity Date, subject to the issuance by the Company to the Holder of one or more warrants, exercisable
for a period of one year from the date of issuance, to purchase the Company’s common stock, par value $0.001 (“Common
Stock”) exercisable at $0.035 per share of Common Stock, into that number of shares of Common Stock calculated as the
product of the Principal Amount of the Note plus any accrued and unpaid interest, multiplied by 50% and then dividing that product
by $0.035 (“Extended Maturity Date Warrant”). The Extended Maturity Date Warrant shall otherwise be substantially
similar in form and substance to the Warrant issued in connection with this Note.

 

    	 

    	 

    

 

(b)At
any time (including, without limitation, in lieu of demanding payment at maturity (whether on
the Maturity Date or the Extended Maturity Date, as applicable)), the Holder may elect, at its option and in its sole discretion,
to convert the outstanding Principal Amount plus accrued and unpaid interest under this Note into a number of shares of the Company’s
common stock (the “Common Stock”) equal to the quotient obtained by dividing the outstanding Principal
Amount plus any accrued and unpaid interest under this Note by $0.035, subject to adjustment for stock splits, reverse stock splits,
common stock dividends, and similar recapitalization events. In the event that the Principal Amount
and accrued interest thereon is not paid in full at maturity (whether on the Maturity Date or the Extended Maturity Date, as applicable),
and the Holder has not exercised its conversion right specified above, to the extent the Note is subject to the Default Rate pursuant
to Section 7 hereof, the Note will continue to be subject to the Default Rate (as defined below). The Company will endeavor to
notify the Holder at least 30 days prior to the Maturity Date or, if applicable, the Extended Maturity Date, of the Company’s
obligation to repay in cash amounts outstanding under the Convertible Note at such time if not previously converted in accordance
with Section 2(b) hereof.

 

3.No
Prepayment. The Company may not prepay this Note in whole or in part without the prior written consent of the Holder except
pursuant to a Qualified Financing.

 

4.Qualified
Financing. In the event of any equity or equity-linked securities financing resulting in gross proceeds to the Company in
an aggregate principal amount of at least $1,000,000.00 (a “Qualified Financing”), at a Common Stock
equivalent price of $0.035 or greater, the outstanding Principal Amount and accrued and unpaid interest under the Notes shall
automatically convert into the Company’s Common Stock, such conversion to be effective concurrently with the closing of
the Qualified Financing.

 

5.Acquisition.
Concurrently with the closing of a merger, share exchange, consolidation, acquisition of all or substantially all of the assets
or stock, reorganization or liquidation of the Company that results in the stockholders of the Company immediately prior to such
transaction owning less than 50% of the voting capital stock of the Company (or its successor or parent corporation) immediately
after the transaction or, in the case of a sale of assets or liquidation, the Company owning after the transaction less than substantially
all of the assets owned by the Company prior to the transaction (other than an issuance of equity securities for the primary purpose
of raising capital) or any other event that constitutes a “Capital Change” under the Company’s Second Restated
Certificate of Incorporation, as it may be amended, restated or otherwise modified from time to time (any such transaction, an
“Acquisition”) that occurs prior to the satisfaction in full (whether by payment or conversion) by the
Company of the outstanding Principal Amount and all accrued and unpaid interest under this Note, the Company may elect to either
(i) convert the outstanding Principal Amount and all accrued and unpaid interest hereunder into shares of Company stock in accordance
with the provisions of Section 2(b), or (ii) accelerate the Maturity Date (or, if applicable, the Extended Maturity Date)
to the date of closing of the Acquisition transaction and thereupon the Company shall be obligated to pay holder an amount equal
to then outstanding Principal Amount plus any accrued and unpaid interest in full satisfaction of its obligations hereunder. In
conjunction with such conversion in connection with an Acquisition, the Holder shall execute all documentation required to be
executed by other stockholders of Company in connection with the Acquisition, including, without limitation, escrow, indemnification
and other similar agreements.

