Document:

Exhibit 10.2

 

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

 

	Principal
    Amount: US$105,000.00	Issue
    Date: January 26, 2018
	Purchase
    Price: US$105,000.00	 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, DRONE USA, INC., a Delaware corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of AUCTUS FUND, LLC, a Delaware limited liability company, or registered assigns (the “Holder”)
the sum of US$105,000.00 together with any interest as set forth herein, on October 26, 2018 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of ten percent (10%) (the “Interest Rate”)
per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set
forth herein with the written consent of the Holder which may be withheld for any reason or for no reason. Any amount of principal
or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) twenty four percent (24%)
per annum or (ii) the maximum amount allowed by law from the due date thereof until the same is paid (the “Default Interest”).
Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year
and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.0001 par
value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United
States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice
made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due
on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and,
in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the
city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein,
and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date
hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

     

    

    

 

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

 

The
following terms shall apply to this Note:

 

Article
I. CONVERSION RIGHTS

 

1.1 Conversion
Right. The Holder shall have the right from time to time, and at any time following the Issue Date and ending on the later
of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a)
or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding
and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists
on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter
be changed or reclassified at the Conversion Price (as defined below) determined as provided herein (a “Conversion”);
provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of
that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the
Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a
limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock.
For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations
on conversion may be waived by the Holder (up to a maximum of 9.99%) upon, at the election of the Holder, not less than 61 days’
prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or
such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the
applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit
A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided
that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result
in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”).
The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount
of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if
any, on such principal amount at the interest rates provided in this Note to the Conversion Date, provided however, that the Borrower
shall have the right to pay any or all interest in cash plus (3) at the Holder’s option, Default Interest, if any,
on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

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1.2 Conversion
Price.

 

Calculation
of Conversion Price. Subject to the adjustments described herein, the conversion price (the “Conversion Price”)
shall equal the lesser of (i) the lowest Trading Price (as defined below) during the previous twenty-five (25) Trading Day period
ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price (as defined herein)
(subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s
securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events). The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as
defined herein) (representing a discount rate of 35%). “Market Price” means the lowest Trading Price for the Common
Stock during the twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading
Price” means, for any security as of any date, the lesser of: (i) the lowest trade price on the OTC Pink, OTCQB or applicable
trading market as reported by a reliable reporting service (“Reporting Service”) designated by the Holder or, if the
OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any
of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink
sheets” by the National Quotation Bureau, Inc., or (ii) the closing bid price on the OTC Pink, OTCQB or applicable trading
market as reported by a Reporting Service designated by the Holder or, if the OTC Pink is not the principal trading market for
such security, the closing bid price of such security on the principal securities exchange or trading market where such security
is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of
the closing bid prices of any market makers for such security that are listed in the “pink sheets” by the National
Quotation Bureau, Inc. To the extent the Conversion Price of the Borrower’s Common Stock closes below the par value per
share, the Borrower will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest
value possible under law. The Borrower agrees to honor all conversions submitted pending this adjustment. Furthermore, the Conversion
Price may be adjusted downward if, within three (3) business days of the transmittal of the Notice of Conversion to the Borrower,
the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion. If the shares of the
Borrower’s Common Stock have not been delivered within three (3) business days to the Borrower, the Notice of Conversion
may be rescinded. At any time after the Closing Date, if in the case that the Borrower’s Common Stock is not deliverable
by DWAC (including if the Borrower’s transfer agent has a policy prohibiting or limiting delivery of shares of the Borrower’s
Common Stock specified in a Notice of Conversion), an additional 10% discount will apply for all future conversions under all
Notes. If in the case that the Borrower’s Common Stock is “chilled” for deposit into the DTC system and only
eligible for clearing deposit, an additional 15% discount shall apply for all future conversions under all Notes while the “chill”
is in effect.  If in the case of both of the above, an additional cumulative 25% discount shall apply. Additionally, if the
Borrower ceases to be a reporting company pursuant to the 1934 Act or if the Note cannot be converted into free trading shares
after one hundred eighty-one (181) days from the Issue Date, an additional 30% discount will be attributed to the Conversion Price.
If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall
be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted
for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading
Day” shall mean any day on which the Common Stock is tradable for any period on the OTC Pink, OTCQB or on the principal
securities exchange or other securities market on which the Common Stock is then being traded. The Borrower shall be responsible
for the fees of its transfer agent and all DTC fees associated with any such issuance. Holder shall be entitled to deduct $500.00
from the conversion amount in each Notice of Conversion to cover Holder’s deposit fees associated with each Notice of Conversion.
If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value of the Common
Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such conversion
and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional Principal”
means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares
issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price
not been adjusted by the Holder to the par value price.

 

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While
this Note is outstanding, each time any 3rd party has the right to convert monies owed to that 3rd party
(or receive shares pursuant to a settlement or otherwise), including but not limited to under Section 3(a)(9) and Section 3(a)(10),
at a discount to market greater than the Conversion Price in effect at that time (prior to all other applicable adjustments in
the Note), then the H1older, in Holder’s sole discretion, may utilize such greater discount percentage (prior to all applicable
adjustments in this Note) until this Note is no longer outstanding. While this Note is outstanding, each time any 3rd
party has a look back period greater than the look back period in effect under the Note at that time, including but not limited
to under Section 3(a)(9) and Section 3(a)(10), then the Holder, in Holder’s sole discretion, may utilize such greater number
of look back days until this Note is no longer outstanding. The Borrower shall give written notice to the Holder within one (1)
business day of becoming aware of any event that could permit the Holder to make any adjustment described in the two immediately
preceding sentences.

 

(a) Conversion
Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which
the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially
all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer
to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred
to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall,
effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below),
be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion
Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which
a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination
or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

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(b) Pro
Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in
connection with a conversion of this Note, the Borrower shall issue to the Holder the number of shares of Common Stock not in
dispute and resolve such dispute in accordance with Section 4.13.

 

1.3 Authorized
Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have
authorized and reserved 10 times the number of shares that is actually issuable upon full conversion of the Note (based on the
Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”). The Reserved Amount shall be increased
from time to time in accordance with the Borrower’s obligations pursuant to Section 3(d) of the Purchase Agreement. The
Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition,
if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares
of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same
time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed
its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that
its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and
conditions of this Note. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than the initial Reserved
Amount, regardless of any prior conversions.

 

If,
at any time the Borrower does not maintain or replenish the Reserved Amount within three (3) business days of the request of the
Holder, the principal amount of the Note shall increase by Five Thousand and No/100 United States Dollars ($5,000) (under Holder’s
and Borrower’s expectation that any principal amount increase will tack back to the Issue Date) per occurrence.

 

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1.4 Method
of Conversion.

 

(a) Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time
to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 5:00 p.m., New York, New York time) and (B) subject to
Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

(b) Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder
first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order
of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes)
may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a
portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount
stated on the face hereof.

 

(c) Payment
of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such
tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

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

 

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(e) Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of
accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its
obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate
except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion.
If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the
Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be
the Conversion Date so long as the Notice of Conversion is received by the Borrower before 5:00 p.m., New York, New York time,
on such date.

 

(f) Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section
1.1 and in this Section 1.4, the Borrower shall use its commercially reasonable best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with
DTC through its Deposit Withdrawal At Custodian (“DWAC”) system.

 

(g) DTC
Eligibility & Market Loss. If the Borrower fails to maintain its status as “DTC Eligible” for any reason,
or, if the Conversion Price is less than $0.01 at any time while this Note is outstanding, the principal amount of the Note shall
increase by Fifteen Thousand and No/100 United States Dollars ($15,000) (under Holder’s and Borrower’s expectation
that any principal amount increase will tack back to the Issue Date). In addition, the Variable Conversion Price shall be redefined
to mean forty percent (40%) multiplied by the Market Price, subject to adjustment as provided in this Note.

 

(h) Failure
to Deliver Common Stock Prior to Delivery Deadline. Without in any way limiting the Holder’s right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion
of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the
Deadline that the Borrower fails to deliver such Common Stock until the Borrower issues and delivers a certificate to the Holder
or credit the Holder’s balance account with OTC for the number of shares of Common Stock to which the Holder is entitled upon
such Holder’s conversion of any Conversion Amount (under Holder’s and Borrower’s expectation that any damages will tack back to
the Issue Date).. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which
it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance
with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the
terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from
a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly
the parties acknowledge that the liquidated damages provision contained in this Section 1.4(h) are justified.

 

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(i) Rescindment
of a Notice of Conversion.  If (i) the Borrower fails to respond to Holder within one (1) business day from the Conversion
Date confirming the details of Notice of Conversion, (ii) the Borrower fails to provide any of the shares of the Borrower’s
Common Stock requested in the Notice of Conversion within three (3) business days from the date of receipt of the Note of Conversion,
(iii) the Holder is unable to procure a legal opinion required to have the shares of the Borrower’s Common Stock issued
unrestricted and/or deposited to sell for any reason related to the Borrower’s standing, (iv) the Holder is unable to deposit
the shares of the Borrower’s Common Stock requested in the Notice of Conversion for any reason related to the Borrower’s
standing, (v) at any time after a missed Deadline, at the Holder’s sole discretion, or (vi) if OTC Markets changes the Borrower’s
designation to ‘Limited Information’ (Yield), ‘No Information’ (Stop Sign), ‘Caveat Emptor’
(Skull & Crossbones), ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign) or other
trading restriction on the day of or any day after the Conversion Date, the Holder maintains the option and sole discretion to
rescind the Notice of Conversion (“Rescindment”) with a “Notice of Rescindment.”

 

1.5 Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or
a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule
144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an
Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject
to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note
have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion
of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective
registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following
form, as appropriate:

 

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

 

    	 	8	 

    

    

 

The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be reasonably accepted by the Borrower so that the sale or transfer is
effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the
Borrower does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an
exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant
to Section 3.2 of the Note.

 

1.6 Effect
of Certain Events.

 

(a) Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all
of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more
than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the
Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be
deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder
upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III)
or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability
company, partnership, association, trust or other entity or organization.

 

(b) Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all
of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of
all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon
the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted
in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such
case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities
or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section
1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least
fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no
such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor
or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions
shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

    	 	9	 

    

    

 

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

 

(d) Adjustment
Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance
with this Section 1.6(d) hereof is deemed to have issued or sold, except for shares of Common Stock issued directly to vendors
or suppliers of the Borrower in satisfaction of amounts owed to such vendors or suppliers (provided, however, that such vendors
or suppliers shall not have an arrangement to transfer, sell or assign such shares of Common Stock prior to the issuance of such
shares), any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses
or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the
date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately
upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the
Borrower in such Dilutive Issuance.

 

    	 	10	 

    

    

 

The
Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants,
rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to
purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”)
(such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”)
and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price
then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the
“price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i)
the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options,
plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options,
plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming
full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities
issuable upon exercise of such Options.

 

Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and
the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price
per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof
at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

(e) Purchase
Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights
to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of
any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

    	 	11	 

    

    

 

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

 

1.7 [Intentionally
Omitted].

 

1.8 Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower’s failure to convert this Note.

 

1.9 Prepayment.
Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay the amounts outstanding hereunder pursuant
to the following terms and conditions:

 

(a) At
any time during the period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue Date,
the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the
Note to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in
cash equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued
and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, if any.

 

    	 	12	 

    

    

 

(b) At
any time during the period beginning the day which is ninety one (91) days following the Issue Date and ending on the date which
is one hundred eighty (180) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three
(3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest),
in full by making a payment to the Holder of an amount in cash equal to 150%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus
(y) Default Interest, if any.

