Document:

NTGR-EX10.22_2014.12.31-10K

NETGEAR, INC.

AMENDED AND RESTATED 
CHANGE OF CONTROL AND SEVERANCE AGREEMENT

This Amended and Restated Change of Control and Severance Agreement (the “Agreement”) is entered into as of September 18, 2014, (the “Effective Date”) by and between NETGEAR, Inc. (the “Company”), and Jeff Capone (“Executive”).

WHEREAS, Executive had previously been a full-time employee and, as of the Effective Date, will transition to a reduced work schedule of thirty (30) hours per week and Executive’s employment pursuant to this reduced work schedule is scheduled to end on the six month anniversary of the Effective Date at which time his employment with the Company will terminate, unless it has been terminated earlier as set forth in the Agreement; and 

WHEREAS, the Company and Executive desire to amend and restate the Agreement consistent with the Executive’s revised transitional role.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

		
	1.
	Duties and Scope of Employment.

(a)Positions and Duties. As of the Effective Date, Executive is serving as Chief Technology Officer of the Company. Executive will render such business and professional services in the performance of his duties, consistent with Executive’s position within the Company, as shall reasonably be assigned to him by the Company’s Chief Executive Officer and/or Board of Directors (the “Board”). As of the Effective Date, Executive will be expected to provide services to the Company for at least thirty (30) hours per week.  This Agreement will have a term of six months commencing upon the Effective Date (the “Transition Term”), but may be terminated earlier by either party, subject to payment of applicable severance benefits upon qualified terminations of employment in accordance with Section 6.  Executive agrees and acknowledges that the termination of his employment on the anniversary of the Effective Date will not entitle him to any severance benefits under Section 6.

(b)Obligations. During the Transition Term, Executive will perform his duties faithfully and to the best of his ability and will devote his business efforts and time to the Company as necessary to perform his duties hereunder. For the duration of the Transition Term, Executive agrees not to actively engage in any other employment, occupation or consulting activity that would be competitive with the Company’s businesses.  Notwithstanding any provisions in this agreement, the Company acknowledges and agrees that Executive will conduct business activities outside the 30 hours per week limit set forth in this Agreement ("Extracurricular Time").   Executive shall conduct activities in the Extracurricular Time exclusively outside of working hours for the Company, and without any use of Company time, equipment, resources, or facilities.  Any activities in the Extracurricular Time, including but not limited to business activities, consulting work, advising companies, investing in companies, and research activities ("Extracurricular Activities") becomes the sole and unencumbered intellectual property of Executive so long as such work (1) does not use the Company’s time, equipment, supplies, facilities, or other property; (2) does not use the Company’s intellectual property, including trade secrets; (3) does not relate to the Company’s current business or to its 

demonstrably anticipated research and development; and (4) does not directly compete with products or services offered by the Company. Such Extracurricular Activities will include inventions, reducing to practice inventions, improvements, developments, ideas or discoveries whether patentable or unpatentable (collectively hereinafter referred to as "Inventions"), and shall be the sole intellectual property of Executive.

2.At-Will Employment. The parties agree that Executive’s employment with the Company will be “at-will” employment and may be terminated at any time with or without cause or notice. Executive understands and agrees that neither his job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of his employment with the Company.

3.    Compensation.

(a)Base Salary. During the Transition Term, the Company will pay Executive as compensation for his services a base salary at the annualized rate of Two Hundred Six Thousand Two Hundred Fifty Dollars and Thirty-Three Cents ($206,250.33) (the “Base Salary”) (for clarity, this is seventy-five (75%) of Executive’s annual base salary immediately prior to the Effective Date). The Base Salary will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholding. 

(b)MBO Bonus. Executive will be eligible to receive an annual target bonus for fiscal 2014.  The annual bonus opportunity will equal fifty percent (50%) of Executive’s actual base salary earned in fiscal 2014.  For clarity, the annual bonus opportunity will be up to fifty percent (50%) of (i) the base salary earned in 2014 prior to the Effective Date as a full-time employee; plus (ii) the Base Salary earned in 2014 during the Transition Term. Payment of the annual bonus will be based upon the Company’s achievement of various financial and/or other goals established by the Board. All MBO bonuses will be subject to applicable withholding and taxes.  If the Transition Term ends prior to the end of fiscal 2014, then Executive will continue to be eligible to receive a portion of the bonus for fiscal 2014 determined in accordance with the same terms and conditions that apply to other senior executives, except for continued employment through the end of the performance period or payment date, and pro-rated based on the actual base salary earned in 2014.  Executive’s annual bonus will be paid at the same time as similarly situated Company executives and no later than March 15, 2015. Executive will not be eligible for a bonus for fiscal 2015. 

(c)    Equity Awards. Executive has been granted (i) options to purchase shares of the Company’s common stock under the Company’s 2006 Long Term Incentive Plan (the “2006 Plan”) (the “Options”); and (ii) awards of restricted stock units, each unit representing the right to receive a share of Company common stock on the date it becomes vested (the “RSU Awards”).  The Options will continue to be subject to the terms, definitions and provisions of the 2006 Plan and the stock option agreement(s) by and between Executive and the Company (the “Option Agreement(s)”), which are incorporated herein by reference.  The RSU Awards will continue to be subject to the terms, definitions and provisions of the 2006 Plan and the RSU Award grant agreement(s) between Executive and the Company (the “RSU Agreement(s)”), which are incorporated herein by reference.  Executive shall also be subject to the Company’s Director and Officer stock ownership guidelines, which is also incorporated by reference hereto.  Executive’s Options and RSU Awards will continue to vest on the same vesting schedule in effect prior to the 

Effective Date during the Transition Term.  Executive understands and agrees that the Company does not expect to grant him any additional equity awards.

(d)    Retention Bonus. In consideration for Executive’s continued employment with the Company, Executive will be eligible to earn a retention bonus of Sixty Three Thousand Four Hundred Sixty One and 64/100 Dollars ($63,461.64) (the “Retention Bonus”) on the six month anniversary of the Effective Date provided that Executive has been continuously employed with Company since the Effective Date.   
    
4.    Employee Benefits. During the Transition Term, Executive will be entitled to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company’s group medical, dental, vision, and disability plans, subject to Executive’s continuing to satisfy the eligibility criteria of such benefit plans. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

5.        Expenses. The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.  

6.        Severance.

(a)Involuntary Termination. If Executive’s employment with the Company terminates other than voluntarily, or for death, disability or for “Cause” (as defined in Paragraph 9 of this Agreement), and Executive signs and does not revoke a standard release of claims (as described further in Section 6(b) below) with the Company, then Executive shall be entitled to receive severance payments at Executive’s final base salary rate, less applicable withholding, for a period equal to the lesser of: (i) three months; or (ii) the remainder of the Transition Term (such lesser period, the “Severance Period”). Severance payments will be made in accordance with the Company’s normal payroll procedures.  During the Severance Period, Company will reimburse Executive and his family for COBRA premiums, assuming Executive remains eligible during the entire Severance Period and Executive has timely elected COBRA coverage. In addition, if Executive’s employment terminates other than voluntarily or for “Cause” (as defined herein), Executive’s time-based equity awards will accelerate as to shares that would have vested had Executive remained continuously employed through the end of the Transition Term.

(b)Timing of Release.  The receipt of any severance benefits pursuant to Section 6(a) will be subject to Executive signing and not revoking a standard release of claims agreement (the “Release”), and provided that such Release is effective within sixty (60) days following the termination of employment or such earlier period as required by the Release.  To become effective, the Release must be executed by the Executive and any revocation periods (as required by statute, regulation, or otherwise) must have expired without the Executive having revoked the Release.  In addition, no severance will be paid or provided until the Release actually becomes effective.

             7.          Voluntary Termination; Termination for Cause. If Executive’s employment with the Company terminates voluntarily by Executive or for Cause by the Company, then all vesting of Options, RSU Awards, and all other options and restricted stock awards granted to Executive will terminate immediately and all payments of compensation by the Company to Executive hereunder and all 

obligations with respect thereto (including, without limitations, with respect to base salary, bonuses, employee benefits, relocation and temporary living reimbursements and other expense reimbursements) will terminate immediately (except as to amounts already earned).

8.          Intentionally Omitted.

9.    Definition of Cause. For purposes of this Agreement, “Cause” is defined as (i) an act of dishonesty made by Executive in connection with Executive’s responsibilities as an employee, (ii) Executive’s conviction of, or plea of nolo contendere to, a felony, (iii) Executive’s gross misconduct, or (iv) Executive’s continued violation of his employment duties after Executive has received a written demand for performance from the Company which specifically sets forth the factual basis for the Company’s belief that Executive has not substantially performed his duties.

