Document:

EXECUTION
COPY

 

EXCHANGE
AGREEMENT

 

THIS
EXCHANGE AGREEMENT (the “Agreement”) is dated this 26th day of September, 2016 (the “Effective Date”),
by and among Notis Global, Inc. (the “Company”), EWSD I LLC, a subsidiary of the Company (“EWSD”), and
Pueblo Agriculture Supply and Equipment, LLC, a subsidiary of the Company (“PASE”) (the Company, and together with
EWSD and PASE, sometimes collectively referred to as the “Companies”), and Redwood Management, LLC (the “Holder”).

 

WHEREAS,
the Holder beneficially owns and holds certain Convertible Debentures issued by the Company set forth on Exhibit A hereto
(the “Securities”); and

 

WHEREAS,
the Holder desires to exchange the Securities for certain 10% Convertible Debenture due June 30, 2017 of EWSD and PASE set forth
on Exhibit B (the “Exchange Securities”), and EWSD and PASE desire to issue the Exchange Securities in exchange
for the Securities, all on the terms and conditions set forth in this Agreement; and

 

WHEREAS,
the reliance upon the representations made by the Holder and each of the Companies in this Agreement, the transactions contemplated
by this Agreement are such that the offer and exchange of securities by the Companies under this Agreement will be exempt from
registration under applicable United States securities laws as a result of this exchange offer being undertaken pursuant to Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

 

NOW,
THEREFORE, in consideration of the terms and conditions contained herein, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Holder hereby agree as follows:

 

Section
1. Exchange. Subject to and upon the terms and conditions set forth in this Agreement, the Holder agrees to surrender to
the Company the Securities (other than any Securities or portions thereof which have previously been converted into common stock
of the Company pursuant to their terms or repaid in cash) and, in exchange therefore, the Company shall issue to the Holder the
Exchange Securities (each, an “Exchange”).

 

1.1
Closing. On the date hereof (the “Closing Date”), the Company will issue and deliver (or cause to be issued
and delivered) the Exchange Securities to the Holder, or in the name of a custodian or nominee of the Holder, or as otherwise
requested by the Holder in writing, and the Holder will surrender to the Company an equal amount of the Securities.

 

1.2
Section 4(a)(2). Assuming the accuracy of the representations and warranties of each of the Company and the Holder set
forth in Sections 2 and 3 of this Agreement, the parties acknowledge and agree that the purpose of such representations and warranties
is, among other things, to ensure that the Exchange qualifies as an exchange of securities under Section 4(a)(2) of the Securities
Act.

 

    	 

    	 

    

 

Section
2. Representations and Warranties of the Companies. Except as set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, each of the Companies, as applicable, represents and warrants to the
Holder that:1

 

(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each any subsidiary of the Company as set forth on Schedule
3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the
date hereof (a “Subsidiary”) free and clear of any Liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe
for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the
Transaction Documents shall be disregarded. (“Transaction Documents” shall mean, this Agreement.)

 

(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole; or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

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(c)
Authorization; Enforcement. The Company has the requisite power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
or members in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents; (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien (except
Liens in favor of the Purchasers) upon any of the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected;
or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.

 

(e)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than:
(i) the filings required pursuant to Section 4.6 of this Agreement, and (ii) the filing of Form D and 8-K with the Commission
and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

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(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents.

 

(g)
Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include
the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The
Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant
to the exercise of employee stock options under the Equity Incentive Plan, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the Exchange Act. Other than with regard to Exempt
Issuances, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities and
securities issued to employees, officers or directors, or former employees, officers or directors and other service providers
or former service providers of the Company pursuant to the Equity Incentive Plan or otherwise, there are no outstanding options,
warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of
Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of
such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid
and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.
Other than as set forth on Schedule 3.1(g), there are no stockholders agreements, voting agreements or other similar agreements
with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between
or among any of the Company’s stockholders.

 

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(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has
never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission
with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the filing of the Company’s Form 10-Q for the period
ended March 31, 2016: (i) there has been no event, occurrence or development that has had or that could reasonably be expected
to result in a Material Adverse Effect; (ii) the Company has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the
Commission; (iii) the Company has not altered its method of accounting; (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock; and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to the Equity Incentive Plan or as set forth in the SEC Reports. Except for the issuance of the Securities contemplated
by this Agreement, or the Exempt Issuances no event, liability, fact, circumstance, occurrence or development has occurred or
exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses,
properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading
Day prior to the date that this representation is made.

 

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(j)
Litigation. Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary, nor any director
or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. Other than as set forth in the SEC Reports, there has not been, and to
the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company that is likely to lead to action that can reasonably be expected to
result in a Material Adverse Effect. Other than as set forth in the SEC Reports, there has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k)
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement
or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and
its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties
is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of
any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or
regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters,
except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.

 

(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP
and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.

 

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(o)
Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective
businesses as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that
any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be
abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the
date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has
any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have
or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The
Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all
of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(p)
Transactions with Affiliates and Employees. Except as set forth in the SEC Reports and for the Exempt Issuances, none of the officers
or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered;
(ii) reimbursement for expenses incurred on behalf of the Company; and (iii) other employee benefits, including stock option or
stock award agreements under the Equity Incentive Plan.

 

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(q)
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the applicable Closing Date. Other than as disclosed
in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company
and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.

 

(r)
Certain Fees. Other than as set forth on Schedule 3.1(r), no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(s)
Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to each Purchaser as
contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading
Market.

 

(t)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.

 

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(u)
Registration Rights. Other than with regard to the Exempt Issuances, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company or any Subsidiaries.

 

(v)
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from
any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

(w)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and each Purchaser’s ownership of the Securities.

 

(x)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities
of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its
Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

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(y)
No Integrated Offering. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, neither
the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the
registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading
Market on which any of the securities of the Company are listed or designated.

 

(z)
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(aa)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law; or (iv) violated in any material respect any
provision of FCPA.

 

(bb)
Accountants. The Company’s accounting firm is set forth on Schedule 3.1(bb) of the Disclosure Schedules. To the knowledge
and belief of the Company, such accounting firm is a registered public accounting firm as required by the Exchange Act.

 

(cc)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company.

 

(dd)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each Purchaser is
acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any
advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents
and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company
further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction
Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

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(ee)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s
placement agent in connection with the placement of the Securities.

 

(ff)
Stock Option Plans. Each stock option granted by the Company under the Equity Incentive Plan was granted (i) in accordance with
the terms of the Equity Incentive Plan, and (ii) with an exercise price at least equal to the fair market value of the Common
Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the
Equity Incentive Plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy
or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the
release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results
or prospects.

 

(gg)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(hh)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon a Purchaser’s
request.

 

(ii)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly,
five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.

 

    	12

    	 

    

 

(jj)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and all foreign income
and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes
and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports
and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for
periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.

 

(kk)
Seniority. As of each Closing Date, no Indebtedness or other claim against the Company is senior to the Notes in right of payment,
whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase
money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is
senior only as to the property covered thereby).

 

(ll)
Acknowledgment Regarding a Purchaser’s Trading Activity. [Reserved].

 

(mm)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.

 

Section
3. Representations and Warranties of the Holder. The Holder represents and warrants, to the Companies that:

 

3.1
Ownership of the Securities. The Holder is the legal and beneficial owner of the Securities. The Holder paid for the Securities,
and has continuously held the Securities since its issuance or purchase. The Holder, individually or through an affiliate, owns
the Securities outright and free and clear of any options, contracts, agreements, liens, security interests, or other encumbrances.

 

3.2
No Public Sale or Distribution. The Holder is acquiring the Exchange Securities in the ordinary course of business for
its own account and not with a view toward, or for resale in connection with, the public sale or distribution thereof; provided,
however, that by making the representations herein, the Holder does not agree to hold any of the Exchange Securities for any minimum
or other specific term and reserves the right to dispose of the Exchange Securities at any time in accordance with an exemption
from the registration requirements of the Securities Act and applicable state securities laws. The Holder does not presently have
any agreement or understanding, directly or indirectly, with any person to distribute, or transfer any interest or grant participation
rights in, the Securities or the Exchange Securities.

 

    	13

    	 

    

 

3.3
Accredited Investor and Affiliate Status. The Holder is an “accredited investor” as that term is defined in
Rule 501 of Regulation D under the Securities Act. The Holder is not, and has not been, for a period of at least three months
prior to the date of this Agreement (a) an officer or director of the Company, (b) an “affiliate” of the Company (as
defined in Rule 144) (an “Affiliate”) or (c) a “beneficial owner” of more than 10% of the common stock
(as defined for purposes of Rule 13d-3 of the Exchange Act).

 

3.4
Reliance on Exemptions. The Holder understands that the Exchange is being made in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Holder set forth herein in order to determine the availability of such exemptions and the eligibility
of the Holder to complete the Exchange and to acquire the Exchange Securities.

 

3.5
Information. The Holder has been furnished with all materials relating to the business, finances and operations of the
Company and materials relating to the Exchange which have been requested by the Holder. The Holder has been afforded the opportunity
to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Holder or
its representatives shall modify, amend or affect the Holder’s right to rely on the Company’s representations and
warranties contained herein. The Holder acknowledges that all of the documents filed by the Company with the SEC under Sections
13(a), 14(a) or 15(d) of the Exchange Act that have been posted on the SEC’s EDGAR site are available to the Holder, and
the Holder has not relied on any statement of the Company not contained in such documents in connection with the Holder’s
decision to enter into this Agreement and the Exchange.

 

3.6
Risk. The Holder understands that its investment in the Exchange Securities involves a high degree of risk. The Holder
is able to bear the risk of an investment in the Exchange Securities including, without limitation, the risk of total loss of
its investment. The Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed
investment decision with respect to the Exchange.

 

    	14

    	 

    

 

3.7
No Governmental Review. The Holder understands that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement in connection with the Exchange or the fairness or
suitability of the investment in the Exchange Securities nor have such authorities passed upon or endorsed the merits of the Exchange
Securities.

 

3.8
Organization; Authorization. The Holder is duly organized, validly existing and in good standing under the laws of its
state of formation and has the requisite organizational power and authority to enter into and perform its obligations under this
Agreement.

 

3.9
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Holder
and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with
its terms. The execution, delivery and performance of this Agreement by the Holder and the consummation by the Holder of the transactions
contemplated hereby (including, without limitation, the irrevocable surrender of the Securities) will not result in a violation
of the organizational documents of the Holder.