 

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

 

1.10 Any
notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its
registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment
which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment amount to or upon the
order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional
Prepayment Date. If the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due
to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit
its right to prepay the Note pursuant to this Section 1.9.

 

Article
II. CERTAIN COVENANTS

 

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

 

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

 

2.3 Borrowings.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written
consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation
of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit
or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date
hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors
financial institutions or other lenders incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall
be used to repay this Note.

 

    	 	13	 

    

    

 

2.4 Sale
of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business.
Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

2.5 Advances
and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a)
in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b)
made in the ordinary course of business or (c) not in excess of $100,000.

 

2.6 Section
3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or
arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9)
of the Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(l0) of the Securities Act (a “3(a)(l0) Transaction”).
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(l0)
Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note,
but not less than Fifteen Thousand Dollars $15,000, will be assessed and will become immediately due and payable to the Holder
at its election in the form of cash payment or addition to the balance of this Note.

 

2.7 Preservation
of Existence, etc. The Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve,
its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries
that have no or minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in which the character
of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

 

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

 

    	 	14	 

    

    

 

2.9
Repayment from Proceeds. While any portion of this Note is outstanding, if the Borrower receives cash proceeds from any
source or series of related or unrelated sources, including but not limited to, from payments from customers, the issuance of
equity or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line
of credit of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of Borrower’s receipt of
such proceeds, inform the Holder of such receipt, following which the Holder shall have the right in its sole discretion to require
the Borrower to immediately apply all or any portion of such proceeds to repay all or any portion of the outstanding amounts owed
under this Note. Failure of the Borrower to comply with this provision shall constitute an Event of Default. In the event that
such proceeds are received by the Holder prior to the Maturity Date, the required prepayment shall be subject to the terms of
Section 1.9 herein.

 

Article
III. EVENTS OF DEFAULT

 

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

 

3.1 Failure
to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise.

 

3.2 Conversion
and the Shares. The Borrower (i) fails to issue shares of Common Stock to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance
with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated
form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as
and when required by this Note, (iii) directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iv) fails to remove (or
directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for
three (3) business days after the Holder shall have delivered a Notice of Conversion, (v) fails to remain current in its obligations
to its transfer agent, (vi) causes a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower
to its transfer agent, (vii) fails to repay Holder, within forty eight (48) hours of a demand from the Holder, any amount of funds
advanced by Holder to Borrower’s transfer agent in order to process a conversion, and/or (viii) fails to maintain the Reserved
Amount.

 

    	 	15	 

    

    

 

3.3 Failure
to Deliver Transaction Expense Amount. The Borrower fails to deliver the Transaction Expense Amount (as defined in the Purchase
Agreement) to the Holder within three (3) business days of the date such amount is due.

 

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

 

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

 

3.6 Receiver
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors or commence
proceedings for its dissolution, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such a receiver or trustee shall otherwise be appointed for the Borrower or for a substantial
part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment.

 

3.7 Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or
any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.8 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the
Borrower, or the Borrower admits in writing its inability to pay its debts generally as they mature, or have filed against it
an involuntary petition for bankruptcy relief, all under federal or state laws as applicable or the Borrower admits in writing
its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for bankruptcy relief,
all under international, federal or state laws as applicable.

 

3.9 Delisting
of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC Pink, OTCQB,
Nasdaq National Market, Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange.

 

3.10 Failure
to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including
but not limited to becoming delinquent in its filings); and/or the Borrower shall cease to be subject to the reporting requirements
of the Exchange Act.

 

    	 	16	 

    

    

 

3.11Liquidation.Any
dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

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

 

3.13 Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or in the future), or any disposition or conveyance of any material
asset of the Borrower.

 

3.14Financial
Statement Restatement.The restatement of any financial statements filed by the Borrower with the SEC for any date or period
from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder
with respect to this Note or the Purchase Agreement.

 

3.15Reverse
Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to
the Holder.

 

3.16
 Replacement of Transfer Agent. In the event that the Borrower proposes to replace
its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable
Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to
the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to
Borrower and the Borrower.

 

3.17 Cessation
of Trading. Any cessation of trading of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National Market, Nasdaq
Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange, and such cessation of trading shall
continue for a period of five consecutive (5) Trading Days.

 

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

 

    	 	17	 

    

    

 

3.19 Bid
Price. The Borrower shall lose the “bid” price for its Common Stock ($0.0001 on the “Ask” with
zero market makers on the “Bid” per Level 2) and/or a market (including the OTC Pink, OTCQB or an equivalent replacement
exchange).

 

3.20 OTC
Markets Designation. OTC Markets changes the Borrower’s designation to ‘No Information’ (Stop Sign), ‘Caveat
Emptor’ (Skull and Crossbones), or ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation
Mark Sign).

 

3.21 Inside
Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any
actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s
filing of a Form 8-K pursuant to Regulation FD on that same date.

 

3.22 Unavailability
of Rule 144. If, at any time on or after the date which is six (6) months after the Issue Date, the Holder is unable to (i)
obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Holder’s
brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s
conversion of any portion of the Note into free trading shares of the Borrower’s Common Stock pursuant to Rule 144, and
(ii) thereupon deposit such shares into the Holder’s brokerage account.

 

Upon
the occurrence of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 3.15, 3.16. 3.17, 3.18, 3.19, 3.20, 3.21, and/or 3.22 exercisable through the delivery of written notice to the Borrower
by such Holders (the “Default Notice”), the Note shall become immediately due and payable and the Borrower shall pay
to the Holder, in full satisfaction of its obligations hereunder, an amount equal to (i) 150% (except
with respect to SECTION 3.2 AND/OR 3.22, in which case 150% shall be replaced with 200%) times the sum of
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount
of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on
the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in
clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) at the option of the Holder, the
“parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common
Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading
Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest
applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date
in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Trading Price for the Common
Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory
Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable,
all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies
available at law or in equity. Further, if a breach of Sections 3.9, 3.10 and/or 3.19 occurs or is continuing after the six (6)
month anniversary of this Note, then the principal amount of the Note shall increase by Fifteen Thousand and No/100 United States
Dollars ($15,000) (under Holder’s and Borrower’s expectation that any principal amount increase will tack back to
the Issue Date) and the Holder shall be entitled to use the lowest Trading Price during the delinquency period as a base price
for the conversion with the Variable Conversion Price shall be redefined to mean forty percent (40%) multiplied by the Market
Price (at the option of the Holder), subject to adjustment as provided in this Note. For example, if the lowest Trading Price
during the delinquency period is $0.01 per share and the conversion discount is 50%, then the Holder may elect to convert future
conversions at $0.005 per share. If this Note is not paid at Maturity Date, then the outstanding principal due under this Note
shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000).

 

    	 	18	 

    

    

 

The
Holder shall have the right at any time, to require the Borrower to immediately issue, in lieu of the Default Amount, the number
of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect, subject
to the terms of this Note. This requirement by the Borrower shall automatically apply upon the occurrence of an Event of Default
without the need for any party to give any notice or take any other action.

 

If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Borrower for its attorneys’ fees
and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

Article
IV. MISCELLANEOUS

 

4.1 Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

 

    	 	19	 

    

    

 

4.2 Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:

 

If
to the Borrower, to:

 

Drone
USA, Inc.

16
Hamilton Street

West
Haven, CT 06516

Attn:
Michael Bannon

E-mail:
mike@droneusainc.com

 

If
to the Holder:

 

Auctus
Fund, LLC

177
Huntington Avenue, 17th Floor

Boston,
MA 02115

Attn:
Lou Posner

Facsimile:
(617) 532-6420

 

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

 

Chad
Friend, Esq., LL.M.

Legal
& Compliance, LLC

330
Clematis Street, Suite 217

West
Palm Beach, FL 33401

e-mail:
CFriend@LegalandCompliance.com

 

4.3 Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The
term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other
Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended
or supplemented.

 

4.4 Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Neither the Borrower nor the Holder shall assign this Note or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing, the Holder may assign its rights hereunder to any
“accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder or to any
of its “affiliates”, as that term is defined under the 1934 Act, without the consent of the Borrower. Notwithstanding
anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account
or other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that following conversion
of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than
the amount stated on the face hereof.

 

    	 	20	 

    

    

 

4.5 Cost
of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof reasonable costs of
collection, including reasonable attorneys’ fees.

 

4.6 Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of Massachusetts or in the federal courts located in the Commonwealth of Massachusetts.
The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and
shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE BORROWER
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY. The prevailing party shall
be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this
Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other
Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any other manner permitted by law.

 

4.7 Certain
Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount
(or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower
and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

 

    	 	21	 

    

    

 

4.8 Purchase
Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

 

4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior
notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders
who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities
or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection
with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation,
dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to
the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known
at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially
simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9 including, but not limited
to, name changes, recapitalizations, etc. as soon as possible under law.

 

4.10 Usury.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest
permitted under applicable law. The Borrower covenants (to the extent that it may lawfully do so) that it will not seek to claim
or take advantage of any law that would prohibit or forgive the Borrower from paying all or a portion of the principal or interest
on this Note.

 

4.11 Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law
or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required. No provision of this Note shall alter or impair the obligation of
the Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and
rate, and in the form, herein prescribed.

 

    	 	22	 

    

    

 

4.12 Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.

 

4.13 Dispute
Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, Default Sum, Closing or Maturity Date, the closing bid price, or fair market value (as the case may be) or
the arithmetic calculation of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or
the Holder shall submit the disputed determinations or arithmetic calculations via facsimile (i) within two (2) Business Days
after receipt of the applicable notice giving rise to such dispute to the Borrower or the Holder or (ii) if no notice gave rise
to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the
Borrower are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination
or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder, then the Borrower shall, within
two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, the closing bid price, the
or fair market value (as the case may be) to an independent, reputable investment bank selected by the Borrower and approved by
the Holder or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount or Default
Amount, Default Sum to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower.
The Borrower shall cause at its expense the investment bank or the accountant to perform the determinations or calculations and
notify the Borrower and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed
determinations or calculations. Such investment bank’s or accountant’s determination or calculation shall be binding
upon all parties absent demonstrable error.

 

4.14 Terms
of Future Financings.  So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder.  The
types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited
to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts,
stock sale price, private placement price per share, and warrant coverage.

 

4.15 Piggyback
Registration Rights. The Borrower shall include on the next registration statement the Borrower files with SEC (or on the
subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note.
Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than
Fifteen Thousand and No/100 United States Dollars ($15,000), being immediately due and payable to the Holder at its election in
the form of cash payment or addition to the balance of this Note.

 

[signature
page follows]

 

    	 	23	 

    

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer as of the date first above
written.

 

	 	DRONE
    USA, INC.
	 	 	 
	 	By:	                         
	 	Name: Michael Bannon
	 	Title: Chief Executive Officer

 

    	 	24	 

    

    

 

EXHIBIT
A

NOTICE
OF CONVERSION 

 

The
undersigned hereby elects to convert $_________________principal amount of the Note (defined below) together with $________________
of accrued and unpaid interest thereto, totaling $_____________ into that number of shares
of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of
Drone USA, Inc., a Delaware corporation (the “Borrower”), according to the conditions of the convertible note of the
Borrower dated as of January 26, 2018 (the “Note”), as of the date written below. No fee will be charged to the Holder
for any conversion, except for transfer taxes, if any.

 

Box
Checked as to applicable instructions:

 

	 	☐	The
    Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal At Custodian system (“DWAC Transfer”).
	 	 	 