10.    Confidential Information. Executive has entered into the Company’s standard Confidential Information and Invention Assignment Agreement (the “Confidential Information Agreement”) upon commencing employment, and Executive agrees to continue to abide by its terms during and after his employment with the Company.

11.    Non-Solicitation. Until the date one (1) year after the termination of Executive’s employment with the Company for any reason, Executive agrees and acknowledges that Executive’s right to receive the severance payments set forth in Section 6 (to the extent Executive is otherwise entitled to such payments) shall be conditioned upon Executive not either directly or indirectly soliciting, inducing, attempting to hire, recruiting, encouraging, taking away, hiring any employee of the Company or causing an employee to leave his or her employment either for Executive or for any other entity or person.

12.    Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

13.    Notices. All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given (i) on the date of delivery if delivered personally, (ii) one (1) day after being sent by a well established commercial overnight service, or (iii) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:

If to the Company:

NETGEAR, Inc.
350 East Plumeria Drive
San Jose, CA 95134
Attn: Legal Department

If to Executive:
    
at the last residential address known by the Company.

14.    Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision.

15.    Arbitration.
    
(a)    General. In consideration of Executive’s service to the Company, its promise to arbitrate all employment related disputes and Executive’s receipt of the compensation, pay raises and other benefits paid to Executive by the Company, at present and in the future, Executive agrees that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise) arising out of, relating to, or resulting from Executive’s service to the Company under the Agreement or otherwise or the termination of Executive’s service with the Company, including any breach of this Agreement, shall be subject to binding arbitration under the Arbitration Rules set forth in California Code of Civil Procedure Section 1280 through 1294.2, including Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which Executive agrees to arbitrate, and thereby agrees to wave any right to a trial by jury, include any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the California Fair Employment and Housing Act, the California Labor Code, claims of harassment, discrimination or wrongful termination and any statutory claims. Executive further understands that this Agreement to arbitrate also applies to any disputes that the Company may have with Executive.

(b)    Procedure. Executive agrees that any arbitration will be administered by the American Arbitration Association (“AAA”) and that a neutral arbitrator will be selected in a manner consistent with its National Rules for the Resolution of Employment Disputes. The arbitration proceedings will allow for discovery according to the rules set forth in the California Code of Civil Procedure. Executive agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Executive agrees that the arbitrator shall issue a written decision on the merits. Executive also agrees that the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs, available under applicable law. The Parties understand that the Arbitrator shall issue a written decision in support of his award. Executive understands the Company will pay for any administrative or hearing fees charged by the arbitrator or AAA except that Executive shall pay the first $200.00 of any filing fees associated with any arbitration Executive initiates. Executive agrees that the arbitrator shall administer and conduct any arbitration in a manner consistent with the Rules and that to the extent that the AAA’s National Rules for the Resolution of Employment Disputes conflict with the Rules, the Rules shall take precedence.

(c)    Remedy. Except as provided by the Rules, arbitration shall be the sole, exclusive and final remedy for any dispute between Executive and the Company. Accordingly, except as provided for by the Rules, neither Executive nor the Company will be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Company policy, and the arbitrator shall not order or require the Company to adopt a policy not otherwise required by law which the Company has not adopted.

(d)    Availability of Injunctive Relief. In addition to the right under the Rules to petition the court for provisional relief, Executive agrees that any party may also petition the court for injunctive relief where either party alleges or claims a violation of this Agreement or the Confidentiality Agreement or any other agreement regarding trade secrets, confidential information, nonsolicitation or Labor Code §2870. In the event either party seeks injunctive relief, the prevailing party shall be entitled to recover reasonable costs and attorneys fees.

(e)    Administrative Relief. Executive understands that this Agreement does not prohibit Executive from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the workers’ compensation board. This Agreement does, however, preclude Executive from pursuing court action regarding any such claim.

(f)    Voluntary Nature of Agreement. Executive acknowledges and agrees that Executive is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive further acknowledges and agrees that Executive has carefully read this Agreement and that Executive has asked any questions needed for Executive to understand the terms, consequences and binding effect of this Agreement and fully understand it, including that Executive is waiving Executive’s right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity to seek the advice of an attorney of Executive’s choice before signing this Agreement.

17.    Integration. This Agreement, together with the 2006 Plan, Option Agreement(s), RSU Agreement(s) and the Confidential Information Agreement represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in writing and signed by duly authorized representatives of the parties hereto.

18.    Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

19.    Governing Laws. This Agreement will be governed by the laws of the State of California.

20.    Section 409A.

(a)    Notwithstanding anything to the contrary in this Agreement, no Deferred Payments (as defined below) shall be payable until Executive has a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the final regulations and official guidance thereunder (“Section 409A”).  Similarly, no severance payable to Executive, if any, pursuant to this Agreement that would otherwise be exempt from Section 409 pursuant to Treasury Regulation Section 1.409A-1(b)(9) shall be payable until Executive has a “separation from service” within the meaning of Section 409A.
    
(b)    Any severance payments or benefits under this Agreement that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the sixtieth (60th) day following Executive’s separation from service, or, if later, such time as required by Section 20(c).  Any installment payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s separation from service but for the preceding sentence will be paid to Executive on the sixtieth (60th) day following the Executive’s separation from service and the remaining payments shall be made as provided in this Agreement.

(c)    Further, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s separation from service (other than due to death), and the severance payments and benefits payable to Executive, if any, pursuant to the Agreement, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A (together, the “Deferred Payments”), such Deferred Payments that are otherwise payable within the first six (6) months following Executive’s separation from service will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service but prior to the six (6) month anniversary of Executive’s separation from service (or any later delay date), then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment and benefit payable under the Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

(d)    Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments for purposes the Agreement.  Any severance payment that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit shall not constitute Deferred Payments for purposes of the Agreement.  For purposes of this section (d), “Section 409A Limit” will mean the lesser of two (2) times: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during the taxable year preceding the taxable year of Executive’s separation from service as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Executive’s employment is terminated.

(e)    The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided under the Agreement will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply.  Executive and the Company agree to work together in good faith to consider amendments to the Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A.

21.    Acknowledgment. Executive acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

COMPANY:

NETGEAR, INC.

/s/ Patrick Lo            
Patrick Lo                            Date:  September 18, 2014
Chief Executive Officer

EXECUTIVE:

/s/ Jeff Capone                            Date:  September 18, 2014
Jeff CaponeExhibit 4.1

 

[FORM OF SENIOR
SECURED CONVERTIBLE NOTE]

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, 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.
ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 16(a) HEREOF. THE
PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE
AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

 

Enerpulse
Technologies, Inc.

 

SENIOR
SECURED CONVERTIBLE NOTE

  

	Issuance Date:  February __, 2015	Original Principal Amount: U.S. $[          ]

 

FOR VALUE RECEIVED,
Enerpulse Technologies, Inc., a Nevada corporation (the "Company"), hereby promises to pay to [buyer]
or registered assigns (the "Holder") in cash and/or in shares of Common Stock (as defined below) the amount set
out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise,
the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise
(in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal
at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date") until the
same becomes due and payable, whether upon the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in
accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued
in exchange, transfer or replacement hereof, this "Note") is one of an issue of Senior Secured Convertible Notes
issued pursuant to the Securities Purchase Agreement on the Closing Date (collectively, the "Notes" and such other
Senior Secured Convertible Notes, the "Other Notes"). Certain capitalized terms used herein are defined
in Section 28.

 

    	 

    	 

    

 

(1)            PAYMENTS
OF PRINCIPAL; PREPAYMENT. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal and accrued and unpaid Interest on such Principal. The "Maturity Date" shall be February [__],
20181 (the "Scheduled Maturity Date"),
as may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined in Section
4(a)) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) and (ii) through
the date that is ten (10) Business Days after the consummation of a Change of Control in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date; provided,
that no Interest shall accrue hereunder from and after the Scheduled Maturity Date if the Maturity Date has been extended at the
Holder's option pursuant to clause (ii) above. Other than as specifically permitted by this Note, the Company may not prepay any
portion of the outstanding Principal or accrued and unpaid Interest on Principal, if any.

 

(2)            INTEREST.