 

3.10
Prior Investment Experience. The Holder acknowledges that it has prior investment experience, including investment in securities
of the type being exchange, including the Securities or the Exchange Securities, and has read all of the documents furnished or
made available by the Company to it and is able to evaluate the merits and risks of such an investment on its behalf, and that
it recognizes the highly speculative nature of this investment.

 

3.11
Tax Consequences. The Holder acknowledges that the Company has made no representation regarding the potential or actual
tax consequences for the Holder which will result from entering into the Agreement and from consummation of the Exchange. The
Holder acknowledges that it bears complete responsibility for obtaining adequate tax advice regarding the Agreement and the Exchange.

 

3.12
No Registration, Review or Approval. The Holder acknowledges, understands and agrees that the Exchange Securities are being
exchanged hereunder pursuant to an exchange offer exemption under Section 4(a)(2) of the Securities Act.

 

    	15

    	 

    

 

Section
4. Conditions Precedent to Obligations of the Companies. The obligation of the Companies to consummate the transactions
contemplated by this Agreement is subject to the satisfaction on each Closing Date of each of the following conditions, provided
that these conditions are for the Companies’ sole benefit and may be waived by the Companies at any time in its sole discretion
by providing the Holder with prior written notice thereof:

 

4.1
Delivery. The Holder shall have delivered to the Company the Securities.

 

4.2
No Prohibition. No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports
to enjoin or restrain any of the transactions contemplated by this Agreement.

 

4.3
Representations. The accuracy in all material respects when made and on the applicable Closing Date of the representations
and warranties of the Holder contained herein (unless as of a specific date therein).

 

Section
5. Conditions Precedent to Obligations of the Holder. The obligation of each Holder to consummate the transactions contemplated
by this Agreement is subject to the satisfaction on each Closing Date of each of the following conditions, provided that these
conditions are for each Holder’s sole benefit and may be waived by the applicable Holder at any time in its sole discretion
by providing the Company with prior written notice thereof:

 

5.1
No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to enjoin or restrain
any of the transactions contemplated by this Agreement;

 

5.2
the accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the
Company contained herein (unless as of a specific date therein);

 

5.3
all obligations, covenants and agreements of the Companies required to be performed at or prior to the applicable Closing Date
shall have been performed;

 

5.4
there is no event of default then existing on any Exchange Securities and the Equity Conditions (as defined in the Exchange Securities)
are satisfied on such date; and

 

5.5
from the date hereof to the relevant Closing Date, trading in the Company’s common stock shall not have been suspended by
the SEC or any trading market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any trading market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Holder makes it impracticable or inadvisable to purchase the Exchange Securities
at the closing.

 

    	16

    	 

    

 

Section
6. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed under the laws of the state of
New York, without regard to principles of conflicts of law or choice of law that would permit or require the application of the
laws of another jurisdiction. The Company and the Holder each hereby agrees that all actions or proceedings arising directly or
indirectly from or in connection with this Agreement shall be litigated only in the Supreme Court of the State of New York or
the United States District Court for the Southern District of New York located in New York County, New York. The Company and the
Holder each consents to the exclusive jurisdiction and venue of the foregoing courts and consents that any process or notice of
motion or other application to either of said courts or a judge thereof may be served inside or outside the State of New York
or the Southern District of New York by generally recognized overnight courier or certified or registered mail, return receipt
requested, directed to such party at its or his address set forth below (and service so made shall be deemed “personal service”)
or by personal service or in such other manner as may be permissible under the rules of said courts. THE COMPANY AND THE HOLDER
EACH HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS AGREEMENT.

 

Section
7. Indemnification of Holder. Subject to the provisions of this Section 7, each of the Companies, jointly and severally
will indemnify and hold the Holder and its directors, officers, shareholders, members, partners, employees and agents (and any
other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Holder (within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Holder Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Holder Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by any Company in this Agreement or in the other document
related to this exchange or (b) any action instituted against Holder Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such Holder Party, with respect to any of the transactions
contemplated by this exchange (unless such action is based upon a breach of such Holder Party’s representations, warranties
or covenants under the exchange or any agreements or understandings such Holder Party may have with any such stockholder or any
violations by such Holder Party of state or federal securities laws or any conduct by such Holder Party which constitutes fraud,
gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Holder Party in respect of which
indemnity may be sought pursuant to this Agreement, such Holder Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Holder Party.
Any Holder Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Holder Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Holder Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable
to any Holder Party under this Agreement (y) for any settlement by a Holder Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Holder Party’s breach of its representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Holder Party may have with any such stockholder or any violations
by such Holder Party of state or federal securities laws or any conduct by such Holder Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance. The indemnification required by this Section 7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are received or are incurred however, each Holder
Party who receives such interim payment agrees to reimburse the Company for any such payment made by the Company to such Holder
Party if it is finally determined in such action or proceeding that such Holder Party is not entitled to indemnification pursuant
to this Section 7. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any
Holder Party against any Company or others and any liabilities the Company may be subject to pursuant to law.

 

    	17

    	 

    

 

Section
8. Fees and Expenses. Except as expressly set forth below, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees (including, without limitation,
any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice
delivered by the Holder), stamp taxes and other taxes and duties levied in connection with the delivery of any Exchange Securities
to the Holder.

 

Section
9. Certain Transactions. The Holder covenants that neither it, nor any affiliate acting on its behalf or pursuant to any
understanding with it will execute any “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act
of any of the Company’s securities during the period commencing with the execution of this Agreement and ending on the later
of (i) the Maturity Date (as defined in the Exchange Securities) or (ii) the date that the Exchange Securities are no longer outstanding
(provided that this provision shall not prohibit any sales made where a corresponding Notice of Conversion (as defined in the
Exchange Securities) is tendered to the Company and the shares received upon such conversion or exercise are used to close out
such sale).

 

Section
10. Certificates. Certificates evidencing the Underlying Shares shall not contain any legend: (i) while a registration
statement covering the resale of such security is effective under the Securities Act; (ii) following any sale of such Underlying
Shares pursuant to Rule 144; or (iii) if such legend is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue
a legal opinion to the Transfer Agent promptly after any of the events described in (i)-(iii) in the preceding sentence if required
by the Transfer Agent to effect the removal of the legend hereunder (with a copy to the Holder and its broker). If all or any
portion of an Exchange Security is converted at a time when there is an effective registration statement to cover the resale of
the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under
applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date
or at such time as such legend is no longer required under this Section, it will, no later than two Trading Days following the
delivery by the Holder to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued
with a restrictive legend, deliver or cause to be delivered to the Holder a certificate representing such shares that is free
from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer
Agent that enlarge the restrictions on transfer set forth in this Section. Certificates for Underlying Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime
broker with the Depository Trust Company System as directed by the Holder.

 

    	18

    	 

    

 

Section
11. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile signature.

 

Section
12. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

Section
13. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

Section
14. Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Holder,
the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement
and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the Company nor the Holder makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Holder. No provision hereof may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought.

 

    	19

    	 

    

 

Section
15. Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b)
one calendar day (excluding Saturdays, Sundays, and national banking holidays) after deposit with an overnight courier service,
in each case properly addressed to the party to receive the same.

 

The
addresses for such communications shall be:

 

If
to any Company:

633
West 5th Street, 28th Floor

Los
Angeles, CA 90071

Attention:
Chief Executive Officer

 

If
to the Holder:

 

16850
Collins Ave # 112-341

Sunny
Isles, FL 33160

Attn:
John DeNobile

 

With
a copy (which shall not constitute notice) to:

 

Robinson
Brog Leinwand Greene Genovese & Gluck P.C.

875 Third Avenue, 9th Floor

New York, NY 10022

Attn: David E. Danovitch, Esq.

 

or
to such other address and/or to the attention of such other person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change.

 

Section
16. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Exchange Securities. The Holder may assign some or all of their rights
hereunder without the consent of any Company, in which event such assignee shall be deemed to be the Holder hereunder with respect
to such assigned rights.

 

Section
17. No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

Section
18. Survival of Representations. The representations and warranties of the Company and the Holder contained in Sections
2 and 3, respectively, will survive the closing of the transactions contemplated by this Agreement.

 

    	20

    	 

    

 

Section
19. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

Section
20. Securities Laws Disclosure; Publicity. The Company shall by 9:30 a.m. (New York City time) on the Trading Day immediately
following the date hereof file a Current Report on Form 8-K, including the transaction documents as exhibits thereto, with the
Commission within the time required by the Exchange Act. From and after the filing of such 8-K, the Company represents to the
Holder that it shall have publicly disclosed all material, non-public information delivered to the Holder by the Company or any
of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated
by the transaction documents. The Company and the Holder shall consult with each other in issuing any press releases with respect
to the transactions contemplated hereby, and neither the Company nor the Holder shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Company, with respect to any press release of the Holder, or without
the prior consent of the Holder, with respect to any press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of the Holder, or include the name of the Holder in any filing with the Commission or any regulatory agency
or trading market, without the prior written consent of the Holder, except: (a) as required by federal securities law in connection
with any registration statement contemplated by this Agreement and (b) to the extent such disclosure is required by law or trading
market regulations, in which case the Company shall provide the Holder with prior notice of such disclosure permitted under this
clause (b).

 

[Signature
Page Follows]

 

    	21

    	 

    

 

IN
WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above.

 

	Notis
    Global, Inc. 	 
	 	    
