Document:

Exhibit 4.34

 

DEBT
SETTLEMENT AGREEMENT AND RELEASE

 

THIS
DEBT SETTLEMENT AGREEMENT AND RELEASE (this “Agreement”) is made and entered into as of June 27, 2016 (the “Effective
Date”), by and between Marine Plus S.A., a corporation formed under the laws of Liberia (the “Creditor”) and
FreeSeas Inc., a corporation formed under the laws of the Republic of the Marshall Islands (the “Company”).

 

RECITALS:

 

WHEREAS,
the Creditor has provided to the Company (and/or one or more of its subsidiaries) services and/or goods, for which an aggregate
amount equal to US$59,936.81 remains unpaid pursuant to the invoices listed on Schedule A hereto (the “Invoices”);

 

WHEREAS,
the Creditor has agreed to accept, and the Company has agreed to issue to the Creditor, a convertible debenture in the principal
face amount of 59,936.81 $, in the form attached hereto as Exhibit A (the “Note”) in full satisfaction of the
Invoice, which Note shall be convertible into shares of the Company’s common stock (the “Common Stock”); and

 

WHEREAS,
the Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), that the
Note will be issued on the basis of the statutory exemption provided by Rule 903 of Regulation S promulgated under the Securities
Act and the provisions of Regulation S, relating to transactions by an issuer not involving any public offering, and that such
Note shall be considered a restricted security.

 

NOW,
THEREFORE, in consideration of the foregoing and of the agreements contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Payment
in Full of Invoices by Issuance of the Note. The Creditor hereby agrees to accept the Note as payment in full of the Invoices
and, upon issuance and delivery to the Creditor of the Note, the Creditor agrees that any and all obligations that the Company
may have pursuant to the Invoices shall be satisfied in full and the Company shall have no further obligations to the Creditor
thereunder.

 

2. Representations
and Warranties of the Company. The Company hereby represents and warrants to the Creditor as of the Effective Date as follows:
(i) that the execution, delivery and performance of this Agreement by it will not violate, or result in a breach of, or constitute
a default under, any agreement, instrument, judgment, order or decree to which it is a party or to which it is subject; (ii) that
it has the legal capacity and power and authority to execute and deliver this Agreement and any other related agreements and instruments
delivered in connection herewith; (iii) that no further proceedings or actions are necessary to authorize the execution and delivery
of this Agreement or the performance by the Company of its obligations hereunder; and (iv) that this Agreement constitutes the
legal and binding obligation of the Company, enforceable against it in accordance with these terms.

 

3. Representations
and Warranties of the Creditor and the Company. The Creditor hereby represents and warrants to the Company as of the Effective
Date as follows: (i) that the execution, delivery and performance of this Agreement by it will not violate, or result in a breach
of, or constitute a default under, any agreement, instrument, judgment, order or decree to which it is a party or to which it
is subject; (ii) that it has the legal capacity and power and authority to execute and deliver this Agreement and any other related
agreements and instruments delivered in connection herewith; (iii) that no further proceedings or actions are necessary to authorize
the execution and delivery of this Agreement or the performance by the Creditor of its obligations hereunder; and (iv) that this
Agreement constitutes the legal and binding obligation of the Creditor, enforceable against it in accordance with these terms.

 

     

     

    

 

In
addition, the Creditor hereby represents and warrants to the Company as of the Effective Date as follows:

 

(a) Non-U.S.
Purchaser. The Creditor is outside the United States when receiving and executing this Agreement and the Creditor is not a
U.S. Person as defined in Rule 902 of Regulation S. The Creditor acknowledges that the offer and sale of the Note has taken place,
and is taking place in an “offshore transaction,” as such term is defined in Regulation S;

 

(b) Own
Account. The Creditor is not a “distributor” of securities, as that term is defined in Regulation S, nor a dealer
in securities, and is acquiring the Note as principal for its own account, and not for the account or benefit of, directly or
indirectly, any U.S. Person. The Creditor has no intention to distribute either directly or indirectly the Note or any of the
shares issuable upon conversion of the Note (the “Conversion Shares” and together with the Note, the “Securities”)
in the United States or to U.S. Persons;

 

(c) Exemption.
The Creditor understands that the offer and sale of the Securities is not being registered under the Securities Act or any state
securities laws and is intended to be exempt from registration provided by Rule 903 of Regulation S. The Creditor acknowledges
and agrees that, pursuant to the provisions of Regulation S, the Securities cannot be sold, assigned, transferred, conveyed, pledged
or otherwise disposed of to any U.S. Person or within the United States of America or its territories or possessions for a period
of 40 days from and after the Effective Date, unless such Securities are registered for sale in the United States pursuant to
an effective registration statement under the Securities Act or another exemption from such registration is available;

 

