Document:

Blue Sphere Corporation - 10-K

Exhibit 10.245

 

THIS INSTRUMENT CONTAINS AN AFFIDAVIT
OF CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS BORROWER MAY HAVE AND ALLOWS THE HOLDER TO OBTAIN
A JUDGMENT AGAINST BORROWER WITHOUT ANY FURTHER NOTICE.

 

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: $500,000.00	Issue Date: January 30, 2018
	
        Purchase Price: $450,000.00

        Original Issue Discount: $50,000.00
	 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, BLUE SPHERE
CORPORATION, a Nevada corporation (hereinafter called the “Borrower” or “Company”), hereby promises
to pay to the order of LABRYS FUND, LP, a Delaware limited partnership, or registered assigns (the “Holder”)
the sum of up to US$500,000.00, together with any interest as set forth herein, and to pay interest on the unpaid principal balance
hereof at the rate of twelve percent (12%) (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. The consideration
to the Borrower for this Note is up to $450,000.00 (the “Consideration”). The Holder shall pay $153,000.00 of the Consideration
(the “First Tranche”) within a reasonable amount of time of the full execution of the transactional documents related
to this Note. At the closing of the First Tranche, the outstanding principal amount under this Note shall be $170,000.00, consisting
of the First Tranche plus the prorated portion of the OID (as defined herein). The Holder may pay, in its sole discretion, such
additional amounts of the Consideration and at such dates as the Holder may choose in its sole discretion. THE PRINCIPAL SUM
DUE TO THE HOLDER SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE HOLDER, AS WELL AS THE APPLICABLE PORTION OF
THE OID, FEES, AND INTEREST. The maturity date for each tranche funded shall be six (6) months from the effective date of the
payment for the respective tranche (each a “Maturity Date”), and is the date upon which the principal sum of each respective
tranche, as well as any accrued and unpaid interest and other penalties relating to that respective tranche, shall be due and payable.
In connection with the issuance of this convertible promissory note (the “Note”), the Borrower shall, on the Issue
Date, issue 85,000 shares of common stock (the “Returnable Shares”) to Holder as a commitment fee, provided,
however, the Returnable Shares must be returned to the Borrower’s treasury if the Note is fully repaid and satisfied
prior to the date which is one hundred eighty (180) days following the Issue Date, subject further to the terms and conditions
of this Note.

 

     

     

    

 

This Note may not be prepaid in whole or
in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when
due shall bear interest at the rate of 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, $0.001 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 carries a prorated original issue
discount of $50,000.00 (the “OID”), to cover the Holder’s accounting fees, due diligence fees, monitoring, and/or
other transactional costs incurred in connection with the purchase and sale of the Note, which is included in the principal balance
of this Note. Thus, the purchase price of this Note shall be up to $450,000.00, computed as follows: the Principal Amount minus
the OID.

 

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 also apply to
this Note:

 

Article
I. CONVERSION RIGHTS

 

1.1  Conversion Right. The
Holder shall have the right, in its sole and absolute discretion, from time to time, and at any time on or following the date of
this Note 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 11:59 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) any Additional Principal for such Conversions, plus (5) at the Holder’s
option, any amounts owed to the Holder pursuant to any other provision of this Note, all subject to the 4.99% (or up to 9.99% if
increased as provided above) limitation discussed above.

 

1.2  Conversion Price.

 

(a)    Calculation of
Conversion Price. Subject to the adjustments described herein, the conversion price (the “Conversion Price”) shall
equal the lesser of (i) 65% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 35%) during
the previous twenty (20) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the
Alternate 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 “Alternate 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 (as defined below) for the Common Stock during the twenty (20) 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 (the “OTC Market”) as reported
by a reliable reporting service (“Reporting Service”) designated by the Holder or, if the OTC Market 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 lowest closing bid price on the OTC Market as reported by a Reporting Service designated by the Holder
or, if the OTC Market 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. 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 Market 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. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative
in the absence of manifest error.

 

     

     

    

 

Each time, while this Note is outstanding,
the Borrower enters into a Section 3(a)(9) transaction (including but not limited to the issuance of new promissory notes or of
a replacement promissory note), in which any 3rd party has the right to convert monies owed to that 3rd party
(or receive shares pursuant to a settlement or otherwise) at a discount to market greater than the Alternate Conversion Price in
effect at that time (prior to all other applicable adjustments in the Note), then the Alternate Conversion Price shall be automatically
adjusted to such greater discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding.
Each time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9) transaction (including but not limited to
the issuance of new promissory notes or of a replacement promissory note), in which any 3rd party has a look back period
greater than the look back period in effect under the Note at that time, then the Holder’s look back period shall automatically
be adjusted to such greater number of days until this Note is no longer outstanding. The Borrower shall give written notice to
the Holder, with the adjusted Alternate Conversion Price and/or adjusted look back period (each adjustment that is applicable due
to the triggering event), within one (1) business day of an event that requires any adjustment described in the two immediately
preceding sentences.

 

The Conversion Price is subject to full
ratchet anti-dilution in the event that the Company issues any common stock at a per share price lower than the Conversion Price
(each a “Dilutive Price”) then in effect, provided, however, that Holder shall have the sole discretion in deciding
whether to utilize such Dilutive Price instead of the Conversion Price otherwise in effect at the time of the respective conversion.

 

(b)       Adjustment
to Conversion Price. At any time after the Issue Date, (i) 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), (ii) if the Borrower ceases to be a reporting company pursuant or subject to
the Exchange Act, (iii) if the Borrower loses a market (including the OTCBB, OTCQB or an equivalent replacement exchange) for its
Common Stock, (iv) if the Borrower fails to maintain its status as “DTC Eligible” for any reason, (v) if the Conversion
Price is less than one cent ($0.01), (vi) if the Note cannot be converted into free trading shares on or after six months from
the Issue Date, (vii) if at any time the Borrower does not maintain or replenish the Reserved Amount (as defined herein) within
three (3) business days of the request of the Holder, (viii) if the Borrower fails to maintain the listing of the Common Stock
on at least one of the OTC Markets or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq Small Cap Market,
the New York Stock Exchange, or the NYSE American, (ix) if the Borrower fails to comply with the reporting requirements of the
Exchange Act; the reporting requirements necessary to satisfy the availability of Rule 144 to the Holder or its assigns, including
but not limited to the timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, the requirements
for XBRL filings, the requirements for disclosure of financial statements on its website, (x) if the Borrower effectuates a reverse
split of its Common Stock without twenty (20) days prior written notice to the Holder, (xi) if 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), (xii) 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, (xiii) any cessation
of trading of the Common Stock on at least one of the OTC Markets or an equivalent replacement exchange, the Nasdaq National Market,
the Nasdaq Small Cap Market, the New York Stock Exchange, or the NYSE American, and such cessation of trading shall continue for
a period of five consecutive (5) Trading Days, and/or (xiv) the Borrower loses the “bid” price for its Common
Stock ($0.0001 on the “Ask” with zero market makers on the “Bid” per Level 2), and/or (xv) if the Holder
is notified in writing by the Company or the Company’s transfer agent that the Company does not have the necessary amount
of authorized and issuable shares of Common Stock available to satisfy the issuance of Shares pursuant to a Conversion Notice,
then the Holder shall be entitled to increase, by 10% for each occurrence, cumulative or otherwise, the discount to the Conversion
Price shall apply for all future conversions under the Note. The Holder maintains the option and sole discretion to increase by
Five Thousand and No/100 United States Dollars ($5,000) per each occurrence described above (under Holder’s and Borrower’s
expectation that any principal amount increase will tack back to the Issue Date) the principal amount of the Note instead of applying
further discounts to the Conversion Price. Under no circumstances shall the principal amount exceed an additional Twenty Five Thousand
and No/100 United States Dollars ($25,000) or the Conversion Price be less than 30% multiplied by the Market Price due to cumulative
effect.

 

     

     

    

 

(c)       DTC
Chill. If in the case that the Borrower’s Common Stock is “chilled” for deposit into the DTC system and only
eligible for clearing deposit, then an additional 15% discount to the Conversion Price shall apply for all future conversions under
all Notes while the “chill” is in effect. 