                	 
	By:	 	 
	Name:
    	 	 
	Title:
    	 	 
	 	 	 
	EWSD
    I LLC	 
	 	 	 
	By:	 	 
	Name:
    	 	 
	Title:
    	 	 
	 	 	 
	Pueblo
    Agriculture Supply and Equipment, LLC	 
	 	 	 
	By:	 	 
	Name:
    	 	 
	Title:
    	 	 
	 	 	 
	REDWOOD
    MANAGEMENT, LLC	 
	 	 	 
	By:
    	 	 
	Name:
    	 	 
	Title:
    	 	 

 

 

    	22

    	 

    

 

Exhibit
A

List
of convertible debentures

 

	Date	 	Original
                                         principal

                                                                                amount
                                         of debenture

	July
    21, 2014	 	1,000,000
	August
    25, 2014	 	1,000,000
	September
    26, 2014	 	500,000
	November
    21, 2014	 	250,000
	January
    30, 2015	 	200,000
	February
    27, 2015	 	100,000
	March
    13, 2015	 	50,000
	March
    16, 2015	 	25,000
	March
    20, 2015	 	75,000
	March
    27, 2015	 	150,000
	April
    2, 2015	 	100,000
	April
    2, 2015	 	50,000
	April
    10, 2015	 	150,000
	April
    17, 2015	 	50,000
	April
    24, 2015	 	150,000
	April
    24, 2015	 	25,000
	May
    1, 2015	 	150,000
	May
    7, 2015	 	105,000
	May
    8, 2015	 	31,500
	May
    15, 2015	 	150,000
	May
    22, 2015	 	150,000
	May
    29, 2015	 	150,000
	June
    5, 2015	 	150,000
	June
    12, 2015	 	400,000
	June
    19, 2015	 	1,000,000
	July
    10, 2015	 	500,000
	August
    14, 2015	 	650,000.00
	August
    24, 2015	 	82,220.00
	August
    28, 2015	 	207,220.00
	September
    4, 2015	 	457,220.00
	September
    11, 2015	 	82,220.00
	September
    18, 2015	 	250,000.00
	October
    14, 2015	 	100,000.00
	October
    23, 2015	 	250,000.00
	November
    13, 2015	 	150,000.00
	November
    20, 2015	 	450,000.00
	December
    11, 2015	 	300,000.00
	December
    22, 2015	 	105,263.00
	January
    4, 2016	 	631,579.00
	January
    8, 2016	 	263,158.00
	February
    18, 2016	 	210,000
	March
    18, 2016	 	125,000
	March
    22, 2016	 	85,000
	May
    13, 2016 (due July 13, 2016)	 	50,000
	May
    20, 2016 (due July 20, 2016)	 	50,000
	June
    14, 2016	 	10,000
	June
    22, 2016	 	120,000

 

Convertible
Debenture dated July 10, 2015

 

Convertible
Debenture dated August 24, 2015

 

Convertible
Debenture dated August 28, 2015

 

Convertible
Debenture dated May 13, 2016

 

Convertible
Debenture dated May 20, 2016

 

	Total	$5,882,241.63
	 	(plus
    accrued interest).

 

    	23

    	 

    

 

Exhibit
B

 

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

 

Original
Issue Date: September   , 2016

Fixed
Conversion Price (subject to adjustment herein): $0.75

 

$___,000

 

10%
CONVERTIBLE DEBENTURE

DUE
JUNE 30, 2017

 

THIS
10% CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 10% Convertible Debentures of EWSD I, LLC,
a Delaware limited liability company, and Pueblo Agriculture Supply and Equipment, LLC, a Delaware limited liability company (each,
a “Company” and collectively, the “Companies”), having its principal place of business at
633 West 5th Street, 28th Floor, Los Angeles, CA 90071 designated as its 10% Convertible Debenture due June
30, 2017 (this Debenture, the “Debenture” and, collectively with the other Debentures of such series, the “Debentures”).

 

FOR
VALUE RECEIVED, the Companies jointly and severally promise to pay to Redwood Management, LLC or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $___,000 on June 30, 2017 (the “Maturity Date”)
or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions
hereof. This Debenture is subject to the following additional provisions:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Event
of Default” shall have the meaning set forth in Section 6(a).

 

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

 

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

 

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

 

“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Debenture and accrued and unpaid
interest hereon, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

 

“New
York Courts” shall have the meaning set forth in Section 7(d).

 

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

 

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

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 30, 2016 among the Company and the original Holder
and certain other purchasers thereto, as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

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Section
2. Interest.

 

a)
Payment of Interest in Cash or Kind. The Company shall pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture at the rate of 10% per annum. All interest payments hereunder will be payable in
cash, or subject to the Equity Conditions, in cash or Common Stock in the Company’s discretion. Accrued and unpaid interest
shall be due on payable on each Conversion Date and on the Maturity Date, or as otherwise set forth herein.

 

b)
Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day
periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest
hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration
and transfers of this Debenture (the “Debenture Register”).

 

c)
Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal
to the lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall
accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.

 

d)
Prepayment. At any time upon ten (10) days written notice to the Holder, the Company may prepay any portion of the principal
amount of this Debenture and any accrued and unpaid interest. If the Company exercises its right to prepay the Debenture, the
Company shall make payment to the Holder of an amount in cash equal to the sum of the then outstanding principal amount of this
Debenture and interest multiplied by 130% within three (3) Business Days after such ten (10) day period. The Holder may convert
the Debenture from the date notice of the prepayment is given until the date of the prepayment.

 

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Section
3. Registration of Transfers and Exchanges.

 

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

 

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

 

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

 

Section
4. Conversion.

 

a)
Voluntary Conversion. At any time after the Maturity Date until this Debenture is no longer outstanding, this Debenture
shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time
to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Debenture to be converted, accrued and unpaid interest outstanding under this
Debenture to be converted, and the date on which such conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall
not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture, plus
all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain
a Conversion Schedule showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an
objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The
Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less
than the amount stated on the face hereof.

 

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b)
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to the lower of (a) $0.75, subject
to adjustment herein (the “Fixed Conversion Price”), or (b) 60% of the lowest trading price for the thirty
(30) consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Conversion Date (the resulting
pricing being referred to herein as the “Conversion Price”). All such determinations will be appropriately
adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately
decreases or increases the Common Stock during such measuring period. Nothing herein shall limit a Holder’s right to pursue
actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section
hereof or under applicable law.

 

c)
Mechanics of Conversion.

 

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

 

ii.
Delivery of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates
representing the Conversion Shares which, on or after the date on which such Conversion Shares are eligible to be sold under Rule
144 without the need for current public information and the Company has received an opinion of counsel to such effect reasonably
acceptable to the Company (which opinion the Company will be responsible for obtaining) shall be free of restrictive legends and
trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion
Shares being acquired upon the conversion of this Debenture, and (B) a bank check in the amount of accrued and unpaid interest
(if the Company has elected or is required to pay accrued interest in cash). All certificate or certificates required to be delivered
by the Company under this Section 4(d) shall be delivered electronically through the Depository Trust Company or another established
clearing corporation performing similar functions. If the Conversion Date is prior to the date on which such Conversion Shares
are eligible to be sold under Rule 144 without the need for current public information the Conversion Shares shall bear a restrictive
legend in the following form, as appropriate:

 

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“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company, upon request of the Holder, shall obtain a legal opinion to allow for such sales under
Rule 144.

 

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

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In
the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal or interest amount hereof,
the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has
been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder,
restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company
posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture,
which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying
dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction,
the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for
any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date,
the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, $1,000 per Trading Day for each Trading
Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall
limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the Company’s
failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section
hereof or under applicable law.

 

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

 

vi.
Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to 200% of the Required
Minimum for the sole purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as
herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and
the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall (subject to the
terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of
Section 5) upon the conversion of the then outstanding principal amount of this Debenture and payment of interest hereunder. The
Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.

 

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

 

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

 

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

 

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Section
5. Certain Adjustments.

 

a)
Stock Dividends and Stock Splits. If the Parent, at any time while this Debenture is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Parent upon conversion
of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Parent, then
the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Parent) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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

 

    	34

    	 

    

 

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

 

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

 

    	35

    	 

    

 

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

 

f)
Notice to the Holder.

 

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

 

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

 

    	36

    	 

    

 

Section
6. Events of Default.

 

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

 

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

 

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

 

    	37

    	 

    

 

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

 

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

 

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

 

vi.
the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured
or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $50,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

vii.
the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through the Depository
Trust Company System is no longer available or “chilled”;

 

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

 

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

 

    	38

    	 

    

 

x.
the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it
is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);

 

xi.
if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian
or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;

 

xii.
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company
or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty
(60) days;

 

xiii.
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company
or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $300,000 individually or in
the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after
the date thereof;

 

xiv.
the Company shall fail to maintain sufficient reserved shares pursuant to Section 4.10 of the Purchase Agreement; or

 

xv.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $125,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

 

b)
Remedies Upon Event of Default. Subject to the Beneficial Ownership Limitation as set forth in Section 4(d), if any Event
of Default occurs, then the outstanding principal amount of this Debenture, plus accrued but unpaid interest, liquidated damages
and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash at the Mandatory Default Amount. After the occurrence of any Event of Default that results in the eventual
acceleration of this Debenture, the interest rate on this Debenture shall accrue at an additional interest rate equal to the lesser
of 2% per month (24% per annum) or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection with such acceleration
described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice
of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder
at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any,
as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

 

    	39

    	 

    

 

Section
7. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address
as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 7(a). Any and all
notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally,
by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or
address of the Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of
the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 12:00
p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 12:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is
required to be given.

 

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

 

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

 

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

 

    	40

    	 

    

 

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

 

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

 

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

 

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

 

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

 

j)
Secured Obligation. The obligations of the Company under this Note are secured pursuant to the Security Agreement dated
as of the date hereof, between the Company and the Secured Parties (as defined therein).

 

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

 

(Signature
Pages Follow)

 

    	41

    	 

    

 

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

 

	 	EWSD
    I, LLC
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	Facsimile
    No. for delivery of Notices: ___________
	 	 	 
	 	Pueblo
    Agriculture Supply and Equipment, LLC
	 	 	                            
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	Facsimile
    No. for delivery of Notices: ___________

 

	ACCEPTED
    AND AGREED: 	     
	 	 	 
	Notis
    Global, Inc.	 
	 	                                	 
	By:	 	 
	Name:	 	 
	Title:	 	 
	Facsimile
    No. for delivery of Notices: _______________	 

 

    	 

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal and interest under the 10% Convertible Debenture due June 30, 2017 of EWSD I, LLC
and Pueblo Agriculture Supply and Equipment, LLC (collectively, the “Company”), into shares of common stock
of Notis Global, Inc., a Nevada corporation (the “Common Stock”), according to the conditions hereof, as of
the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer
taxes, if any.

 

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

 

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

 

Conversion
calculations:

 

	 	Date
    to Effect Conversion:
	 	 
	 	Principal
    Amount of Debenture to be Converted:
	 	 
	 	Payment
    of Interest in Common Stock __ yes __ no
	 	If
    yes, $_____ of Interest Accrued on Account of Conversion at Issue.
	 	 