	 	 	Name
                                         of DTC Prime Broker:

Account
Number:

 

	 	☐	The undersigned
    hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below
    (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or,
    if additional space is necessary, on an attachment hereto:

 

	 	Name:
    [NAME]	 	 	 
	 	Address:
    [ADDRESS]	 	 	 
	 	 	 	 	 
	 	Date
    of Conversion:  	 	 	 
	 	Applicable
    Conversion Price:	$	 	 
	 	Number
    of Shares of Common Stock to be Issued	 	 	 
	 	    Pursuant
    to Conversion of the Notes:  	 	 	 
	 	Amount
    of Principal Balance Due remaining	 	 	 
	 	    Under
    the Note after this conversion:	 	 	 
	 	Accrued
    and unpaid interest remaining:	 	 	 

 

	 	[HOLDER]
	 	 	 
	 	By:	                            	 
	 	Name: [NAME]
	 	Title: [TITLE]
	 	Date: [DATE]Exhibit

AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of February 9, 2018, by and among IMH Financial Corporation, a Delaware corporation (the “Company”), and each of the other Persons signatory hereto or that executes and delivers a joinder agreement pursuant to Section 8.  Capitalized terms used but not otherwise defined herein are defined in Section 13. 
WHEREAS, the Company and SRE Monarch, LLC, a Delaware limited liability company (“SRE”), are parties to the Series B-2 Cumulative Convertible Preferred Stock Subscription Agreement dated as of July 23, 2014 (the “SRE Purchase Agreement”); and
WHEREAS, the Company, JCP Realty Partners, LLC, a Delaware limited liability company (“JCP Realty”), and Juniper NVM, LLC, a Delaware limited liability company (“Juniper NVM”), are parties to the Series B-1 Cumulative Convertible Preferred Stock Exchange and Subscription Agreement dated as of July 23, 2014 (the “Juniper Purchase Agreement”); and  
WHEREAS, in order to induce the Company to enter into the SRE Purchase Agreement and the Juniper Purchase Agreement and to induce SRE, JCP Realty and Juniper NVM (the “Original Investors”) to invest funds in the Company and otherwise acquire shares of the Series B Preferred Stock, the Company and the Original Investors entered into an Investors’ Rights Agreement dated as of July 23, 2014 (the “Original Agreement”), to provide the Original Investors with certain registration rights to cause the shares of Common Stock issuable upon conversion of the shares of Series B Preferred Stock owned by the Original Investors to be registered under the Securities Act, and certain other rights as set forth therein; and
WHEREAS, the Company, SRE and JPMorgan Chase Funding Inc., a Delaware corporation (“JPM” or the “Series B-3 Investor”, as applicable), are parties to the Preferred Stock Purchase Agreement dated as of April 11, 2017 pursuant to which SRE sold all of its B-2 Cumulative Convertible Preferred Stock to JPM, and in connection therewith JPM signed a joinder to the Original Agreement and became an Original Investor; and
WHEREAS, the Company and JPM, are parties to the Series B-3 Cumulative Convertible Preferred Stock Subscription Agreement dated as of the date hereof (the “Series B-3 Purchase Agreement”); and
WHEREAS, in order to induce the Company to enter into the Series B-3 Purchase Agreement and to induce the Series B-3 Investor to invest funds in the Company and otherwise acquire shares of the Series B Preferred Stock, the Company and the Series B-3 Investor and the Original Investors (collectively, the “Investors”) have agreed to enter into this Agreement to provide the Investors with certain registration rights to cause the shares of Common Stock issuable upon conversion of the shares of Series B Preferred Stock owned by the Investors to be registered under the Securities Act, and certain other rights as set forth herein.

1

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1.Demand and Shelf Registrations.
(a)    Demand Registrations.  At any time after any of the Company’s equity securities are listed on a national securities exchange (provided that if a Lock-Up Period is in effect with respect to the Company’s first Underwritten Offering under the Securities Act for cash, after such Lock-Up Period has expired), if the Company has not effected or is not diligently pursuing a Shelf Registration pursuant to Section 1(b), any Major Investor may require the Company to register under the Securities Act all or any portion of such Major Investor’s Registrable Securities on (i) Form S-11 or any similar long-form Registration Statement (a “Long-Form Registration”), or, if available, (ii) Form S-3 or any similar short-form Registration Statement (a “Short-Form Registration”) (such Major Investor, an “Initiating Holder” and any registration under this Section 1(a), a “Demand Registration”), provided, however, that any Demand Registration on Form S-11 may only be requested by a Major Investor if the sale of the Registrable Securities requested to be registered by the Initiating Holder(s) of the Registrable Securities is reasonably expected to result in aggregate gross cash proceeds in excess of ten million dollars ($10,000,000) (before deducting any underwriting discount or commission).
(b)    Shelf Registration.  Provided that any of the Company’s equity securities are then listed on a national securities exchange, the Company shall no later than the earlier of (i) forty-five (45) days after the conversion of all of the outstanding Series B Preferred Stock into Common Stock or (ii) forty-five (45) days after any Major Investor has agreed in writing that, within three (3) Business Days after being notified of the effectiveness of the Shelf Registration (as defined below), it will convert all of its shares of Series B Preferred Stock into Common Stock, file a Registration Statement with the Securities and Exchange Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect) (the “Shelf Registration”), and shall thereafter, subject to Section 1(c), use its reasonable best efforts to cause such Registration Statement to become effective as promptly as practicable.  If any Registrable Securities remain issued and outstanding after three (3) years following the initial effective date of such Shelf Registration (the “Initial Shelf Effective Date”), the Company shall, prior to the expiration of such Shelf Registration, file a new Shelf Registration covering such Registrable Securities and shall thereafter use its reasonable best efforts to cause to be declared effective as promptly as practical, such new Shelf Registration.  Any Shelf Registration Statement filed pursuant to this Section 1(b) shall include a “plan of distribution” section in substantially the form attached hereto as Annex I (unless otherwise required pursuant to written comments received from the SEC upon review of the Shelf Registration Statement). The Company shall give prompt written notice of any proposed Shelf Registration at least twenty (20) days before the anticipated filing date (the “Shelf Notice”) to all Holders.  The Shelf Notice shall offer each Holder the opportunity to include in the Registration Statement the number of Registrable Securities as such Holder may request.

2

(c)    Maintenance of Mandatory Shelf Registration.  In the event the number of shares available under any Shelf Registration previously filed pursuant to this Section 1 is at any time insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement, the Company shall, as soon as practicable, but in any event not later than the later of (i) thirty (30) days after the Company becomes aware of the necessity therefor and (ii) the earliest date that the Company is permitted by the SEC to file the new Registration Statement as required hereby, file a new Shelf Registration Statement so as to register for resale all of the Registrable Securities not so covered.
(d)    Information from Holders.  In order to be named as a selling securityholder in the Shelf Registration as of the Initial Shelf Effective Date, each Holder must no later than ten (10) Business Days prior to the Initial Shelf Effective Date, which will be at least twenty (20) days following notice by the Company of the expected Initial Shelf Effective Date, furnish to the Company in writing such information as may be reasonably requested by the Company for the purpose of including such Holder’s Registrable Securities in the Shelf Registration (the “Participating Holder Information”).  The Company shall include in the Shelf Registration Participating Holder Information received by the Company at least ten (10) Business Days prior to the Initial Shelf Effective Date, to the extent necessary and in a manner so that upon Initial Shelf Effective Date the Holder shall be named as a selling securityholder and be permitted to deliver (or be deemed to deliver) a Prospectus relating to the Shelf Registration to purchasers of the Registrable Securities in accordance with applicable law.
From and after the Initial Shelf Effective Date (including with respect to a Shelf that is not the initial Shelf Registration), upon receipt of Participating Holder Information (including any updated Participating Holder Information) in writing (including any amendments to any prior Participating Holder Information), the Company shall use its reasonable best efforts to as soon as practicable but in any event within ten (10) Business Days (in the case of a supplement) or within thirty (30) calendar days (in the case of an amendment), as applicable, after the Company receives such Participating Holder Information, file any post-effective amendments or supplements, as applicable, to the Shelf Registration or a Prospectus relating to the Shelf Registration or the documents incorporated by reference therein necessary for such Holder to be named as a selling securityholder and permit such Holder to deliver (or be deemed to deliver) a Prospectus relating to the Shelf Registration to purchasers of the Registrable Securities (subject to the Company’s rights during any Delay Period or Suspension Period).  Holders that do not deliver Participating Holder Information as provided for in this Section 1(d) shall not be named as selling securityholders in the Prospectus relating to the Shelf Registration until such Holder delivers such information.  If the Company shall file a post-effective amendment to the Shelf Registration, it shall use its reasonable best efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is reasonably practicable and notify such Holder as promptly as is reasonably practicable after the effectiveness under the Securities Act of any post-effective amendment.  If such Participating Holder Information is delivered during a Delay Period or Suspension Period, the Company shall so inform the Holder delivering such Participating Holder Information and shall take the 

3

actions set forth in this Section 1(d) upon expiration of the Delay Period or Suspension Period, as applicable, as though such Holder’s Participating Holder Information had been delivered on the expiration date of such Delay Period or Suspension Period.
(e)    Demand Notices and Requests for Underwritten Shelf Takedowns.  The Initiating Holder(s) may request (i) pursuant and subject to Section 1(a) and the other terms and conditions hereof, a Demand Registration that is an Underwritten Offering (a “Underwritten Demand Offering”), or (ii) pursuant and subject to Section 1(b) and the other terms and conditions hereof, to sell all or any portion of their Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf (an “Underwritten Shelf Takedown”).  Each such request shall be made by giving written notice (an “Underwritten Offering Notice”) to the Company.  Each Underwritten Offering Notice shall specify the approximate number of Registrable Securities requested to be registered, in the case of an Underwritten Demand Offering, or sold, in the case of an Underwritten Shelf Takedown.  Within ten (10) days after receipt of any Underwritten Offering Notice, the Company shall give written notice of such requested registration or requested Underwritten Shelf Takedown, as applicable, to all other Holders of Registrable Securities and, subject to the provisions of Section 1(f)(ii) below, shall include in such Underwritten Demand Offering or Underwritten Shelf Takedown, as applicable, all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the receipt of the Company’s notice.  Following the delivery of an Underwritten Offering Notice in connection with an Underwritten Demand Offering, the Company shall use its reasonable best efforts to make such filing within forty-five (45) days of receipt of such Underwritten Offering Notice (the “Filing Deadline”), and shall use its reasonable best efforts to cause such Registration Statement to become effective within one hundred and eighty (180) days after receipt of an Underwritten Offering Notice (the “Effectiveness Deadline”).
(f)    Registrations; Takedowns.
(i)     A registration shall not count as one of the permitted Demand Registrations until it has become effective, and any Demand Registration shall not count as a Demand Registration unless the Initiating Holder(s) is able to register and sell at least seventy percent (70%) of the Registrable Securities requested to be registered by such Initiating Holder(s) in such Demand Registration; provided that the Company shall in any event pay all Registration Expenses in connection with any registration initiated as a Demand Registration whether or not it has become effective and whether or not such registration has counted as one of the permitted Demand Registrations; provided further that a Demand Registration which is withdrawn at the sole request of the Initiating Holder(s) who demanded such Demand Registration will count as a Demand Registration unless the Company is reimbursed by such Initiating Holder(s) for all reasonable out‐of‐pocket expenses incurred by the Company in connection with such registration.
(ii)    An underwritten sale of Registrable Securities shall not count as one of the permitted Underwritten Shelf Takedowns unless the Initiating Holder(s) is 