 

(d)       [Intentionally
Omitted]

 

(e)       Par
Value Adjustments. 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, provided, however, that the
Holder, in its sole and absolute discretion may elect to instead to set the Conversion Price to par value for such Conversion(s)
and the Conversion Amount for such Conversion(s) shall 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(s) to equal the same number of Conversion Shares as would have been issued had the Conversion Price
not been set to par value pursuant to this Section 1.2(e).

 

(f)        Conversion
Price During Major Announcements. Notwithstanding anything contained in the preceding section 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. 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 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(d) to become operative.

 

     

     

    

 

(g)       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 seven (7) 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”). Initially, the Company will instruct the Transfer
Agent to reserve 1,830,769 shares of common stock in the name of the Holder for issuance upon conversion hereof. 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. If, at any time the Borrower does not maintain
the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note, and the then outstanding principal
due under this Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000).

 

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, and the Reserved Amount will be increased by a factor of two
(2) each time the Borrower issues a Variable Security (as defined herein).

 

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 on or following 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 11:59 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)   Book
Entry 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.

 

(d)   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.

 

(e)   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 two (2) 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.

 

(f)    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 11:59 p.m., New York, New York time, on such date.

 

     

     

    

 

(g)   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.

 

(i)    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 business 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, and 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(i) are justified. 

 

(j)    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 two (2) business days from the Conversion Date specified
therein, (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, (vi) [intentionally
omitted] or (vii) 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 the Conversion Date, then the Holder maintains the option and
sole discretion to rescind the applicable Notice of Conversion (“Rescindment”) pursuant to which such Conversion Shares
were issuable with a “Notice of Rescindment.” This Note shall remain convertible before and after the Maturity Date
hereof until this Note is repaid or converted in full.

 

     

     

    

 

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.”

 

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 unjustly 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.

 

(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.

 

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.

 

     

     

    

 

(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 third (3rd) 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 initial one hundred eighty (180) day period following the funding date of the respective tranche of this Note, 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 amount of the respective tranche of this Note in full by making a payment to the Holder of an amount in cash equal
to the sum of: (i) the then outstanding principal amount of the respective tranche of this Note plus (ii) accrued and
unpaid interest on the unpaid principal amount of the respective tranche of this Note plus (iii) Default Interest, if any,
in accordance with Article III, plus (iv) any Additional Principal, plus (v) at the Holder’s option, any amounts
owed to the Holder pursuant to any other provision of this Note, plus (vi) $750.00 to reimburse Holder for the fees associated
with the Returnable Shares.

 

(b)   After the expiration of one hundred
eighty (180) days following the funding date of the respective tranche of this Note, the Borrower shall have no right of prepayment
with respect to that specific tranche of this Note.

 

     

     

    

 

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 a specific tranche of this 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.

 

Upon confirmation by Holder that the prepayment
has been received by the Holder and that all amounts outstanding under this Note are paid in full, the Holder shall return the
Returnable Shares back to the Company’s treasury. 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,
then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section 1.9 and the Holder shall
no longer be required to return the Returnable Shares to the Borrower under any circumstances.

 

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  [Intentionally Omitted]

 

2.3  [Intentionally Omitted]

 

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  [Intentionally Omitted]

 

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 a cash payment or added to the balance of this Note (under Holder’s and Borrower’s expectation that this amount
will tack back to the Issue Date).

 

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.

 

2.9   Charter.
So long as the Borrower shall have any obligations under this Note, the Borrower shall not amend its charter documents, including
without limitation its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights
of the Holder.

 

2.10 [Intentionally
Omitted]

 

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. Any amount of principal on this Note which is not paid when due shall bear interest at the rate of Twenty
Four percent (24%) per annum from the due date thereof until the same is paid (“Default Interest”).

 

3.2  Conversion and the Shares.
The Borrower fails to reserve the Reserved Amount required for Holder at all times, issue shares of Common Stock to the Holder
(or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue)
(electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or
otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate
for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required
by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent
from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for two (2) business days after the Holder shall have delivered a Notice of Conversion. It is
an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this
Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent.
If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion,
such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.  

 

     

     

    

 

3.3  Breach of Covenants. The
Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents
including but not limited to the Purchase Agreement.

 

3.4  Breach of Representations
and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given
in writing pursuant hereto or in connection herewith (including, without limitation, the 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.

 

3.5  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. 

 

3.6   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.

 

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

 

3.8   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.

 

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

 

3.10 [Intentionally
Omitted]

 

3.11 [Intentionally
Omitted]

 

3.12 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 $200,000.00, 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.

 

3.13 Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent and (i) the Borrower fails to obtain
written approval from the Holder prior to the effective date of such replacement, or (ii) 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.

 

     

     

    

 

3.14 Bid Price. If the Borrower loses 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 OTCBB, OTCQB or an equivalent replacement
exchange) for its Common Stock.

 

3.15 Failure
To Deliver Returnable Shares. The Borrower fails to deliver the Returnable Shares to the Holder within three (3) business days
of the Issue Date.

 

3.16 [Intentionally
Omitted]

 

3.17 Maximum Conversion. If
at any time while this Note is outstanding, and assuming the beneficial ownership limitations contained in this Note did not apply
to this specific calculation, the Holder could convert the amounts outstanding under Note into more than 4.99% of the outstanding
shares of Common Stock of the Company as of the date of calculation (including any beneficial ownership associated with the Returnable
Shares held at the time of such calculation).

 

3.18 [Intentionally
Omitted]

 

3.19 OTC
Marketplace Segments. If (i) the Common Stock of the Borrower or the Borrower itself has any notation on the OTC Markets Group
website (www.otcmarkets.com) other than “Current Information,” including but not limited to “Limited Information”
(Yield Sign) or “No Information” (Stop Sign), or if the Common Stock of the Borrower is shown only as quoted on the
“grey markets,” and (ii) by reason thereof, the Holder is unable to obtain a standard “144 legal opinion”
from an attorney reasonably acceptable to The Holder, its brokerage firm, and the Company’s transfer agent in order to facilitate
the Holder’s conversion of any of the Borrower’s obligations hereunder into shares of the Borrower’s Common Stock
and thereupon deposit such shares into the Holder’s brokerage account.

 

3.20 Dilutive Issuance. If
at any time while this Note is outstanding, the Company issues any of its common stock at a price per share price lower than the
Conversion Price then in effect.

 

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 DDQ.
If any of the information in the due diligence questionnaire, provided by the Borrower to the Holder on or around the Issue Date,
is false or misleading in any material respect.

 

3.23 [Intentionally Omitted]

 

3.24 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.

 

     

     

    

 

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, 3.22, 3.23, and/or 3.24, the Holder shall no longer be required to return the Returnable Shares to the Borrower under
any circumstances and 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) 1.50 TIMES (except with respect to
SECTION 3.2, in which case 1.50 TIMES shall be replaced with 2.00 TIMES) 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”) 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. 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. Additionally, if this Note is not paid at the Maturity Date,
then the outstanding principal due under this Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000).

 

The Holder shall have the right at any
time to convert the Default Amount, in whole or in part, at the Conversion Price in effect at the time of conversion, subject to
the beneficial ownership limitations contained in the Note.

 

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.

 

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.

 

Holder’s Right to Confession of
Judgment.  Upon the occurrence and during the continuation of any Event of Default, and in addition to any other right
or remedy of the Holder hereunder, under the related transaction documents, or otherwise at law or in equity, the Borrower hereby
irrevocably authorizes and empowers Holder or its legal counsel, each as the Borrower’s attorney-in-fact, to appear ex
parte and without notice to the Borrower to confess judgment against the Borrower for the unpaid amount of this Note.
The judgment shall set forth the amount then due hereunder, plus attorney’s fees and cost of suit, and to release all errors,
and waive all rights of appeal. The Borrower waives the right to contest Holder’s rights under this section, including without
limitation the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect. No single exercise
of the foregoing right and power to confess judgment will be deemed to exhaust such power, whether or not any such exercise shall
be held by any court to be invalid, voidable, or void, and such power shall continue undiminished and may be exercised from time
to time as the Holder may elect until all amounts owing on this Note have been paid in full.