	 	Number
    of shares of Common Stock to be issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Delivery
    Instructions:

 

    	 

    	 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

This
10% Convertible Debenture due on June 30, 2017 in the original principal amount of $___,000 is issued by EWSD I, LLC and Pueblo
Agriculture Supply and Equipment, LLC. This Conversion Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

 

Dated:

 

	Date
                                         of Conversion

        (or
        for first entry,

        Original
        Issue Date)
	 	Amount
    of Conversion	 	Aggregate
                                         Principal Amount Remaining Subsequent to Conversion (or original

                                                                                                                           Principal
                                         Amount)
	 	Company
    AttestExhibit 4.1

 

DUKE ENERGY OHIO, INC.

(FORMERLY NAMED “THE CINCINNATI GAS & ELECTRIC COMPANY”)

 

TO

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., 
 AS TRUSTEE

(SUCCESSOR TRUSTEE TO THE BANK OF NEW YORK MELLON 
 AND TO IRVING TRUST COMPANY)

 

 

FORTY-SIXTH SUPPLEMENTAL INDENTURE

 

DATED AS OF January 8, 2019

 

TO

 

FIRST MORTGAGE

 

DATED AS OF AUGUST 1, 1936

 

 

Subjecting Certain Additional Property to the Lien of the Indenture

 

and

 

Creating First Mortgage Bonds, 3.65% Series, Due February 1, 2029

and First Mortgage Bonds, 4.30% Series, Due February 1, 2049

 

 

TABLE OF CONTENTS

 

	
ARTICLE ONE.
    	
 
    
	
 
    	
 
    
	
DEFINITIONS
    	
2
    
	
 
    	
 
    
	
SECTION 1.01.   DEFINITIONS
    	
2
    
	
 
    	
 
    
	
ARTICLE TWO.
    	
 
    
	
 
    	
 
    
	
AMENDMENTS   TO THE INDENTURE
    	
2
    
	
 
    	
 
    
	
SECTION 2.01.   AMENDMENT TO THE FIRST GRANTING CLAUSE
    	
2
    
	
 
    	
 
    
	
SECTION 2.02.   AMENDMENT TO THE SECOND GRANTING CLAUSE
    	
4
    
	
 
    	
 
    
	
SECTION 2.03.   AMENDMENT TO THE DEFINITION OF EXCEPTED PROPERTY
    	
4
    
	
 
    	
 
    
	
SECTION 2.04.   AMENDMENT TO THE DEFINITION OF PERMITTED LIENS
    	
4
    
	
 
    	
 
    
	
ARTICLE THREE.
    	
 
    
	
 
    	
 
    
	
FIRST   MORTGAGE BONDS, 3.65% SERIES, DUE FEBRUARY 1, 2029 AND
    	
 
    
	
FIRST   MORTGAGE BONDS, 4.30% SERIES, DUE FEBRUARY 1, 2049
    	
5
    
	
 
    	
 
    
	
SECTION 3.01.   CREATION AND DESIGNATION OF BONDS
    	
5
    
	
 
    	
 
    
	
SECTION 3.02.   AGGREGATE PRINCIPAL AMOUNT OF BONDS OF EACH SERIES ISSUABLE
    	
5
    
	
 
    	
 
    
	
SECTION 3.03.   BOOK-ENTRY SYSTEM
    	
6
    
	
 
    	
 
    
	
SECTION 3.04.   DATE OF BONDS OF EACH SERIES
    	
9
    
	
 
    	
 
    
	
SECTION 3.05.   MATURITY DATE, INTEREST RATE, INTEREST PAYMENT DATES AND REGULAR   RECORD DATES FOR THE BONDS OF EACH SERIES
    	
9
    
	
 
    	
 
    
	
SECTION 3.06.   PLACE AND MANNER OF PAYMENT OF BONDS OF EACH SERIES
    	
9
    
	
 
    	
 
    
	
SECTION 3.07.   DENOMINATIONS AND NUMBERING OF DEFINITIVE BONDS OF EACH SERIES
    	
10
    
	
 
    	
 
    
	
SECTION 3.08.   TEMPORARY BONDS OF EACH SERIES AND EXCHANGE THEREOF
    	
10
    
	
 
    	
 
    
	
SECTION 3.09.   REDEMPTION PROVISIONS OF THE BONDS
    	
10
    
	
 
    	
 
    
	
SECTION 3.10.   FORM OF THE BONDS OF EACH SERIES
    	
13
    

 

i

 

	
ARTICLE FOUR.
    	
 
    
	
 
    	
 
    
	
MISCELLANEOUS
    	
27
    
	
 
    	
 
    
	
SECTION 4.01.   INDENTURE RATIFIED AND CONFIRMED
    	
27
    
	
 
    	
 
    
	
SECTION 4.02.   EXECUTION IN COUNTERPARTS
    	
27
    
	
 
    	
 
    
	
SECTION 4.03.   EFFECT OF HEADINGS AND TABLE OF CONTENTS
    	
27
    
	
 
    	
 
    
	
SECTION 4.04.   SUCCESSORS AND ASSIGNS
    	
27
    
	
 
    	
 
    
	
SECTION 4.05.   SEPARABILITY CLAUSE
    	
28
    
	
 
    	
 
    
	
SECTION 4.06.   BENEFITS OF INDENTURE
    	
28
    
	
 
    	
 
    
	
SECTION 4.07.   GOVERNING LAW
    	
28
    
	
 
    	
 
    
	
SECTION 4.08.   TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.
    	
28
    

 

ii

 

FORTY-SIXTH SUPPLEMENTAL INDENTURE, dated as of January 8, 2019, between DUKE ENERGY OHIO, INC. (hereinafter sometimes referred to as the “Company”), a corporation organized and existing under the laws of the State of Ohio, formerly named The Cincinnati Gas & Electric Company, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, and the successor trustee to The Bank of New York Mellon and Irving Trust Company (hereinafter sometimes referred to as the “Trustee”), whose mailing address is 10161 Centurion Parkway N, Jacksonville, Florida 32256.

 

RECITALS OF THE COMPANY

 

The Indenture, dated as of August 1, 1936 (the “Original Indenture”) was authorized, executed and delivered by the Company to provide for the issuance from time to time of its bonds, to be issued in one or more series as contemplated therein, and to provide security for the payment of the principal of and premium, if any, and interest, if any, on the bonds.

 

The Company has heretofore executed and delivered to the Trustee forty-five supplemental indentures for the purposes recited therein, including creating series of Securities and otherwise amending, restating and supplementing the Original Indenture (the Original Indenture, as so amended, restated and supplemented, being hereinafter called the “Indenture”).

 

The Company, by appropriate corporate action in conformity with the terms of the Indenture, has duly determined to make, execute and deliver to the Trustee this Forty-sixth Supplemental Indenture to the Indenture (i) as permitted by Section 13.01 of the Indenture in order to subject to the Lien of the Indenture all right, title and interest of the Company, as of the date of this Forty-sixth Supplemental Indenture, in and to certain property, real, personal and mixed, in connection with the transmission and distribution of natural gas by the Company and, in so doing, include such property in the definition of Mortgaged Property, exclude such property from the definition of Excepted Property and modify the definition of Permitted Liens and (ii) as permitted by Sections 2.01, 3.01, 13.01, 16.02 and/or Section 16.03 of the Indenture in order to establish the form or terms of, and to provide for the creation and issuance of, two new series of Securities (each, a “Series”) under the Indenture to be designated as (a) “First Mortgage Bonds, 3.65% Series, Due February 1, 2029” in an aggregate principal amount of $400,000,000 (hereinafter referred to as the “Bonds of Series Due 2029”) and (b) “First Mortgage Bonds, 4.30% Series, Due February 1, 2049” in an aggregate principal amount of $400,000,000 (hereinafter referred to as the “Bonds of Series Due 2049” and, together with the Bonds of Series Due 2029, the “Bonds”).

 

All things necessary to make the Bonds of each Series herein described, when duly authenticated by the Trustee and issued by the Company, valid, binding, and legal obligations of the Company, and to make this Forty-sixth Supplemental Indenture a valid and binding agreement supplemental to the Indenture, have been done and performed.

 

THIS FORTY-SIXTH SUPPLEMENTAL INDENTURE WITNESSETH:

 

In consideration of the premises and of the acceptance and purchase of the Bonds of each Series, the Company hereby covenants and agrees to and with the Trustee as follows:

 

 

ARTICLE ONE.

 

DEFINITIONS

 

SECTION 1.01.  DEFINITIONS.

 

(a)                                 In addition to the words and terms defined elsewhere in this Forty-sixth Supplemental Indenture, the following defined term used herein shall, unless the context otherwise requires, have the meaning specified below.

 

“Business Day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in New York, New York or Cincinnati, Ohio are generally authorized or required by law, regulation or executive order to remain closed.

 

(b)                                 Each capitalized term that is used herein and is defined in the Indenture shall have the meaning specified in the Indenture unless such term is otherwise defined herein.  The terms defined herein include the plural as well as the singular.

 

ARTICLE TWO.

 

AMENDMENTS TO THE INDENTURE

 

SECTION 2.01.  AMENDMENT TO THE FIRST GRANTING CLAUSE

 

(a)                                 The First Granting Clause is hereby amended by inserting the following section heading prior to clause (a) in such First Granting Clause:

 

(1)                                 Electric Property.

 

(b)                                 The First Granting Clause is hereby further amended by inserting the following section immediately after the last word of clause (g) in such First Granting Clause:

 

(2)                                 Natural Gas Property.