4

able sell at least seventy percent (70%) of the Registrable Securities requested to be sold in such Underwritten Shelf Takedown; provided that an Underwritten Shelf Takedown which is withdrawn at the sole request of such Initiating Holder(s) will count as an Underwritten Shelf Takedown unless the Company is reimbursed by such Initiating Holder(s) for all reasonable out‐of‐pocket expenses incurred by the Company in connection with any such Underwritten Shelf Takedown.
(g)    Short-Form Registrations.  The Company shall use its reasonable best efforts to become and remain eligible to use Short-Form Registration (a “Short-Form Shelf”) for registration of the Registrable Securities pursuant to Rule 415 at all times after any of the Company’s equity securities are listed on a national securities exchange.  Any Shelf Registration shall be a Short‐Form Shelf so long as the Company is eligible to use a Short-Form Registration and the Company shall use its reasonable best efforts to convert any Shelf Registration effected as a Long-Form Registration to a Short-Form Shelf as promptly as reasonably practicable after the Company is eligible to use a Short-Form Registration.  
(h)    Priority on Underwritten Demand Offerings and Underwritten Shelf Takedowns.  The Company shall not include in any Underwritten Demand Offering or Underwritten Shelf Takedown any securities which are not Registrable Securities without the prior written consent of the Holder(s) of a majority of the Registrable Securities included in such registration.  If any managing underwriter(s) advises the Company in writing that in its opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in an Underwritten Demand Offering or Underwritten Shelf Takedown exceeds the number of Registrable Securities and other securities, if any, which can be sold in an orderly manner in such offering within a price range acceptable to the Holder(s) of a majority of the Registrable Securities requesting such Underwritten Demand Offering or requesting to be included in the Underwritten Shelf Takedown, as applicable, the Company shall include in such Underwritten Demand Offering or Underwritten Shelf Takedown the number which can be so sold in the following order of priority:  first, the Registrable Securities requested to be included in such registration, which in the opinion of such underwriter(s) can be sold in an orderly manner within the price range of such offering, pro rata among the respective Holder(s) of such Registrable Securities on the basis of the number of shares of Common Stock owned by each such Holder(s), second, the securities to be sold for the account of the Company, and third, any other securities requested to be included in such registration to the extent permitted hereunder.
(i)    Effectiveness Period.  The Company shall use its reasonable best efforts to keep each Registration Statement filed pursuant to this Section 1 continuously effective and usable for the resale of the Registrable Securities covered thereby (i) in the case of a registration that is not a Shelf Registration, for a period of one hundred eighty (180) days from the date on which the SEC declares such Registration Statement effective and (ii) in the case of a Shelf Registration, for a period of three (3) years from the date on which the SEC declares such Registration Statement effective; provided, however, that the time period for which the Company is required to maintain the effectiveness of any Registration Statement relating to a Demand Registration shall be extended by the aggregate number of 

5

days of all applicable Delay Periods and Suspension Periods occurring with respect to such registration, and such period and any extension thereof is hereinafter referred to as the “Effectiveness Period.”  Notwithstanding the foregoing, the Company shall have no obligation to keep a Registration Statement effective after the earlier to occur of (i) the date all securities covered by such Registration Statement have been sold by the Holders and (ii) the date on which the securities covered by such Registration Statement cease to be Registrable Securities, and the Effectiveness Period shall end on such date.
(j)    Restrictions on Registrations and Underwritten Offerings.  Notwithstanding anything contained herein to the contrary, the Company shall not be obligated to:
(i)    effect in the aggregate, more than three (3) Demand Registrations or Shelf Registrations (whether by Short-Form Registration, Long-Form Registration or Underwritten Shelf Takedown), no more than two of which can be (2) Long-Form Demand Registrations;
(ii)    file a Registration Statement for a Demand Registration or Shelf Registration within one-hundred twenty (120) days after the effective date of a previous Demand Registration or Shelf Registration; or
(iii)    effect an Underwritten Offering within ninety (90) days (or one hundred and eighty (180) days with respect to the Company’s first Underwritten Offering under the Securities Act for cash) after the later of the closing of (x) an Underwritten Offering pursuant to this Section 1, or (y) a Piggyback Registration in which Holders were able to sell at least seventy (70%) of the Registrable Securities requested to be included in such Piggyback Registration.
(k)    Selection of Underwriters.  The Holder(s) of a majority of the Registrable Securities included in an Underwritten Demand Offering or an Underwritten Shelf Takedown, as applicable, shall have the right to select the investment banker(s) and manager(s), subject to the Company’s approval (such approval not to be unreasonably withheld, conditioned or delayed); provided, however, in connection with the Company’s first Underwritten Offering under the Securities Act for cash that is registered under the Securities Act pursuant to this Agreement, the Holder(s) of a majority of the Registrable Securities to be included in such registration and the Company shall mutually select the investment banker(s) and manager(s).
(l)    Other Registrations.  The Company shall not grant to any Person the right (other than as set forth herein and except to employees and directors of the Company with respect to registrations on Form S-8 and with respect to registrations on Form S-4 (or any successor forms thereto)), to request the Company to register any securities of the Company, except such rights as are (i) not more favorable than or inconsistent with the rights granted to the Holders, and (ii) that do not adversely affect the priorities of the Holders set forth herein.

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(m)    Postponement of Registration.  Notwithstanding the foregoing, the Company shall not be obligated to effect, or take action to effect, any Demand Registration, Shelf Registration or Underwritten Shelf Takedown during the period in which the board of directors of the Company (the “Board”) determines that in its reasonable judgment and in good faith that the registration and distribution of the Registrable Securities covered or to be covered by such Demand Registration, Shelf Registration or Underwritten Shelf Takedown, as applicable, would materially interfere with any proposed or pending material financing, acquisition or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries or would require premature disclosure thereof, and such disclosure would be materially adverse to the Company, and the Company may, at its option, direct that such request be delayed for a reasonable period of time (a “Delay Period”) and the Company shall notify the Initiating Holders to such effect; provided, however, that (i) the Company shall be entitled to a maximum of one (1) Delay Period in any twelve (12) month period and (ii) no Delay Period shall last for more than forty-five (45) consecutive days.
Furthermore, in the event that the Board determines that in its reasonable judgment and in good faith it is advisable to suspend for a period of time (a “Suspension Period”) the use of a Prospectus included in a Registration Statement because the use of such Prospectus would materially interfere with any pending material financing, acquisition or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries or would require premature disclosure thereof, and such disclosure would be materially adverse to the Company, the Company shall, in connection with a Prospectus relating to an offering that is not underwritten, notify the Holders whose securities are included in such Prospectus and, if the Prospectus relates to an underwritten offering, notify the managing underwriter(s), to such effect, and, upon receipt of such notice, such Holders or managing underwriter(s), as applicable, shall immediately discontinue any sales of Registrable Securities pursuant to such Registration Statement until:
(i)    such Holders or managing underwriter(s), as applicable, have been advised that the Prospectus has been filed with the SEC and, if required by terms of an underwriting agreement relating to Registrable Securities covered by such Registration Statement, the managing underwriter(s) has received copies of a Prospectus; or
(ii)    such Holders and managing underwriter(s), as applicable, are advised in writing by the Company that the then current Prospectus may be used and, if required by terms of an underwriting agreement relating to Registrable Securities covered by such Registration Statement, the managing underwriter has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus.
Notwithstanding anything to the contrary contained herein, (i) the Company shall be entitled to a maximum of one (1) Suspension Period in any twelve (12) month period and (ii) no Suspension Period shall last for more than forty-five (45) consecutive days.  

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Furthermore, the Company shall not be entitled to initiate or continue a Delay Period or a Suspension Period unless it shall (A) concurrently prohibit sales by all holders of the Company’s equity securities who are not Holders (“Other Holders”) under Registration Statements covering securities held by such Other Holders and (B) in accordance with the Company’s policies from time to time in effect, if applicable, forbid purchases and sales in the open market by directors and executive officers of the Company.  
(n)    Rights Upon Postponement of Demand Registration.  In the event of any Delay Period or Suspension Period, the Initiating Holder(s) shall have the right (x) in the case of a delay of the filing or effectiveness of a Registration Statement in connection with a Demand Registration that is delayed or suspended by operation of Section 1(m), upon the affirmative approval of the Holders of not less than a majority of the Registrable Securities initially requesting such Demand Registration, to withdraw such request by giving written notice to the Company within twenty (20) days after receipt of such notice of delay or, if earlier, the termination of such Delay Period, and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder, and the Company shall pay all Registration Expenses in connection with such registration, (y) in the case of a suspension of a Prospectus (including the suspension of filing any Prospectus supplement) in connection with an Underwritten Shelf Takedown, upon the affirmative approval of the Holders of not less than a majority of the Registrable Securities requesting to be included in such Underwritten Shelf Takedown, to withdraw such request by giving written notice to the Company within twenty (20) days after receipt of such notice of suspension or, if earlier, the termination of such Suspension Period, and, if such request is withdrawn, such Underwritten Shelf Takedown shall not count as one of the permitted Underwritten Shelf Takedowns hereunder and (z) in the case of a suspension of sales in connection with a Demand Registration, to receive an extension of the registration period equal to the number of days of the Suspension Period.  If the Initiating Holder(s) exercises such right to withdraw such request for a Demand Registration as set forth in (x) and such request for an Underwritten Shelf Takedown as set forth in (y), the Company shall abandon or withdraw such Registration Statement; provided, however, that if the Company and the Holders participating in a Demand Registration or Underwritten Shelf Takedown, as applicable, have requested to be included in such Demand Registration or Underwritten Shelf Takedown, as applicable, Registrable Securities in the aggregate amount of at least $10,000,000, then the Company and such Holders shall have the right to continue with such Demand Registration regardless of the withdrawal of the Initiating Holder(s). 
(o)    Effect of Failure to File and Obtain and Maintain Effectiveness of Registration Statement.  In the event that the Registration Statement (containing such number of Registrable Securities as is permitted by the SEC) is not declared effective by the Effectiveness Deadline, then, in addition to any other rights the Holders of Registrable Securities may have hereunder or under applicable law, the Company shall pay to each Holder of Registrable Securities on each monthly anniversary of the Effectiveness Deadline (if the  Registration Statement has not been declared effective) until the Registration Statement has been declared effective an amount, as partial liquidated damages and not as a penalty, equal to 0.1% of the purchase price paid by such Holder for such Registrable 

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Securities, provided, however, the Company shall not pay to any Holder of Registrable Securities more than 0.6% of the purchase price paid by such Holder for such Registrable Securities pursuant to this Section 1(o).
2.    Piggyback Offerings.
(a)    Right to Piggyback.  Whenever the Company proposes to register any of its equity securities under the Securities Act (other than pursuant to a Demand Registration and other than pursuant to a Registration Statement on Form S-8, Form S-4 or any successor forms thereto), or otherwise proposes to offer any of its equity securities under the Securities Act in an Underwritten Offering either for its own account or for the account of one or more securityholders and the Company is eligible to use a registration form for such offering that may be used for the registration of Registrable Securities (a “Piggyback Offering”), the Company shall give prompt written notice to all Holders of Registrable Securities of its intention to effect such a registration (which notice shall be given not less than fifteen (15) days prior to the expected filing date of the Company’s Registration Statement; provided, however, that in the case of an Underwritten Offering under a Shelf Registration, such notice shall be given not less than seven (7) Business Days prior to the date of commencement of marketing efforts for such offering) and shall, subject to the provisions of Section 2(c) below, include in such Piggyback Offering all Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) Business Days after the receipt of the Company’s notice.  Notwithstanding anything to the contrary contained herein, the Company may determine not to proceed with a registration which is the subject of such notice.  A Piggyback Offering shall not be considered a Demand Registration for purposes of this Agreement and the rights to Piggyback Offerings may be exercised an unlimited number of occasions.
(b)    Piggyback Expenses.  The Registration Expenses of the Holders of Registrable Securities shall be paid by the Company in all Piggyback Offerings.
(c)    Priority on Registrations.
(i)    If a Piggyback Offering is an Underwritten Offering on behalf of the Company, and the managing underwriter(s) advises the Company in writing that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such registration the number which can be so sold in the following order of priority:  first, the securities to be sold for the account of the Company, second, the Registrable Securities requested to be included in such registration (pro rata among the Holder(s) of such Registrable Securities on the basis of the number of shares of Common Stock owned by each such Holder), and third, any other securities requested to be included in such registration.
(ii)    If a Piggyback Offering is an Underwritten Offering on behalf of Other Holders and the managing underwriter(s) advises the Company in writing that 