(d) No
Registration. The Securities have not been registered under the Securities Act or any state securities laws and may not be
transferred, sold, assigned, hypothecated or otherwise disposed of unless registered under the Securities Act and applicable state
securities laws or unless registered or an exemption from such registration is available. The Creditor represents and warrants
and hereby agrees that all offers and sales of the Securities shall be made only pursuant to such registration or to such exemption
from registration;

 

(e) Financial
Risk. The Creditor represents, warrants and agrees that the Creditor will not sell or otherwise transfer the Securities unless
registered under the Securities Act or in reliance upon an exemption therefrom, and fully understands and agrees that the Creditor
must bear the economic risk of his investment in the Securities for an indefinite period of time because, among other reasons,
the Securities have not been registered under the Securities Act or under the securities laws of certain states and, therefore,
cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act
and under the applicable securities laws of such states or an exemption from such registration is available. The Creditor has
the financial ability to bear the economic risk of his investment in the Securities, has adequate means for providing for his
current needs and personal contingencies and has no need for liquidity with respect to his investment in the Securities; and

 

    	 	2	 

     

    

 

(f) No
Directed Selling Efforts. The Creditor has not acquired the Note as a result of, and will not itself engage in, any “directed
selling efforts” (as defined in Regulation S) in the United States in respect of the Securities, which would include any
activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market
in the United States for the resale of the Securities; provided, however, that the Purchaser may sell or otherwise dispose of
the Securities pursuant to registration thereof under the Securities Act and any applicable state and provincial securities laws
or under an exemption from such registration requirements;

 

(g) No
Plan or Scheme. The Creditor acknowledges that the statutory and regulatory basis for the exemption from U.S. registration
requirements claimed for the offer of the Securities, although in technical compliance with Regulation S, would not be available
if the offering is part of a plan or scheme to evade the registration provisions of the Securities Act or any applicable state
or provincial securities laws;

 

(h) Foreign
Subscriber. The Creditor has satisfied itself as to the full observance of the laws of its jurisdiction in connection with
any invitation to acquire the Securities or any use of this Agreement, including: (a) the legal requirements within its jurisdiction
for the acquisition of the Securities; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental
or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Securities. Such Creditor’s acquisition of and payment for,
and its continued beneficial ownership of the Securities, will not violate any applicable securities or other laws of the Creditor’s
jurisdiction;

 

(i) Non-Affiliate.
The Creditor is not an Affiliate of the Company nor is any Affiliate of such Regulation S Person an Affiliate of the Company.
An “Affiliate” is an individual or corporation, partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any
kind (each of the foregoing, a “Person”) that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the
Securities Act; and

 

(j) Legend.
The Securities shall bear a legend in substantially the following form, and the Creditor understands that the Company shall be
required to refuse to register any transfer of the Securities not made in accordance with applicable U.S. securities laws:

 

THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION
S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE SECURITIES
TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED,
NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN) OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES”
AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

    	 	3	 

     

    

 

4. Representations
of the Creditor with Respect to the Invoices. The Creditor hereby represents as to the Invoices as follows: (i) each of the
Invoices represents a bona fide outstanding claim against the Company, and is an enforceable obligation arising in the ordinary
course of business, for money due and payable to the Creditor for services rendered or goods delivered pursuant to a written or
verbal agreement, by and between the Creditor and the Company (and/or one or more of its subsidiaries), in each case, in good
faith; (ii) each of the Invoices is currently due and owing and is payable in full; (iii) the documents attached hereto are true
and, correct and complete copies of the Invoices; (iv) the Creditor is the sole owner of the Invoices, and has not previously
sold, transferred, encumbered or released any part of the Invoices; and (v) there is no action based on any of the Invoices that
is currently pending in any court or other legal venue and no judgments based upon the Invoices have been previously entered in
any legal proceeding.

 

5. Release.
Effective upon delivery of the Note to the Creditor, the Creditor hereby knowingly and voluntarily releases and forever discharges
the Company and its predecessors, successors, direct and indirect parent companies, direct and indirect subsidiary companies,
companies under common control with any of the foregoing, assigns, directors, officers, affiliates, agents and representatives
(collectively, the “Released Parties”), from all claims, liabilities, demands, costs, charges, expenses, actions,
causes of action, judgments, and executions, past, present or future, with respect to the Invoices. The parties agree that the
foregoing release is not intended to release, and shall not release, any claims between any of the parties that may arise under
this Agreement or the Note. Upon the execution of this Agreement, the Creditor shall be deemed to have received sufficient consideration
for the releases set forth in this Section 5.

 

6. Voluntary
and Knowing Agreement and Release. Each of the parties hereto acknowledges that they have entered into this Agreement of their
own free will, and that no promises or representations have been made to them by any person to induce them to enter into this
Agreement other than the express terms set forth herein. Each of the parties hereto further acknowledges that they have read this
Agreement and understands all of their respective terms.