 

All right, title and interest of the Company, as of the date of the Forty-sixth Supplemental Indenture, in and to all property, real, personal and mixed, wherever located (other than Excepted Property), in any case used or to be used in or in connection with the transmission, storage and distribution of natural gas by the Company (whether or not such use is the sole use of such property), including without limitation, all right, title and interest of the Company in and to the following:

 

(a)                                 all real property owned in fee, easements and other interests in real property;

 

2

 

(b)                                 without limiting the generality of the foregoing, all recorded easements or rights of way on, upon, over, under and through real property located in the State of Ohio, used or useful in the Company’s transmission or distribution of natural gas and acquired by the Company in the ordinary course of its business, whether acquired by deed, grant of easement, dedication by plat or otherwise, and whether acquired in the name of the Company or any of its predecessor companies and including the Company’s right to the joint use of any easement or right of way acquired by any other utility company;

 

(c)                                  all facilities, machinery, equipment and fixtures for the storage, transmission and distribution of natural gas including, but not limited to, all storage facilities, natural gas transmission lines and gas distribution systems, including, but not limited to, all water sets, benches and retorts, gas holders, boilers, purification apparatus, exhausters and pumps, meters and meter installations, gauges, regulators and regulator installations, governors, calorimetric devices, valves, fuel handling apparatus, safety tanks, valves, pipes and piping, couplings, gates, drips, lighting and heating apparatus, machinery, equipment, appliances, and all accessory equipment, appurtenances and supplies forming a part of such natural gas storage facilities, transmission lines and distribution systems and all other property used or to be used for any or all of such purposes;

 

(d)                                 all buildings, offices, warehouses, structures or improvements in addition to those referred to or otherwise included in clauses (a) and (c) in Section 2 above;

 

(e)                                  all franchises, licenses, permits, grants, immunities, privileges and rights of the Company used or useful in the operation of its natural gas transmission and distribution businesses, including all franchises, licenses, permits, grants, immunities, privileges and rights of the Company granted by any municipalities or political subdivisions, and all right, title and interest therein owned by the Company on the date of the Forty-sixth Supplemental Indenture, and all renewals, extensions and modifications of said franchises, grants, privileges and rights, or any of them;

 

(f)                                   all computers, data processing, data storage, data transmission and/or telecommunications facilities, equipment and apparatus necessary for the operation or maintenance of any facilities, machinery, equipment or fixtures described or referred to in clause (c) in Section 2 above; and

 

(g)                                  all of the foregoing property in the process of construction;

 

3

 

SUBJECT, however, to Liens which have been granted on such property by the Company to prior to the date of the execution and delivery of this Forty-sixth Supplemental Indenture.

 

SECTION 2.02.  AMENDMENT TO THE SECOND GRANTING CLAUSE.

 

(a)                                 The Second Granting Clause is hereby amended and replaced with the following in entirety:

 

“Subject to the applicable exceptions permitted by Section 17.09(d), Section 12.03 and Section 12.05, (i) all right, title and interest of the Company in all property, real, personal and mixed, wherever located (other than Excepted Property), as set forth in Section 1 of the First Granting Clause, which may be hereafter acquired by the Company, it being the intention of the Company that all such property acquired by the Company after the Execution Date shall be as fully embraced within and subjected to the Lien hereof as if such property were owned by the Company as of the Execution Date and (ii) all right, title and interest of the Company in all property, real, personal and mixed, wherever located (other than Excepted Property), as set forth in Section 2 of the First Granting Clause, which may be hereafter acquired by the Company, it being the intention of the Company that all such property acquired by the Company after the date of the Forty-sixth Supplemental Indenture shall be as fully embraced within and subjected to the Lien hereof as if such property were owned by the Company as of the date of the Forty-sixth Supplemental Indenture; and”

 

SECTION 2.03.  AMENDMENT TO THE DEFINITION OF EXCEPTED PROPERTY.

 

(a)                                 Clause (b) is hereby amended by inserting the words “and natural gas” in each instance immediately after the word “electric” appears.

 

(b)                                 Clause (d) is hereby amended by inserting the following words immediately prior to the words “of the First Granting Clause”:

 

“in Sections (1) and (2)”

 

(c)                                  Clause (k) is hereby deleted in its entirety and replaced with the following words:

 

“(k) [Reserved]”

 

(d)                                 Clause (l) is hereby amended by inserting the words “and natural gas” immediately after the word “electric”.

 

SECTION 2.04.  AMENDMENT TO THE DEFINITION OF PERMITTED LIENS.

 

(a)                                 Clause (a) is hereby amended by adding the following words immediately after “the Original Indenture”:

 

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“and, with respect to property described in Section 2 of the First Granting Clause, Liens existing at the date of the Forty-sixth Supplemental Indenture.”

 

ARTICLE THREE.

 

FIRST MORTGAGE BONDS, 3.65% SERIES, DUE FEBRUARY 1, 2029 AND
 FIRST MORTGAGE BONDS, 4.30% SERIES, DUE FEBRUARY 1, 2049

 

SECTION 3.01.  CREATION AND DESIGNATION OF BONDS.

 

There is hereby created two series of Securities to be issued under and secured by the Indenture, to be designated as (i) “First Mortgage Bonds, 3.65% Series, Due February 1, 2029” (such series being the Bonds of Series Due 2029 hereinbefore referenced), and (ii) “First Mortgage Bonds, 4.30% Series, Due February 1, 2049” (such series being the Bonds of Series Due 2049 hereinbefore referenced).

 

SECTION 3.02.  AGGREGATE PRINCIPAL AMOUNT OF BONDS OF EACH SERIES ISSUABLE.

 

(a)                                 The principal amount of Bonds of Series Due 2029 which may be authenticated and delivered hereunder is initially limited to the aggregate principal amount of Four Hundred Million Dollars ($400,000,000) and the principal amount of Bonds of Series Due 2049 which may be authenticated and delivered hereunder is initially limited to the aggregate principal amount of Four Hundred Million Dollars ($400,000,000) (except, in each case, for Bonds of each Series authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Bonds of such Series pursuant to Section 3.04, 3.05, 3.06, 5.06 or 13.06 of the Indenture and except for any Bonds of each such Series which, pursuant to Section 3.03 of the Indenture, are deemed never to have been authenticated and delivered hereunder); provided that Section 3.01 of the Indenture provides that without the consent of any Holder, the aggregate principal amount of a series of Securities may be increased and additional Securities of such series may be issued up to the maximum aggregate principal amount authorized with respect to such series as increased, provided that such additional Securities of such series are fungible with the previously issued Securities of such series for Federal income tax purposes.

 

(b)                                 The Bonds of Series Due 2029 in the aggregate principal amount of Four Hundred Million Dollars ($400,000,000) and the Bonds of Series Due 2049 in the aggregate principal amount of Four Hundred Million Dollars ($400,000,000) may at any time subsequent to the execution hereof be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered (either before or after the recording hereof) upon the basis of either Retired Securities and/or Property Additions issued and delivered to the Trustee for such purpose, pursuant to a Company Order referred to in Section 16.02 and/or Section 16.03 of the Indenture and upon receipt by the Trustee of the officer’s certificate or opinion and other documents required by said Section 16.02 and/or Section 16.03.

 

5

 

SECTION 3.03.  BOOK-ENTRY SYSTEM.

 

The following provisions shall apply to the Bonds of each Series.

 

(a)                                 The Bonds of each Series shall be issued in fully registered form only.  However, except as provided elsewhere in this Section, the registered owner of each Series of Bonds initially shall be The Depository Trust Company (“DTC”) or its nominee, and each such Series of Bonds initially shall be registered in the name of DTC or its nominee.  Payment of the principal or Redemption Price (if any) of or interest on Bonds of each Series registered in the name of DTC or its nominee shall be made in the manner specified in DTC’s rules and by-laws.  DTC (and any successor securities depositary) and its (or their) participating institutions (each, a “Participant”) shall maintain a book-entry registration and transfer system with respect to ownership of beneficial interests in the Bonds of each Series (the “Book-Entry System”).

 

(b)                                 The Bonds of each Series initially shall be issued in the form of one or more authenticated, fully registered bonds for such series (each, a “Global Security”) which (i) need not be in the form of a lithographed or engraved certificate, but may be typewritten or printed on ordinary paper or such paper as the Trustee may reasonably request, (ii) shall represent and be denominated in an amount equal to 100% of the aggregate principal amount of such Series of Bonds issued under the Indenture and this Forty-sixth Supplemental Indenture, (iii) shall be executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and this Forty-sixth Supplemental Indenture, (iv) shall be registered in the name of DTC or its nominee, and delivered to DTC or its nominee or a custodian therefor, and (v) shall contain the following legend on the face thereof:

 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered holder hereof, Cede & Co., has an interest herein.

 

Unless and until it is exchanged in whole or in part for Bonds of Series Due 2029 or Bonds of Series Due 2049 (as applicable) in definitive certificated form, each Global Security representing the Bonds of such Series may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such nominee to a successor securities depository or a nominee of any such successor securities depository.

 

6

 

(c)                                  The Trustee and the Company may treat DTC or its nominee, or any successor securities depositary or nominee thereof (collectively, the “Depository”) as the sole and exclusive owner of the Bonds of each Series registered in its name for the purposes of payment of the principal or Redemption Price (if any) of or interest on the Bonds of such Series, giving any notice permitted or required to be given to Holders of the Bonds of such Series under the Indenture or this Forty-fourth Supplemental Indenture, registering the transfer of the Bonds of such Series, obtaining any consent or other action to be taken by Holders of the Bonds of such Series, and for all other purposes whatsoever and neither the Trustee nor the Company shall be affected by any notice to the contrary.  Neither the Company nor the Trustee nor any Security Registrar nor any Paying Agent shall have any responsibility or obligation to any Participant, any Person claiming a beneficial ownership interest in a Series of Bonds under or through the Depository or any Participant, or any other Person which is not shown on the Security Register as being a Holder of a Series of Bonds with respect to (i) the accuracy of any records maintained by the Depository or any Participant; (ii) the payment by the Depository to any Participant of any amount in respect of the principal or Redemption Price (if any) of or interest on the Bonds of such Series; (iii) the payment by any Participant to any owner of a beneficial ownership interest in the Bonds of such Series in respect of the principal or Redemption Price (if any) of or interest on the Bonds of such Series or (iv) any consent or other action taken by the Depository as owner of the Bonds of such Series.  The Trustee shall pay all principal or Redemption Price (if any) of and interest on the Bonds of each Series only to or upon the order of the registered Holder or Holders of the Bonds of such Series, as shown on the Security Register, and all such payments shall be valid and effective to fully satisfy and discharge the Company’s obligations with respect to the principal or Redemption Price (if any) of and interest on the Bonds of such Series, to the extent of the sum or sums so paid.  Except as hereinafter provided, no Person other than a Holder of a Bond of a Series, as shown on the Security Register, shall receive an authenticated Bond of such Series evidencing the obligation of the Company to make payment of the principal or Redemption Price (if any) of and interest on the Bonds of such Series, pursuant to the Indenture or this Forty-sixth Supplemental Indenture.  Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee for Cede & Co, and subject to the provisions of the Indenture, the word “Cede & Co.”, as used in this Forty-sixth Supplemental Indenture, shall refer to each new nominee of DTC.