 

Article
IV. MISCELLANEOUS

 

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

 

     

     

    

 

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

 

If to the
Borrower, to:

 

Blue Sphere Corporation

301 McCullough Drive, 4th Floor

Charlotte, NC 28262

E-mail:
info@bluespherecorporate.com  

 

If to the Holder:

 

Labrys Fund, LP

48 Parker
Road

Wellesley,
MA 02482

E-mail: admin@equiluxgroup.com

 

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

 

Legal & Compliance,
LLC

330 Clematis
Street, Ste. 217

West Palm
Beach, FL 33401

Attn: Chad
Friend, Esq., LL.M.

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. The Holder
may assign or transfer this Note to any transferee at its sole discretion. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this
Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this
Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending
arrangement. 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. The Borrower shall not assign any of its rights or obligations under this Note without the signed written consent
of the Holder.

 

     

     

    

 

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. The parties hereby warrant and represent that the selection of Nevada law as governing under this Note (i) has a reasonable
nexus to each of the Parties and to the transactions contemplated by the Note; and (ii) does not offend any public policy of Nevada,
Massachusetts, or of any other state, federal, or other jurisdiction.  Any action brought by either party against the other
arising out of or related to this Note, or any other agreements between the parties, shall be commenced only in the state or federal
courts of general jurisdiction located in the Commonwealth of Massachusetts, except that all such disputes between the parties
shall be subject to alternative dispute resolution through binding arbitration at the Holder’s sole discretion and election
(regardless of which party initiates the legal proceedings). 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 parties agree that, in connection with any such arbitration proceeding, each
shall submit or file any claim which would constitute a compulsory counterclaim within the same proceeding as the claim to which
it relates. Any such claim that is not submitted or filed in such proceeding shall be waived and such party will forever be barred
from asserting such a claim. Both parties agree to submit to the jurisdiction of such courts or to such arbitration panel, as the
case may be.

 

If the Holder elects alternative dispute
resolution by arbitration, the arbitration proceedings shall be conducted in the Commonwealth of Massachusetts and administered
by the American Arbitration Association in accordance with its Commercial Arbitration Rules and Mediation Procedures in effect
on the Issue Date, except as modified by this Note. The Holder’s election to arbitrate shall be made in writing, delivered
to the other party, and filed with the American Arbitration Association. The American Arbitration Association must receive the
demand for arbitration prior to the date when the institution of legal or equitable proceedings would be barred by the applicable
statute of limitations, unless legal or equitable proceedings between the parties have already commenced, and the receipt by the
American Arbitration Association of a written demand for arbitration also shall constitute the institution of legal or equitable
proceedings for statute of limitations purposes. The parties shall be entitled to limited discovery at the discretion of the arbitrator(s)
who may, but are not required to, allow depositions. The parties acknowledge that the arbitrators’ subpoena power is not
subject to geographic limitations. The arbitrator(s) shall have the right to award individual relief which he or she deems proper
under the evidence presented and applicable law and consistent with the parties’ rights to, and limitations on, damages and
other relief as expressly set forth in this Note. The award and decision of the arbitrator(s) shall be conclusive and binding on
all parties, and judgment upon the award may be entered in any court of competent jurisdiction. The Holder reserves the right,
but shall have no obligation, to advance the Issuer’s share of the costs, fees and expenses of any arbitration proceeding,
including any arbitrator fees, in order for such arbitration proceeding to take place, and by doing so will not be deemed to have
waived or relinquished its right to seek the recovery of those amounts from the arbitrator, who shall provide for such relief in
the final award, in addition to the costs, fees, and expenses that are otherwise recoverable. The foregoing agreement to arbitrate
shall be specifically enforceable under applicable law in any court having jurisdiction thereof.

 

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

 

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

 

4.8  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 Notwithstanding any provision in this Note or the related transaction documents to the contrary,
the total liability for payments of interest and payments in the nature of interest, including, without limitation,
all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit
imposed by the usury laws of the jurisdiction governing this Note or any other applicable law. In the event the
total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges,
fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate
of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of
the jurisdiction governing this Note, all sums in excess of those lawfully collectible as interest for the period in
question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction
of the outstanding principal balance due hereunder immediately upon receipt of such sums by the Holder
hereof, with the same force and effect as though the Company had specifically designated such excess sums to be so applied
to the reduction of the principal balance then outstanding, and the Holder hereof had agreed to accept
such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time
to time, elect, by notice in writing to the Company, to waive, reduce, or limit the collection of any
sums in excess of those lawfully collectible as interest, rather than accept such sums as a prepayment of the principal
balance then outstanding. It is the intention of the parties that the Company does not intend or expect
to pay, nor does the Holder intend or expect to charge or collect any interest under this Note greater than the
highest non-usurious rate of interest which may be charged under applicable law.

 

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.

 

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 to 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, Issue, 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 a cash payment or added to the balance of this Note.

 

4.16 Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within one (1) Trading Day after any such receipt or delivery,
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to the Company or its Subsidiaries.

 

4.17 [Intentionally
Omitted]

 

[signature page to follow]

 

     

     

    

 

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.

 

	 	BLUE SPHERE CORPORATION
	 	 	 
	 	By: 	/s/ Shlomi Palas
	 	Name: Shlomi Palas
	 	Title: Chief Executive Officer

 

     

     

    

 

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 Blue Sphere Corporation,
a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as
of January 30, 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: Labrys Fund, LP	 
	 	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:

 

	 	 	 	$	 	 

 

Default Amounts & Penalties
remaining (if applicable):

 

	 	 	 	$	 

 

LABRYS FUND, LP

 

	 	By:	 	 

	 	Name:	 	 

	 	Title: Principal

	 	Date:	 	 

 

     

     

    

 

EXHIBIT B

Affidavit of Confession of Judgment

 

	COMMONWEALTH OF MASSACHUSETTS	 	 	 
	 	 	X	 
	LABRYS FUND, LP,	 	 
	 	 	 	Index No.
	 	Plaintiff,	 	 
	 	 	 	AFFIDAVIT OF
	 	 	 	CONFESSION OF
	-against -	 	 	JUDGMENT
	 	 	 	 
	BLUE SPHERE CORPORATION,	 	 	 
	 	Defendant.	 	 
	 	 	X	 
	 	 	 
	COMMONWEALTH OF MASSACHUSETTS	)	 	 
	 	)	ss.:	 

 

Shlomi Palas, being duly sworn, hereby deposes and says:

 

1.       
I am the Chief Executive Officer of defendant BLUE SPHERE CORPORATION (“Borrower”). As such, I am fully familiar with
all the facts and circumstances recited herein on personal knowledge. Borrower has its principal place of business at 301 McCullough
Drive, 4th Floor, Charlotte, NC 28262. On behalf of the Borrower, I hereby confess judgment in favor of Labrys Fund, LP (“Labrys
Fund”), residing at 48 Parker Road, Wellesley, MA 02482, in the amount of Five Hundred Thousand Dollars ($500,000.00), less
any payments made on or after the date of this affidavit of confession of judgment, plus interest at default interest rate of twenty
four percent (24%) percent per annum on said amount and all other applicable penalties under the Note (as defined herein). In no
event shall interest payable hereunder exceed the maximum permissible under applicable law.

 

2.       I
hereby authorize the federal courts and/or state courts located in the Commonwealth of Massachusetts to enter judgment against
Borrower in the amount of in the amount of Five Hundred Thousand Dollars ($500,000.00), less any payments made on or after the
date of this affidavit of confession of judgment, plus interest at default interest rate of twenty four percent (24%) percent per
annum on said amount and all other applicable penalties under the Note, plus the costs and attorneys’ fees that are set forth
below, less any payments made on or after the date of this affidavit of confession of judgment, upon Borrower’s failure for
any reason to timely make any payment to Labrys Fund called for by the convertible promissory note between of the parties, dated
January 30, 2018 (the “Note”), due to the occurrence of an Event of Default (as defined in the Note) under the Note.

