Document:

Exhibit 10.1

 

AMENDMENT NO. 3 TO SECURITIES PURCHASE AGREEMENT

 

This Amendment No. 3 to Securities Purchase Agreement (this “Amendment”)
dated this 31st day of August, 2018, by and among I.AM INC., a Nevada corporation (the “Company”), David J. Krause,
an individual (individually, a “Company Stockholder”), Deborah J. Krause, an individual (a “Company Stockholder”
and with David J. Krause, the “Company Stockholders”) and Digital Power Lending, LLC, a California limited liability
company (the “Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, the Company, the Company Stockholders,
and the Purchaser are party to a securities purchase agreement, dated May 23, 2018, as amended by Amendment No. 1 thereto, dated
June 28, 2018, and by Amendment No. 2 dated on or about July 30, 2018 (as amended, the “Purchase Agreement”);

 

WHEREAS, the Company, the Company Stockholders,
and the Purchaser desire to amend the Purchase Agreement as more particularly set forth below;

 

WHEREFORE, the parties do hereby agree as follows:

 

1.       The last sentence of
Section 4.4 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:

 

In the event that the Management Agreement is not entered into by
October 1, 2018, then on October 5, 2018, (i) the Purchaser shall return to the Company for cancellation, all Shares owned by the
Purchaser, in return for which Purchaser shall receive a full refund of the Purchase Price; and (ii) the Company shall sell to
the Company Stockholders, and the Company Stockholders shall purchase from the Company, shares of Common Stock in an aggregate
amount equal to the number of shares returned to the Company for cancellation by the Purchaser (allocated between the Company Stockholders
in such amounts that following such sale, each Company Stockholder will own an equal amount of shares of the Company’s Common
Stock, or as otherwise agreed to between the Company Stockholders), at a purchase price of $1.00 per share.

 

2.       Except as modified herein,
the terms of the Purchase Agreement shall remain in full force and effect.

 

3.       This Amendment may be
executed in any number of counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon
all parties, their successors and assigns, and all of which taken together shall constitute one and the same Amendment. A signature
delivered by facsimile shall constitute an original.

 

[Signature Page Follows]

 

    	 	1	 

    	 

    

 

 

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

 

 

i.am inc.

 

 

By: /s/ David J. Krause

Name:

Title:

 

 

 

DIGITAL POWER LENDING, LLC

 

 

By: /s/ William Corbett

Name: William Corbett

Title: Manager

 

 

 

/s/ David J. Krause

David J. Krause

 

 

 

/s/ Deborah J. Krause

Deborah J. Krause

 

 

2Exhibit 4.1

 

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

 

	Original Issue Date: August 31, 2018	Principal Amount: $2,000,000 

    Purchase Price: $2,000,000

  

SENIOR
SECURED 

CONVERTIBLE
PROMISSORY NOTE

DUe
February 28, 2019

 

THIS SENIOR SECURED
CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued Senior Secured Convertible Promissory Notes
of DPW Holdings, Inc., a Delaware corporation (the “Company”), having its principal place of business at 201
Shipyard Way, Newport Beach, CA 92663, designated as its Senior Secured Convertible Promissory Note due February 28, 2019 (this
“Note”, or collectively with the other Notes of such series, the “Notes”).

 

FOR VALUE RECEIVED,
the Company promises to pay to __________ or its registered assigns (the “Holder”), or shall have paid pursuant
to the terms hereunder, the principal sum of $2,000,000 on February 28, 2019 (the “Maturity Date”) or such earlier
date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is subject to
the following additional provisions:

 

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

 

“Affiliate”
means any 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.

 

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

  

    		 1	 

     

    

 

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

 

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

 

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

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common
Stock” means the Class A common stock of the Company, par value $0.001 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed.

 

“Common
Stock Equivalents” means any securities of the Company or any subsidiary which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant, unit, or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

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

 

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

 

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

 

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“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the
terms hereof, including without limitation, shares of Common Stock issued upon conversion or redemption of this Note, and shares
of Common Stock issued and issuable in lieu of the cash payment of interest on this Note in accordance with the terms of this Note.