 

7. Advice
of Counsel. The Creditor acknowledges that before entering into this Agreement, it has had the opportunity to consult with
an attorney of its choice.

 

8. Attorneys’
Fees. Each party shall bear its own legal fees and expenses in connection with the negotiation, execution and delivery of
this Agreement.

 

9. Choice
of Law and Venue. This Agreement shall be governed by and construed according to the laws of the State of New York, without
giving effect to its choice of law principles. The parties agree that all actions and proceedings arising out of or relating directly
or indirectly to this Agreement or any ancillary agreement or any other related obligations shall be litigated solely and exclusively
in the state or federal courts located in the City of New York, New York, and that such courts are convenient forums. Each party
hereby submits to the personal jurisdiction of such courts for purposes of any such actions or proceedings.

 

10. Severance
of Provisions; Survival of Representations and Warranties. If any of the provisions of this Agreement shall be held invalid,
the remainder of this Agreement shall not be affected thereby, and shall remain in full force and effect. The representations,
warranties and agreements of the Parties shall survive the delivery of the Note under this Agreement.

 

    	 	4	 

     

    

 

11. Notices.
All notices and other communications shall be in writing and shall be provided to the recipient party to the addresses set forth
on the signature page hereto. All notices and communications shall be deemed made and effective as follows: (i) if transmitted
for overnight delivery via a nationally recognized delivery service, the first business day after being delivered by the transmitting
party to such overnight delivery service, (ii) if faxed, when transmitted in legible form by facsimile machine to the recipient
party’s correct facsimile machine number, (iii) if by e-mail, when transmitted by e-mail, or (iv) if mailed via regular
mail, upon delivery. Any party may designate a superseding notice contact name, street address, e-mail address or fax number by
providing the other parties with written notice pursuant to the provisions hereof.

 

12. Entire
Agreement. This Agreement sets forth the entire understanding of the parties and supersedes any and all prior agreements,
oral or written, relating to the subject matter hereof. The parties attest that no other representations were made regarding this
Agreement other than those contained herein.

 

13. Confidentiality.
Each of the parties hereby agrees, without the prior written consent of the other, to not disclose, and to otherwise keep confidential,
the transactions contemplated hereby, except to the extent that disclosure thereof is required by law, rule or regulation; provided,
however, that each of the parties may disclose information regarding such sale to their respective accountants, attorneys, shareholders
and other interest holders.

 

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

 

15. Modifications.
This Agreement may not be modified except by a writing, signed by each of the parties hereto. This Agreement shall be binding
upon the parties and their respective successors and assigns.

 

16. Counterparts.
This Agreement may be signed in counterparts, and said counterparts shall be treated as though signed as one document. Facsimile
or other electronic signatures to this Agreement shall be treated as original signatures.

 

(SIGNATURES
APPEAR ON THE FOLLOWING PAGE)

 

    	 	5	 

     

    

 

IN
WITNESS WHEREOF, the Creditor and the Company have caused this Settlement Agreement and Release to be signed by their respective
duly authorized officers or representatives as of the date first above written.

 

	 	CREDITOR:
	 	 	 
	 	MARINE PLUS S.A.
	 	 	 
	 	By:	   
	 	Name: Mr. Dimitrios Vranopoulos
	 	Title: Director
	 	 	 
	 	Address
    for delivery of notice:
	 	 	 
	 	Marine
    Plus S.A.
	 	80
    Broad str. Liberia
	 	 	 
	 	COMPANY:
	 	 	 
	 	FREESEAS INC.
	 	 	 
	 	By:	                    
	 	Name: Dimitris Papadopoulos
	 	Title: Chief Financial Officer
	 	 	 
	 	Address
    for delivery of notice:
	 	 	 
	 	10, Eleftheriou Venizelou Street
	 	(Panepistimiou Ave.)
	 	106 71, Athens, Greece
	 	Attention:  Chief Financial Officer
	 	Fax: +30 210 4291 010
	 	Email:  dp@freeseas.gr

 

    	 	6	 

     

    

 

SCHEDULE
A

 

InvoicesExhibit
4.35

 

CONVERTIBLE
NOTE

 

THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATIONS
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE SECURITIES TO
WHICH THIS CERTIFICATE RELATES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED
HEREIN OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH
CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED
BY REGULATION S UNDER THE 1933 ACT. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

 

FREESEAS
INC.