 

     

     

    

 

3.       In
order to secure these obligations, Borrower agreed to simultaneously deliver with the execution of the Note this Affidavit of Confession
of Judgment.

 

4.       The
sums confessed pursuant to this affidavit of confession of judgment are justly due and owing to Labrys Fund under the following
circumstances: Borrower entered into the Note pursuant to which Borrower promised to pay to the order of Labrys Fund the principal
sum of Five Hundred Thousand Dollars ($500,000.00) plus interest as provided for therein. The amounts confessed by this affidavit
represent a convertible promissory note investment by Labrys Fund in Borrower and arise out of Borrower’s breach of its obligations
under the Note.

 

5.       Borrower
agrees to pay any and all costs and expenses incurred by Labrys Fund in enforcing the terms of this affidavit of confession of
judgment, including reasonable attorneys’ fees and expenses at the rate of $475.00 per hour that Labrys Fund incurs or is
billed for in connection with enforcing the terms of the affidavit of confession of judgment, entering any Judgment, collecting
upon said Judgment, and defending or prosecuting any appeals.

 

	 	BLUE SPHERE CORPORATION	 
	 	 	 	 
	 	By: 	 	 
	 	Name: Shlomi Palas	 
	 	Title: Chief Executive Officer	 

 

     

     

    

 

STATE OF ______________        )

ss.:

COUNTY OF ______________    )

 

ACKNOWLEDGMENT

 

On __________, 2018 before me personally
came ________________________________________, to me known, who, by me duly sworn, did depose and say that deponent is an officer
of BLUE SPHERE CORPORATION, the corporation described in, and which executed the foregoing affidavit of confession of judgment,
that deponent knows the seal of the corporation, that the seal affixed to the affidavit of confession of judgment is the corporation’s
seal, that it was affixed by order of the board of directors of the corporation and that deponent signed deponent’s name
by like order.

 

_____________________________

Notary Public

 

SEAL:

 

[Signature Page to Affidavit of Confession
of Judgment]Blue Sphere Corporation - 10-K

Exhibit 10.403

 

 

BLUE SPHERE CORPORATION

 

2018 STOCK INCENTIVE PLAN

 

		1.	Purpose

 

Blue Sphere Corporation’s 2018 Stock
Incentive Plan is intended to promote the best interests of Blue Sphere Corporation and its stockholders by (i) assisting
the Corporation and its Affiliates in the recruitment and retention of persons with ability and initiative, (ii) providing
an incentive to such persons to contribute to the growth and success of the Corporation’s businesses by affording such persons
equity participation in the Corporation and (iii) associating the interests of such persons with those of the Corporation
and its Affiliates and stockholders.

 

		2.	Definitions

 

As used in this Plan the following definitions
shall apply:

 

A.            “Affiliate” means (i) any Subsidiary, (ii) any Parent, (iii) any corporation, or trade
or business (including, without limitation, a partnership, limited liability company or other entity) which is directly or indirectly
controlled fifty percent (50%) or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest)
by the Corporation or one of its Affiliates, and (iv) any other entity in which the Corporation or any of its Affiliates has
a material equity interest and which is designated as an “Affiliate” by resolution of the Committee.

 

B.             “Award” means any Option or Stock Award granted hereunder.

 

C.             “Board” means the Board of Directors of the Corporation.

 

D.            “Code” means the Internal Revenue Code of 1986, and any amendments thereto.

 

E.             “Committee” means the Board or any Committee of the Board to which the Board has delegated any responsibility
for the implementation, interpretation or administration of this Plan.

 

F.             “Common Stock” means the common stock, no par value, of the Corporation.

 

G.             “Consultant” means (i) any person performing consulting or advisory services for the Corporation
or any Affiliate, or (ii) a director of an Affiliate.

 

H.            “Corporation” means Blue Sphere Corporation, a Nevada corporation.

 

I.              “Corporation Law” means Title 7 of the Nevada Revised Statutes, as the same shall be amended from time
to time.

 

J.              “Date of Grant” means the date that the Committee approves an Option grant; provided, that all terms
of such grant, including the number of shares subject to the grant, exercise price and vesting are defined at such time.

 

K.            “Deferral Period” means the period of time during which Deferred Shares are subject to deferral limitations
under Section 7.D of this Plan.

 

    1

     

    

 

L.             “Deferred Shares” means an award pursuant to Section 7.D of this Plan of the right to receive shares
of Common Stock at the end of a specified Deferral Period.

 

M.           “Director” means a member of the Board.

 

N.             “Eligible Person” means an employee of the Corporation or an Affiliate (including a corporation
that becomes an Affiliate after the adoption of this Plan), a Director or a Consultant to the Corporation or an Affiliate (including
a corporation that becomes an Affiliate after the adoption of this Plan).

 

O.            “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

P.             “Fair
Market Value” means, on any given date, the current fair market value of the shares of Common Stock as determined as
follows:

 

(i)              If the Common Stock is traded on a national securities exchange, the closing price for the day of determination as quoted
on such market or exchange, including the NASDAQ Global Market or NASDAQ Capital Market, which is the primary market or exchange
for trading of the Common Stock or if no trading occurs on such date, the last day on which trading occurred, or such other appropriate
date as determined by the Committee in its discretion, as reported in The Wall Street Journal or such other source as the
Committee deems reliable;

 

(ii)             If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high and the low asked prices for the Common Stock for the day of determination; or

 

(iii)            In the absence of an established market for the Common Stock, Fair Market Value shall be determined by the Committee in
good faith.

 

Q.            “Family Member” means a parent, child, spouse or sibling.

 

R.            “Incentive Stock Option” means an Option (or portion thereof) intended to qualify for special tax treatment
under Section 422 of the Code.

 

S.             “Nonqualified Stock Option” means an Option (or portion thereof) which is not intended or does
not for any reason qualify as an Incentive Stock Option.

 

T.            “Option” means any option to purchase shares of Common Stock granted under this Plan.

 

U.            “Parent” means any corporation (other than the Corporation) in an unbroken chain of corporations ending
with the Corporation if each of the corporations (other than the Corporation) owns stock possessing at least fifty percent (50%)
of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

V.             “Participant” means an Eligible Person who (i) is selected by the Committee or an authorized officer
of the Corporation to receive an Award and (ii) is party to an agreement setting forth the terms of the Award, as appropriate.

 

W.           “Performance Agreement” means an agreement described in Section 8 of this Plan.

 

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X.            “Performance Objectives” means the performance objectives established by the Committee pursuant to this
Plan for Participants who have received grants of Awards. Performance Objectives may be described in terms of Corporation-wide
objectives or objectives that are related to the performance of the individual Participant or the Affiliate, division, department
or function within the Corporation or Affiliate in which the Participant is employed or has responsibility. Any Performance Objectives
applicable to Awards to the extent that such an Award is intended to qualify as “Performance Based Compensation” under
Section 162(m) of the Code shall be limited to specified levels of or increases in the Corporation’s or a business unit’s
return on equity, earnings per share, total earnings, earnings growth, return on capital, return on assets, economic value added,
earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, sales growth, gross margin
return on investment, increase in the Fair Market Price of the shares, net operating profit, cash flow (including, but not limited
to, operating cash flow and free cash flow), cash flow return on investments (which equals net cash flow divided by total capital),
internal rate of return, increase in net present value or expense targets. The Awards intended to qualify as “Performance
Based Compensation” under Section 162(m) of the Code shall be pre-established in accordance with applicable regulations under
Section 162(m) of the Code and the determination of attainment of such goals shall be made by the Committee. If the Committee determines
that a change in the business, operations, corporate structure or capital structure of the Corporation (including an event described
in Section 9), or the manner in which it conducts its business, or other events or circumstances render the Performance Objectives
unsuitable, the Committee may modify such Performance Objectives or the related minimum acceptable level of achievement, in whole
or in part, as the Committee deems appropriate and equitable; provided, however, that no such modification shall be made to an
Award intended to qualify as “Performance Based Compensation” under Section 162(m) of the Code unless the Committee
determines that such modification will not result in loss of such qualification or the Committee determines that loss of such qualification
is in the best interests of the Corporation.