  

“DTC”
means the Depository Trust Company.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

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

 

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

 

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

 

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

 

“Mandatory
Default Amount” means the payment of one hundred twenty-five percent (125%) of the outstanding principal amount of this
Note and accrued and unpaid interest hereon, in addition to the payment of all other amounts, costs, expenses and liquidated damages
due in respect of this Note.

 

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

 

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

 

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

 

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

 

“Person”
means 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. 

 

“Purchase
Agreement” means that certain Securities Purchase Agreement, dated August 31, 2018 between the Company and the Holder.

 

“Registration
Rights Agreement” means that certain Registration Rights Agreement between
the Company and the Holder, dated August 31, 2018.

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to this Note, including any Conversion Shares issuable upon conversion in full of this Note (including Conversion
Shares issuable as payment of interest on this Note), ignoring any conversion limits set forth therein, and assuming
that the conversion price is at all times on and after the date of determination 100% of the then conversion price on the Trading
Day immediately prior to the date of determination. 

  

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“Sales
Agreement” means the At Market Issuance Sales Agreement, dated February 27, 2018,
between the Company and H.C. Wainwright & Co., LLC, pursuant to which the Company may sell up to $50,000,000 in shares
of Common Stock in an at-the-market offering.

 

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

 

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

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1 of the Purchase Agreement and shall, where applicable,
also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

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

 

“Trading
Day” means a day on which the principal Trading Market is open for trading. 

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market;
the New York Stock Exchange; any level of the OTC Markets operated by OTC Markets Group, Inc. or the OTC Bulletin Board (or any
successors to any of the foregoing). 

 

 Section 2.             Interest.

 

a)           Payment of Interest in Cash. The Company shall pay interest to the Holder on the aggregate principal amount of this
Note at the rate of ten percent (10%) per annum, which annual interest shall be guaranteed. The Company agrees to pay the Holder
100% of such guaranteed annual interest in cash on the Closing Date. Accrued and unpaid interest shall be due and payable on each
Conversion Date and on the Maturity Date, or as otherwise set forth herein.

 

b)           Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve (12) thirty
(30) calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder,
has been made. Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company
regarding registration and transfers of this Note (the “Note Register”).

  

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

 

d)           Voluntary
Prepayment. So long as no Event of Default (as defined in Section 6(a)) hereof exists, but subject to the Holder’s conversion
rights set forth herein, the Company may prepay any portion of the principal amount of this Note, any accrued and unpaid interest,
and any other amounts due under this Note in accordance with this Section 2(d). The Holder may continue to convert the Note from
the date the Optional Prepayment Notice (as defined below) is given until the date of the prepayment. If the Company exercises
its right to prepay the Note, the Company shall deliver a notice of prepayment (an “Optional Prepayment Notice”)
to the Holder of the Note at its registered address, which shall state: (1) that the Company is exercising its right to prepay
the Note, and (2) the date of prepayment, which shall be not more than ten (10) days from the date of the Optional Prepayment
Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Company shall make payment of
the amounts designated below to or upon the order of the Holder as specified by the Holder in writing to the Company at least
one (1) Business Day prior to the Optional Prepayment Date. If the Company exercises its right to prepay the Note at any time
within the initial thirty (30) days following the Original Issue Date, the Company shall make payment to the Holder of an amount
in cash equal to the sum of: (w) 105% multiplied by the principal amount of the Note then outstanding plus (x) accrued and unpaid
interest on the principal amount to the Optional Prepayment Date plus (y) any other amounts due under the Note, including Late
Fees, if any, on the amounts referred to in clauses (w) and (x). If the Company exercises its right to prepay the Note at any
time from the 31st day through the 60th day following the Original Issue Date, the Company shall make payment to the Holder of
an amount in cash equal to the sum of: (w) 110% multiplied by the principal amount of the Note then outstanding plus (x) accrued
and unpaid interest on the principal amount to the Optional Prepayment Date plus (y) any other amounts due under the Note, including
Late Fees, if any, on the amounts referred to in clauses (w) and (x). If the Company exercises its right to prepay the Note at
any time from the 61st day through the 90th day following the Original Issue Date, the Company shall make payment to the Holder
of an amount in cash equal to the sum of: (w) 115% multiplied by the principal amount of the Note then outstanding plus (x) accrued
and unpaid interest on the principal amount to the Optional Prepayment Date plus (y) any other amounts due under the Note, including
Late Fees, if any, on the amounts referred to in clauses (w) and (x). If the Company exercises its right to prepay the Note at
any time within from the 91st day through the 120th day following the Original Issue Date, the Company shall make payment to the
Holder of an amount in cash equal to the sum of: (w) 120% multiplied by the principal amount of the Note then outstanding plus
(x) accrued and unpaid interest on the principal amount to the Optional Prepayment Date plus (y) any other amounts due under the
Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x). If the Company exercises its right to prepay
the Note at any time from the 121st day through the 180th day following the Original Issue Date, the Company shall make payment
to the Holder of an amount in cash equal to the sum of: (w) 125% multiplied by the principal amount of the Note then outstanding
plus (x) accrued and unpaid interest on the principal amount to the Optional Prepayment Date plus (y) any other amounts due under
the Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x).