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in its opinion the number of equity securities requested to be included in such Piggyback Offering exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Other Holders, the Company shall include in such registration the number which can be so sold in the following order of priority:  first, the securities requested to be included therein by the Other Holders requesting such registration, second, the Registrable Securities requested to be included in such registration (pro rata among the Holder(s) of such Registrable Securities on the basis of the number of shares of Common Stock owned by each such Holder) and third, other securities requested to be included in such registration.
(iii)    If, as a result of the proration provisions of this Section 2(c), any Holder shall not be entitled to include all Registrable Securities in a Piggyback Offering that such Holder has requested be included, such Holder may elect to withdraw its request to include Registrable Securities in such Piggyback Offering or may reduce the number requested to be included; provided, however, that (A) such request must be made in writing prior to commencement of marketing activities in connection with such Piggyback Offering and (B) such withdrawal shall be irrevocable and, after making such withdrawal, such Holder shall no longer have any right to include Registrable Securities in the Piggyback Offering as to which such withdrawal was made.
(d)    Selection of Underwriters.  If any Piggyback Offering is an Underwritten Offering, the Company will have the right to select the investment banker(s) and manager(s) for the offering.
3.    Holdback Agreements.
(a)    Holders of Registrable Securities.  If requested by the lead managing underwriter, each Holder who “beneficially owns” (as such term is defined under and determined pursuant to Rule 13d-3 promulgated under the Exchange Act) five percent (5.0%) or more of the issued and outstanding Common Stock of the Company and each Holder including Registrable Securities in any Underwritten Demand Offering, Underwritten Shelf Takedown or Piggyback Offering shall not effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, (i) with respect to the Company’s first Underwritten Offering under the Securities Act for cash, for the seven (7) days prior to and the one hundred eighty (180) days beginning on the effective date of such registration plus up to an additional eighteen (18) days to the extent necessary to comply with applicable regulatory requirements following the effective date of such registration, (ii) with respect to any other Underwritten Demand Offering or Piggyback Offering in which Registrable Securities are included, the seven (7) days prior to and the ninety (90)-day period beginning on the effective date of such registration, and (iii) upon notice from the Company of the commencement of a distribution in connection with any other Underwritten Offering (including, but not limited to, any distribution in connection with any Shelf Registration) by or on behalf of the Company, the seven (7) days prior to 

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and the ninety (90)-day period beginning on the date of commencement of such distribution (the “Lock-Up Period”), in each case except as part of such Underwritten Offering, and in each case unless the underwriters managing such Underwritten Offering otherwise agree; provided, however, that (i) notwithstanding the foregoing, no Holder shall be subject to the provisions hereof unless all of the Company’s directors and officers (and their respective Affiliates) are subject to the Lock-Up Period and (ii) if any Other Holder of Registrable Securities of the Company or any of the Company’s directors and officers (or any of their respective Affiliates) shall be subject to a shorter period or receives more advantageous terms relating to the Lock-Up Period, then the Lock-Up Period shall be such shorter period and also on such more advantageous terms.  The restrictions set forth in this Section 3(a) shall not be applicable to Transfers by Holders to Affiliates who agree to be bound by the provisions hereof, Transfers related to securities owned by Holders as a result of open market purchases made following the closing of the applicable offerings, and other Transfers to which the underwriters managing such Underwritten Offering agree; provided, however, that nothing herein shall prevent a Holder that is a partnership or corporation from making a distribution of Registrable Securities to the partners or shareholders thereof that is otherwise in compliance with applicable securities laws, so long as such distributees agree to be bound by the terms hereof.  The provisions of this Section 3(a) will no longer apply to a Holder once such Holder ceases to hold Registrable Securities.
(b)    The Company.  If requested by the lead managing underwriter, the Company (i) shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities (except pursuant to registrations on Form S-8, Form S-4 or any successor forms thereto), with respect to any Underwritten Demand Offering, Underwritten Shelf Takedown or any Piggyback Offering that is an Underwritten Offering in which Registrable Securities are included, during the seven (7) days prior to and the ninety (90)-day period beginning on the pricing of such Underwritten Offering, and (ii) shall, to the extent permitted by Regulation FD of the Exchange Act and assuming such person agrees to be bound by a reasonable confidentiality agreement, use its reasonable best efforts to cause each Person who “beneficially owns” (as such term is defined under and determined pursuant to Rule 13d-3 promulgated under the Exchange Act) five percent (5.0%) or more of the issued and outstanding Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date of this Agreement in a transaction not required to be registered under the Securities Act to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period, in each case except as part of such Underwritten Offering, and in each case unless the underwriters managing the Underwritten Offering otherwise agree.
4.    Registration Procedures.  Whenever any Holder(s) of Registrable Securities has requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as promptly as practicable:

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(a)    prepare and file with the SEC a Registration Statement with respect to such Registrable Securities in accordance with the provisions hereof, provided that before filing a Registration Statement or Prospectus or any amendments or supplements thereto, the Company shall furnish to the Holder(s) who is including such Registrable Securities in such Registration Statement, their counsel (“Counsel to the Holders”), and the managing underwriters (if any), copies of all such documents proposed to be filed, which documents shall be subject to the prompt review and comment of such Counsel to the Holders and such other documents reasonably requested by such counsel, including any comment letter from the SEC, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein, provided, that the Company shall not have any obligation to modify any information if the Company reasonably expects that so doing would cause such Registration Statement or Prospectus to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.  The Company shall not include any information relating to a Holder in any such Registration Statement or Prospectus or any amendments or supplements thereto (including such documents that, upon filing, would be incorporated or deemed to be incorporated by reference therein) to which the Holder (if such Registration Statement includes Registrable Securities of such Holder) shall object, in writing, on a timely basis, unless, in the opinion of the Company, the inclusion of such information is necessary to comply with applicable law.  No later than the second Business Day following the effective date of any Registration Statement, the Company shall file with the SEC, in accordance with Rule 424(b)(4) under the Securities Act, the final prospectus to be used in connection with sales pursuant to such Registration Statement.  The Company shall use its reasonable best efforts to confirm that (i) no Registration Statement or Prospectus (nor any amendment or supplement to any Registration Statement or Prospectus) shall, upon filing with the SEC, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make any statements therein (in the case any Prospectus or any amendment or supplement thereto, in light of the circumstances under which they were made) not misleading and (ii) no issuer free writing prospectus relating to any Registration Statement shall include any information that conflicts with the information in such Registration Statement;
(b)    notify each Holder of Registrable Securities of the effectiveness of each Registration Statement filed pursuant hereto and prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective during the Effectiveness Period and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement; and cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act;

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(c)    furnish to each Holder of Registrable Securities and each managing underwriter, if any, without charge, at least one (1) copy of such Registration Statement, each amendment and supplement thereto, and the Prospectus included in such Registration Statement and Prospectus supplements, if applicable, and each post‐effective amendment thereto;
(d)    deliver to each Holder of Registrable Securities, and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such Participating Holder or underwriters may reasonably request in connection with the distribution of the Registrable Securities; and the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each Holder of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;
(e)    use its reasonable best efforts (i) to register or qualify such Registrable Securities under such other securities or blue sky laws of any jurisdictions as any underwriter reasonably requests, (ii) to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and (iii) to do any and all other acts and things which may be reasonably necessary or advisable to enable any such underwriter to consummate the disposition in such jurisdictions of the Registrable Securities (provided that the Company shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction);
(f)    notify Counsel to the Holders and each underwriter (i) at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, as soon as practicable after (A) the happening of any event that causes the Registration Statement or related Prospectus to contain an untrue statement of a material fact or to omit any fact necessary to make the statements therein not misleading in light of the circumstances in which they were made, and, at the request of such Holder or any underwriter, the Company shall promptly prepare a supplement or amendment to such Prospectus, furnish (or make available) a reasonable number of copies of such supplement or amendment to each seller of such Registrable Securities, Counsel to the Holders and the underwriters and file such supplement or amendment with the Securities and Exchange Commission so that, as thereafter delivered (or deemed to be delivered) to the purchasers of such Registrable Securities, such Registration Statement or related Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances in which they were made, (B) the Company becomes aware of any request by the Securities and Exchange Commission or any Federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus covering Registrable Securities or for additional information relating thereto, (C) the Company becomes aware of the issuance or threatened issuance by the Securities and Exchange Commission of any stop order suspending or threatening to suspend 

13

the effectiveness of a Registration Statement, or (D) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Registrable Security for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, and (ii) as soon as reasonably practicable after each Registration Statement or any amendment thereto has been filed with the Securities and Exchange Commission and after each Registration Statement or any post-effective amendment thereto has become effective;
(g)    for a reasonable period prior to the filing of any Registration Statement or the commencement of marketing efforts for an Underwritten Shelf Takedown, as applicable, provide any Participating Holder holding more than forty percent (40%) of all participating Registrable Securities, any Major Investor if it is a Participating Holder, any underwriter participating in any disposition pursuant to a Registration Statement, Counsel to the Holders and counsel to the underwriters (each, an “Inspector” and, collectively, the “Inspectors”), a reasonable opportunity to participate (including, but not limited to, reviewing, commenting on and attending all meetings) in the preparation of such Registration Statement, each Prospectus included therein or filed with the SEC and each amendment or supplement thereto;
(h)    provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities, in each case, no later than the effective date of such registration.
(i)    enter into such customary agreements and take all such other customary actions reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, (i) make such representations and warranties to the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, any Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish to the Participating Holders and the underwriters, if any, opinions and “negative assurance letters” of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and counsels to the Participating Holders), addressed to each Participating Holders and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) use its reasonable best efforts to obtain “comfort” letters and updates thereof from the independent registered public accounting firm of the Company (and, if necessary, any other independent registered public accounting firms of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each Participating Holder (unless such accountants shall be prohibited from so addressing such letters by applicable 

14

standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures substantially to the effect set forth in Section 6 with respect to all parties to be indemnified pursuant to said Section 6 except as otherwise agreed by the Holders and (v) deliver such documents and certificates as may be reasonably requested by the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 4(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.  The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;
(j)    make available for inspection by and copying by the Inspectors all financial and other records, pertinent corporate documents and properties of the Company, and its subsidiaries and cause the officers, directors, employees and independent accountants of the Company and its subsidiaries to respond to such inquiries and to supply all information reasonably requested by any such Inspector in connection with such Registration Statement, provided, however, that recipients of such financial and other records and pertinent corporate documents agree in writing to keep the confidentiality thereof pursuant to a written agreement reasonably acceptable to the Company (which shall contain customary exceptions thereto);
(k)    use its reasonable best efforts to avoid the issuance of any order suspending the effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, or, if issued, to obtain the withdrawal or lifting of any such order or suspension as promptly as practicable;
(l)    use its reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States, except as may be required solely as a consequence of the nature of any Holder’s business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable such selling Holder or the underwriters, if any, to consummate the disposition of such Registrable Securities;
(m)    use its reasonable best efforts to (i) prevent the issuance of any stop order by the SEC, and in the event of such issuance, to obtain the withdrawal of any such stop order and (ii) obtain the withdrawal of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction at the earliest practicable date;
(n)    cause all shares of Registrable Securities covered by such Registration Statement to be authorized to be listed on any national securities exchange if any other shares 