 

 (a)   Interest
on this Note shall commence accruing on the Issuance Date at the Interest Rate and shall be computed on the basis of a 360-day
year and twelve 30-day months and shall be payable in arrears on the Maturity Date. Interest shall be payable on the Maturity Date,
to the record holder of this Note on the Maturity Date in shares of Common Stock ("Interest Shares") so long as
there has been no Equity Conditions Failure during the period from the Interest Notice Date (as defined below) through the Maturity
Date; provided, however, that the Company may, at its option following written notice to the Holder, pay Interest
on the Maturity Date in cash ("Cash Interest") or in a combination of Cash Interest and Interest Shares. The Company
shall deliver a written notice (the "Interest Election Notice") to each holder of the Notes on or prior to the
Maturity Notice Due Date (the date such notice is delivered to the Holder and all holders of the Other Notes, the "Interest
Notice Date") which notice (i) either (a) confirms that Interest to be paid on the Maturity Date shall be paid entirely
in Interest Shares, or (b) elects to pay Interest on the Maturity Date as Cash Interest or a combination of Cash Interest and Interest
Shares and specifies the amount of Interest that shall be paid as Cash Interest and the amount of Interest, if any, that shall
be paid in Interest Shares which amounts, when added together, must at least equal the Interest due on the Maturity Date, and (ii)
if Interest is to be paid, in whole or in part, in Interest Shares, certifies that there has been no Equity Conditions Failure
as of such Interest Notice Date. If there is an Equity Conditions Failure as of the Interest Notice Date, then unless the Company
has elected to pay such Interest as Cash Interest, the Interest Election Notice shall indicate that unless the Holder waives the
Equity Conditions Failure, the Interest shall be paid as Cash Interest. If the Company confirmed (or is deemed to have confirmed
by operation of this Section 2) the payment of the Interest in Interest Shares, in whole or in part, and if there was no Equity
Conditions Failure as of the Interest Notice Date (or is deemed to have certified that there has been no Equity Conditions Failure
in connection with such Interest payment in Interest Shares by operation of this Section 2) but an Equity Conditions Failure occurred
between the Interest Notice Date and any time prior to the Maturity Date (the "Interest Interim Period"), the
Company shall provide the Holder a subsequent notice to that effect indicating that unless the Holder waives the Equity Conditions
Failure, the Interest shall be paid as Cash Interest. If there is an Equity Conditions Failure (which is not waived in writing
by the Holder) during the Interest Interim Period, then at the option of the Holder, the Holder may require the Company to pay
the amount of Interest payable on the Maturity Date as Cash Interest. Interest to be paid on the Maturity Date in Interest Shares
shall be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section
3(a)) of Common Stock equal to (i) the amount of Interest payable on the Maturity Date less any Cash Interest paid, divided by
(ii) the Interest Conversion Price in effect on the Maturity Date. If the Company does not timely deliver an Interest Election
Notice in accordance with this Section 2(a), then the Company shall be deemed to have delivered an irrevocable Interest Election
Notice confirming the payment of Interest in Interest Shares and shall be deemed to have certified that in connection with the
delivery of Interest Shares on the Maturity Date no Equity Conditions Failure has occurred. Except as expressly provided in this
Section 2, the Company shall pay the Interest in Interest Shares and/or Cash Interest pursuant to this Section 2 and the corresponding
Interest amounts of the Other Notes pursuant to the corresponding provisions of the Other Notes in the same ratio of the Interest
Shares and/or Cash Interest hereunder.

 

 

1
Insert date that is thirty-six (36) months immediately following the Issuance Date.

 

    	- 2 -

    	 

    

 

 (b)   When
any Interest Shares are to be paid on the Maturity Date, the Company shall (i) (a) provided that the Company's transfer agent (the
"Transfer Agent"), if any, is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer Program, credit such aggregate number of Interest Shares to which the Holder shall be entitled to the Holder's
or its designee's balance account with DTC through its Deposit/Withdrawal At Custodian system, or (b) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer Program or if the Company does not have a transfer agent, issue
and deliver on the Interest Notice Date and the Maturity Date, to the address set forth in the register maintained by the Company
for such purpose pursuant to the Securities Purchase Agreement or to such address as specified by the Holder in writing to the
Company at least two (2) Business Days prior to the Maturity Date a certificate, registered in the name of the Holder or its designee,
for the number of Interest Shares to which the Holder shall be entitled, and (ii) pay to the Holder, in cash by wire transfer of
immediately available funds, the amount of any Cash Interest.

 

 (c)   Prior
to the payment of Interest on the Maturity Date, Interest on this Note shall accrue at the Interest Rate and be payable by way
of inclusion of the Interest in the Conversion Amount (as defined in Section 3(b)(i)) on each Share Delivery Date (as defined in
Section 3(c)(i)) in accordance with Section 3(b)(i) and on each Redemption Date in accordance with Section 4(b) or Section 5(b),
as applicable. From and after the occurrence and during the continuance of an Event of Default, the Interest Rate shall be increased
to fourteen percent (14.0%). In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the date of such cure; provided, that the Interest as calculated and unpaid at
such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days
after the occurrence of such Event of Default through and including the date of cure of such Event of Default; provided,
further, that for the purpose of this Section 2, such Event of Default shall not be deemed cured unless and until any accrued
and unpaid Interest shall be paid to the Holder, including, without limitation, Interest accrued at the increased rate of fourteen
percent (14.0%). The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of Interest
Shares pursuant to this Section 2.

 

    	- 3 -

    	 

    

 

(3)            CONVERSION
OF NOTES. At any time or times after the Issuance Date, this Note shall be convertible into shares of the Company's common
stock, par value $0.001 per share (the "Common Stock"), on the terms and conditions set forth in this Section
3.

 

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

 

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

 

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

 

(ii)         "Conversion
Price" means, as of any Conversion Date or other date of determination, $0.20 per share, subject to adjustment as provided
herein.

 

 (c)           Mechanics
of Conversion.

 

(i)          Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"),
the Holder shall (A) transmit by facsimile or electronic mail (or otherwise deliver), for receipt on or prior to 11:59 p.m., New
York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion
Notice") to the Company and (B) if required by Section 3(c)(iii), surrender this Note to a common carrier for delivery
to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in
the case of its loss, theft or destruction). On or before the second (2nd) Business Day following the date of receipt of a Conversion
Notice, the Company shall transmit by facsimile or electronic mail a confirmation of receipt of such Conversion Notice to the Holder
and the Transfer Agent. On or before the third (3rd) Trading Day following the date of receipt of a Conversion Notice (the "Share
Delivery Date"), the Company shall (x) provided that the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program and the Conversion Shares are subject to an effective registration statement in favor of the Holder
or at a time when Rule 144 would be available for immediate resale of the Conversion Shares by the Holder, credit such aggregate
number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC
through its Deposit Withdrawal At Custodian system or (y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program or the Conversion Shares are not subject to an effective registration statement in favor of the Holder
or at a time when Rule 144 would not be available for immediate resale of the Conversion Shares by the Holder, issue and deliver
to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion
as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no event later than five (5) Business Days after receipt
of this Note and at its own expense, issue and deliver to the Holder a new Note (in accordance with Section 16(d)) representing
the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion
of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion
Date, irrespective of the date such Conversion Shares are credited to the Holder's account with DTC or the date of delivery of
the certificates evidencing such Conversion Shares, as the case may be.

 

    	- 4 -

    	 

    

 

(ii)         Company's
Failure to Timely Convert. If the Company shall fail on or prior to the Share Delivery Date to issue and deliver a certificate
to the Holder, if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program or the shares of
Common Stock to which the Holder is entitled upon the Holder's conversion of any Conversion Amount are not eligible to be issued
without a restrictive legend pursuant to Section 2(g) of the Securities Purchase Agreement, or credit the Holder's balance account
with DTC, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program and the shares of Common
Stock to which the Holder is entitled upon the Holder's conversion of any Conversion Amount are eligible to be issued without a
restrictive legend pursuant to Section 2(g) of the Securities Purchase Agreement, for the number of shares of Common Stock to which
the Holder is entitled upon the Holder's conversion of any Conversion Amount (a "Conversion Failure") or on any
date of the Company's obligation to deliver shares of Common Stock as contemplated pursuant to clause (y) below, then, in addition
to all other remedies available to the Holder, (X) the Holder, upon written notice to the Company, may void its Conversion Notice
with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant
to such Conversion Notice; provided that the voiding of a Conversion Notice shall not affect the Company's obligations to
make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise and (Y) if
on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction
of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a
"Buy-In"), then the Company shall, within three (3) Trading Days after the Holder's request and in the Holder's
discretion, either (x) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at
which point the Company's obligation to issue and deliver such certificate or credit the Holder's balance account with DTC for
the shares of Common Stock to which the Holder is entitled upon the Holder's conversion of the applicable Conversion Amount shall
terminate, or (y) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares
of Common Stock or credit the Holder's balance account with DTC for such shares of Common Stock and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B)
the Closing Bid Price of the Common Stock on the Conversion Date. For the purpose of this Section 3(c)(ii), a Mandatory Conversion
Date shall also deemed to be a Share Delivery Date.