  

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e)           Mandatory Prepayment. Except for any transaction set forth on Schedule 2(e), during the term of the Note,
(i) in the event that the Company consummates any single or contemporaneous public or private offerings of securities in which
the Company receives gross proceeds in the aggregate equal to or greater than $2,000,000 (a “Qualified Offering”)
or (ii) in the event that the Company consummates a private or public offering or other financing or capital-raising transaction
of any kind, including the receipt of funds pursuant to a repayment from a related party of promissory notes issued to such entity
(each a “Non-Qualified Offering”), at any time upon ten (10) days written notice to the Holder, but subject
to the Holder’s conversion rights set forth herein, the Company shall make payment to the Holder, from up to 100% of the
proceeds from such Qualified Offering or from up to 25% of the proceeds of such Non-Qualified Offering, as applicable, of an amount
in cash as follows: (A) if the Company is required to prepay the Note at any time within the initial thirty (30) days following
the Original Issue Date, the Company shall make payment to the Holder of an amount in cash equal to the sum of: (w) 105% multiplied
by the principal amount of the Note then outstanding plus (x) accrued and unpaid interest on the outstanding principal amount to
the date of mandatory prepayment (the “Mandatory Prepayment Date”) plus (y) any other amounts due under the
Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x); (B) if the Company is required to prepay
the Note at any time from the 31st day through the 60th day following the Original Issue Date, the Company shall make payment to
the Holder of an amount in cash equal to the sum of: (w) 110% multiplied by the principal amount of the Note then outstanding plus
(x) accrued and unpaid interest on the principal amount to the Mandatory Prepayment Date plus (y) any other amounts due under the
Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x); (C) if the Company is required to prepay
the Note at any time from the 61st day through the 90th day following the Original Issue Date, the Company shall make payment to
the Holder of an amount in cash equal to the sum of: (w) 115% multiplied by the principal amount of the Note then outstanding plus
(x) accrued and unpaid interest on the principal amount to the Mandatory Prepayment Date plus (y) any other amounts due under the
Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x); (D) if the Company is required to prepay
the Note at any time from the 91st day through the 120th day following the Original Issue Date, the Company shall make payment
to the Holder of an amount in cash equal to the sum of: (w) 120% multiplied by the principal amount of the Note then outstanding
plus (x) accrued and unpaid interest on the principal amount to the Mandatory Prepayment Date plus (y) any other amounts due under
the Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x); and (E) if the Company is required to
prepay the Note at any time from the 121st day through the 180th day following the Original Issue Date, the Company shall make
payment to the Holder of an amount in cash equal to the sum of: (w) 125% multiplied by the principal amount of the Note then outstanding
plus (x) accrued and unpaid interest on the principal amount of the Note to the Mandatory Prepayment Date plus (y) any other amounts
due under the Note, including Late Fees, if any, on the amounts referred to in clauses (w) and (x). The Holder may continue to
convert the Note from the date notice of the mandatory prepayment is given until the date of the mandatory prepayment.