 

    	2

    	 

    

 

6.Effect
of Conversion. Upon conversion of this Note into shares of the Company’s Common Stock in accordance with the terms hereof,
and, if and as applicable, upon receipt by the Company of any required documentation from the purchaser, exchange agent or transfer
agent, as the case may be, the Company shall promptly issue and deliver to the Holder (a) a certificate or certificates for the
shares issuable upon such conversion of this Note (“Conversion Shares”). Such conversion shall be deemed
to have been made, in the case of conversion pursuant to Section 2(b), as of the close of business on the Maturity Date (or the
Extended Maturity Date, if applicable) or such earlier date as may be designated by the Holder in accordance with Section 2(b);
in the case of a Qualified Financing, simultaneously with the completion of the initial closing of the Qualified Financing; and
in the case of an Acquisition, immediately prior to the closing of such Acquisition (in each case, the “Conversion
Time”). The Holder shall be treated for all purposes as the record holder of such Conversion Shares as of the Conversion
Time. No fractional Conversion Shares shall be issued in connection with any conversion of this Note, and any fractional shares
shall be rounded up or down to the nearest whole share in lieu of any such fraction (and any fraction representing one-half of
a share shall be rounded up). The issuance of Conversion Shares to the Holder upon conversion of this Note in accordance with
its terms shall constitute indefeasible satisfaction in full of the obligations of the Company under this Note.

 

7.
Event of Default. If the Company (a) fails to pay when due any principal or interest payment on the due date hereunder,
and such payment shall not have been made within five (5) days of the Company’s receipt of the Holder’s written notice
to the Company of such failure to pay; (b) materially breaches any other covenant contained in this Note and such failure continues
for 30 days after the Company receives written notice of such material breach from the Holder; (c) voluntarily files for bankruptcy
protection or makes a general assignment for the benefit of creditors; or (d) is the subject of an involuntary bankruptcy petition
and such petition is not dismissed within 60 days, then in any such case the Holder may, upon written notice to the Company (any
of the foregoing, an “Event of Default”), declare the Note in default and immediately due and payable
in full. From that date forward, at the option of and upon written notice from the Holder, this Note shall bear interest at a
rate of the lower of twelve percent (12%) per annum or the highest rate allowed by applicable law (such lower rate, the “Default
Rate”), until the earlier of payment in full, conversion, waiver of any applicable Event of Default or rescission of
such notice.

 

8.
Information Rights. So long as this Note is outstanding, the Company agrees to deliver to Holder any material information
provided to stockholders of the Company in their capacity as such and, upon request of Holder, such other material information
that a stockholder of the Company would be entitled to receive by law or under the charter documents of the Company.

 

9.
Notices. All notices provided for in this Note shall be in writing and delivered in accordance with the Purchase Agreement.

 

10.
Governing Law. This Note, and any disputes arising under this Note, will be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any conflict of laws principle to the contrary. The Company and the
Holder agree that the state and federal courts located in New York County, New York will have exclusive jurisdiction over any
dispute between them arising out of this Note.

 

    	3

    	 

    

 

11.
Assignment. Subject to the restrictions on transfer described in the next sentence, the rights and obligations of the
Company and the Holder shall be binding upon and shall inure to the benefit of their successors, assigns and transferees. Holder
may not assign or otherwise transfer this Note without prior written consent of the Company. No assignment or other transfer of
the Note shall be effective unless a legend has been added to the Note in accordance with Treasury Regulation §1.1275-3(b)
stating that the Note was issued with original issue discount and specifying (i) the dollar amount of such original issue discount,
(ii) the dollar amount of the issue price of the Note, (iii) the issue date of the Note, and (iv) the percentage constituting
the yield to maturity of the Note.

 

12.
Waiver and Amendment. The provisions of this Note may be amended or waived only upon the written consent of the Company,
the Holder and the majority in interest of the then Holders (as determined based on the principal amount then outstanding under
all of the Convertible Notes); provided, however, that no such amendment or waiver may adversely affect any Holder’s
rights without such Holder’s consent.

 

13.
Collection Costs. The Company agrees to pay all costs and expenses, including without limitation reasonable attorney’s
fees, incurred by the Holder in any action brought to enforce the terms of this Note and/or to collect this Note, and in any appeal
thereof.

 

14.
Headings. Headings used in this Note have been included for convenience and ease of reference only, and will not in any
manner influence the construction or interpretation of any provision of this Note.

 

15.
Only Company Liable. In no event shall any stockholder, officer, director or employee of the Company be liable for any
amounts due or payable pursuant to this Note.