15

of the particular class of Registrable Securities are at that time, or will be immediately following the offering, listed on such exchange;
(o)    otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, obtain all other approvals, consents, exemptions or authorizations from such governmental agencies or authorities as may be necessary and required of the Company to enable the Participating Holders and underwriters to consummate the disposition of Registrable Securities, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(p)    use its reasonable best efforts to timely file all material required to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(q)    use its reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange, if any, on which similar securities issued by the Company are then listed;
(r)    cause appropriate officers as are reasonably requested by a managing underwriter to use their reasonable best efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including participation in “road shows”), taking into account the Company’s business needs;
(s)    (i) prepare and file with the SEC such amendments and supplements to each Registration Statement as may be necessary to comply with the provisions of the Securities Act, including post effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period required hereunder and if applicable, file any Registration Statements pursuant to Rule 462(b) promulgated under the Securities Act, (ii) cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and (iii) provide additional information related to each Registration Statement as requested by, and obtain any required approval necessary from, the SEC or any Federal or state governmental authority;
(t)    if requested by any Participating Holder or underwriter, promptly include in a Prospectus supplement or amendment such information as the Holder or managing underwriters may reasonably request, including in order to permit the intended method of distribution of such securities (including information to reflect any transfer by such Holder of any Registrable Securities, or of any securities convertible into (or exercisable or exchangeable for) any Registrable Securities, to any other Person that is (or in connection with such transfer, pursuant to Section 8, becomes) a Holder and to permit the sale by such transferee of such Registrable Securities pursuant to such Registration Statement), and make 

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all required filings of such Prospectus supplement or such amendment as soon as reasonably practicable after the Company has received such request;
(u)    in the case of certificated Registrable Securities, cooperate with any Participating Holder and the underwriters to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each Participating Holder that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the Participating Holders or underwriters may reasonably request at least three (3) Business Days prior to any sale of Registrable Securities;
(v)    cooperate with each Participating Holder and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;
(w)    use its reasonable best efforts to assist a Holder in facilitating private sales of Registrable Securities by, among other things, providing officers’ certificates and other customary closing documents; and
(x)    use its reasonable best efforts to take all other actions necessary to effect the registration of the Registrable Securities contemplated hereby.
5.    Registration Expenses.
(a)    Expenses.  Except as otherwise provided in this Agreement, all expenses incident to the Company’s performance of or compliance with this Agreement, including all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and of all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), shall be borne by the Company.  For the avoidance of doubt, the Company shall, in any event, pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company may then be listed.
(b)    Reimbursement of Counsel.  In connection with each Demand Registration, each Underwritten Shelf Takedown and each Piggyback Offering, the Company shall reimburse the Holders of Registrable Securities included in such registration for the reasonable fees and disbursements of Counsel to the Holders; provided, however, the amount of such reimbursement shall not exceed $50,000 in the aggregate for all Counsel to the Holders, unless agreed to in advance by the Company and the Major Investors.

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(c)    Payment of Certain Expenses by Holders of Registrable Securities.  Underwriting discounts selling commissions and transfer taxes relating to the Registrable Securities included in any registration hereunder, and all fees and expenses of counsel for any Holders of Registrable Securities (other than fees and expenses to be reimbursed by the Company as set forth in Section 5(b) above) shall be borne and paid by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.
6.    Indemnification; Contribution.
(a)    Indemnification by the Company.  The Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Holder, the officers, directors, partners, members, managers, shareholders, affiliates, accountants, attorneys, agents and employees of each of them, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each such controlling Person, each underwriter (in connection with an Underwritten Offering), if any, the officers, directors, partners, members, managers, shareholders, affiliates, accountants, attorneys, agents and employees of such underwriter and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively, “Holder Indemnitees”), from and against any and all losses, claims, damages, liabilities, costs (including reasonable attorneys’ fees and any legal or other fees or expenses reasonably incurred by such party in connection with any Proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, Prospectus, any amendment (including any post-effective amendment) or supplement to any Registration Statement or Prospectus, any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered, or any other offering document (including any related notification, or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in light of the circumstances under which they were made) not misleading, or any violation by the Company of the Securities Act or of the Exchange Act, and will reimburse each Holder Indemnitee for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability, or action, provided, however, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability, or expense arises out of or is based on any untrue statement (or alleged untrue statement) or omission (or alleged omission) by any Holder or underwriter, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus or other offering document in reliance upon and in conformity with written information furnished to the Company by such Holder or underwriter expressly for inclusion in such Registration Statement, Prospectus or other offering document.  It is agreed that the 

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indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed).  Such indemnity agreement shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder Indemnitee and shall survive the transfer of Registrable Securities by any such Holder Indemnitee.
(b)    Indemnification by Holders of Registrable Securities.  In connection with any Registration Statement in which a Holder includes Registrable Securities, such Holder agrees to indemnify, to the fullest extent permitted by law, individually and not jointly and severally, the Company, each other Holder which includes Registrable Securities in such Registration Statement, their respective directors,  officers, employees, attorneys, accountants, agents, representatives and each Person who controls the Company and such Holders (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (collectively, “Company/Holder Indemnitees”), from and against all Losses arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement, Prospectus, or other offering document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse the Company and each Holder Indemnitee for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus, or other offering document in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for inclusion in such Registration Statement, Prospectus, or other offering document; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld or delayed); and provided, further, that the liability of each Holder hereunder shall be limited to the net proceeds received by such Holder from the sale of Registrable Securities giving rise to such indemnification obligation.  Furthermore, in connection with an Underwritten Offering, each Holder shall provide customary indemnification to the underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act).
(c)    Conduct of Indemnification Proceedings.  If any Person shall be entitled to indemnity hereunder (an “indemnified party”), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the “indemnifying party”) of any claim or of the commencement of any Proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except (and only) to the extent that the indemnifying party 

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has been prejudiced in defending the claim by such delay or failure.  The indemnifying party shall have the right, exercisable by giving written notice to an indemnified party promptly after the receipt of written notice from such indemnified party of such claim or Proceeding, to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  Notwithstanding the indemnifying party’s rights in the prior sentence, an indemnified party shall have the right to employ its own counsel (and one local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would in the reasonable judgment of the indemnified party present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and, based on advice of counsel to the indemnified party, the indemnified party shall have legal defenses available to it and/or other indemnified parties that are inconsistent with or in addition to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after written notice of the institution of such action has been delivered to the indemnifying party; or (iv) the indemnifying party shall have requested the indemnified party to employ separate counsel at the expense of the indemnifying party.  No indemnifying party shall, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general circumstances or allegations, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties.  If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld).  No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement or compromise that does not include as an unconditional term thereof the giving by the claimant or plaintiff therein, to such indemnified party, of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder or that includes any admission of fault or culpability of such indemnified party.
(d)    Survival of Indemnification.  The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the Transfer of Registrable Securities.
(e)    Contribution.  If the indemnification required by this Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any Losses referred to in this Section 6:
(i)    The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and such indemnified party, on the other 

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hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such indemnifying party, on the one hand, and indemnified party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been taken by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.
(ii)    The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 6(e), an indemnifying party that is a Holder shall not be required to contribute any amount in excess of the amount by which the net proceeds to the indemnifying party from the sale of the Registrable Securities sold in a transaction that resulted in Losses in respect of which contribution is sought in such proceeding pursuant to this Section 6(e), exceed the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission (including as a result of any indemnification obligation hereunder).  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(iii)    The indemnity and contribution agreements contained in this Section 6 are in addition to any other liability that the indemnifying parties may otherwise have to the indemnified parties; provided, however, that in no event shall any Holder be liable to any indemnified parties with respect to any untrue statement or alleged untrue statement or omission or alleged omission in any Registration Statement, Prospectus or other offering document for any amount in excess of the amount by which the net proceeds to the indemnifying party from the sale of the Registrable Securities sold in the transaction that resulted in any liability, exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission (including as a result of any indemnification or contribution obligation hereunder).  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
7.    Holders’ Obligations.

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(a)    It shall be a condition precedent to the obligations of the Company to include Registrable Securities of any Holder in any Registration Statement or Prospectus, as the case may be, that such Holder shall timely furnish to the Company (as a condition precedent to such Holder’s participation in such registration) its Participating Holder Information in accordance with the terms hereof.  Each Participating Holder shall timely provide the Company with such information as may be reasonably requested to enable the Company to prepare a supplement or post‐effective amendment to any Shelf Registration or a supplement to any Prospectus relating to such Shelf Registration.
(b)    At the managing underwriter’s request, no Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements in customary form approved by the Person or Persons entitled hereunder to approve such arrangements and (ii) completes and executes such underwriting agreement and other documents reasonably required in connection with such underwriting arrangements, provided that no Holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such Holder (including with respect to such Holder’s ownership of and title to its Registrable Securities) and such Holder’s intended method of distribution) or to undertake any indemnification obligations to the Company with respect thereto, except as otherwise provided in Section 6(b), or to the underwriters with respect thereto, except to the extent of the indemnification being given to the Company and its controlling persons in Section 6(b).
8.    Transfer of Registration Rights.  The rights of a Holder hereunder may be Transferred in connection with a Transfer of Registrable Securities (or any securities convertible into Registrable Securities).  Notwithstanding the foregoing, such rights may only be Transferred provided that all of the following additional conditions are satisfied:  (a) such Transfer is effected in accordance with applicable securities laws; (b) such transferee agrees in writing to become subject to the terms of this Agreement as a Holder by delivering to the Company a duly executed joinder agreement in form attached hereto as Exhibit A; and (c) the Company is given written notice by such Holder of such Transfer, stating the name and address of such transferee and identifying the Registrable Securities with respect to which such rights are being Transferred.
9.    Rule 144; Removal of Restrictions.
(a)    Rule 144.  The Company shall (i) file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner, and (ii) furnish to each Holder forthwith upon written request, (x) a written statement by the Company as to its compliance with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (y) a copy of the most recent annual or quarterly report of the Company, and (z) such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of Rule 144, all to the extent required from time to time to enable such 