 

(d)                                 In the event that after the occurrence of an Event of Default that has not been cured or waived, holders of a majority in aggregate principal amount of the beneficial interests in the Bonds of a Series, as reflected in the books and records of the Depository, notify the Trustee, through the Depository or any Participant, that the continuation of the Book-Entry System is no longer in the best interests of such holders of beneficial interests in the Bonds of such Series, then the Trustee shall notify the Depository and the Company, and the Depository will notify each Participant of the availability through the Depository of definitive certificated Bonds of such Series.  In such event, the Company shall execute, and the Trustee, upon receipt of a Company Order, for the authentication and delivery of definitive certificated Bonds of such Series, will authenticate and deliver such Bonds in definitive certificated form, in any authorized denominations, all pursuant to the provisions of the Indenture and this Forty-sixth Supplemental Indenture, to the Person or Persons specified to the Trustee in writing by the Depository in the

 

7

 

aggregate principal amount of the applicable Global Security or Securities and in exchange for such Global Security or Securities.

 

(e)                                  If at any time the Depository notifies the Company that it is unwilling or unable to continue as Depository for a Series of Bonds, or if at any time the Depository shall no longer be registered as a clearing agency in good standing under the Exchange Act or other applicable statute or regulation, the Company may appoint a successor Depository with respect to the Bonds of such Series.  If a successor Depository for the Bonds of such Series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive certificated Bonds of such Series, will authenticate and deliver Bonds of such Series in definitive certificated form, in any authorized denominations, all pursuant to the provisions of the Indenture and this Forty-sixth Supplemental Indenture, to the Person or Persons specified to the Trustee in writing by the Depository in the aggregate principal amount of the applicable Global Security or Global Securities and in exchange for such Global Security or Global Securities.

 

(f)                                   The Company may at any time and in its sole discretion and subject to the procedures of the Depository determine that a Series of Bonds shall no longer be represented by a Global Security or Global Securities.  In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive certificated Bonds, will authenticate and deliver such Bonds in definitive certificated form, in any authorized denominations, all pursuant to the provisions of the Indenture and this Forty-sixth Supplemental Indenture, to the Person or Persons specified to the Trustee in writing by the Depository in the aggregate principal amount of the applicable Global Security or Global Securities and in exchange for such Global Security or Global Securities.

 

(g)                                  Upon the exchange of any Global Security for the Bonds of Series Due 2029 or the Bonds of Series Due 2049 in definitive certificated form, in authorized denominations, the related Global Security or Global Securities shall be cancelled by the Trustee.

 

(h)                                 Whenever the Depository requests the Company and the Trustee to do so, the Trustee and the Company will cooperate with the Depository in taking appropriate action after reasonable notice to (i) make available one or more separate Global Securities evidencing a Series of Bonds to any Participant having Bonds of such Series credited to its account at the Depository, or (ii) arrange for another Depository to maintain custody of the Global Security or Securities evidencing a Series of Bonds.

 

(i)                                     In connection with any notice or other communication to be provided to Holders of the Bonds of a Series pursuant to the Indenture or this Forty-sixth Supplemental Indenture by the Company or the Trustee with respect to any consent or other action to be taken by Holders of the Bonds of such Series, the Company or the Trustee, as the case may be, shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.  Such notice

 

8

 

to the Depository shall be given only so long as a Depository or its nominee is the sole Holder of the Bonds of such Series.

 

SECTION 3.04.  DATE OF BONDS OF EACH SERIES.

 

Each Bond of Series Due 2029 and each Bond of Series Due 2049 issued prior to the first Interest Payment Date therefor shall be dated as of January 8, 2019, and otherwise shall be dated as provided in Section 3.03 of the Indenture.

 

SECTION 3.05.  MATURITY DATE, INTEREST RATE, INTEREST PAYMENT DATES AND REGULAR RECORD DATES FOR THE BONDS OF EACH SERIES.

 

(a)                                 All Bonds of Series Due 2029 shall be due and payable on February 1, 2029, and shall bear interest from January 8, 2019 or the last date to which interest has been paid or duly provided for at the rate of 3.65% per annum, payable semi-annually on the first day of February and August in each year, commencing August 1, 2019 (each such date being an Interest Payment Date for the Bonds of Series Due 2029).  In the event that any Interest Payment Date for the Bonds of Series Due 2029 should fall on a day that is not a Business Day, then the interest payment shall be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after such Interest Payment Date.

 

(b)                                 All Bonds of Series Due 2049 shall be due and payable on February 1, 2049, and shall bear interest from January 8, 2019 or the last date to which interest has been paid or duly provided for at the rate of 4.30% per annum, payable semi-annually on the first day of February and August in each year, commencing August 1, 2019 (each such date being an Interest Payment Date for the Bonds of Series Due 2049).  In the event that any Interest Payment Date for the Bonds of Series Due 2049 should fall on a day that is not a Business Day, then the interest payment shall be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after such Interest Payment Date.

 

(c)                                  Subject to certain exceptions provided in the Indenture or this Forty-sixth Supplemental Indenture, the interest payable on any Interest Payment Date for Bonds of each Series shall be paid to the Person in whose name such Series of Bonds shall be registered at the close of business on the Regular Record Date for such Series of Bonds (as defined in the form of the Bonds of such Series set forth in Section 3.10) or, in the case of any Defaulted Interest therefor, in the manner and to the Person as provided in Section 3.07 of the Indenture.

 

SECTION 3.06.  PLACE AND MANNER OF PAYMENT OF BONDS OF EACH SERIES.

 

Subject to agreements with or the rules of the Depository or any successor book-entry security system or similar system with respect to Global Securities, the principal or Redemption Price (if any) of and interest on the Bonds of each Series shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts, at the office or agency of the Company in Cincinnati, Ohio, or, at the option of the Holder thereof, at the office or agency of the Company in the Borough of

 

9

 

Manhattan, The City of New York, State of New York, except that interest on the Bonds of each Series may be paid, at the option of the Company, by check or draft mailed to the address of the Person entitled thereto as it appears on the Security Register.

 

SECTION 3.07.  DENOMINATIONS AND NUMBERING OF DEFINITIVE BONDS OF EACH SERIES.

 

Definitive Bonds of each Series shall be issuable in denominations of $2,000 and integral multiples of $1,000 in excess thereof, numbered in each case consecutively from “R-1” upward.

 

SECTION 3.08.  TEMPORARY BONDS OF EACH SERIES AND EXCHANGE THEREOF.

 

Pursuant to the provisions of Section 3.04 of the Indenture, Bonds of each Series may be issued in temporary form, and if temporary bonds be issued, the Company shall, with all reasonable dispatch, at its own expense and without charge to the holders of the temporary bonds, prepare and execute definitive Bonds of such Series and exchange the temporary bonds for such definitive bonds in the manner provided for in said Section, provided, however, no presentation or surrender of temporary Bonds shall be necessary in order for the Holders entitled to interest thereon to receive such interest.

 

SECTION 3.09.  REDEMPTION PROVISIONS OF THE BONDS.

 

(a)                                 Bonds of Series Due 2029.

 

(i)                                     At any time before November 1, 2028 (the “2029 Par Call Date”), the Bonds of Series Due 2029 may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to the greater of (1) 100% of the principal amount of the Bonds of Series Due 2029 being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the Bonds of Series Due 2029 being redeemed that would be due if the Bonds of Series Due 2029 matured on the 2029 Par Call Date (exclusive of interest accrued to the Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 0.20% (20 basis points), plus, in each case, accrued and unpaid interest on the principal amount of the Bonds of Series Due 2029 being redeemed to, but excluding, the Redemption Date.  For the avoidance of doubt, interest that is due and payable on an Interest Payment Date for the Bonds of Series Due 2029 falling on or prior to a Redemption Date therefor will be payable on such Interest Payment Date in accordance with the Bonds of Series Due 2029 and the Indenture.  The Company shall notify the Trustee of the Redemption Price with respect to any redemption pursuant to this paragraph promptly after the calculation thereof.  The Trustee shall not be responsible for calculating said Redemption Price.

 

10

 

At any time on or after the 2029 Par Call Date, the Bonds of Series Due 2029 may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to 100% of the principal amount of the Bonds of Series Due 2029 being redeemed plus accrued and unpaid interest on the principal amount of the Bonds of Series Due 2029 being redeemed to, but excluding, the Redemption Date.

 

(b)                                 Bonds of Series Due 2049.

 

(i)                                     At any time before August 1, 2048 (the “2049 Par Call Date”), the Bonds of Series Due 2049 may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to the greater of (1) 100% of the principal amount of the Bonds of Series Due 2049 being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the Bonds of Series Due 2049 being redeemed that would be due if the Bonds of Series Due 2049 matured on the 2049 Par Call Date (exclusive of interest accrued to the Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 0.25% (25 basis points), plus, in each case, accrued and unpaid interest on the principal amount of the Bonds of Series Due 2049 being redeemed to, but excluding, the Redemption Date.  For the avoidance of doubt, interest that is due and payable on an Interest Payment Date for the Bonds of Series Due 2049 falling on or prior to a Redemption Date therefor will be payable on such Interest Payment Date in accordance with the Bonds of Series Due 2049 and the Indenture.  The Company shall notify the Trustee of the Redemption Price with respect to any redemption pursuant to this paragraph promptly after the calculation thereof.  The Trustee shall not be responsible for calculating said Redemption Price.

 

At any time on or after the 2049 Par Call Date, the Bonds of Series Due 2049 may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to 100% of the principal amount of the Bonds of Series Due 2049 being redeemed plus accrued and unpaid interest on the principal amount of the Bonds of Series Due 2049 being redeemed to, but excluding, the Redemption Date.

 

(c)                                  For purposes of this Section 3.09, except as otherwise expressly provided or unless the context otherwise requires:

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the applicable Series of Bonds being redeemed (assuming, for this purpose, that the Bonds of Series Due 2029 matured on the 2029 Par Call Date and the Bonds of Series Due 2049 matured on the 2049 Par Call Date), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of Bonds of such Series.