 

16.
Counterparts. The Note may be executed in two or more counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.

 

***

 

    	4

    	 

    

  

The Company
has caused this Convertible Note to be signed by its duly authorized officer and dated the day and year first above written.

 

CORTEX
PHARMACEUTICALS, INC.

 

	By:
    	 	 
	 	 	 
	Name:
    	 	 
	 	 	 
	Title:
    	 	 

 

(Signature
Page to Form of Convertible Note)

 

    	 

    	 

    

 

	AGREED
    AND ACCEPTED:	 
	 	 	 
	[HOLDER]	 
	 	 	 
	Name:
    	 	 
	 	 	 
	Address:
    	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Email:	 	 

 

(Signature
Page to Form of Convertible Note)

 

    	 

    	 

    

  

EXHIBIT
B

 

FORM
OF WARRANT

[see
attached]

 

    	5

    	 

    

 

EXHIBIT
B

FORM
OF WARRANT

 

NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAW, AND NO INTEREST HEREIN OR THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS COVERING ANY SUCH TRANSACTION, (B) THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES (CONCURRED
IN BY COUNSEL FOR THE COMPANY) THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF
THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.

 

WARRANT
TO PURCHASE COMMON STOCK

 

cortex
pharmaceuticals, inc.

 

	Warrant
    Number: [_______]	Initial
    Exercise Date: [_________], 2014

 

THIS
WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that, for value received, [______________] or its
permitted assigns (the “Holder”) is entitled, upon the terms and conditions hereof, and subject to the limitations
on exercise hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and
on or prior to 5:00 p.m. New York time on September 15, 2015 (the “Termination Date”) but not thereafter, to
subscribe for and purchase from Cortex Pharmaceuticals, Inc., a Delaware corporation (the “Company”), up to [_______]
shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one
share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section
1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that
certain Convertible Note and Warrant Purchase Agreement, dated as of October [__], 2014 (the “Purchase Agreement”),
among the Company and the Investors. This is one of the “Warrants” referred to in the Purchase Agreement.

 

Section
2.Exercise.

 

a)Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on any Business Day (as defined below) on or after the Initial Exercise Date and on or before the Termination Date by delivery
to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder
at the address of the Holder appearing on the books of the Company) of a duly completed and executed facsimile copy of the Notice
of Exercise form annexed hereto (the “Notice of Exercise”). Within three (3) Business Days (as defined below)
following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price (as defined below) for the
shares specified in the applicable Notice of Exercise by wire transfer in immediately available funds or cashier’s check
drawn on a United States bank in immediately available funds. A “Business Day” means any day other than a Saturday
or Sunday or any day that national commercial banks in New York City, New York are authorized or required to close or any day
that the NADSAQ stock markets or any other nationally recognized stock markets are closed. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within three (3) Business Days of the date the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Company, either directly or through its representative, shall maintain,
or cause to be maintained, records showing the number of Warrant Shares purchased and the date of such purchases, which records
shall be deemed to be accurate absent manifest error. The Company shall deliver any objection to any Notice of Exercise within
two (2) Business Days of actual receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder,
the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof.

 

    	6

    	 

    

 

b)Exercise
Price. The exercise price per share of the Common Stock under this Warrant initially shall be $0.035 per share, subject to
adjustment hereunder (including, without limitation, under Sections 2 and 3 hereof) (as adjusted, the “Exercise Price”).

 

c)
Mechanics of Exercise.

 

i.Delivery
of Certificates Upon Exercise. Certificates for shares issuable upon the exercise hereof shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the Holder’s broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system and
such shares are eligible for legend removal, and otherwise by physical delivery to the address specified by the Holder in the
Notice of Exercise on the date that is no more than five (5) Business Days after the latest of (A) the delivery to the Company
of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set
forth above (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been
issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of
such shares for all purposes, as of the latter of the date the Warrant has been exercised and payment to the Company of the Exercise
Price has been made in good funds by either certified check, wire transfer or other similar payment method and all taxes required
to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid.

 

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

 

iii.Rescission
Rights. If the Company fails to transmit, or to cause the transfer agent of the Company to transmit, to the Holder a certificate
or the certificates representing the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder
will have the right to rescind such exercise.