 

Y.             “Performance Period” means a period of time established under Section 8 of this Plan within which the
Performance Objectives relating to a Stock Award are to be achieved.

 

Z.             “Performance
Share” means an award pursuant to Section 8 of this Plan of the right to receive shares of Common Stock upon the achievement
of specified Performance Objectives.

 

AA.         “Plan” means this Blue Sphere Corporation 2018 Stock Incentive Plan.

 

BB.          “Repricing” means, other than in connection with an event described in Section 9 of this Plan, (i) lowering
the exercise price of an Option after it has been granted or (ii) canceling an Option at a time when the exercise price exceeds
the then-Fair Market Value of the Common Stock in exchange for another Option.

 

CC.          “Restricted Stock Award” means an award of Common Stock under Section 7.B.

 

DD.         “Securities Act” means the Securities Act of 1933, as amended.

 

EE.          
“Stock Award” means a Stock Bonus Award, Restricted Stock Award, Stock Appreciation Right, Deferred Shares,
or Performance Shares.

 

FF.           “Stock Bonus Award” means an award of Common Stock under Section 7.A.

 

GG.          “Stock Award Agreement” means a written agreement between the Corporation and a Participant setting forth
the specific terms and conditions of a Stock Award granted to the Participant under Section 7. Each Stock Award Agreement shall
be subject to the terms and conditions of this Plan and shall include such terms and conditions as the Committee shall authorize.

 

HH.         “Stock Option Agreement” means an agreement (written or electronic) between the Corporation and a Participant
setting forth the specific terms and conditions of an Option granted to the Participant. Each Stock Option Agreement shall be subject
to the terms and conditions of this Plan and shall include such terms and conditions as the Committee shall authorize.

 

II.             “Subsidiary” means any corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing
at least fifty percent (50%) of the total combined voting power of all classes of stock in one of the other corporations in such
chain.

 

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JJ.            “Ten Percent Owner” means any Eligible Person owning at the time an Option is granted more than ten percent
(10%) of the total combined voting power of all classes of stock of the Corporation or of a Parent or Subsidiary. An individual
shall, in accordance with Section 424(d) of the Code, be considered to own any voting stock owned (directly or indirectly) by or
for such Eligible Person’s brothers, sisters, spouse, ancestors and lineal descendants and any voting stock owned (directly
or indirectly) by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by or for
its stockholders, partners, or beneficiaries.

 

		3.	implementation,
interpretation and Administration

 

A.            Delegation to Board Committee. The Board shall have the sole authority to implement, interpret, and/or administer
this Plan unless the Board delegates all or any portion of its authority to implement, interpret, and/or administer this Plan to
a Committee. To the extent not prohibited by the Certificate of Incorporation or Bylaws of the Corporation, the Board may delegate
all or a portion of its authority to implement, interpret, and/or administer this Plan to a Committee of the Board appointed by
the Board and constituted in compliance with the applicable Corporation Law. The Committee shall consist solely of two (2) or
more Directors who are (i) Non-Employee Directors (within the meaning of Rule 16b-3 under the Exchange Act) for purposes
of exercising administrative authority with respect to Awards granted to Eligible Persons who are subject to Section 16 of
the Exchange Act; (ii) to the extent required by the rules of the market on which the Corporation’s shares are traded
or the exchange on which the Corporation’s shares are listed, “independent” within the meaning of such rules;
and (iii) at such times as an Award under this Plan by the Corporation is subject to Section 162(m) of the Code (to the extent
relief from the limitation of Section 162(m) of the Code is sought with respect to Awards and administration of the Awards by a
committee of “outside directors” is required to receive such relief), “outside directors” within the meaning
of Section 162(m) of the Code.

 

B.             Delegation to Officers. The Committee may delegate to one or more officers of the Corporation the authority to grant
and administer Awards to Eligible Persons who are not Directors or executive officers of the Corporation; provided that the Committee
shall have fixed the total number of shares of Common Stock that may be subject to such Awards. No officer holding such a delegation
is authorized to grant Awards to himself or herself. In addition to the Committee, the officer or officers to whom the Committee
has delegated the authority to grant and administer Awards shall have all powers delegated to the Committee with respect to such
Awards.

 

C.             Powers of the Committee. Subject to the provisions of this Plan, and in the case of a Committee appointed by the
Board, the specific duties delegated to such Committee, the Committee (and the officers to whom the Committee has delegated such
authority) shall have the authority:

 

(i)              To construe and interpret all provisions of this Plan and all Stock Option Agreements, Stock Award Agreements, Performance
Agreements, or any other agreement under this Plan.

 

(ii)             To determine the Fair Market Value of Common Stock in the absence of an established market for the Common Stock.

 

(iii)            To select the Eligible Persons to whom Awards are granted from time to time hereunder.

 

(iv)            To determine the number of shares of Common Stock covered by an Award; to determine whether an Option shall be an Incentive
Stock Option or Nonqualified Stock Option; and to determine such other terms and conditions, not inconsistent with the terms of
this Plan, of each such Award. Such terms and conditions include, but are not limited to, the exercise price of an Option, purchase
price of Common Stock subject to a Stock Award, the time or times when Options or a Stock Award may be exercised or Common Stock
issued thereunder, the vesting schedule of an Option, the right of the Corporation to repurchase Common Stock issued pursuant to
the exercise of an Option or a Stock Award and other restrictions or limitations (in addition to those contained in this Plan)
on the forfeitability or transferability of Options, Stock Awards or Common Stock issued upon exercise of an Option or pursuant
to a Stock Award. Such terms may include conditions which shall be determined by the Committee and need not be uniform with respect
to Participants.

 

    4

     

    

 

(v)             To accelerate the time at which any Option or Stock Award may be exercised, or the time at which a Stock Award or Common
Stock issued under this Plan may become transferable or non-forfeitable.

 

(vi)            To determine whether and under what circumstances an Option or Stock Award may be settled in cash, shares of Common Stock
or other property under Section 6.H instead of in Common Stock.

 

(vii)          
To waive, amend, cancel, extend, renew, accept the surrender of, modify or accelerate the vesting of or lapse of restrictions
on all or any portion of an outstanding Award. Except as otherwise provided by this Plan, Stock Option Agreement, Stock Award Agreement
or Performance Agreement or as required to comply with applicable law, regulation or rule, no amendment, cancellation or modification
shall, without a Participant’s consent, adversely affect any rights of the Participant; provided, however, that (x) an
amendment or modification that may cause an Incentive Stock Option to become a Nonqualified Stock Option shall not be treated as
adversely affecting the rights of the Participant and (y) any other amendment or modification of any Stock Option Agreement,
Stock Award Agreement or Performance Agreement that does not, in the opinion of the Committee, adversely affect any rights of any
Participant, shall not require such Participant’s consent. Notwithstanding the foregoing, the restrictions on the Repricing
of Options, as set forth in this Plan, may not be waived.

 

(viii)        
To prescribe the form of Stock Option Agreements, Stock Award Agreements, Performance Agreements, or any other agreements
under this Plan; to adopt policies and procedures for the exercise of Options or Stock Awards, including the satisfaction of withholding
obligations; to adopt, amend, and rescind policies and procedures pertaining to the administration of this Plan; and to make all
other determinations necessary or advisable for the administration of this Plan. Except for the due execution of the award agreement
by both the Corporation and the Participant, the Award’s effectiveness will not be dependent on any signature unless specifically
so provided in the award agreement.

 

The express grant in this Plan of any specific
power to the Committee shall not be construed as limiting any power or authority of the Committee; provided that the Committee
may not exercise any right or power reserved to the Board. Any decision made, or action taken, by the Committee or in connection
with the implementation, interpretation, and administration of this Plan shall be final, conclusive and binding on all persons
having an interest in this Plan.

 

		4.	Eligibility

 

A.            Eligibility for Awards. Awards, other than Incentive Stock Options, may be granted to any Eligible Person selected
by the Committee. Incentive Stock Options may be granted only to employees of the Corporation or a Parent or Subsidiary.