 

Convertible
Note

 

	Issuance
    Date:  June 27, 2016	Original
    Principal Amount: U.S. $59,936.81

 

FOR
VALUE RECEIVED, FREESEAS INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands
(the “Company”), hereby promises to pay to the order of MARINE PLUS S.A. or its registered assigns
(“Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms
hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the
Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and
to pay interest (“Interest”) on any outstanding Principal (as defined below) (as such interest on any
outstanding Principal may be reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise) at the applicable
Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in
each case in accordance with the terms hereof). This Convertible Note (this “Note”, including all Convertible
Notes issued in exchange, transfer or replacement hereof, collectively, the “Notes”) is issued pursuant
to the Debt Exchange Agreement (as defined below) on the Closing Date (as defined below). Certain capitalized terms used herein
are defined in Section 28.

 

     

     

    

 

1. PAYMENTS
OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal,
accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 23(c)) on such Principal and Interest).
Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued
and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

 

2. INTEREST;
INTEREST RATE.

 

(a) Interest
on this Note shall commence accruing on the Issuance Date, shall accrue daily at the Interest Rate on the outstanding Principal
amount from time to time, shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable to the
Holder on the Maturity Date or any applicable Redemption Date (each, an “Interest Date”). Interest shall
be payable on each Interest Date, to the record holder of this Note on the applicable Interest Date, in freely-tradable shares
of Common Stock that have been registered for resale by the Holder ("Interest Shares") under the Securities
Act of 1933, as amended, so long as there has been no Equity Conditions Failure; provided however, that the Company may, at its
option following notice to the Holder, pay Interest on any Interest Date in cash ("Cash Interest") or
in a combination of Cash Interest and Interest Shares. The Company shall deliver a written notice (each, an "Interest
Election Notice") to each holder of the Notes on or prior to the Interest Notice Due Date (the date such notice is
delivered to all of the holder, the "Interest Notice Date") which notice (i) either (A) confirms that
Interest to be paid on such Interest Date shall be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest
or a combination of Cash Interest and Interest Shares and specifies the amount of Interest that shall be paid as Cash Interest
and the amount of Interest, if any, that shall be paid in Interest Shares and (ii) if any Interest is to be paid in Interest Shares,
certifies that there has been no Equity Conditions Failure. If the Equity Conditions are not satisfied as of the Interest Notice
Date, then unless the Company has elected to pay such Interest as Cash Interest, the Interest Notice shall indicate that unless
the Holder waives the Equity Conditions, the Interest shall be paid as Cash Interest. If the Equity Conditions were satisfied
as of the Interest Notice Date but the Equity Conditions are no longer satisfied at any time prior to the Interest Date, the Company
shall provide the Holder a subsequent notice to that effect indicating that unless the Holder waives the Equity Conditions, the
Interest shall be paid in cash. Interest to be paid on an Interest Date in Interest Shares shall be paid in a number of fully
paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a)) of Common Stock equal to the
quotient of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and (2) the Conversion Price
in effect on the applicable Interest Date.

 

(b) When
any Interest Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company's transfer agent (the
"Transfer Agent") is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer Program, credit such aggregate number of Interest Shares to which the Holder shall be entitled to
the Holder's or its designee's balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver on the applicable Interest
Date, to the address set forth in the register maintained by the Company for such purpose pursuant to the Debt Exchange Agreement
or to such address as specified by the Holder in writing to the Company at least two (2) Business Days prior to the applicable
Interest Date, a certificate, registered in the name of the Holder or its designee (and without any restrictive legend or stop
transfer order maintained against it), for the number of Interest Shares to which the Holder shall be entitled and (ii) with respect
to each Interest Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of any Cash Interest.

 

    	 	2	 

     

    

 

(c) Prior
to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way
of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i). From and after
the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to eighteen
percent (18.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and unpaid at such
increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after
the occurrence of such Event of Default through and including the date of such cure of such Event of Default. The Company shall
pay any and all taxes that may be payable with respect to the issuance and delivery of Interest Shares.

 

3. CONVERSION
OF NOTES. This Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined
below), on the terms and conditions set forth in this Section 3.

 

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

 

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

 

(i) “Conversion
Amount” means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination
is being made, plus all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and unpaid
Late Charges with respect to such portion of such Principal and such Interest.

 

    	 	3	 

     

    

 

(ii) “Conversion
Price” means, for any date of determination, the lesser of (A) the lowest VWAP of the Common Stock during the twenty-one
(21) consecutive Trading Days ending and including the Trading Day immediately preceding the applicable Conversion Date (the “Variable
Conversion Base Price”) and (B) $ 0.2427 (as adjusted for stock splits, stock dividends, stock combinations or other
similar transactions). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination
or other similar transaction during any such measuring period.

 

(c) Mechanics
of Conversion.

 

(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:00 p.m., New York time, on such date,
a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), the Holder shall surrender this Note to a nationally recognized overnight delivery
service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft
or destruction as contemplated by Section 17(b)). On or before the second (2nd) Trading Day following the date of receipt
of a Conversion Notice, the Company shall (1) provided that the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program and such shares of Common Stock may be issued without restrictive legend, credit such aggregate number of shares
of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or such shares of Common Stock may not be issued without restrictive legend, issue and deliver (via reputable
overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered
for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion
of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Trading
Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance
with Section 17(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.