 

    	- 5 -

    	 

    

 

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

 

    	- 6 -

    	 

    

 

(iv)        Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from this Note and one or more holder
of Other Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of this Note and the
Other Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from the Holder and each holder of Other
Notes electing to have this Note or the Other Notes converted on such date a pro rata amount of such holder's portion of the Note
and its Other Notes submitted for conversion based on the Principal amount of this Note and the Other Notes submitted for conversion
on such date by such holder relative to the aggregate Principal amount of this Note and all Other Notes submitted for conversion
on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a
conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve
such dispute in accordance with Section 21.

 

(v)         Mandatory
Conversion. If at any time from and after the Issuance Date, (i) the Closing Bid Price of the Common Stock for any twenty (20)
Trading Days during any thirty (30) consecutive Trading Days following the Issuance Date (the "Mandatory Conversion Measuring
Period") equals or exceeds 300% of the Conversion Price in effect on the Issuance Date (as adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction after the Subscription Date) and (ii) no Equity Conditions
Failure has occurred during the period from the applicable Mandatory Conversion Notice Date through the applicable Mandatory Conversion
Date (each as defined below), the Company shall have the right to require the Holder to convert all or any portion of the Conversion
Amount then remaining under this Note (the "Mandatory Conversion Amount"), as designated in the Mandatory Conversion
Notice on the Mandatory Conversion Date (each as defined below) into fully paid, validly issued and nonassessable shares of Common
Stock in accordance with Section 3(b) hereof at the Conversion Rate as of the Mandatory Conversion Date (as defined below)
(a "Mandatory Conversion"). The Company may exercise its right to require conversion under this Section 3(c)(v)(A)
by delivering within not more than two (2) Trading Days following the end of such Mandatory Conversion Measuring Period a written
notice thereof by facsimile or electronic mail, and overnight courier to all, but not less than all, of the holders of Notes and
the Transfer Agent (the "Mandatory Conversion Notice" and the date all of the holders of this Note and the Other
Notes received such notice is referred to as the "Mandatory Conversion Notice Date"). The Mandatory Conversion
Notice shall be irrevocable. The Mandatory Conversion Notice shall (i) state (a) the Trading Day on which the Mandatory Conversion
shall occur, which Trading Day shall not be less than ten (10) Trading Days nor more than fifteen (15) Trading Days following the
Mandatory Conversion Notice Date (the "Mandatory Conversion Date"), (b) the aggregate Conversion Amount of the
Notes which the Company has elected to be subject to Mandatory Conversion from the Holder and all of the holders of the Other Notes
pursuant to this Section 3(c)(v) (and analogous provisions under the Other Notes), (c) the number of shares of Common Stock to
be issued to the Holder on the Mandatory Conversion Date, (d) the Make-Whole Amount to be paid to the Holder on the Mandatory Conversion
Date in cash by wire transfer of immediately available funds and (e) certify that there has been no Equity Conditions Failure
as of the applicable Mandatory Conversion Notice Date. If the Company confirmed that there was no Equity Conditions Failure as
of the applicable Mandatory Conversion Notice Date but an Equity Conditions Failure occurred between the applicable Mandatory Conversion
Notice Date and any time through the applicable Mandatory Conversion Date (the "Mandatory Conversion Interim Period"),
the Company shall provide the Holder a subsequent notice to that effect. If the Equity Conditions are not satisfied (or waived
in writing by the Holder) during such Mandatory Conversion Interim Period, then the Mandatory Conversion shall be null and void
with respect to all or any part designated by the Holder of the unconverted Mandatory Conversion and the Holder shall be entitled
to all the rights of a holder of this Note with respect to such amount of the Mandatory Conversion Amount. On the Mandatory Conversion
Date the Company shall deliver or shall cause to be delivered to the Holder (1) the number of shares of Common Stock the Holder
is entitled to pursuant to Section 3(b) and (2) deliver to the Holder the Make-Whole Amount in cash by wire transfer of immediately
available funds pursuant to wire instructions provided to the Company by the Holder in writing. Notwithstanding anything to the
contrary in this Section 3(c)(v)(A), until the Mandatory Conversion has occurred, the Mandatory Conversion Amount may be converted,
in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3(c)(i). Notwithstanding the foregoing, the
Company may effect only two (2) Mandatory Conversions during any six (6) month period. All Conversion Amounts converted by the
Holder after the Mandatory Conversion Notice Date shall reduce the Mandatory Conversion Amount of this Note required to be converted
on the Mandatory Conversion Date, unless the Holder otherwise indicates in the applicable Conversion Notice. If the Company elects
to cause a Mandatory Conversion pursuant to Section 3(c)(v), then it must simultaneously take the same action in the same proportion
with respect to the Other Notes.

 

    	- 7 -

    	 

    

 

(d)           Beneficial
Ownership Limitation on Conversions. The Company shall not effect the conversion of any portion of this Note, and the Holder
shall not have the right to convert any portion of this Note, to the extent that after giving effect to such conversion, the Holder
together with the other Attribution Parties collectively would beneficially own in excess of [9.99] [4.99]% (the "Maximum
Percentage") of the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution
Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number
of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion
of this Note beneficially owned by the Holder or any of the other Attribution Parties and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants, including the Other Notes and Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d). For purposes
of this Section 3(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes
of determining the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of the Note without
exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (i) the
Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing
with the SEC, as the case may be, (ii) a more recent public announcement by the Company or (iii) any other written notice by the
Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the "Reported Outstanding
Share Number"). If the Company receives a Conversion Notice from a Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the Holder's
beneficial ownership, as determined pursuant to this Section 3(d), to exceed the Maximum Percentage, the Holder must notify the
Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at any
time, upon the written or oral request of the Holder, the Company shall within two (2) Trading Days confirm orally and in writing
to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the
Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event
that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the other Attribution
Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares
of Common Stock (as determined under Section 13(d) of the Exchange Act), the number of shares so issued by which the Holder's and
the other Attribution Parties' aggregate beneficial ownership exceeds the Maximum Percentage (the "Excess Shares")
shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer
the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase
not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage
will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of Notes that
is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of
this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including
for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d) to the extent necessary to correct
this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership
limitation contained in this Section 3(d) or to make changes or supplements necessary or desirable to properly give effect to such
limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Note.

 

    	- 8 -

    	 

    

 

(4)            RIGHTS
UPON EVENT OF DEFAULT.

 

  (a)           Event
of Default. Each of the following events shall constitute an "Event of Default":

 

(i)          the
failure of the applicable Registration Statement required to be filed pursuant to the Registration Rights Agreement to be filed
within the applicable time period specified in the Registration Rights Agreement or to be declared effective by the SEC on or prior
to the date that is sixty (60) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement),
or, while the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration
Rights Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation,
the issuance of a stop order) or is unavailable to any holder of the Notes for sale of all of such holder's Registrable Securities
in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of ten
(10) consecutive days or for more than an aggregate of thirty (30) days in any 365-day period (other than days during an Allowable
Grace Period (as defined in the Registration Rights Agreement));

 

(ii)         (A)
the suspension of the Common Stock from trading for a period of three (3) consecutive Trading Days or for more than an aggregate
of ten (10) Trading Days in any 365-day period or (B) the failure of the Common Stock to be listed on an Eligible Market;

 

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

 

(iv)        at
any time following the tenth (10th) consecutive Business Day that the Holder's Authorized Share Allocation is less than
125% of the sum of (A) the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the
full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise) and
(B) the number of shares of Common Stock that the Holder would be entitled to receive upon exercise in full of the Holder's Warrants
(without regard to any limitations on exercise set forth in the Warrants);

 

    	- 9 -

    	 

    

 

(v)         the
Company's failure to pay to the Holder any amount of Principal or Interest or other amounts when and as due under this Note (including,
without limitation, the Company's failure to pay any redemption or other amounts), or any other Transaction Document, except, in
the case of a failure to pay Interest when and as due, in which case only if such failure continues for a period of at least an
aggregate of five (5) Business Days;

 

(vi)        any
default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries of
at least $100,000 in the aggregate other than with respect to this Note or any Other Notes;

 

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

 

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

 

(ix)         a
final judgment or judgments for the payment of money aggregating in excess of $200,000 are rendered against the Company or any
of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged, settled or
stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however,
that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating
the $200,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity
provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by
insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the
issuance of such judgment;

 