 

B.             Eligibility of Consultants. A Consultant shall be an Eligible Person only if the offer or sale of the Corporation’s
securities would be eligible for registration on Form S-8 Registration Statement (or any successor form) because of the identity
and nature of the service provided by such person, unless the Corporation determines that an offer or sale of the Corporation’s
securities to such person will satisfy another exemption from the registration under the Securities Act and complies with the securities
laws of all other jurisdictions applicable to such offer or sale. Accordingly, an Award may not be granted pursuant to this Plan
for the purpose of the Corporation obtaining financing or for investor relations purposes.

 

C.             Substitution Awards. The Committee may make Awards under this Plan by assumption, in substitution or replacement
of performance shares, phantom shares, stock awards, stock options or similar awards granted by another entity (including an Affiliate)
in connection with a merger, consolidation, acquisition of property or stock or similar transaction. Notwithstanding any provision
of this Plan (other than the maximum number of shares of Common Stock that may be issued under this Plan), the terms of such assumed,
substituted, or replaced Awards shall be as the Committee, in its discretion, determines is appropriate.

 

    5

     

    

 

		5.	Common Stock
Subject to Plan

 

A.            Share Reserve and Limitations on Grants. The maximum aggregate number of shares of Common Stock that may be (i) issued
under this Plan pursuant to the exercise of Options (without regard to whether payment on exercise of the Stock Option is made
in cash or shares of Common Stock) and (ii) issued pursuant to Stock Awards shall be 570,000 shares, of which up to 200,000 shares
shall be reserved specifically for the issuance of Incentive Stock Options. The number of shares of Common Stock subject to the
Plan shall be subject to adjustment as provided in Section 9. Notwithstanding any provision hereto to the contrary, shares
subject to the Plan shall include shares forfeited in a prior year as provided herein. For purposes of determining the number of
shares of Common Stock available under this Plan, shares of Common Stock withheld by the Corporation to satisfy applicable tax
withholding obligations pursuant to Section 10 of this Plan shall be deemed issued under this Plan. No single participant
may receive more than 25% of the total Options awarded in any single year.

 

B.             Reversion of Shares. If an Option or Stock Award is terminated, expires or becomes unexercisable, in whole or in
part, for any reason, the unissued or unpurchased shares of Common Stock which were subject thereto shall become available for
future grant under this Plan. Shares of Common Stock that have been actually issued under this Plan shall not be returned to the
share reserve for future grants under this Plan; except that shares of Common Stock issued pursuant to a Stock Award which are
forfeited to the Corporation or repurchased by the Corporation at the original purchase price of such shares, shall be returned
to the share reserve for future grant under this Plan.

 

C.             Source of Shares. Common Stock issued under this Plan may be shares of authorized and unissued Common Stock or shares
of previously issued Common Stock that have been reacquired by the Corporation.

 

		6.	Options

 

A.            Award. In accordance with the provisions of Section 4, the Committee will designate each Eligible Person to
whom an Option is to be granted and will specify the number of shares of Common Stock covered by such Option. The Stock Option
Agreement shall specify whether the Option is an Incentive Stock Option or Nonqualified Stock Option, the exercise price of such
Option, the vesting schedule applicable to such Option, the expiration date of such Option, events of termination of such Option,
and any other terms of such Option. No Option that is intended to be an Incentive Stock Option shall be invalid for failure to
qualify as an Incentive Stock Option.

 

B.             Option Price. The exercise price per share for Common Stock subject to an Option shall be determined by the Committee,
but shall comply with the following:

 

(i)             
The exercise price per share for Common Stock subject to an Option shall not be less than one hundred percent (100%) of
the Fair Market Value on the date of grant.

 

(ii)            
The exercise price per share for Common Stock subject to an Incentive Stock Option granted to a Participant who is deemed
to be a Ten Percent Owner on the date such option is granted, shall not be less than one hundred ten percent (110%) of the Fair
Market Value on the date of grant.

 

C.             Maximum Option Period. The maximum period during which an Option may be exercised shall be ten (10) years from
the date such Option was granted. In the case of an Incentive Stock Option that is granted to a Participant who is or is deemed
to be a Ten Percent Owner on the date of grant, such Option shall not be exercisable after the expiration of five (5) years
from the date of grant.

 

    6

     

    

 

D.             Maximum Value of Options which are Incentive Stock Options. To the extent that the aggregate Fair Market Value of
the Common Stock with respect to which Incentive Stock Options granted to any Participant are exercisable for the first time during
any calendar year (under all stock option plans of the Corporation or any Parent or Subsidiary) exceeds $100,000 (or such other
amount provided in Section 422 of the Code), the Options shall not be deemed to be Incentive Stock Options. For purposes of
this section, the Fair Market Value of the Common Stock will be determined as of the time the Incentive Stock Option with respect
to the Common Stock is granted. This section will be applied by taking Incentive Stock Options into account in the order in which
they are granted.

 

E.             Nontransferability. Options granted under this Plan which are intended to be Incentive Stock Options shall be nontransferable
except by will or by the laws of descent and distribution and, during the lifetime of the Participant, shall be exercisable by
only the Participant to whom the Incentive Stock Option is granted. Except to the extent transferability of a Nonqualified Stock
Option is provided for in the Stock Option Agreement or is approved by the Committee, during the lifetime of the Participant to
whom the Nonqualified Stock Option is granted, such Option may be exercised only by the Participant. If the Stock Option Agreement
so provides or the Committee so approves, a Nonqualified Stock Option may be transferred by a Participant through a gift or domestic
relations order to the Participant’s family members to the extent such transfer complies with applicable securities laws
and regulations and provided that such transfer is not a transfer for value (within the meaning of applicable securities laws and
regulations). The holder of a Nonqualified Stock Option transferred pursuant to this section shall be bound by the same terms and
conditions that governed the Option during the period that it was held by the Participant. No right or interest of a Participant
in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant, unless such obligation
is to the Corporation itself or to an Affiliate.

 

F.             Vesting. Options will vest as provided in the Stock Option Agreement.

 

G.             Termination. Options will terminate as provided in the Stock Option Agreement.

 

H.            Exercise. Subject to the provisions of this Plan and the applicable Stock Option Agreement, an Option may be exercised
to the extent vested in whole at any time or in part from time to time at such times and in compliance with such requirements as
the Committee shall determine. A partial exercise of an Option shall not affect the right to exercise the Option from time to time
in accordance with this Plan and the applicable Stock Option Agreement with respect to the remaining shares subject to the Option.
An Option may not be exercised with respect to fractional shares of Common Stock. The Participant may face certain restrictions
on his/her ability to exercise Options and/or sell underlying shares when such Participant is potentially in possession of insider
information. The Corporation will make the Participant aware of any formal insider trading policy it adopts, and the provisions
of such insider trading policy (including any amendments thereto) shall be binding upon the Participant.

 

I.              Payment. Unless otherwise provided by the Stock Option Agreement, payment of the exercise price for an Option shall
be made in cash or a cash equivalent acceptable to the Committee or if the Common Stock is traded on an established securities
market, by payment of the exercise price by a broker-dealer or by the Option holder with cash advanced by the broker-dealer if
the exercise notice is accompanied by the Option holder’s written irrevocable instructions to deliver the Common Stock acquired
upon exercise of the Option to the broker-dealer or by delivery of the Common Stock to the broker-dealer with an irrevocable commitment
by the broker-dealer to forward the exercise price to the Corporation. With the consent of the Committee, payment of all or a part
of the exercise price of an Option may also be made (i) by surrender to the Corporation (or delivery to the Corporation of
a properly executed form of attestation of ownership) of shares of Common Stock that have been held for such period prior to the
date of exercise as is necessary to avoid adverse accounting treatment to the Corporation, or (ii) any other method acceptable
to the Committee. If Common Stock is used to pay all or part of the exercise price, the sum of the cash or cash equivalent and
the Fair Market Value (determined as of the date of exercise) of the shares surrendered must not be less than the Option price
of the shares for which the Option is being exercised.

 

J.              Stockholder Rights. No Participant shall have any rights as a stockholder with respect to shares subject to an Option
until the date of exercise of such Option and the certificate for shares of Common Stock to be received on exercise of such Option
has been issued by the Corporation.