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Holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144. 
(b)    Removal of Restrictions.  The Company shall, promptly upon the request of any Holder (and, to the extent necessary, the delivery of such Registrable Securities to the transfer agent therefor), cause any legend or stop-transfer instructions with respect to restrictions on transfer under the Securities Act of such Registrable Securities to be removed or otherwise eliminated if (i) such Registrable Securities are sold pursuant to an effective Registration Statement, (ii) in connection with a sale transaction, such Holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or transfer of the Registrable Securities may be made without registration under the Securities Act, (iii) such Holder provides the Company reasonable assurances that the Securities have been or are being sold pursuant to, or can then be sold by such Holder without restriction or limitation under, Rule 144, or (iv) such Holder certifies that such Holder is not an Affiliate of the Company and has not been an Affiliate during the preceding three months and either (A) a holding period (determined as provided in Rule 144(d)) of at least six (6) months has elapsed since the acquisition of such Registrable Securities from the Company or an Affiliate of the Company and such Holder will only sell the Registrable Securities in accordance with Rule 144 (including, as applicable the, public information requirement thereof) or pursuant to an effective Registration Statement, or (B) a holding period (determined as provided in Rule 144(d)) of at least one (1) year has elapsed since the acquisition of such Registrable Securities from the Company or an Affiliate of the Company.  The Company shall be responsible for the fees and expenses of its transfer agent and The Depository Trust Company (the “DTC”) associated with the issuance of the Registrable Securities to the Holder and any legend or stop-transfer instruction removal or elimination in accordance herewith.
10.    Redemption of Class C Common Stock.  The Company may not redeem any shares of Class C Common Stock without the unanimous approval of the Board.  
11.    Information Rights.
(a)    The Company shall deliver to each Major Investor (i) unaudited financial reports of the Company within thirty (30) days after the end of each calendar month (provided that in the event that the Company is no longer a reporting Person under the Exchange Act, the Company shall provide each Major Investor with audited financial reports within ninety (90) days after the end of the Company’s fiscal year and quarterly unaudited financial reports within forty-five (45) days after the end of each of the Company’s fiscal quarter), (ii) an annual budget and business plan of the Company within thirty (30) days of the beginning of the Company’s fiscal year and (iii) such other information relating to the financial condition, business, prospects, or corporate affairs of the Company and its Affiliates as any Major Investor may from time to time reasonably request.  
(b)    The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine the Company’s books 

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of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Major Investor.
(c)    Each Major Investor shall, so long as neither it nor any of its Affiliates are then a member of the Board, and there is not then an effective registration statement pursuant to which such Major Investor is a selling stockholder, have the right, but not the obligation, to deliver a written notice (a “Stop Notice”) to the Company requesting that, notwithstanding any provision contained herein or in any of the other Transaction Documents, none of the Company nor any of its Affiliates, agents or other representatives provide any material non-public information regarding the Company or any of its Affiliates to such Major Investor.  Following the Company’s receipt of any such Stop Notice from a Major Investor and until such time as such Major Investor elects to again receive material non-public information by delivering a written notice to that effect to the Company (an “Initiation Notice”; and the period beginning with a Major Investor’s delivery of a Stop Notice and ending on the Company’s receipt of an Initiation Notice from such Major Investor is referred to as a “Restriction Period”), the Company shall not provide, and shall cause its Affiliates, agents and other representatives, to cease providing, any material non-public information to such Major Investor.  
12.    Confidentiality.  Each Major Investor agrees that neither it nor its Representatives shall use or disclose at any time, either during the term of this Agreement or thereafter, any Confidential Information of which any such Investor Party is or becomes aware pursuant to this Agreement, provided that any Investor Party may disclose any such information to any other Investor Party, and use such information, in connection with customary activities incident to such Major Investor’s investment in the Company, including monitoring, reporting or analysis with respect thereto, but not in connection with effecting any transactions in securities of the Company.  Notwithstanding the foregoing, any Investor Party may truthfully respond to a lawful and valid subpoena or other legal process, but shall give the Company prior written notice thereof (to the extent lawfully permitted to do so), and any Investor Party may disclose such Confidential Information to the extent necessary or appropriate in connection with any audit or review by any governmental or regulatory authority.  In any event, each Major Investor will be responsible for any breach of this Section 12 by any of its Representatives and agrees, at its sole expense, to take all reasonable measures to assure that its Representatives do not make any prohibited or unauthorized disclosure or use (including in legal proceedings) of the Confidential Information.
13.    Definitions.
“Affiliate” of any Person means any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person.  The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) as used with respect to any Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning specified in the preamble hereto.

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“Board” has the meaning specified in Section 1(m).
“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.
“Class C Common Stock” means, the Company’s Class C Common Stock, par value $0.01 per share, having the rights and preferences set forth with respect thereto in the Certificate of Incorporation of the Company.
“Certificate of Designation” means the Second Amended and Restated Certificate of Designation of Series B-1 Cumulative Convertible Preferred Stock, Series B-2 Cumulative Convertible Preferred Stock and Series B-3 Cumulative Convertible Preferred Stock that was filed with the Secretary of State of the State of Delaware on February 9, 2018 (as the same may be amended and/or restated from time to time).
“Common Stock” means, collectively, the classes of Voting Common Stock, par value $0.01 par value per share, of the Company, having the rights and preferences set forth with respect thereto in the Certificate of Incorporation of the Company.
“Company” has the meaning specified in the preamble hereto.
“Company/Holder Indemnitees” has the meaning specified in Section 6(b).
“Confidential Information” means information not generally known to the public that any such Investor Party obtains from the Company, any of its Affiliates or any of their authorized representatives or agents regarding the business, operations, financial condition, prospects or plans of the Company or any of its Affiliates, including, but not limited to, material non-public information of the Company.  Confidential Information, however, at any time, shall not include any information that is generally available to the public as of such date (other than as a result of any breach hereof by an Investor Party), nor shall it include any information that any Investor Party obtained from any Person other than the Company, its Affiliates and their representatives or agents, provided that any such Person was not known by the corresponding Investor Party to be subject to a duty or contractual obligation to maintain such information in confidence.
“Counsel to the Holders” has the meaning specified in Section 4(a).
“Delay Period” has the meaning specified in Section 1(m).
“Demand Registration” has the meaning specified in Section 1(a).
“Effectiveness Deadline” has the meaning specified in Section 1(e).
“Effectiveness Period” has the meaning specified in Section 1(i).
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder.

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“Filing Deadline” has the meaning specified in Section 1(e).
“Holder” means (i) any Person signatory hereto (other than the Company) and any Affiliate of such Person, (ii) any Transferee who becomes a signatory hereto pursuant to Section 8 and any Affiliate of such Transferee, provided that such Transferee (a) alone or together with its Affiliates, holds Registrable Securities (or securities convertible into Registrable Securities) representing beneficial ownership of at least one percent (1%) of the Company’s issued and outstanding Common Stock or (b) cannot sell all of its Registrable Securities freely pursuant to Rule 144(b)(1).
“Holder Indemnitees” has the meaning specified in Section 6(a).
“indemnified party” has the meaning specified in Section 6(c).
“indemnifying party” has the meaning specified in Section 6(c).
“Initial Shelf Effective Date” has the meaning specified in Section 1(b).
“Initiating Holders” has the meaning specified in Section 1(a).
“Initiation Notice” has the meaning specified in Section 11(c).
“Inspector” has the meaning specified in Section 4(g).
“Investors” has the meaning specified in the preamble hereto.
“Investor Party” means, each Major Investor and each of its Representatives.
“JCP Realty” has the meaning specified in the preamble hereto.
“JPM” has the meaning specified in the preamble hereto.
“Juniper NVM” has the meaning specified in the preamble hereto.
“Juniper Purchase Agreement” has the meaning specified in the preamble hereto.
“Lock-Up Period” has the meaning specified in Section 3(a).
“Long-Form Registration” has the meaning specified in Section 1(a).
“Losses” has the meaning specified in Section 6(a).
“Major Investor” shall mean each Investor and any respective subsequent transferee (or any subsequent transferees thereof) of such Investor, as long as such Investor (together with its Affiliates) and/or such transferee(s) beneficially own(s) twelve and two-tenths percent (12.2%) or more of the Series B Preferred Stock; provided, however, if there is no Major Investor, (i) the functions (or rights) of the Major Investors shall be performed by (or granted to) the Holders of a majority of the Registrable Securities covered by a specific Registration Statement and (ii) with 

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respect to Section 1(a) of this Agreement, the Holders of 50% of the Registrable Securities then issued and outstanding may request registration under the Securities Act as provided in Section 1(a) of this Agreement.
“Original Agreement” has the meaning specified in the preamble hereto.
“Other Holders” has the meaning specified in Section 1(m).
“Participating Holders” means Holders participating, or electing to participate, in an offering of Registrable Securities.
“Participating Holder Information” has the meaning specified in Section 1(d).
“Person” shall mean any natural person, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, estate, trust, bank trust company, land trust, business trust, or other organization, whether or not a legal entity, custodian, trustee-executor, administrator, nominee or entity in a representative capacity and any government or agency or political subdivision thereof.
“Piggyback Offering” has the meaning specified in Section 2(a).
“Proceeding” shall mean an action, claim, suit, arbitration or proceeding (including an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Prospectus” shall mean any prospectus included in, or relating to, any Registration Statement (including any preliminary prospectus, any prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A or Rule 430B promulgated under the Securities Act and any “issuer free writing prospectus” (as defined in Rule 433 under the Securities Act)), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.
“Registrable Securities” means any Common Stock issued (or transferred) on or after the date hereof to Persons who are parties hereto or become a party hereto pursuant to the conversion of the Series B Preferred Stock or other Common Stock issued or issuable with respect to any of the foregoing securities by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, or upon conversion or exercise of any such securities; provided that such securities shall cease to be Registrable Securities when (A) they have been sold pursuant to an effective Registration Statement, (B) they have been distributed to the public through a broker, dealer or market maker pursuant to Rule 144 or (C) with respect to any Person and such Person’s Affiliates, the number of Registrable Securities held by such Persons (x) represents less than five percent (5%) beneficial ownership of the outstanding Common Stock of the Company and (y) such securities may be sold under Rule 144(b)(1).  For the purposes of this Agreement, a Person shall be deemed to be a Holder of Registrable 

27

Securities whenever such Person has the right to acquire such Registrable Securities (upon conversion or exercise in connection with a Transfer of securities or otherwise, but disregarding any restrictions or limitation upon the exercise of such right), whether or not such acquisition has been effected.
“Representatives” means the directors, officers, employees, members, managers, partners, agents or representatives of each Major Investor.
“Registration Expenses” has the meaning specified in Section 5(a).
“Registration Statement” means any registration statement of the Company under the Securities Act which permits the public offering of any of the Registrable Securities in accordance with the intended methods of distribution thereof pursuant to the provisions of this Agreement, including any related Prospectus, amendments and supplements to such registration statement or Prospectus, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement, including, but not limited to, each Demand Registration filed pursuant to Section 1(a) and each Shelf Registration filed pursuant to Section 1(b).
“Restriction Period” has the meaning specified in Section 11(c).
“Rule 144” means Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the SEC.
“SEC” or “Securities and Exchange Commission” means the United States Securities and Exchange Commission or any successor governmental agency.
“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.
“Series B Preferred Stock” means the Company’s Series B-1 Cumulative Convertible Preferred Stock, par value $0.01 per share, the Company’s Series B-2 Cumulative Convertible Preferred Stock, par value $0.01 per share and the Company’s Series B-3 Cumulative Convertible Preferred Stock, par value $0.01 per share. 
“Series B-3 Investor” has the meaning specified in the preamble hereto.
“Series B-3 Purchase Agreement” has the meaning specified in the preamble hereto.
“Shelf Notice” has the meaning specified in Section 1(b).
“Shelf Registration” has the meaning specified in Section 1(b).
“Short-Form Registration” has the meaning specified in Section 1(a).
“Short-Form Shelf” has the meaning specified in Section 1(g).