(x)          other
than as specifically set forth in another clause of this Section 4(a), the Company or any of its Subsidiaries breaches in any material
respect or in any respect that results, or would reasonably be expected to result, in a Material Adverse Effect (as defined in
the Securities Purchase Agreement), any representation, warranty, covenant or other term or condition of any Transaction Document,
except, in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable, only if
such breach continues for a period of at least five (5) consecutive Business Days;

 

(xi)         any
breach or failure in any respect to comply with Section 13 of this Note;

 

    	- 10 -

    	 

    

 

(xii)        the
Company or any Subsidiary shall fail to perform or comply with any covenant or agreement contained in the Security Agreement (as
defined in the Securities Purchase Agreement) to which it is a party, except, in the case of a breach of a covenant or other agreement
of any Security Document which is curable, only if such breach continues for a period of at least five (5) consecutive Business
Days;

 

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

 

(xiv)      any
Security Document or any other security document, after delivery thereof pursuant hereto, shall fail or cease to create (other
than as a result of any act or omission by the Collateral Agent (as defined in the Securities Purchase Agreement) or any secured
party under the Security Documents) a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first
priority Lien, in favor of the Collateral Agent for the benefit of the holders of the Notes on any Collateral (as defined in the
Security Documents) purported to be covered thereby, subject to Permitted Liens securing any Permitted Senior Indebtedness which
may have priority over such Lien;

 

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

 

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

 

(xvii)     the
Company's failure for any reason after the date that is six (6) months immediately following the Issuance Date to satisfy the current
public information requirement under Rule 144(c); provided, however, that if (A) the Company files a Form 12b-25
within the applicable deadline imposed by Rule 12b-25 (or any successor thereto) with respect to any Quarterly Report on Form 10-Q
or any Annual Report on Form 10-K and (ii) the Company subsequently files such Quarterly Report on Form 10-Q or Annual Report on
Form 10-K, as applicable, with the SEC within the applicable period provided in Rule 12b-25, then the late filing of such report
shall not be considered an Event of Default hereunder; or

 

    	- 11 -

    	 

    

 

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

 

(b)           Redemption
Right. Upon the occurrence of an Event of Default with respect to this Note or any Other Note, the Company shall within one
(1) Business Day deliver written notice thereof via facsimile or electronic mail and overnight courier (an "Event of Default
Notice") to the Holder. At any time after the earlier of the Holder's receipt of an Event of Default Notice and the Holder
becoming aware of an Event of Default, the Holder may require the Company to redeem (an "Event of Default Redemption")
all or any portion of this Note by delivering written notice thereof (the "Event of Default Redemption Notice")
to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to require
the Company to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed
by the Company in cash by wire transfer of immediately available funds pursuant to wire instructions provided to the Company by
the Holder in writing at a price equal to the sum of (1) the greater of (x) 125% of the Conversion Amount being redeemed and (y)
the product of (A) the Conversion Amount being redeemed and (B) the quotient determined by dividing (I) the greatest Closing Sale
Price of the shares of Common Stock during the period beginning on the date immediately preceding such Event of Default and ending
on the date the Holder delivers the Event of Default Redemption Notice, by (II) the lowest Conversion Price in effect during such
period and (2) the Make-Whole Amount (the "Event of Default Redemption Price"). Redemptions required by
this Section 4(b) shall be made in accordance with the provisions of Section 10. To the extent redemptions required by this Section
4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions
shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section
3(d), until the Event of Default Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted
for redemption under this Section 4(b) (together with any interest thereon) may be converted, in whole or in part, by the Holder
into Common Stock pursuant to Section 3. The parties hereto agree that in the event of the Company's redemption of any portion
of the Note under this Section 4(b), the Holder's damages would be uncertain and difficult to estimate because of the parties'
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any Event of Default redemption premium due under this Section 4(b) is intended by the parties to
be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as a penalty.

 

    	- 12 -

    	 

    

 

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

 

 (a)           Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Note and the other Transaction Documents. No later than (i) thirty (30) days prior to
the occurrence or consummation of any Fundamental Transaction or (ii) if later, the first Trading Day following the date the Company
first becomes aware of the occurrence or potential occurrence of a Fundamental Transaction, the Company shall deliver written notice
thereof via facsimile or electronic mail and overnight courier to the Holder. Upon the occurrence or consummation of any Fundamental
Transaction the Company and the Successor Entity or Successor Entities, jointly and severally, shall succeed to, and the Company
shall cause any Successor Entity or Successor Entities to jointly and severally succeed to, and be added to the term "Company"
under this Note (so that from and after the date of such Fundamental Transaction, each and every provision of this Note referring
to the "Company" shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and
severally), and the Company and the Successor Entity or Successor Entities, jointly and severally, may exercise every right and
power of the Company prior thereto and shall assume all of the obligations of the Company prior thereto under this Note with the
same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company
in this Note, and, solely at the request of the Holder, if the Successor Entity and/or Successor Entities is a publicly traded
corporation whose common capital stock is quoted on or listed for trading on an Eligible Market, shall deliver (in addition to
and without limiting any right under this Note) to the Holder in exchange for this Note a security of the Successor Entity and/or
Successor Entities evidenced by a written instrument substantially similar in form and substance to this Note and convertible for
a corresponding number of shares of capital stock of the Successor Entity and/or Successor Entities (the "Successor Capital
Stock") equivalent (as set forth below) to the shares of Common Stock acquirable and receivable upon conversion of this
Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction (provided,
however, to the extent that the Holder's right to receive any such shares of publicly traded common stock (or their equivalent)
of the Successor Entity would result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, if applicable,
then the Holder shall not be entitled to receive such shares to such extent (and shall not be entitled to beneficial ownership
of such shares of publicly traded common stock (or their equivalent) of the Successor Entity as a result of such consideration
to such extent) and the portion of such shares shall be held in abeyance for the Holder until such time or times, as its right
thereto would not result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, at which time or times
the Holder shall be delivered such shares to the extent as if there had been no such limitation), and such security shall be satisfactory
to the Holder, and with an identical conversion price to the Conversion Price hereunder (such adjustments to the number of shares
of capital stock and such conversion price being for the purpose of protecting after the consummation or occurrence of such Fundamental
Transaction the economic value of this Note that was in effect immediately prior to the consummation or occurrence of such Fundamental
Transaction, as elected by the Holder solely at its option). Upon occurrence or consummation of the Fundamental Transaction the
Company and the Successor Entity or Successor Entities shall deliver to the Holder confirmation that there shall be issued upon
conversion of this Note at any time after the occurrence or consummation of the Fundamental Transaction, as elected by the Holder
solely at its option, shares of Common Stock, Successor Capital Stock or, in lieu of the shares of Common Stock or Successor Capital
Stock (or other securities, cash, assets or other property purchasable upon the conversion of this Note prior to such Fundamental
Transaction), such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase
or subscription rights), which for purposes of clarification may continue to be shares of Common Stock, if any, that the Holder
would have been entitled to receive upon the happening of such Fundamental Transaction or the record, eligibility or other determination
date for the event resulting in such Fundamental Transaction, had this Note been converted immediately prior to such Fundamental
Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction (without
regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. The provisions
of this Section 5(a) shall apply similarly and equally to successive Fundamental Transactions.

 

    	- 13 -

    	 

    

 

 (b)           Redemption
Right. No sooner than twenty-five (25) days nor later than twenty (20) days prior to the consummation of a Change of Control,
but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile
or electronic mail and overnight courier to the Holder (a "Change of Control Notice"). At any time during
the period beginning on the earlier to occur of (x) any oral or written agreement by the Company or any of its Subsidiaries, upon
consummation of which the transaction contemplated thereby would reasonably be expected to result in a Change of Control, (y) the
Holder becoming aware of a Change of Control and (z) the Holder's receipt of a Change of Control Notice and ending twenty-five
(25) Trading Days after the date of the consummation of such Change of Control, the Holder may require the Company to redeem (a
"Change of Control Redemption") all or any portion of this Note by delivering written notice thereof ("Change
of Control Redemption Notice") to the Company, which Change of Control Redemption Notice shall indicate the Conversion
Amount the Holder is electing to require the Company to redeem. The portion of this Note subject to redemption pursuant to this
Section 5(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds pursuant to wire instructions
provided to the Company by the Holder in writing at a price equal to the greater of (x) 125% of the Conversion Amount being redeemed
and (y) the product of (A) the Conversion Amount being redeemed and (B) the quotient determined by dividing (I) the greatest Closing
Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur of
(x) the consummation of the Change of Control and (y) the public announcement of such Change of Control and ending on the date
the Holder delivers the Change of Control Redemption Notice, by (II) the lowest Conversion Price in effect during such period (the
"Change of Control Redemption Price"). Redemptions required by this Section 5 shall be made in accordance with
the provisions of Section 10 and shall have priority to payments to shareholders in connection with a Change of Control. To the
extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments
of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary
in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price (together with any interest thereon)
is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together with any interest thereon) may
be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the
event of the Company's redemption of any portion of the Note under this Section 5(b), the Holder's damages would be uncertain and
difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability
of a suitable substitute investment opportunity for the Holder. Accordingly, any Change of Control redemption premium due under
this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its
investment opportunity and not as a penalty.