 

    	 	4	 

     

    

 

(ii) Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to the Holder within three
(3) Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile or otherwise) (the “Share
Delivery Deadline”), a certificate for the number of shares of Common Stock to which the Holder is entitled and register
such shares of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s balance
account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion
of any Conversion Amount (as the case may be) (a “Conversion Failure”) then, in addition to all other remedies
available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the
issuance of such shares of Common Stock is not timely effected an amount equal to 1% of the product of (A) the sum of the number
of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (B) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could
have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice
to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of
this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall
not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to
this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline, the Company shall
fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register
or credit the Holder’s or its designee’s balance account with DTC for the number of shares of Common Stock to which
the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if on or after such Share Delivery
Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Holder of all or any portion of the number of shares of Common Stock issuable upon such conversion that the Holder
so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall,
within three (3) Business Days after receipt of the Holder’s request and in the Holder’s discretion, either: (I) pay
cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect,
or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue
and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common
Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates
representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied
by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Conversion Notice and ending on the date of such issuance and payment under this clause (II).

 

    	 	5	 

     

    

 

(iii) Book-Entry.
Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion
Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion
thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice
may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and
the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid and/or adjusted (as
the case may be) and the dates of such conversions and/or payments and/or adjustments (as the case may be) or shall use such other
method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

 

(iv) 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 Company shall issue to the Holder the number of shares of Common Stock not in dispute
and resolve such dispute in accordance with Section 22.

 

(d) Limitations
on Conversions. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible by the
Holder hereof, and the Company shall not effect any conversion of this Note or otherwise issue any shares of Common Stock pursuant
hereto, to the extent (but only to the extent) that after giving effect to such conversion or other share issuance hereunder the
Holder (together with its affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”)
of the Common Stock. To the extent the above limitation applies, the determination of whether this Note shall be convertible (vis-à-vis
other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which such securities
shall be convertible, exercisable or exchangeable (as among all such securities owned by the Holder and its affiliates) shall,
subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability to convert this Note, or to issue shares of Common Stock, pursuant
to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent
determination of convertibility. For purposes of this paragraph, beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and regulations promulgated
thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms
of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder
of this Note. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral
request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation, pursuant to this Note. By written notice to the Company, at any time
the Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the 61st day after such notice is delivered to the Company, and
(ii) any such increase or decrease will apply only to the Holder sending such notice and not to any other holder of Notes.

 

    	 	6	 

     

    

 

4. RIGHTS
UPON EVENT OF DEFAULT.

 

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

 

(i) the
suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a
period of ten (10) consecutive days or for more than an aggregate of thirty (30) days in any 365-day period;

 

(ii) the
Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other
amounts when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure
to pay any redemption payments or amounts hereunder) or any other Transaction Document or any other agreement, document, certificate
or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure
to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least
five (5) days;

 

(iii) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be
dismissed within forty-five (45) days of their initiation;

 

(iv) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance
of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other
similar action under federal, state or foreign law;

 

    	 	7	 

     

    

 

(v) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or
insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of sixty (60) consecutive days;

 

(vi) other
than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary materially breaches any representation,
warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other
term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days;

 

(vii) any
Material Adverse Effect occurs; or

 

(viii) any
Change of Control occurs.

 

(b) Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note, the Company
shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier (with next day delivery specified)
(an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s receipt
of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem,
at any time during the period commencing on the date the Holder first becomes aware of such Event of Default through and including
the tenth (10th) Trading Day after the later of (x) the date the Holder receives the applicable Event of Default Notice
with respect thereto and (y) the date such Event of Default has been cured, all or any portion of this Note by delivering written
notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption
Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption
by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product
of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion
Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice
multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock
on any Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the date
the Company makes the entire payment required to be made under this Section 4(b) (the “Event of Default Redemption
Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 10.
To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments
of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary
in this Section 4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges thereon)
is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any Late Charges thereon)
may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note. In the event of the
Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain
and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this
Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of
its investment opportunity and not as a penalty.

 

    	 	8	 

     

    

 

5. RIGHTS
UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.

 

(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this
Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior
to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes,
and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose
common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the
provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company
under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Section 14, which shall continue to be receivable thereafter) issuable upon the conversion or redemption
of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the
Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such
Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any
limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing,
the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the
Fundamental Transaction without the assumption of this Note.

 

    	 	9	 

     

    

 

(b) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in
addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this
Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts
as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder.

 

(c) The
provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and
shall be applied without regard to any limitations on the conversion of this Note.