 

11

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means each of (i) Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC and (ii) a Primary Treasury Dealer (as defined below) selected by U.S. Bancorp Investments, Inc., plus one other financial institution appointed by the Company at the time of any redemption, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated maturity (on a day count basis) of the applicable Comparable Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

(d)                                 Notice of any redemption by the Company will be mailed by or at the direction of the Company at least ten (10) days but not more than sixty (60) days before any Redemption Date to each Holder of Bonds of a Series to be redeemed.  If less than all the Bonds of a Series are to be redeemed at the option of the Company, the Bonds of such Series, if they are in global form, will be redeemed in accordance with the procedures of DTC, and if they are in the form of definitive certificates, the Trustee shall select, in such manner as it shall deem fair and appropriate, the Bonds of such Series to be redeemed in whole or in part.

 

12

 

(e)                                  Unless the Company defaults in payment of the Redemption Price therefor, on and after any Redemption Date therefor, interest will cease to accrue on the Bonds of a Series or portions thereof called for redemption.

 

(f)                                   The Company shall indemnify and hold harmless the Trustee from any and all losses, costs, damages, expenses, fees (including reasonable attorneys’ fees), court costs, judgments, penalties, obligations, suits, disbursements and liabilities of any kind or character whatsoever which may at any time be imposed upon, incurred by or asserted against the Trustee by reason of or arising out of or caused, directly or indirectly, by any act or omission of the Trustee with respect to this Section 3.09, except for such that would arise out of the gross negligence, willful misconduct or bad faith of the Trustee and except for costs and expenses arising in the ordinary course of the Trustee’s business.

 

SECTION 3.10.  FORM OF THE BONDS OF EACH SERIES.

 

The Bonds of each Series and the respective Trustee’s certificates to be endorsed thereon shall be substantially in the following form:

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

13

 

(FORM OF BOND OF SERIES DUE 2029)

 

[Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered holder hereof, Cede & Co., has an interest herein.](1)

 

	
No. R-
    	
$                        
    
	
CUSIP No:   26442EAF7
    	
 
    
	
ISIN:   US26442EAF79
    	
 
    

 

DUKE ENERGY OHIO, INC.

FIRST MORTGAGE BOND, 3.65% SERIES,

DUE FEBRUARY 1, 2029

 

Duke Energy Ohio, Inc., an Ohio corporation (hereinafter called the “Company”), for value received, hereby promises to pay to               , or registered assigns, the principal sum of                               Dollars ($ ) on the first day of February, 2029 and to pay interest on said sum from January 8, 2019 or from the most recent date to which interest has been paid or duly provided for, until said principal sum is paid or made available for payment, at the rate of 3.65% per annum, payable semi-annually on the first day of February and August in each year, commencing August 1, 2019 (each such date herein called an “Interest Payment Date”).  The principal of and premium, if any, and interest on this bond shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts at the office or agency of the Company in Cincinnati, Ohio, or, at the option of the registered owner hereof, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, except that interest on this bond may be paid, at the option of the Company, by check or draft mailed to the address of the Person entitled thereto as it appears on the Security Register.

 

This bond is one of the Securities of the Company issued and to be issued from time to time under and in accordance with and all secured by a First Mortgage Indenture, dated as of August 1, 1936, from the Company to The Bank of New York Mellon Trust Company, N.A., as successor Trustee (which indenture as amended, restated and supplemented by all supplemental indentures is hereinafter referred to as the “Indenture”).  Said Trustee or its successor in trust under the Indenture is hereinafter sometimes referred to as the “Trustee.”  Reference is hereby made to the Indenture for a description of the property mortgaged and pledged and the nature and extent of the security for said Securities.  By the terms of the Indenture, the Securities secured

 

(1)   This should be included only if the Bonds of Series Due 2029 are being issued in global form.

 

14

 

thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided.

 

As used herein, “Business Day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in New York, New York or Cincinnati, Ohio are generally authorized or required by law, regulation or executive order to remain closed.  Capitalized terms not otherwise defined herein have the meanings specified therefor in the Indenture.

 

This bond is one of a series designated as “First Mortgage Bonds, 3.65% Series, Due February 1, 2029” (hereinafter referred to as the “Bonds”) of the Company issued under and secured by the Indenture and created by a Forty-sixth Supplemental Indenture, dated as of January 8, 2019.

 

Subject to certain exceptions provided in the Indenture, the interest payable on any Interest Payment Date shall be paid to the Person in whose name this bond shall be registered at the close of business on the Regular Record Date (hereinafter defined) or, in the case of Defaulted Interest therefor, in the manner and to the person as provided in the Indenture.  If any Interest Payment Date should fall on a day that is not a Business Day, then the interest payment shall be made on the next succeeding Business Day and no interest shall accrue for the intervening period with respect to the payment so deferred.

 

The term “Regular Record Date” shall mean, with respect to any Interest Payment Date for any Bonds, the close of business on the fifteenth (15th) calendar day next preceding the respective Interest Payment Date (whether or not a Business Day); provided, however, that so long as the Bonds are held by a Depository in the form of one or more Global Securities, the Regular Record Date with respect to each Interest Payment Date will be the close of business on the Business Day before the applicable Interest Payment Date.

 

At any time before November 1, 2028 (the “Par Call Date”), the Bonds may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to the greater of (1) 100% of the principal amount of the Bonds being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the Bonds being redeemed that would be due if the Bonds matured on the Par Call Date (exclusive of interest accrued to the Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 0.20% (20 basis points), plus, in the case of each of clause (1) and (2), accrued and unpaid interest on the principal amount of the Bonds being redeemed to, but excluding, the Redemption Date.  For the avoidance of doubt, interest that is due and payable on an Interest Payment Date falling on or prior to a Redemption Date therefor will be payable on such Interest Payment Date in accordance with the Bonds and the Indenture.

 

At any time on or after the Par Call Date, the Bonds may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to 100% of the principal

 

15

 

amount of the Bonds being redeemed plus accrued and unpaid interest on the principal amount of the Bonds being redeemed to, but excluding, the Redemption Date.

 

For purposes of the redemption provisions of the Bonds, the following terms have the following meanings:

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Bonds being redeemed (assuming, for this purpose, that the Bonds matured on the Par Call Date), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the Bonds.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means each of (i) Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC and (ii) a Primary Treasury Dealer (as defined below) selected by U.S. Bancorp Investments, Inc., plus one other financial institution appointed by the Company at the time of any redemption, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a

 

16

 

price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

Notice of any redemption by the Company will be mailed or transmitted by or at the request of the Company at least ten (10) days but not more than sixty (60) days before any Redemption Date to each Holder of Bonds to be redeemed.  If less than all the Bonds are to be redeemed at the option of the Company, the Bonds, if they are in global form, will be redeemed in accordance with the procedures of DTC, and if they are in the form of definitive certificates, the Trustee shall select, in such manner as it shall deem fair and appropriate, the Bonds to be redeemed.

 

Unless the Company defaults in payment of the Redemption Price, on and after any Redemption Date for the Bonds, interest will cease to accrue on the Bonds or portions thereof called for redemption.

 

In the case of any of certain Events of Default specified in the Indenture, the principal of this bond may be declared or may become due and payable prior to the stated date of maturity hereof in the manner and with the effect provided in the Indenture.

 

No recourse shall be had for the payment of the principal or Redemption Price of or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, officer or director, past, present or future, of the Company or of any predecessor or successor company, either directly or through the Company or such predecessor or successor company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers being waived and released by the registered owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture.

 

The Bonds are issuable only in registered form without coupons.  This bond is transferable by the registered owner hereof, in person or by an attorney duly authorized, at the Corporate Trust Office of The Bank of New York Mellon Trust Company, N.A., the Trustee, or its successor in trust under the Indenture, or, at the option of the registered owner, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, upon the surrender and cancellation of this bond, and upon any such transfer a new registered Security or Securities of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor.

 

The Bonds are issuable in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  In the manner and subject to the limitations provided in the Indenture, the Bonds are exchangeable as between authorized denominations, upon presentation thereof for such purpose by the registered owner, at the Corporate Trust Office of The Bank of New York Mellon Trust Company, N.A., the Trustee, or its successor in trust under the Indenture, or, at the option

 

17

 

of the registered owner, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York.

 

No service charge will be made for any transfer or exchange of this bond, but the Company may require a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee, or its successor in trust under the Indenture, of the certificate endorsed hereon.

 

18

 

IN WITNESS WHEREOF, Duke Energy Ohio, Inc. has caused this bond to be executed in its name by the manual or facsimile signature of an Authorized Officer.

 

 

	
 
    	
DUKE   ENERGY OHIO, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    

 

19

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
THE BANK   OF NEW YORK MELLON TRUST 
   COMPANY, N.A., AS TRUSTEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    

 

Dated:

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

20

 

(FORM OF BOND OF SERIES DUE 2049)

 

[Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered holder hereof, Cede & Co., has an interest herein.](1)

 

	
No. R-
    	
$                          
    
	
CUSIP No:   26442EAG5
    	
 
    
	
ISIN:   US26442EAG52
    	
 
    

 

DUKE ENERGY OHIO, INC.

FIRST MORTGAGE BOND, 4.30% SERIES,

DUE FEBRUARY 1, 2049

 

Duke Energy Ohio, Inc., an Ohio corporation (hereinafter called the “Company”), for value received, hereby promises to pay to               , or registered assigns, the principal sum of                               Dollars ($ ) on the first day of February, 2049 and to pay interest on said sum from January 8, 2019 or from the most recent date to which interest has been paid or duly provided for, until said principal sum is paid or made available for payment, at the rate of 4.30% per annum, payable semi-annually on the first day of February and August in each year, commencing August 1, 2019 (each such date herein called an “Interest Payment Date”).  The principal of and premium, if any, and interest on this bond shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts at the office or agency of the Company in Cincinnati, Ohio, or, at the option of the registered owner hereof, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, except that interest on this bond may be paid, at the option of the Company, by check or draft mailed to the address of the Person entitled thereto as it appears on the Security Register.

 

This bond is one of the Securities of the Company issued and to be issued from time to time under and in accordance with and all secured by a First Mortgage Indenture, dated as of August 1, 1936, from the Company to The Bank of New York Mellon Trust Company, N.A., as successor Trustee (which indenture as amended, restated and supplemented by all supplemental indentures is hereinafter referred to as the “Indenture”).  Said Trustee or its successor in trust under the Indenture is hereinafter sometimes referred to as the “Trustee.”  Reference is hereby made to the Indenture for a description of the property mortgaged and pledged and the nature and

 

(1)   This should be included only if the Bonds of Series Due 2049 are being issued in global form.