 

    	- 14 -

    	 

    

 

(6)            CORPORATE
EVENTS. In addition to and not in substitution for any other rights hereunder, prior to the occurrence or consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities, cash, assets or
other property with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall
make appropriate provision to insure that, and any applicable Successor Entity or Successor Entities shall ensure that the Holder
will thereafter have the right to receive upon conversion of this Note at any time after the occurrence or consummation of the
Corporate Event, shares of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares of Common
Stock (or other securities, cash, assets or other property) purchasable upon the conversion of this Note prior to such Corporate
Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or
subscription rights and any shares of Common Stock) which the Holder would have been entitled to receive upon the occurrence or
consummation of such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate
Event, had this Note been converted immediately prior to such Corporate Event or the record, eligibility or other determination
date for the event resulting in such Corporate Event (without regard to any limitations on conversion of this Note). Provision
made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions
of this Section 6 shall apply similarly and equally to successive Corporate Events.

 

(7)            RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.

 

 (a)   Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date, the Company issues or
sells, or in accordance with this Section 7(a) is deemed to have issued or sold, any shares of Common Stock (including the issuance
or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed
to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share (the "New
Issuance Price") less than a price (the "Applicable Price") equal to the Conversion Price in effect immediately
prior to such issue or sale or deemed issuance or sale (the foregoing a "Dilutive Issuance"), then immediately
after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.
For purposes of determining the adjusted Conversion Price under this Section 7(a), the following shall be applicable:

 

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

 

    	- 15 -

    	 

    

 

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

 

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

 

    	- 16 -

    	 

    

 

(iv)        Calculation
of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction, (x) the Options will be deemed to have been issued for the Option Value of such
Options and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold
for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company
pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration other than cash
received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options
or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities,
in which case the amount of consideration received by the Company will be the Closing Sale Price of such publicly traded securities
on the date of receipt of such publicly traded securities. If any shares of Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value
of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required Holders.
If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation
Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th)
day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders.
The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses
of such appraiser shall be equally borne by the Company and such holders of Notes that dispute the Company's fair value valuation.

 

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

 

    	- 17 -

    	 

    

 

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

 

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

 

 (c)           Other
Events. If any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by
such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as
to protect the rights of the Holder under this Note; provided, that no such adjustment will increase the Conversion Price
as otherwise determined pursuant to this Section 7.

 

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

 

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

 

(9)            RESERVATION
OF AUTHORIZED SHARES.

 

 (a)           Reservation.
The Company shall initially reserve out of its authorized and unissued shares of Common Stock a number of shares of Common Stock
for each of this Note and the Other Notes equal to 125% of the Conversion Rate with respect to the Conversion Amount of each such
Note as of the Issuance Date. So long as any of this Note and the Other Notes are outstanding, the Company shall take all
action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of this Note and the Other Notes, the number of shares of Common Stock specified above in this Section 9(a) as shall
from time to time be necessary to effect the conversion of all of the Notes then outstanding; provided, that at no time
shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved pursuant hereto
(in each case, without regard to any limitations on conversions) (the "Required Reserve Amount"). The initial
number of shares of Common Stock reserved for conversions of this Note and the Other Notes and each increase in the number of shares
so reserved shall be allocated pro rata among the Holder and the holders of the Other Notes based on the Principal amount of this
Note and the Other Notes held by each holder at the Closing (as defined in the Securities Purchase Agreement) or increase in the
number of reserved shares, as the case may be (the "Authorized Share Allocation"). In the event that a holder
shall sell or otherwise transfer this Note or any of such holder's Other Notes, each transferee shall be allocated a pro rata portion
of such holder's Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold
any Notes shall be allocated to the Holder and the remaining holders of Other Notes, pro rata based on the Principal amount of
this Note and the Other Notes then held by such holders.

 

    	- 18 -

    	 

    

 

 (b)           Insufficient
Authorized Shares. If at any time while any of the Notes remain outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes
at least a number of shares of Common Stock equal to the Required Reserve Amount (an "Authorized Share Failure"),
then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting
the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than seventy-five (75) days after the occurrence of such Authorized Share Failure, the Company shall either
(x) obtain the written consent of its shareholders for the approval of an increase in the number of authorized shares of Common
Stock and provide each shareholder with an information statement with respect thereto or (y) hold a meeting of its shareholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders' approval of such
increase in authorized shares of Common Stock and to cause its Board of Directors to recommend to the shareholders that they approve
such proposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain
the written consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number
of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing
with the SEC an Information Statement on Schedule 14C. In the event that upon any conversion of this Note, the Company does not
have sufficient authorized shares to deliver in satisfaction of such conversion, then the Holder may elect to void such attempted
conversion.

 

    	- 19 -

    	 

    

 

(10)          REDEMPTIONS.

 

 (a)           Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder within three (3) Business Days after the
Company's receipt of the Holder's Event of Default Redemption Notice (the "Event of Default Redemption Date").
If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(b), the Company shall deliver the
applicable Change of Control Redemption Price to the Holder (i) concurrently with the consummation of such Change of Control if
such notice is received prior to the consummation of such Change of Control and (ii) within three (3) Business Days after the Company's
receipt of such notice otherwise (such date, the "Change of Control Redemption Date"). The Company shall pay the
applicable Redemption Price to the Holder in cash by wire transfer of immediately available funds pursuant to wire instruction
provided by the holder in writing to the Company on the applicable due date. In the event of a redemption of less than all of the
Conversion Amount of this Note, if requested by the Holder and upon delivery by the Holder to the Company of this Note, the Company
shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 16(d)) representing the outstanding
Principal which has not been redeemed and any accrued Interest on such Principal which shall be calculated as if no Redemption
Notice has been delivered. In the event that the Company does not pay the applicable Redemption Price to the Holder within the
time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall
have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note
representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price has not been
paid. Upon the Company's receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such
Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 16(d)) to
the Holder representing such Conversion Amount to be redeemed and (z) the Conversion Price of this Note or such new Notes shall
be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided
and (B) the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is
voided.

 

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

 

    	- 20 -

    	 

    

 

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

 

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

 

(13)          COVENANTS.

 

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

 

(b)           Incurrence
of Indebtedness. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness.

 

(c)           Existence
of Liens. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including Intellectual Property (as defined in Section 13(g), accounts and contract rights)
owned by the Company or any of its Subsidiaries (collectively, "Liens") other than Permitted Liens.

 

(d)           Restricted
Payments. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries
to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash
equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all
or any portion of any Indebtedness (other than Permitted Senior Indebtedness, this Note and the Other Notes), whether by way of
payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or
is otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time and without
being cured would constitute, an Event of Default has occurred and is continuing.

 

(e)           Restriction
on Redemption and Cash Dividends. Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance
with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, redeem
or repurchase its Equity Interest, or permit any Subsidiary to redeem or repurchase its Equity Interests (except on a pro rata
basis among all holders thereof) or declare or pay any cash dividend or distribution on any Equity Interest of the Company or of
its Subsidiaries without in each case the prior express written consent of the Required Holders provided, however,
that without the prior written consent of the Required Holders, any wholly-owned Subsidiary of the Company may pay dividends or
otherwise make distributions to any other wholly owned Subsidiary or to the Company solely to the extent such Subsidiary has executed
and delivered a Guaranty to the Collateral Agent for the benefit of the holders of the Notes.

 

    	- 21 -

    	 

    

 

 (f)           Change
in Nature of Business. The Company shall not make, or permit any of its Subsidiaries to make, any change in the nature of its
business as described in the Company's most recent Annual Report filed on Form 10-K with the SEC. The Company shall not modify
its corporate structure or purpose.

 

 (g)           Intellectual
Property. The Company shall not, and the Company shall not permit any of its Subsidiaries, directly or indirectly, to encumber
or allow any Liens on, any of its copyright rights, copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks,
service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the
goodwill of the business of the Company and its Subsidiaries connected with and symbolized thereby, know-how, operating manuals,
trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement
of any of the foregoing (collectively, "Intellectual Property"), other than Permitted Liens.