 

(a) Purchase
Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion
of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) 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.

 

6. [Intentionally
Omitted]

 

7. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its articles of incorporation, bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will
at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall not increase the par
value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as any of the Notes are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the Notes, the maximum number of shares of Common Stock as shall from time to time
be necessary to effect the conversion of the Notes then outstanding (without regard to any limitations on conversion).

 

    	 	10	 

     

    

 

8.
RESERVATION OF AUTHORIZED SHARES.

 

(a) Reservation.
So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, a number of shares
of Common Stock, as of any date of determination, for each of the Notes in accordance with the following formula:

 

	 	P	x 1 = Share Reserve  
	 	(T x B)

 

P
= The aggregate principal amount of the Note outstanding as of such date of determination;

 

T
= The applicable Conversion Price as of such date of determination;

 

B
= 0.85;

 

provided,
that, the Share Reserve shall in no event be less than 100% of the number of shares of Common Stock as shall from time to time
be necessary to effect the conversion of all of the Notes then outstanding (without regard to any limitations on conversions)
(the “Required Reserve Amount”).

 

(b) Insufficient
Authorized Shares. If, notwithstanding Section 8(a), and not in limitation thereof, at any time while any of the Notes remain
outstanding the Company does not have, for a period of two (2) consecutive days, a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares
of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders
that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon any conversion
due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares
of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”),
in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption
of such portion of the Conversion Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the
product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect to such
Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section 8(b) and (ii)
to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Holder of Authorization Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of
the Holder incurred in connection therewith.

 

    	 	11	 

     

    

 

9. Company
Optional Redemption. At any time after the Issuance Date, the Company shall have the right to redeem all, but not less
than all, of the Conversion Amount then remaining under this Note (the “Company Optional Redemption Amount”)
on the Company Optional Redemption Date (as defined below) (a “Company Optional Redemption”). The portion
of this Note subject to redemption pursuant to this Section 9 shall be redeemed by the Company in cash at a price (the “Company
Optional Redemption Price”) equal to 127.5% of the Conversion Amount of this Note then outstanding. The Company
may exercise its right to require redemption under this Section 9 by delivering an irrevocable written notice thereof by facsimile
and overnight courier to the Holder (the “Company Optional Redemption Notice” and the date the Holder
receives such notice is referred to as the “Company Optional Redemption Notice Date”). The Company may
deliver only one Company Optional Redemption Notice in any ninety (90) day period. The Company Optional Redemption Notice shall
(x) state the date on which the Company Optional Redemption shall occur (the “Company Optional Redemption Date”)
which date shall not be less than thirty (30) calendar days nor more than ninety (90) calendar days following the Company Optional
Redemption Notice Date, (y) state the aggregate Conversion Amount of the Notes which is being redeemed in such Company Optional
Redemption from the Holder pursuant to this Section 9 on the Company Optional Redemption Date and (z) if any Interest portion
of the Company Optional Redemption Amount is being paid in Interest Shares, state the information required in an Interest Election
Notice in accordance with Section 2(a). Notwithstanding anything herein to the contrary, at any time prior to the date the Company
Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the
Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the Holder after the Company Optional
Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company
Optional Redemption Date. Redemptions made pursuant to this Section 9 shall be made in accordance with Section 10 and any payments
of any Interest portion of the Company Optional Redemption Amount in Interest Shares shall be made in accordance with Section
2.

 

10. REDEMPTIONS.

 

(a) Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days
after the Company’s receipt of the Holder’s Event of Default Redemption Notice. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. In the event of a
redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered
to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal which has not been redeemed.
The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not
affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such notice
with respect to the Conversion Amount subject to such notice.

 

    	 	12	 

     

    

 

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

 

12. INTENTIONALLY
OMITTED.

 

13. COVENANTS.
Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:

 

(a) Reserved.

 

(b) Reserved.

 

(c) Reserved.

 

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

 

(e) Restricted
Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in
aggregate principal amount of the Notes then outstanding, issue any other securities that would cause a breach or default under
the Notes.

 

(f) Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock (other than
any obligations to do so outstanding as of the Issuance Date).

 

(g) Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any material assets or rights
of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions,
other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by
the Company and its Subsidiaries in the ordinary course of business and (ii) sales of inventory in the ordinary course of business.

 

(h) Reserved.

 

    	 	13	 

     

    

 

(i) Change
in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
engage in any material line of business substantially different from those lines of business conducted by the Company and each
of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The Company shall not, and
the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their purpose.

 

(j) Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.

 

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

 

(l) Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all reasonably action necessary
or advisable to maintain all of the Intellectual Property Rights of the Company and/or any of its Subsidiaries that are necessary
or material to the conduct of its business in full force and effect.