 

21

 

extent of the security for said Securities.  By the terms of the Indenture, the Securities secured thereby are issuable in series which may vary as to date, amount, date of maturity, rate of interest and in other respects as in the Indenture provided.

 

As used herein, “Business Day” means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in New York, New York or Cincinnati, Ohio are generally authorized or required by law, regulation or executive order to remain closed.  Capitalized terms not otherwise defined herein have the meanings specified therefor in the Indenture.

 

This bond is one of a series designated as “First Mortgage Bonds, 4.30% Series, Due February 1, 2049” (hereinafter referred to as the “Bonds”) of the Company issued under and secured by the Indenture and created by a Forty-sixth Supplemental Indenture, dated as of January 8, 2019.

 

Subject to certain exceptions provided in the Indenture, the interest payable on any Interest Payment Date shall be paid to the Person in whose name this bond shall be registered at the close of business on the Regular Record Date (hereinafter defined) or, in the case of Defaulted Interest therefor, in the manner and to the person as provided in the Indenture.  If any Interest Payment Date should fall on a day that is not a Business Day, then the interest payment shall be made on the next succeeding Business Day and no interest shall accrue for the intervening period with respect to the payment so deferred.

 

The term “Regular Record Date” shall mean, with respect to any Interest Payment Date for any Bonds, the close of business on the fifteenth (15th) calendar day next preceding the respective Interest Payment Date (whether or not a Business Day); provided, however, that so long as the Bonds are held by a Depository in the form of one or more Global Securities, the Regular Record Date with respect to each Interest Payment Date will be the close of business on the Business Day before the applicable Interest Payment Date.

 

At any time before August 1, 2048 (the “Par Call Date”), the Bonds may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to the greater of (1) 100% of the principal amount of the Bonds being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the Bonds being redeemed that would be due if the Bonds matured on the Par Call Date (exclusive of interest accrued to the Redemption Date), discounted to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 0.25% (25 basis points), plus, in the case of each of clause (1) and (2), accrued and unpaid interest on the principal amount of the Bonds being redeemed to, but excluding, the Redemption Date.  For the avoidance of doubt, interest that is due and payable on an Interest Payment Date falling on or prior to a Redemption Date therefor will be payable on such Interest Payment Date in accordance with the Bonds and the Indenture.

 

22

 

At any time on or after the Par Call Date, the Bonds may be redeemed in whole or in part, at the option of the Company at any time, at a Redemption Price equal to 100% of the principal amount of the Bonds being redeemed plus accrued and unpaid interest on the principal amount of the Bonds being redeemed to, but excluding, the Redemption Date.

 

For purposes of the redemption provisions of the Bonds, the following terms have the following meanings:

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Bonds being redeemed (assuming, for this purpose, that the Bonds matured on the Par Call Date), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the Bonds.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means each of (i) Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC and (ii) a Primary Treasury Dealer (as defined below) selected by U.S. Bancorp Investments, Inc., plus one other financial institution appointed by the Company at the time of any redemption, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

 

23

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

Notice of any redemption by the Company will be mailed or transmitted by or at the request of the Company at least ten (10) days but not more than sixty (60) days before any Redemption Date to each Holder of Bonds to be redeemed.  If less than all the Bonds are to be redeemed at the option of the Company, the Bonds, if they are in global form, will be redeemed in accordance with the procedures of DTC, and if they are in the form of definitive certificates, the Trustee shall select, in such manner as it shall deem fair and appropriate, the Bonds to be redeemed.

 

Unless the Company defaults in payment of the Redemption Price, on and after any Redemption Date for the Bonds, interest will cease to accrue on the Bonds or portions thereof called for redemption.

 

In the case of any of certain Events of Default specified in the Indenture, the principal of this bond may be declared or may become due and payable prior to the stated date of maturity hereof in the manner and with the effect provided in the Indenture.

 

No recourse shall be had for the payment of the principal or Redemption Price of or interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any incorporator, shareholder, officer or director, past, present or future, of the Company or of any predecessor or successor company, either directly or through the Company or such predecessor or successor company, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, shareholders, directors and officers being waived and released by the registered owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Indenture.

 

The Bonds are issuable only in registered form without coupons.  This bond is transferable by the registered owner hereof, in person or by an attorney duly authorized, at the Corporate Trust Office of The Bank of New York Mellon Trust Company, N.A., the Trustee, or its successor in trust under the Indenture, or, at the option of the registered owner, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, upon the surrender and cancellation of this bond, and upon any such transfer a new registered Security or Securities of the same series and maturity date and for the same aggregate principal amount will be issued to the transferee in exchange herefor.

 

The Bonds are issuable in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  In the manner and subject to the limitations provided in the Indenture, the Bonds

 

24

 

are exchangeable as between authorized denominations, upon presentation thereof for such purpose by the registered owner, at the Corporate Trust Office of The Bank of New York Mellon Trust Company, N.A., the Trustee, or its successor in trust under the Indenture, or, at the option of the registered owner, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York.

 

No service charge will be made for any transfer or exchange of this bond, but the Company may require a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

This bond shall not be valid or become obligatory for any purpose unless and until it shall have been authenticated by the execution by the Trustee, or its successor in trust under the Indenture, of the certificate endorsed hereon.

 

25

 

IN WITNESS WHEREOF, Duke Energy Ohio, Inc. has caused this bond to be executed in its name by the manual or facsimile signature of an Authorized Officer.

 

	
 
    	
DUKE   ENERGY OHIO, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    

 

26

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
THE BANK   OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    

 

Dated:

 

[END OF ARTICLE THREE.]

 

ARTICLE FOUR.

 

MISCELLANEOUS

 

SECTION 4.01.  INDENTURE RATIFIED AND CONFIRMED.

 

The Indenture, as supplemented by this Forty-sixth Supplemental Indenture, is in all respects ratified and confirmed and shall be read, taken and construed as one and the same instrument.

 

SECTION 4.02.  EXECUTION IN COUNTERPARTS

 

This Forty-sixth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

 

SECTION 4.03.  EFFECT OF HEADINGS AND TABLE OF CONTENTS.

 

The Article and Section headings in this Forty-sixth Supplemental Indenture and the Table of Contents are for convenience only and shall not affect the construction hereof.

 

SECTION 4.04.  SUCCESSORS AND ASSIGNS.

 

All covenants and agreements in this Forty-sixth Supplemental Indenture by the Company and the Trustee shall bind their respective successors and assigns, whether so expressed or not.

 

27

 

SECTION 4.05.  SEPARABILITY CLAUSE.

 

In case any provision in this Forty-sixth Supplemental Indenture shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

SECTION 4.06.  BENEFITS OF INDENTURE.

 

Nothing in this Forty-sixth Supplemental Indenture or the Bonds of Series Due 2029 or the Bonds of Series Due 2049, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder and the Holders of any Bonds of Series Due 2029 or any Bonds of Series Due 2049, any benefit or any legal or equitable right, remedy or claim under this Forty-sixth Supplemental Indenture.

 

SECTION 4.07.  GOVERNING LAW.

 

This Forty-sixth Supplemental Indenture and the Bonds of Series Due 2029 and the Bonds of Series Due 2049 shall be governed by and construed in accordance with the laws of the State of Ohio, except (a) to the extent that the Trust Indenture Act shall be applicable, and (b) that the rights, duties, obligations, privileges, immunities and standard of care of the Trustee shall be governed by the laws of the State of New York.

 

SECTION 4.08.  TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.

 

The recitals contained herein are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Forty-sixth Supplemental Indenture.

 

 

[EXECUTION PAGES FOLLOW.]

 

28

 

IN WITNESS WHEREOF, the parties hereto have caused this Forty-sixth Supplemental Indenture to be duly executed as of the day and year first above written.

 

	
 
    	
DUKE ENERGY   OHIO, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ John   L. Sullivan, III
    
	
 
    	
 
    	
Name:   John L. Sullivan, III
    
	
 
    	
 
    	
Title:   Assistant Treasurer
    

 

[SIGNATURE PAGE TO FORTY-SIXTH SUPPLEMENTAL INDENTURE]

 

 

	
 
    	
THE BANK OF NEW   YORK MELLON TRUST COMPANY, N.A.,   as Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/ Julie   Hoffman-Ramos
    
	
 
    	
Name:
    	
Julie   Hoffman-Ramos
    
	
 
    	
Title:
    	
Vice   President
    

 

[SIGNATURE PAGE TO FORTY-SIXTH SUPPLEMENTAL INDENTURE]

 

 

	
STATE OF   NORTH CAROLINA
    	
)
    
	
 
    	
) ss:
    
	
COUNTY OF   MECKLENBURG
    	
)
    

 

BE IT REMEMBERED, that on this 8th day of January, 2019, before me, the undersigned, a notary public in and for the County and State aforesaid, duly commissioned and qualified, personally appeared John L. Sullivan, III, personally known to me to be the same person whose name is subscribed to the foregoing instrument, and personally known to me to be the Assistant Treasurer of Duke Energy Ohio, Inc., an Ohio corporation, and acknowledged that he signed and delivered said instrument as his free and voluntary act as such Assistant Treasurer, and as the free and voluntary act of said Duke Energy Ohio, Inc., for the uses and purposes therein set forth; in pursuance of the power and authority granted to him by resolution of the Board of Directors of said Company.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year aforesaid.

 

(NOTARIAL SEAL)

 

 

	
 
    	
/s/   Phoebe P. Elliot
    
	
 
    	
Notary Public
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:   Phoebe P. Elliot
    
	
 
    	
Commission   Expiration: June 26, 2021
    

 

 

	
State of Texas
    	
)
    
	
 
    	
): ss
    
	
County of Harris
    	
)
    

 

On the 4th day of January in the year 2019, before me, the undersigned, personally appeared, Julie Hoffman-Ramos, a Vice President of The Bank of New York Mellon Trust Company, N.A., personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her capacity, and that by her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

 

	
/s/ Nancy Carpenter
    	
 
    
	
Nancy Carpenter
    	
 
    
	
Notary Public – State of Texas
    	
 
    
	
Notary Id: 275467-4
    	
 
    
	
Commission Expires August 31, 2019

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