 

 (h)           Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, except where the failure to be so qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect.

 

 (i)            Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its material properties which are necessary or useful in the proper conduct of its business in good working order and condition,
ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the material provisions
of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof
or thereunder.

 

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

 

 (k)           Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of
business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its
business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arm's length transaction with a Person that is not an Affiliate thereof.

 

    	- 22 -

    	 

    

 

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

 

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

 

(16)          REISSUANCE
OF THIS NOTE.

 

 (a)           Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 16(d) and subject to Section 3(c)(iii)), registered
as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire
outstanding Principal is being transferred, a new Note (in accordance with Section 16(d)) to the Holder representing the outstanding
Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason
of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal
represented by this Note may be less than the Principal stated on the face of this Note.

 

 (b)           Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 16(d)) representing the outstanding
Principal.

 

 (c)           Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 16(d) and in Principal amounts of at least $100,000)
representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such
outstanding Principal as is designated by the Holder at the time of such surrender.

 

 (d)           Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 16(a) or Section 16(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions
as this Note, and (v) shall represent accrued and unpaid Interest, if any, on the Principal and Interest of this Note, from the
Issuance Date.

 

    	- 23 -

    	 

    

 

(17)          REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder's right
to pursue actual damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or other security being required.

 

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

 

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

 

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

 

    	- 24 -

    	 

    

 

(21)          DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price, the Closing Sale Price or the Weighted
Average Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or any Redemption Price, the Company shall
submit the disputed determinations or arithmetic calculations via facsimile or electronic mail within one (1) Business Day of receipt,
or deemed receipt, of the Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within one (1) Business
Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within one
Business Day submit via facsimile or electronic mail (a) the disputed determination of the Closing Bid Price, the Closing Sale
Price or the Weighted Average Price to an independent, reputable investment bank selected by the Holder and approved by the Company,
such approval not to be unreasonably withheld or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion
Price or any Redemption Price to an independent, outside accountant, selected by the Holder and approved by the Company, such approval
not to be unreasonably withheld or delayed. The Company shall cause the investment bank or, at the Company's expense, the accountant,
as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later
than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. The Company and
the Holder shall jointly bear the cost of any investment bank pursuant to this Section 21.

 

(22)          NOTICES;
PAYMENTS.

 

 (a)           Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without
limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) promptly upon any adjustment
of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least
fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information
shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

 (b)           Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful
money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to
such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Purchasers,
shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement); provided, that
the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with
prior written notice setting out such request and the Holder's wire transfer instructions. 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.

 

    	- 25 -

    	 

    

 

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

 

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

 

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

 

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

 

    	- 26 -

    	 

    

 

(27)          DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company
or its Subsidiaries, the Company shall within two (2) Business Days after any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters
relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.

 

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

 

 (a)          "Affiliate"
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that "control" of a Person means the power
directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such
Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

 (b)          "Approved
Stock Plan" means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant
to which the Company's securities may be issued to any employee, consultant, officer or director for services provided to the Company.

 

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

 

 (d)          "Bloomberg"
means Bloomberg Financial Markets.

 

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

 

    	- 27 -

    	 

    

 

 (f)          "Change
of Control" means any Fundamental Transaction other than (i) any merger of the Company or any of its direct or indirect
wholly-owned Subsidiaries with or into any of the foregoing Persons, or any reorganization, recapitalization or reclassification
of the Common Stock, in which holders of the Company's voting power immediately prior to such merger, reorganization, recapitalization
or reclassification continue after such merger, reorganization, recapitalization or reclassification to hold publicly traded securities
and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members
of the board of directors (or their equivalent if other than a corporation) of such entity or entities or (ii) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.

 

 (g)          "Closing
Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time,
as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Bid Price
or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 21. All such determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction during the applicable calculation period.

 

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

 

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

 

    	- 28 -

    	 

    

 

(j)          "Conversion
Shares" means shares of Common Stock issuable by the Company pursuant to the terms of any of the Notes, including any
Interest Shares and any Principal amount and Interest converted or redeemed.

 

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

 

(l)            "Eligible
Market" means the Principal Market, The New York Stock Exchange, The Nasdaq
Global Market, The NASDAQ Capital Market, The Nasdaq Global Select Market, the NYSE
MKT or the OTC QB.

 

(m)          "Equity
Conditions" means each of the following conditions: (i) on each day during Equity Conditions Measuring Period, either
(x) one or more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective and the prospectus
contained therein shall be available on such applicable date of determination for the resale of all of the shares of Common Stock
to be issued upon conversion of the Mandatory Conversion Amount that is subject to the applicable Mandatory Conversion requiring
the satisfaction of the Equity Conditions or the Interest Shares issuable on the Interest Notice Date or the Maturity Date, as
applicable, in each case in accordance with the terms of the Registration Rights Agreement and there shall not be any Grace Period
(as defined in the Registration Rights Agreement) or (y) all Conversion Shares issuable pursuant to the terms of this Note and
the Other Notes and Warrant Shares issuable upon exercise of the Warrants, including the shares of Common Stock issuable upon conversion
of the Mandatory Conversion Amount that is subject to the applicable Mandatory Conversion requiring the satisfaction of the Equity
Conditions or the Interest Shares issuable on the Interest Notice Date or the Maturity Date, as applicable (collectively, the "Required
Minimum Securities Amount"), shall be eligible for sale pursuant to Rule 144 and the Company shall have satisfied the
current public information requirement of Rule 144(c)(1) (and 144(i)(2), if applicable) and without the need for registration under
any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock
is designated for quotation on the Principal Market or any other Eligible Market and shall not have been suspended from trading
on such exchange or market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of
determination due to business announcements by the Company); (iii) the shares of Common Stock issuable upon conversion of the Mandatory
Conversion Amount that is subject to the applicable Mandatory Conversion requiring the satisfaction of the Equity Conditions or
the Interest Shares issuable on the Interest Notice Date or the Maturity Date, as applicable, may be issued in full without violating
Section 3(d) hereof and the rules or regulations of the Principal Market or any other applicable Eligible Market; (iv) during the
Equity Conditions Measuring Period, there shall not have occurred either (A) the public announcement of a pending, proposed or
intended Fundamental Transaction which has not been abandoned, terminated or consummated, (B) an Event of Default that has not
been cured on or prior to such date of determination or (C) an event that with the passage of time or giving of notice would constitute
an Event of Default; (v) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required
pursuant to the Registration Rights Agreement not to be effective and available for the resale of the Required Minimum Securities
Amount of shares of Common Stock in accordance with the terms of the Registration Rights Agreement or (y) any Conversion Shares
issuable pursuant to the terms of this Note and the Other Notes and Warrant Shares issuable upon exercise of the Warrants, including
the shares of Common Stock issuable upon conversion of the Mandatory Conversion Amount that is subject to the applicable Mandatory
Conversion requiring the satisfaction of the Equity Conditions or the Interest Shares issuable on the Interest Notice Date or the
Maturity Date, as applicable, not to be eligible for sale pursuant to Rule 144 (including, without limitation, by the Company’s
failure to satisfy the current public information requirement of Rule 144(c)(1) (and/or 144(i)(2), if applicable)) and any applicable
state securities laws; (vi) the Holder shall not be in possession of any material, nonpublic information received from the Company,
any Subsidiary or its respective agent or affiliates; (vii) the shares of Common Stock issuable upon conversion of the Mandatory
Conversion Amount that is subject to the applicable Mandatory Conversion requiring the satisfaction of the Equity Conditions or
the Interest Shares issuable on the Interest Notice Date or the Maturity Date, as applicable, are duly authorized and quoted on
the Principal Market or listed and eligible for trading without restriction on an Eligible Market, as applicable; and (viii) if
the event requiring the satisfaction of the Equity Conditions is a Mandatory Conversion, the daily dollar trading volume of the
Common Stock as reported by Bloomberg for each Trading Day during the Equity Conditions Measuring Period shall be at least $250,000.

 

    	- 29 -

    	 

    

 

(n)           "Equity
Conditions Failure" means that on any day during the period commencing ten (10) Trading Days prior to the applicable date
of determination through the applicable date of determination, the Equity Conditions have not each been satisfied (or waived in
writing by the Holder).

 

(o)           "Equity
Conditions Measuring Period" means each day during the period beginning twenty (20) Trading Days prior to the applicable
date of determination and ending on and including the applicable date of determination.