 

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

 

    	7

    	 

    

 

v.Charges,
Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
(the “Assignment Form”) duly executed by the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

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

 

vii.Acquisitions.
If at any time while this Warrant is outstanding there is an Acquisition (as defined below), then the Holder shall receive from
any surviving entity or successor to the Company, in exchange for this Warrant, a new warrant in the surviving entity or successor
to the Company substantially in the form of this Warrant and with an exercise price adjusted to reflect the Common Stock equivalent
price offered in the Acquisition. An “Acquisition” shall mean the closing of a merger, share exchange, consolidation,
acquisition of all or substantially all of the assets or stock, reorganization or liquidation of the Company that results in the
stockholders of the Company immediately prior to such transaction owning less than 50% of the voting capital stock of the Company
(or its successor or parent corporation) immediately after the transaction or, in the case of a sale of assets or liquidation,
the Company owning after the transaction less than substantially all of the assets owned by the Company prior to the transaction
(other than an issuance of equity securities for the primary purpose of raising capital) or any other event that constitutes a
“Capital Change” under the Company’s Second Restated Certificate of Incorporation, as it may be amended, restated
or otherwise modified from time to time. The Holder shall execute all documentation required to be executed by the Company or
the acquirer or successor of the Company in connection with the Acquisition, including, without limitation, escrow, indemnification
and other similar agreements. Subject to and to the extent permitted by applicable law, the Company will endeavor to notify the
Holder of any proposed Acquisition at least 30 days prior to the date of any Acquisition (or such shorter period as reasonably
practicable under the circumstances); provided that the failure to so notify the Holder shall not in any way impair the
Acquisition.

 

Section
3.Certain Adjustments.

 

a)Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant and which shall not include any dividends paid-in-kind in respect to the Series G 1.5% Convertible Preferred
Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that
the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

    	8

    	 

    

 

b)Calculations.
All calculations under this Section 3 shall be made to the nearest 1/100th of a cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

c)Notice
to Holder.

 

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

 

ii.Notice
to Allow Exercise by Holder. If (A) the Company shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock, (B) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights, or (C) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the Company, any of the events in Section 3.(c)ii (A), (B)
or (C) being an “Event”, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register (as defined below) of the Company, at least ten (10) calendar days prior
to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such Event is expected to become effective or close, as applicable, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such Event; provided that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such
notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the Event triggering such notice except as may otherwise be expressly set forth herein.

 

Section
4.Transfer of Warrant.

 

a)Transferability.
Subject to compliance with any applicable securities laws, the conditions set forth in Section 4(d) hereof, and the conditions
of the Purchase Agreement (including, without limitation, the Company’s prior written consent in accordance with the Purchase
Agreement), pursuant to which this Warrant was purchased, this Warrant and all rights hereunder (including, without limitation,
any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the
Company or its designated agent, together with an Assignment Form duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in
the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

    	9

    	 

    

 

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

 

c)Warrant
Register. The Company shall, either directly or through its representative, record or cause to be recorded, this Warrant,
upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the
record Holder hereof from time to time, which Warrant Register shall be deemed to be accurate absent manifest error. The Company
may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant satisfy any other reasonable conditions established by the Company, including, without
limitation, a legal opinion reasonably acceptable to the Company with respect to such transfer.

 

e)Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act. The Holder acknowledges that the Warrant Shares
will not be registered under the Securities Act of 1933, as amended, or any applicable statute or foreign securities law, and
will therefore not be freely transferable.

 

Section
5.Miscellaneous.

 

a)No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).

 

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

 

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

 

    	10

    	 

    

 

d)Authorized
Shares.

 

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

 

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

 

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

 

e)Jurisdiction.
This Warrant is a contract between the Company and the Holder and its terms shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be performed in the State of New York, without giving effect
to any choice or conflict of law provision or rule of that or any other jurisdiction. The Company and each Holder irrevocably
consent to the jurisdiction of the United States federal courts and the state courts located in New York City, in any suit or
proceeding based on or arising under this Warrant and irrevocably agree that all claims in respect of such suit or proceeding
may be determined in such courts. The Company and each Holder irrevocably waives the defense of an inconvenient forum to the maintenance
of such suit or proceeding in such forum. The Company further agrees that service of process upon the Company mailed by first
class mail shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. Nothing
herein shall affect the right of any Holder to serve process in any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit
on such judgment or in any other lawful manner.