 

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

 

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

 

14. PARTICIPATION.
Upon any conversion of this Note, the Holder shall be entitled to receive such dividends paid and distributions made to the holders
of Common Stock from and after the initial Issuance Date to the same extent as if the Holder had effected such conversion and
had held such shares of Common Stock (issued or to be issued in such conversion) on the record date for such dividends and distributions.
Payments under the preceding sentence shall be made on or prior to the applicable Share Delivery Deadline with respect to such
conversion.

 

    	 	14	 

     

    

 

15. AMENDING
THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment to this Note.

 

16. TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by
the Holder without the consent of the Company.

 

17. REISSUANCE
OF THIS NOTE.

 

(a) Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 17(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being
transferred, a new Note (in accordance with Section 17(d)) to the Holder representing the outstanding Principal not being transferred.
The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii)
following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less
than the Principal stated on the face of this Note.

 

(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal.

 

(c) Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 17(d) and in principal amounts of at least $1,000)
representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such
outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d) Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated by the Holder
which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed
the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance
date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and
Interest of this Note, from the Issuance Date.

 

    	 	15	 

     

    

 

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

 

19. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly
acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price
paid for this Note was less than the original Principal amount hereof.

 

20. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings
ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the
Holder.

 

21. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.

 

    	 	16	 

     

    

 

22. DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, any Redemption Price, the Closing Bid
Price, the Closing Sale Price or fair market value (as the case may be) or the arithmetic calculation of the Conversion Rate or
the applicable Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed
determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt of
the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) 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 Company 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 Company or the Holder (as the case may be), then the Company
shall, within two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, any Redemption
Price, the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) to an independent, reputable investment
bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate or any
Redemption Price (as the case may be) to an independent, outside accountant selected by the Holder that is reasonably acceptable
to the Company. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the
determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10)
Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s
or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable
error.

 

23. NOTICES;
CURRENCY; PAYMENTS.

 

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

 

(b) Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts
owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into
the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate”
means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange
rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an
amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period
of time).

 

    	 	17	 

     

    

 

(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set
forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account
of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in
writing, provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing
the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be
due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents
which is not paid when due (solely to the extent such amount is not then accruing interest at the Default Rate) shall result in
a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen
percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).

 

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

 

25. WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and
all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and
the Debt Exchange Agreement.

 

26. GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. In the event that any provision of this Note is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY 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.

 

    	 	18	 

     

    

 

27. MAXIMUM
PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed
by the Company to the Holder and thus refunded to the Company.

 

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

 

(a) “Bloomberg”
means Bloomberg, L.P.

 

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

 

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

 

(d)
“Closing Bid Price” and “Closing Sale Price” means, for any security as of
any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).

 

    	 	19	 

     

    

 

(e) “Closing
Date” means the date the Company initially issued the Note pursuant to the terms of the Debt Exchange Agreement.

 

(f) “Common
Stock” means (i) the Company’s common stock, US$0.001 par value per share, and (ii) any capital stock into
which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

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

 

(h) “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances,
directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any shares of Common Stock.

 

(i) “Debt
Exchange Agreement” means that certain Debt Exchange Agreement, dated as of the Closing Date, by and between the
Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.

 

(j)
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, The NASDAQ Global Select Market,
The NASDAQ Global Market, The NASDAQ Capital Market, the OTCQX or the OTCQB or the OTC Pink “Current” Market run by
the OTC Markets Group Inc. (or any successor to any of the foregoing).

 

    	 	20	 

     

    

 

(k) "Equity
Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning
six (6) month prior to the applicable date of determination and ending on and including the applicable date of determination (the
"Equity Conditions Measuring Period"), all shares of Common Stock issuable upon conversion of the Notes
(including as Interest Shares) shall be eligible for sale without restriction and without the need for registration under any
applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock
is designated for quotation on the Principal Market or any other Eligible Market and shall not have been suspended from trading
on such exchange or market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of
determination due to business announcements by the Company) nor shall delisting or suspension by such exchange or market been
pending in writing by such exchange or market; (iii) during the one (1) year period ending on and including the date immediately
preceding the applicable date of determination, the Company shall have delivered shares of Common Stock upon conversion of the
Notes to the Holders on a timely basis as set forth in Section 3(c)(ii) hereof; (iv) any applicable shares of Common Stock to
be issued in connection with the event requiring determination may be issued in full without violating Section 3(d) hereof and
the rules or regulations of the Principal Market or any applicable Eligible Market; (v) the Company shall not have failed to timely
make any payments within five (5) Business Days of when such payment is due pursuant to any Transaction Document; (vi) during
the Equity Conditions Measuring Period, there shall not have occurred either (A) the public announcement of a pending, proposed
or intended Fundamental Transaction which has not been abandoned, terminated or consummated, or (B) an Event of Default or (C)
an event that with the passage of time or giving of notice would constitute an Event of Default; (vii) the Company shall have
no knowledge of any fact that would cause any shares of Common Stock issuable upon conversion of the Notes (including as Interest
Shares) not to be eligible for sale without restriction pursuant to Rule 144 and any applicable state securities laws; and (viii)
the Company otherwise shall have been in compliance with and shall not have breached any provision, covenant, representation or
warranty of any Transaction Document.