 

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

 

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

 

    	- 30 -

    	 

    

 

(r)           "Excluded
Securities" means any shares of Common Stock issued or issuable: (i) in connection with any Approved Stock Plan provided,
however, that no more than an aggregate of 250,000 (as adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction after the Subscription Date) shares of Common Stock are issued or issuable to consultants
hereunder as Excluded Securities; (ii) pursuant to the terms of the Notes (including, without limitation, pursuant to a Mandatory
Conversion or any Interest Shares issued pursuant to Section 2 hereof) or upon the exercise of the Warrants; provided that the
terms of such Notes or Warrants are not amended, modified or changed on or after the Subscription Date; (iii) upon conversion or
exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding the Subscription Date,
provided, that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the
Subscription Date (other than a change to the conversion price, exchange price or exercise price of such Options or Convertible
Securities arising from weighted-average or full-ratchet anti-dilution adjustment provisions as such provisions are set forth on
the Subscription Date in such Options or Convertible Securities) and (iv) pursuant to acquisitions or strategic transactions approved
by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the
equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business
synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing securities for the purpose of raising capital or
to an entity whose primary business is investing in securities.

 

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

 

    	- 31 -

    	 

    

 

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

 

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

 

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

 

(w)           "Interest
Conversion Price" means, with respect to the Maturity Date, that price which shall be the lower of (i) the Conversion
Price then in effect and (ii) ninety (90%) of the arithmetic average of the five (5) lowest Weighted Average Price of the Common
Stock on any Trading Day during the twenty (20) consecutive Trading Days ending on the Trading Day immediately preceding the Maturity
Date, rounded down to the nearest 1/10th of one cent. All such determinations to be appropriately adjusted for any stock split,
stock dividend, stock combination, reclassification or other similar transaction during such period.

 

    	- 32 -

    	 

    

 

(x)           "Interest
Notice Due Date" means the twenty-first (21st) Trading Day prior to the Maturity Date.

 

(y)           "Interest
Rate" means six percent (6.0%) per annum, subject to adjustment as set forth in Section 2.

 

(z)           "Make-Whole
Amount" means the amount equal to any Interest that, but for the applicable related event resulting in the reduction of
the Principal amount outstanding under this Note, would have accrued with respect to the Mandatory Conversion Amount being converted
under this Note or the Conversion Amount being redeemed under this Note, as applicable, at the Interest Rate (assuming the Interest
Rate then in effect as of the applicable Mandatory Conversion Date or Event of Default Redemption Date, as applicable, resulting
in the reduction of the Principal amount outstanding under this Note is the Interest Rate through the Maturity Date) for the period
from the applicable Mandatory Conversion Date or Event of Default Redemption Date, as applicable, resulting in the reduction of
the Principal amount outstanding under this Note through the Maturity Date discounted to the present value of such interest using
a discount rate equal to the interest rate of U.S. Treasury Bonds with equivalent remaining terms from the applicable Mandatory
Conversion Date or Event of Default Redemption Date, as applicable, through February [__], 20182.

 

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

 

(bb)          "Option
Value" means the value of an Option based on the Black and Scholes Option Pricing model obtained from the "OV"
function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the applicable Option if the issuance
of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Option if the
issuance of such Option is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination,
(ii) an expected volatility equal to the 100 day volatility (not to exceed 100% volatility) obtained from the HVT function on Bloomberg
as of the day immediately following the public announcement of (A) the Trading Day immediately following the public announcement
of the applicable Option if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the
issuance of the applicable Option if the issuance of such Option is not publicly announced, (iii) the underlying price per share
used in such calculation shall be the highest Weighted Average Price during the period beginning on the day prior to the execution
of definitive documentation relating to the issuance of the applicable Option and the public announcement of such issuance, (iv)
a zero cost of borrow and (v) a 360 day annualization factor.

 

 

2
Insert date that is thirty-six (36) months immediately following the Issuance Date.

 

    	- 33 -

    	 

    

 

(cc)          "Parent
Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity
whose common capital stock or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the Required
Holders, any other market, exchange or quotation system), or, if there is more than one such Person or such entity, the Person
or entity designated by the Required Holders or in the absence of such designation, such Person or entity with the largest public
market capitalization as of the date of consummation of the Fundamental Transaction.

 

(dd)          "Permitted
Indebtedness" means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) trade payables incurred in the ordinary
course of business consistent with past practice, (iii) unsecured Indebtedness incurred
by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected
in a written agreement acceptable to the Required Holders and approved by the Required Holders in writing, and which Indebtedness
does not provide at any time for (a) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any
principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (b) total interest and fees
at a rate in excess of six percent (6.0%) per annum, (iv) Indebtedness secured by Permitted Liens described in clauses (iv) of
the definition of Permitted Liens, (v) Indebtedness not to exceed $167,271 evidenced by that certain unsecured note in an original
principal amount of $167,271 dated September 5, 2013 issued by Enerpulse, Inc. to LWM, LLC and (vi) Permitted Senior Indebtedness.

 

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

 

    	- 34 -

    	 

    

 

(ff)          "Permitted
Senior Indebtedness" means Indebtedness in connection with any credit facility to be entered into by the Company and/or
its Subsidiaries with one or more chartered banks, secured by a first priority Lien on all or substantially all of the assets of
the Company and/or its Subsidiaries, provided that the Notes are subordinated to such Indebtedness on terms satisfactory to the
Collateral Agent and the Buyers; provided, further, that such Permitted Senior Indebtedness shall not be, and shall
not be amended, extended, renewed, reinstated or refinanced to become, Indebtedness of the Company that is, directly or indirectly,
convertible or exercisable into, or exchangeable for, shares of Common Stock or any other equity interests of the Company or any
of its Subsidiaries.

 

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

 

(hh)         "Principal
Market" means the OTC QX.

 

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

 

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

 

(kk)         "Registrable
Securities" shall have the meaning ascribed to such term in the Registration Rights Agreement.

 

(ll)         "Registration
Rights Agreement" means that certain registration rights agreement dated as of the Subscription Date by and among the
Company and the Purchasers relating to, among other things, the registration of the resale of the shares of Common Stock issuable
upon conversion of this Note and the Other Notes and exercise of the Warrants.

 

(mm)         "Registration
Statement" shall have the meaning ascribed to such term in the Registration Rights Agreement.

 

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

 

(oo)         "Required
Holders" means the holders of Notes representing at least a majority of the aggregate principal amount of the Notes then
outstanding.

 

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

 

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

 

(rr)         "Securities
Purchase Agreement" means that certain securities purchase agreement dated as of the Subscription Date by and among the
Company and the Purchasers of the Notes pursuant to which the Company issued the Notes and Warrants.

 

    	- 35 -

    	 

    

 

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

 

(tt)         "Subscription
Date" means February [__], 2015.

 

(uu)         "Subsidiary"
shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(vv)         "Successor
Entity" means one or more Person or Persons (or, if so elected by the Holder, the Company or Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or, if so elected by the Holder, the
Company or the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(ww)         "Trading
Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

 

(xx)        "Transaction
Document" shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

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

 

(zz)         "Warrant
Shares" means shares of Common Stock issuable by the Company upon the exercise of any of the Warrants.

 

(aaa)        "Weighted
Average Price" means, for any security as of any date, the dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as the Principal Market
publicly announces is the official close of trading) as reported by Bloomberg through its "Volume at Price" functions,
or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time
as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time
as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets
Group Inc. (formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved pursuant to Section 21. All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable calculation
period.

 

[Signature Page Follows]

 

    	- 36 -

    	 

    

 

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

 

	 	Enerpulse Technologies, Inc.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	 

    	 

    

 

EXHIBIT I

 

Enerpulse
Technologies, Inc.

 

CONVERSION NOTICE

 

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

 

	Date of Conversion:	 

 

	Aggregate Conversion Amount to be converted:	 

 

	Please confirm the following information:

 

	Conversion Price:	 

 

	Number of shares of Common Stock to be issued:	 

 

	After giving effect to the conversion provided for in this 

Conversion Notice, the undersigned (together with its Attribution Parties) will beneficially own no more than ___________________ shares of Common Stock of the Company.

 

	Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

	Issue to:	 
	 	 
	 	 

 

	Facsimile Number and Electronic Mail:	 

 

	Authorization:	 

 

	By:	 

 

	Title:	 

 

	Dated:	 

 

	Account Number:	 

	  (if electronic book entry transfer)	 

 

	Transaction Code Number:	 

	  (if electronic book entry transfer)	 

 

    	 

    	 

    

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges
this Conversion Notice and hereby directs Securities Transfer Corporation to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated February __, 2015 from the Company and acknowledged and agreed to
by Securities Transfer Corporation.

 

 

	 	Enerpulse Technologies, Inc.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:

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