 

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K.            Disposition and Stock Certificate Legends for Incentive Stock Option Shares. A Participant shall notify the Corporation
of any sale or other disposition of Common Stock acquired pursuant to an Incentive Stock Option if such sale or disposition occurs
(i) within two years of the grant of an Option or (ii) within one year of the issuance of the Common Stock to the Participant.
Such notice shall be in writing and directed to the Chief Financial Officer of the Corporation or is his/her absence, the Chief
Executive Officer. The Corporation may require that certificates evidencing shares of Common Stock purchased upon the exercise
of Incentive Stock Options issued under this Plan be endorsed with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE
MAY NOT BE SOLD OR TRANSFERRED PRIOR TO ___, 20___, IN THE ABSENCE OF A WRITTEN STATEMENT FROM THE CORPORATION TO THE EFFECT THAT
THE CORPORATION IS AWARE OF THE FACTS OF SUCH SALE OR TRANSFER.

 

The blank contained in this legend shall
be filled in with the date that is the later of (i) one year and one day after the date of the exercise of such Incentive Stock
Option or (ii) two years and one day after the grant of such Incentive Stock Option.

 

L.             No Repricing. In no event shall the Committee permit a Repricing of any Option without the approval of the stockholders
of the Corporation.

 

		7.	Stock Awards

 

A.            Stock Bonus Awards. Stock Bonus Awards may be granted by the Committee. Each Stock Award Agreement for a Stock Bonus
Award shall be in such form and shall contain such terms and conditions (including provisions relating to consideration, vesting,
reacquisition of shares following termination, and transferability of shares) as the Committee shall deem appropriate. The terms
and conditions of Stock Award Agreements for Stock Bonus Awards may change from time to time and need not be uniform with respect
to Participants, and the terms and conditions of separate Stock Bonus Awards need not be identical.

 

B.             Restricted Stock Awards. Restricted Stock Awards may be granted by the Committee. Each Stock Award Agreement for
a Restricted Stock Award shall be in such form and shall contain such terms and conditions (including provisions relating to purchase
price, consideration, vesting, reacquisition of shares following termination, and transferability of shares) as the Committee shall
deem appropriate. The terms and conditions of the Stock Award Agreements for Restricted Stock Awards may change from time to time
and need not be uniform with respect to Participants, and the terms and conditions of separate Restricted Stock Awards need not
be identical. Vesting of any grant of Restricted Stock Awards may be further conditioned upon the attainment of Performance Objectives
established by the Committee in accordance with the applicable provisions of Section 8 of this Plan regarding Performance Shares.

 

C.             Deferred Shares. The Committee may authorize grants of Deferred Shares to Participants upon the recommendation of
the Corporation’s management, and upon such terms and conditions as the Committee may determine in accordance with the following
provisions:

 

(i)             
Each grant shall constitute the agreement by the Corporation to issue or transfer shares of Common Stock to the Participant
in the future in consideration of the performance of services, subject to the fulfillment during the Deferral Period of such conditions
as the Committee may specify.

 

(ii)            
Each grant may be made without additional consideration from the Participant or in consideration of a payment by the Participant
that is less than the Fair Market Value on the date of grant.

 

(iii)           
Each grant shall provide that the Deferred Shares covered thereby shall be subject to a Deferral Period, which shall be
fixed by the Committee on the date of grant, and any grant or sale may provide for the earlier termination of such period in the
event of a change in control of the Corporation or other similar transaction or event.

 

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(iv)           
During the Deferral Period, the Participant shall not have any right to transfer any rights under the subject Award, shall
not have any rights of ownership in the Deferred Shares and shall not have any right to vote such shares, but the Committee may
on or after the date of grant, authorize the payment of dividend or other distribution equivalents on such shares in cash or additional
shares on a current, deferred or contingent basis.

 

(v)            
Any grant, or the vesting thereof, may be further conditioned upon the attainment of Performance Objectives established
by the Committee in accordance with the applicable provisions of Section 8 of this Plan regarding Performance Shares.

 

(vi)          
Each grant shall be evidenced by an agreement delivered to and accepted by the Participant and containing such terms and
provisions as the Committee may determine consistent with this Plan. The terms and conditions of the agreements for Deferred Shares
may change from time to time and need not be uniform with respect to Participants, and the terms and conditions of separate Deferred
Shares need not be identical.

 

		8.	Performance
Shares

 

A.            The Committee may authorize grants of Performance Shares, which shall become payable to the Participant upon the achievement
of specified Performance Objectives, upon such terms and conditions as the Committee may determine in accordance with the following
provisions:

 

(i)              Each grant shall specify the number of Performance Shares to which it pertains, which may be subject to adjustment to reflect
changes in compensation or other factors.

 

(ii)             The Performance Period with respect to each Performance Share shall commence on the date established by the Committee and
may be subject to earlier termination in the event of a change in control of the Corporation or similar transaction or event.

 

(iii)            Each grant shall specify the Performance Objectives that are to be achieved by the Participant.

 

(iv)            Each grant may specify in respect of the specified Performance Objectives a minimum acceptable level of achievement below
which no payment will be made and may set forth a formula for determining the amount of any payment to be made if performance is
at or above such minimum acceptable level but falls short of the maximum achievement of the specified Performance Objectives.

 

(v)            Each grant shall specify the time and manner of payment of Performance Shares that shall have been earned, and any grant
may specify that any such amount may be paid by the Corporation in cash, shares of Common Stock or any combination thereof and
may either grant to the Participant or reserve to the Committee the right to elect among those alternatives.

 

(vi)           Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified
by the Committee on the date of grant.

 

(vii)          Any grant of Performance Shares may provide for the payment to the Participant of dividend or other distribution equivalents
thereon in cash or additional shares of Common Stock on a current, deferred or contingent basis.

 

(viii)        
If provided in the terms of the grant and subject to the requirements of Section 162(m) of the Code (in the case of awards
intended to qualify for exception therefrom), the Committee may adjust Performance Objectives and the related minimum acceptable
level of achievement if, in the sole judgment of the Committee, events or transactions have occurred after the date of grant that
are unrelated to the performance of the Participant and result in distortion of the Performance Objectives or the related minimum
acceptable level of achievement.

 

    9

     

    

 

(ix)            Each grant shall be evidenced by an agreement that shall be delivered to and accepted by the Participant, which shall state
that the Performance Shares are subject to all of the terms and conditions of this Plan and such other terms and provisions as
the Committee may determine consistent with this Plan. The terms and conditions of the agreements for Performance Shares may change
from time to time and need not be uniform with respect to Participants, and the terms and conditions of separate Performance Shares
need not be identical.

 

(x)             Until the achievement of the Performance Objectives and the resulting issuance of the Performance Shares, the Participant
shall not have any rights as a stockholder in the Performance Shares and shall not have any right to vote such shares, but the
Committee may on or after the date of grant, authorize the payment of dividend or other distribution equivalents on such shares
in cash or additional shares on a current, deferred or contingent basis.

 

		9.	Changes in
Capital Structure

 

A.            No Limitations of Rights. The existence of outstanding Awards shall not affect in any way the right or power of the
Corporation or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes
in the Corporation’s capital structure or its business, or any merger or consolidation of the Corporation, or any issuance
of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

 

B.             Changes in Capitalization. If the Corporation shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Common Stock outstanding,
without receiving consideration therefore in money, services or property, then (i) the number, class, and per share price of shares
of Common Stock subject to outstanding Options and other Awards hereunder and (ii) the number of and class of shares then reserved
for issuance under this Plan and the maximum number of shares for which Awards may be granted to a Participant during a specified
time period shall be appropriately and proportionately adjusted. The conversion of convertible securities of the Corporation shall
not be treated as effected “without receiving consideration.” The Committee shall make such adjustments, and its determinations
shall be final, binding and conclusive.

 

C.             Merger, Consolidation or Asset Sale. If the Corporation is merged or consolidated with another entity or sells or
otherwise disposes of substantially all of its assets to another company while Options or Stock Awards remain outstanding under
this Plan, unless provisions are made in connection with such transaction for the continuance of this Plan and/or the assumption
or substitution of such Options or Stock Awards with new options or stock awards covering the stock of the successor company, or
parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, then all outstanding
Options and Stock Awards which have not been continued, assumed or for which a substituted award has not been granted shall, whether
or not vested or then exercisable, unless otherwise specified in the Stock Option Agreement or Stock Award Agreement, terminate
immediately as of the effective date of any such merger, consolidation or sale.