 

(l) "Equity
Conditions Failure" means that (i) on any day during the period commencing ten (10) Trading Days prior to the applicable
Interest Date through the applicable Interest Date or (ii) on any day during the period commencing ten (10) Trading Days prior
to the applicable Company Optional Redemption Notice Date through the applicable Company Optional Redemption Date, the Equity
Conditions have not been satisfied (or waived in writing by the Holder).

 

(m) “Fundamental
Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more
related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving
corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange
offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination),
or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined
in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Voting Stock of the Company.

 

(n) “GAAP”
means United States generally accepted accounting principles, consistently applied.

 

    	 	21	 

     

    

 

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

 

(p) “Interest
Rate” means eight percent (8.0%) per annum, as may be adjusted from time to time in accordance with Section 2.

 

(q) “Material
Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole,
(ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability of the
Company or any of its Subsidiaries to timely perform any of their respective obligations under any of the Transaction Documents.

 

(r)
“Maturity Date” shall mean June 27, 2017; provided, however, the Maturity Date may be extended at the
option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any
event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of
Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the
event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity
Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion
Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time
as such provision shall not limit the conversion of this Note.

 

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

 

    	 	22	 

     

    

 

(t) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common
stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental
Transaction.

 

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

 

(v) “Principal
Market” means, as of any date of determination, the principal securities exchange or securities market on which
the Common Stock is then traded.

 

(w) “Redemption
Notices” means, collectively, the Event of Default Redemption Notices and the Company Optional Redemption Notices,
and each of the foregoing, individually, a “Redemption Notice.”

 

(x) “Redemption
Premium” means (i) in the case of the Events of Default described in Section 4(a) (other than Sections 4(a)(iv)
through 4(a)(vi)), 127.5% or (ii) in the case of the Events of Default described in Sections 4(a)(iv) through 4(a)(vi), 100%.

 

(y) “Redemption
Prices” means, collectively, Event of Default Redemption Prices, and the Company Optional Redemption Prices and
each of the foregoing, individually, a “Redemption Price.”

 

(z) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.

 

(aa) “Subsidiaries”
means any Person in which the Company, directly or indirectly, (I) owns a majority of the outstanding capital stock or holds a
majority of equity or similar interest of such Person or (II) controls or operates all or any part of the business, operations
or administration of such Person, and each of the foregoing.

 

(bb) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.

 

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

 

    	 	23	 

     

    

 

(dd) “Transaction
Documents” means, collectively, this Note, the Debt Exchange Agreement and each of the other agreements and instruments
entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as
may be amended from time to time.

 

(ee) “Voting
Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof
have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers,
trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other
class or classes shall have or might have voting power by reason of the happening of any contingency).

 

(ff) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average
of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

[signature
page follows]

 

    	 	24	 

     

    

 

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

 

	 	FREESEAS
    INC.
	 	 	 
	 	By:	
	 	 	Name:
    Dimitris Papadopoulos
	 	 	Title:
    Chief Financial Officer

 

Convertible Note
- Signature Page

    	 	 	 

     

    

 

EXHIBIT
I

 

FREESEAS INC.

CONVERSION NOTICE

 

Reference
is made to the Convertible Note (the “Note”) issued to the undersigned by FreeSeas Inc.,a corporation
incorporated and existing under the laws of the Republic of the Marshall Islands (the “Company”). In
accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note)
of the Note indicated below into shares of Common Stock, US$0.001 par value per share (the “Common Stock”),
of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the
Note.

 

	Date
    of Conversion:	 
	 	 
	Aggregate
    Principal to be converted:	 
	 	 
	Aggregate
    accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and
    such Aggregate Interest to be converted:	 
	 	 
	AGGREGATE
    CONVERSION AMOUNT TO BE CONVERTED:	 
	 	 
	Please
    confirm the following information:
	 
	Conversion
    Price:	 
	 	 
	Number
    of shares of Common Stock to be issued:	 
	 	 
	

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

	 
	Issue
    to:	 
	 	 

                                                                                 

	 	

                                                                                 

                                                                                 

	 	 
	Facsimile
    Number:	 
	 	 
	Holder:	 
	 	 
	By:	 
	 	 
	Title:	 
	 	 
	Dated:	 
	 	 
	Account
    Number:	 
	(if
electronic book entry transfer)	 
	 	 
	Transaction
    Code Number:	 
	(if
electronic book entry transfer)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}]]