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“SRE” has the meaning specified in the preamble hereto.
“SRE Purchase Agreement” has the meaning specified in the preamble hereto.
“Stop Notice” has the meaning specified in Section 11(c).
“Suspension Period” has the meaning specified in Section 1(m).
“Transaction Documents” means this Agreement, the SRE Purchase Agreement, the Juniper Purchase Agreement, the Series B-3 Purchase Agreement, and the Certificate of Designation.
“Transfer” or “Transferred” means any direct or indirect sale, assignment, transfer, gift, hypothecation, pledge, encumbrance or other disposition of Registrable Securities, in a single transaction or a series of related transactions, whether with or without consideration, whether voluntarily or involuntarily, or by operation of law.
“Underwritten Demand Offering” has the meaning specified in Section 1(e).
“Underwritten Offering” means an offering in which securities of the Company are sold to one or more underwriters (as defined in Section 2(a)(11) of the Securities Act) in a firm commitment underwritten offering for resale to the public, including an Underwritten Demand Offering and an Underwritten Shelf Takedown.
“Underwritten Offering Notice” has the meaning specified in Section 1(e).
“Underwritten Shelf Takedown” has the meaning specified in Section 1(e).
14.    Amendment; Waivers; Further Assurances.
(a)    Amendment.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, without the written consent of the Company and the Holders holding at least fifty percent (50%) of the Registrable Securities then issued and outstanding; provided that no such amendment, modification, supplement, waiver, consent or departure that would have an adverse effect on any Holder of Registrable Securities shall be effective against such Holder without its written consent.
(b)    No Waivers.  No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
(c)    Further Assurances.  Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement.

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15.    Miscellaneous.
(a)    Remedies; Specific Performance.  Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically, to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor.  The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement and shall not be required to prove irreparable injury to such party or that such party does not have an adequate remedy at law with respect to any breach of this Agreement (each of which elements the parties admit).  The parties hereto further agree and acknowledge that each and every obligation applicable to it and contained in this Agreement shall be specifically enforceable against it and hereby waives and agrees not to assert any defenses against an action for specific performance of their respective obligations hereunder.
(b)    Successors and Assigns.  All provisions of this Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.
(c)    Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
(d)    Counterparts.  This Agreement may be executed simultaneously in two or more counterparts, anyone of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.
(e)    Descriptive Headings; Interpretation; No Strict Construction.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement.  Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns, pronouns, and verbs shall include the plural and vice versa.  Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and, if applicable, hereof.  The words “include,” “includes” or “including” in this Agreement shall be deemed to be followed by “without limitation.”  The use of the words “or,” “either” or “any” shall not be exclusive.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

30

(f)    Governing Law.  The internal laws of the State of Delaware shall govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties, without regard to its principles of conflicts of laws that would implicate the substantive or procedural laws of any other jurisdiction.
(g)    Jurisdiction.  Any Proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal or state court located in the County and State of Delaware, and each party hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such Proceeding in any such court or that any such Proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such Proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 15(j) shall be deemed effective service of process on such party.
(h)    Attorneys’ Fees.  In the event that any Proceeding is instituted under or in relation to this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing or defending any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants (which shall include, without limitation, all fees, costs and expenses of appeals).
(i)    Waiver of Jury Trial.  Each of the parties to this Agreement hereby agrees to waive its respective rights to a jury trial of any claim or cause of action based upon or arising out of this Agreement.  The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this Agreement, including contract claims, tort claims and all other common law and statutory claims.  Each party hereto acknowledges that this waiver is a material inducement to enter into this Agreement, that each has already relied on this waiver in entering into this Agreement, and that each will continue to rely on this waiver in their related future dealings.  Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 15(i) AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
(j)    Notices.  All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage 

31

prepaid by registered or certified mail or by facsimile transmission (with immediate telephone confirmation thereafter) and, in the case of the Holders, shall also be sent via e-mail,
If to the Company, to:
IMH Financial Corporation
7001 N. Scottsdale Rd, Suite 2050
Scottsdale, Arizona 85253
Attention: Lawrence D. Bain, CEO
Facsimile: (480) 840-8401

with a copy to (which shall not constitute notice):
Ulmer & Berne LLP
1660 West 2nd Street, Suite 1100
Cleveland, Ohio 44113
Attention:  Howard Groedel, Esq.
Telephone:  (216) 583-7118
Facsimile:  (216) 583-7119

If to the Holders to the address set forth in Exhibit B and if to any transferee of any Holder, to the address of such transferee set forth in the Transfer documentation provided to the Company, in each case with copies to (which copies shall not constitute notice) their respective counsel at the address set forth in Exhibit B, or at such other address as such party each may specify by written notice to the others, and each such notice, request, consent and other communication shall for all purposes of the Agreement be treated as being effective or having been given when delivered personally, upon one (1) Business Day after being deposited with a courier if delivered by courier, upon receipt of facsimile confirmation (if transmitted during the normal business hours of the recipient, otherwise such notice shall be deemed to be effective or have been given on the next Business Day), or, if sent by mail, at the earlier of its receipt or seventy two (72) hours after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid.
(k)    Delivery by Facsimile or other Electronic Means.  This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by facsimile or other electronic means, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall reexecute original forms thereof and deliver them to all other parties.  No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or other electronic means to deliver a signature or 

32

the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or other electronic means as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
(l)    Entire Agreement.  This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof.
(m)    Termination.  This Agreement may be terminated at any time by a written instrument signed by all parties hereto.  Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 6) shall terminate in its entirety on such date as there shall be no Registrable Securities held by the Holders.
(n)    No Third Party Beneficiaries.  Nothing herein expressed or implied is intended to confer upon any Person, other than the parties hereto or their respective permitted assigns and successors any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as set forth in Section 6.
(o)    Sophisticated Parties; Advice of Counsel.  Each of the parties to this Agreement specifically acknowledges that (i) it is a knowledgeable, informed, sophisticated Person capable of understanding and evaluating the provisions set forth in this Agreement and (ii) it has been fully advised and represented by legal counsel of its own independent selection and has relied wholly upon its independent judgment and the advice of such counsel in negotiating and entering into this Agreement.
(p)    Original Agreement.  This Agreement amends, restates and supersedes in its entirety the Original Agreement. 
[SIGNATURE PAGES FOLLOW]

33

IN WITNESS WHEREOF, this Agreement has been duly executed by each of the parties hereto as of the date first above written.
	
			
	 
	COMPANY:

	 
	IMH FINANCIAL CORPORATION

	 
	 

	 
	By:
	/s/ Lawrence D. Bain

	 
	Name:
	Lawrence D. Bain

	 
	Title:
	Chairman and CEO

	 
	 
	 

	 
	HOLDERS:

	 
	JCP REALTY PARTNERS, LLC

	 
	By:
	/s/ Jay Wolf

	 
	Name:
	Jay Wolf

	 
	Title:
	Managing Partner

	 
	 
	 

	 
	JUNIPER NVM, LLC

	 
	By:
	/s/ Jay Wolf

	 
	Name:
	Jay Wolf

	 
	Title:
	Manager

	 
	 
	 

	 
	JPMORGAN CHASE FUNDING, INC.

	 
	By:
	/s/ Chadwick S. Parson

	 
	Name:
	Chadwick S. Parson

	 
	Title:
	Managing Director

[Signature Page to Amended and Restated Investors’ Rights Agreement]

Exhibit A
Form of Joinder Agreement
Attention:  President
Ladies and Gentlemen:
Reference is made to the Amended and Restated Investors’ Rights Agreement, dated as of February 9, 2018 (as such agreement may have been or may be amended from time to time) (the “Investors’ Rights Agreement”), by and among IMH Financial Corporation, a Delaware corporation (the “Company”), each of the other parties signatory thereto and any other parties identified on the signature pages of any joinder agreements substantially similar to this joinder agreement executed and delivered pursuant to Section 8 of the Investors’ Rights Agreement.  Capitalized terms used but not otherwise defined herein have the meanings set forth in the Investors’ Rights Agreement.
In consideration of the transfer to the undersigned of Registrable Securities of the Company, the undersigned represents that it is a transferee of [insert name of transferor] and agrees that, as of the date written below, the undersigned shall become a party to the Investors’ Rights Agreement, and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Investors’ Rights Agreement as though an original party thereto.
[SIGNATURE PAGE FOLLOWS]

A-1

Executed as of the _______ day of __________________, 20___.
	
				
	TRANSFEREE:  [insert name of transferee]
	 

	 
	 
	 

	 
	 
	By:
	 

	 
	 
	Name:
	 

	 
	 
	Title:
	 

	 
	 
	 
	 

	Address:
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	Acknowledged and agreed by:
	 
	 

	IMH FINANCIAL CORPORATION
	 
	 

	 
	 
	 
	 

	By:
	 
	 
	 

	Name:
	 
	 
	 

	Title:
	President
	 
	 

A-2

Exhibit B
JCP Realty Partners, LLC
11150 Santa Monica Blvd., Suite 1400
Los Angeles, CA 90025

with a copy to (which shall not constitute notice):
Munger Tolles & Olson LLP
350 South Grand Avenue, 48th Fl.
Los Angeles, CA 90071
Attention:  C. David Lee, Esq.
Telephone:  (213) 683-9285
Facsimile:  (213) 593-2885
Juniper NVM, LLC
11150 Santa Monica Blvd., Suite 1400
Los Angeles, CA 90025

with a copy to (which shall not constitute notice):
Munger Tolles & Olson LLP
350 South Grand Avenue, 48th Fl.
Los Angeles, CA 90071
Attention:  C. David Lee, Esq.
Telephone:  (213) 683 9285
Facsimile:  (213) 593-2885
JPMorgan Chase Funding Inc.
270 Park Avenue
New York, New York 10017

with a copy to (which shall not constitute notice):
Fried, Frank, Harris, Shriver & Jacobsen LLP
One New York Plaza
New York, New York 10004
Attention:  Julian Chung
Telephone:  (212) 859-8957
Facsimile:  (212) 859-4000

B-1

ANNEX I

PLAN OF DISTRIBUTION 

We are registering the shares of common stock to permit the resale of these shares of common stock by the selling stockholders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock. 

The selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected from time to time pursuant to one or more of the following methods, which may involve crosses or block transactions:

		
	•
	on any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association on which the securities may be listed or quoted at the time of sale;

 
		
	•
	in the over-the-counter market; 

		
	•
	in transactions otherwise than on these exchanges or systems or in the over-the-counter market; 

		
	•
	through the writing of options, whether such options are listed on an options exchange or otherwise; 

		
	•
	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

		
	•
	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; 

		
	•
	purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

		
	•
	an exchange distribution in accordance with the rules of the applicable exchange; 

		
	•
	public or privately negotiated transactions; 

		
	•
	short sales; 

		
	•
	sales pursuant to Rule 144; 

Annex - 1

		
	•
	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; 

		
	•
	a combination of any such methods of sale; or

		
	•
	any other method permitted pursuant to applicable law.

If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions, and to return borrowed shares in connection with such short sales, provided that the short sales are made after the registration statement is declared effective. The selling stockholders may also loan or pledge shares of common stock to broker-dealers in connection with bona fide margin accounts secured by the shares of common stock, which shares broker-dealers could in turn sell if the selling stockholders default in the performance of their respective secured obligations. 

The selling stockholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if any of them defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. 

The selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. 

Annex - 2

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. 

There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part. 

The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, and the rules and regulations thereunder, including, without limitation, Regulation M of the Securities Exchange Act of 1934, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock. 

We will pay all expenses of the registration of the shares of common stock pursuant to the investor rights agreement, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that the selling stockholders will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including liabilities under the Securities Act of 1933, in accordance with the investor rights agreement, or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act of 1933, that may arise from any written information furnished to us by the selling stockholders specifically for use in this prospectus, in accordance with the related investor rights agreement, or we may be entitled to contribution. 

Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates. 

Any shares covered by this prospectus that qualify for sale pursuant to Rule 144 of the Securities Act of 1933 may be sold under Rule 144, rather than pursuant to this prospectus.

Annex - 3

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