 

    	11

    	 

    

 

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

 

g)Nonwaiver.
No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date.

 

h)Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be deemed
delivered the day after the date sent if sent by overnight courier, the same day sent if sent by facsimile transmission or email
with confirmation of receipt by the Holder, or three (3) days after deposit with the US Postal Service if sent via certified mail
or first class mail if sent to the Holder at the address, facsimile number or email address provided by the Holder as of the last
date on which Holder communicated in writing such contact information to the Company.

 

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

 

j)Successors
and Assigns. Subject to applicable securities laws, the provisions and limitations of the Purchase Agreement (including, without
limitation, the Company’s prior written consent in accordance with the Purchase Agreement) and this Warrant, and the rights
and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the
Company and the successors and permitted assigns of Holder. Such successors or permitted assigns of the Holder shall be deemed
to be the Holder for all purposes hereunder. The provisions of this Warrant are intended to be for the benefit of any Holder from
time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares. Nothing herein, express or implied,
is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever,
under or by reason of this Warrant.

 

k)Entire
Agreement. This Warrant constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject
matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with
respect to such subject matter.

 

l)Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, the Holder, and
the majority in interest of the then Holders (as determined based on the number of Warrant Shares for which the then-outstanding
Warrants are exercisable); provided, however, that no such amendment or waiver may adversely affect any Holder’s
rights without such Holder’s consent.

 

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

 

    	12

    	 

    

 

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

 

o)Waiver
of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve
complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have
to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated
hereby.

  

(Signature
Page Follows)

 

    	13

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the ___ day
of _____________, 2014.

   

	 	CORTEX
    PHARMACEUTICALS, INC.
	 	 	 
	 	By:	 
	 	Name:	Arnold S. Lippa
	 	Title:	Chief Executive
    Officer and Executive Chairman

 

    	 

    	 

    

  

	AGREED
    AND ACCEPTED:	 
	 	 	 
	[HOLDER]	 
	 	 	 
	Name:
    	 	 
	 	 	 
	Address:
    	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Email:	 	 

 

    	 

    	 

    

 

NOTICE
OF EXERCISE

 

To:CORTEX
PHARMACEUTICALS, inc.

 

(1)The
undersigned, pursuant to the provisions set forth in the attached Warrant No. ______, hereby irrevocably elects to purchase (check
applicable box):

 

[  ] ____________ shares of
the Common Stock of Cortex Pharmaceuticals, Inc. covered by such Warrant;

 

(2)The
undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant.
Such payment takes the form of (check applicable box or boxes):

 

[  ] $__________
in lawful money of the United States;

 

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

 

_________________________________________________

 

_________________________________________________

(please
print or type name and address)

 

_________________________________________________

(please
insert social security or other identifying number)

 

The
Warrant Shares shall be delivered to the following:

 

__________________________________________________

 

__________________________________________________

 

__________________________________________________

(please
print or type name and address)

 

and
if such number of shares of Common Stock shall not be all the shares evidenced by this Warrant Certificate, that a new Warrant
for the balance of such shares be registered in the name of, and delivered to, Holder.

_______________________________

  

The
Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

 

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

 

[SIGNATURE
OF HOLDER]

 

Name
of Investing Entity: _________________________________________________________________

 

Signature
of Authorized Signatory of Investing Entity: ___________________________________________

 

Name
of Authorized Signatory: _____________________________________________________________

 

Title
of Authorized Signatory: ______________________________________________________________

 

Date:
__________________________________________________________________________________

  

    	 

    	 

    

 

ASSIGNMENT
FORM

 

(To
assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

  

FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned
to

 

_______________________________________________
whose address is

 

_______________________________________________________________.

 

_______________________________________________________________

 

Dated:
______________, _______

 

 

Holder’s
Signature: _____________________________

 

Holder’s
Address: _____________________________

 

_____________________________

  

Assignee’s
Signature: ___________________________________________

 

 

Company’s
Signature: ___________________________________________

 

NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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