 

D.            Limitation on Adjustment. Except as previously expressly provided, neither the issuance by the Corporation of shares
of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Corporation convertible into such shares or other securities, nor the increase or decrease of the number of authorized shares
of stock, nor the addition or deletion of classes of stock, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number, class or price of shares of Common Stock then subject to outstanding Options or Stock Awards.

 

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		10.	Withholding
of Taxes

 

The Corporation or an Affiliate shall have
the right, before any certificate for any Common Stock is delivered, to deduct or withhold from any payment owed to a Participant
any amount that is necessary in order to satisfy any withholding requirement that the Corporation or Affiliate in good faith believes
is imposed upon it in connection with U.S federal, state, or local taxes, including transfer taxes, as a result of the issuance
of, or lapse of restrictions on, such Common Stock, or otherwise require such Participant to make provision for payment of any
such withholding amount. Subject to such conditions as may be established by the Committee, the Committee may permit a Participant
to (i) have Common Stock otherwise issuable under an Option or Stock Award withheld to the extent necessary to comply with
minimum statutory withholding rate requirements; (ii) tender back to the Corporation shares of Common Stock received pursuant
to an Option or Stock Award to the extent necessary to comply with minimum statutory withholding rate requirements for supplemental
income; (iii) deliver to the Corporation previously acquired Common Stock; (iv) have funds withheld from payments of
wages, salary or other cash compensation due the Participant; (v) pay the Corporation or its Affiliate in cash, in order to
satisfy part or all of the obligations for any taxes required to be withheld or otherwise deducted and paid by the Corporation
or its Affiliate with respect to the Option of Stock Award; or (vi) establish a 10b5-1 trading plan for withheld stock designed
to facilitate the sale of stock in connection with the vesting of such shares, the proceeds of which shall be utilized to make
all applicable withholding payments in a manner to be coordinated by the Corporation’s Chief Financial Officer.

 

		11.	Compliance
with Law and Approval of Regulatory Bodies

 

A.            General Requirements. No Option or Stock Award shall be exercisable, no Common Stock shall be issued, no certificates
for shares of Common Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable
federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to
which the Corporation is a party, and the rules of all domestic stock exchanges or quotation systems on which the Corporation’s
shares may be listed. The Corporation shall have the right to rely on an opinion of its counsel as to such compliance. In the absence
of an effective and current registration statement on an appropriate form under the Securities Act, or a specific exemption from
the registration requirements of the Securities Act, shares of Common Stock issued under this Plan shall be restricted shares.
Any share certificate issued to evidence Common Stock when a Stock Award is granted or for which an Option is exercised may bear
such restrictive legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and
regulations. No Option or Stock Award shall be exercisable, no Stock Award shall be granted, no Common Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall be made under this Plan until the Corporation has obtained such
consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters.

 

B.             Participant Representations. The Committee may require that a Participant, as a condition to receipt or exercise
of a particular award, execute and deliver to the Corporation a written statement, in form satisfactory to the Committee, in which
the Participant represents and warrants that the shares are being acquired for such person’s own account, for investment
only and not with a view to the resale or distribution thereof. The Participant shall, at the request of the Committee, be required
to represent and warrant in writing that any subsequent resale or distribution of shares of Common Stock by the Participant shall
be made only pursuant to either (i) a registration statement on an appropriate form under the Securities Act of 1933, which registration
statement has become effective and is current with regard to the shares being sold, or (ii) a specific exemption from the
registration requirements of the Securities Act of 1933, but in claiming such exemption the Participant shall, prior to any offer
of sale or sale of such shares, obtain a prior favorable written opinion of counsel, in form and substance satisfactory to counsel
for the Corporation, as to the application of such exemption thereto.

 

    11

     

    

 

		12.	General Provisions

 

A.            Effect on Employment and Service. Neither the adoption of this Plan, its operation, nor any documents describing
or referring to this Plan (or any part thereof) shall (i) confer upon any individual any right to continue in the employ or service
of the Corporation or an Affiliate, (ii) in any way affect any right and power of the Corporation or an Affiliate to change
an individual’s duties or terminate the employment or service of any individual at any time with or without assigning a reason
therefor or (iii) except to the extent the Committee grants an Option or Stock Award to such individual, confer on any individual
the right to participate in the benefits of this Plan.

 

B.             Use of Proceeds. The proceeds received by the Corporation from any sale of Common Stock pursuant to this Plan shall
be used for general corporate purposes.

 

C.             Unfunded Plan. This Plan, insofar as it provides for grants, shall be unfunded, and the Corporation shall not be
required to segregate any assets that may at any time be represented by grants under this Plan. Any liability of the Corporation
to any Participant with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Corporation shall be deemed to be secured by any pledge of, or other encumbrance
on, any property of the Corporation.

 

D.             Rules of Construction. Headings are given to the Sections of this Plan solely as a convenience to facilitate reference.
The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor
of such provision of law.

 

E.             Choice of Law. This Plan and all Stock Option Agreements, Stock Award Agreements, and Performance Agreements (or
any other agreements) entered into under this Plan shall be interpreted under the Corporation Law excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the laws of any jurisdiction other than the Corporation
Law.

 

F.             Fractional Shares. The Corporation shall not be required to issue fractional shares pursuant to this Plan. The Committee
may provide for elimination of fractional shares or the settlement of such fractional shares in cash.

 

G.             Foreign Employees. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee
may provide for such special terms for Awards to Participants who are foreign nationals, or who are employed by the Corporation
or any Affiliate outside of the United States, as the Committee may consider necessary or appropriate to accommodate differences
in local law, tax policy or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative
versions of, this Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this
Plan, as then in effect, unless this Plan could have been amended to eliminate such inconsistency without further approval by the
stockholders of the Corporation. The terms and conditions set forth in Annex A attached hereto, or any other such annex as indicated
thereon, shall supplement this Plan to the extent necessary to provide for tax or other considerations for Participants who are
foreign nationals, or who are employed by the Corporation or any Affiliate outside of the United States.

 

		13.	Amendment and
Termination

 

The Board may amend or terminate this Plan
from time to time; provided, however, stockholder approval shall be required for any amendment that (i) increases the aggregate
number of shares of Common Stock that may be issued under this Plan, except as contemplated herein; (ii) changes the class
of employees eligible to receive Incentive Stock Options; (iii) modifies the restrictions on Repricings set forth in this Plan;
or (iv) is required by the terms of any applicable law, regulation or rule, including the rules of any market on which the
Corporation shares are traded or exchange on which the Corporation shares are listed. Except as specifically permitted by this
Plan, any Stock Option Agreement or any Stock Award Agreement or as required to comply with applicable law, regulation or rule,
no amendment shall, without a Participant’s consent, adversely affect any rights of such Participant under any Option or
Stock Award outstanding at the time such amendment is made; provided, however, that an amendment that may cause an Incentive Stock
Option to become a Nonqualified Stock Option shall not be treated as adversely affecting the rights of the Participant. Any amendment
requiring stockholder approval shall be approved by the stockholders of the Corporation within twelve (12) months of the date
such amendment is adopted by the Board.

 

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		14.	Effective Date
of Plan; Duration of Plan

 

A.            This Plan shall be effective upon adoption by the Board.

 

B.             Unless previously terminated, this Plan will terminate ten (10) years after the date this Plan is first deemed effective,
except that Awards that are granted under this Plan prior to its termination will continue to be administered under the terms of
this Plan until the Awards terminate, expire or are exercised.

 

IN WITNESS WHEREOF, the Corporation has caused this Plan
to be executed by a duly authorized officer as of the date of adoption of this Plan by the Board of Directors.

 

	BLUE SPHERE CORPORATION	 
	 	 
	By:	 	 
	 	Shlomi Palas	 
	 	Chief Executive Officer	 

 

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