  

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Section 3.
            Registration of Transfers and Exchanges.

 

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

 

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

 

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

 

Section 4.
            Conversion.

 

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

  

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b)           Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $0.40 (the “Fixed
Conversion Price”). All such foregoing determinations will be appropriately adjusted for any stock dividend, stock split,
stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during
such measuring period. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default
pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights
shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

c)  
        Mechanics of Conversion.

 

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

 

ii.         Delivery of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without
the need for current public information and the Company has received an opinion of counsel to such effect, which such opinion must
be acceptable to the Holder in its sole and absolute discretion (which opinion the Company shall be responsible for obtaining at
its sole cost and expense) shall be free of restrictive legends and trading restrictions, representing the number of Conversion
Shares being acquired upon the conversion of this Note. All certificate or certificates required to be delivered by the Company
under this Section 4(c) shall be delivered electronically through the DTC or another established clearing corporation performing
similar functions. If the Conversion Date is prior to the date on which such Conversion Shares are eligible to be sold under Rule
144 without the need for current public information, or there is no registration statement in effect covering the Conversion Shares,
the Conversion Shares shall bear a restrictive legend in the following form, as appropriate:

  

“THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”

 

    		 8	 

     

    

  

Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company, upon request and at the sole cost and expense of the Company, shall obtain a legal opinion
that is acceptable to the Holder in its sole and absolute discretion, to allow for such sales under Rule 144.

 

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

 

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

  

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

  

    		 10	 

     

    

 

vi.           Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to four hundred
percent (400%) of the Required Minimum (the “Reserve Amount”) for the sole purpose of issuance upon conversion
of this Note and payment of interest on this Note, each as herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder (and the other holders of the Notes). The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

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

 

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

  

    		 11	 

     

    

 

d)           Holder’s
Conversion Limitations. The Company shall not effect any conversion of principal and/or interest of this Note, and a Holder
shall not have the right to convert any principal and/or interest of this Note, to the extent that after giving effect to the
conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any
Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common
Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by
the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without
limitation, any other Notes) beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding
sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section
4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together
with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder,
and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be
converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this
Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction,
the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion
has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the
accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this
Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written
notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. 
Upon the written or oral request of a Holder, the Company shall within two (2) Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the
Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not
less than sixty-one (61) days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion
of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply.
Any such increase or decrease will not be effective until the sixty-first (61st) day after such notice is delivered
to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Note.

  

    		 12	 

     

    

 

Section 5.             Certain
Adjustments.

 

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

 

b)           [Reserved]

 

c)           [Reserved]

 

    		 13	 

     

    

 

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

  

e)           Pro
Rata Distributions. While this Note is outstanding, the Company shall not declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”). 
In the event that the Note is repaid at the time of such Distribution, the Holder shall not be entitled to participate in such
Distribution.  If the Holder and the Company mutually agree, and the Note is not repaid at the time of such Distribution,
then the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard
to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to
the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).

 

    		 14	 

     

    

 

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

 

    		 15	 

     

    

 

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

 

h)          
Notice to the Holder.

 

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

 

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

 

    		 16	 

     

    

 

i)            Subsequent Equity Sales; Variable Rate Transactions; Other.

 

		i.	So long as this Note remains outstanding, the Company
shall not, directly or indirectly, amend, modify, waiver or alter any terms of conditions of any Common Stock Equivalents outstanding
as of the date hereof to decrease the exercise, conversion and/or exchange price, as applicable, thereunder or otherwise increase
the aggregate number of shares of Common Stock issuable in connection therewith (other than pursuant to anti-dilution terms and
conditions applicable to such Common Stock Equivalents in effect as of the date hereof and disclosed in filings of the Company
with the Commission prior to the date hereof).

 

		ii.	So long as this Note remains outstanding, the Company
shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries
of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable
Rate Transaction” means a transaction in which the Company issues or sells any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive, additional Common Stock either (i) at a conversion price,
exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for
the Common Stock at any time after the initial issuance of such debt or equity securities or (ii) with a conversion, exercise
or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security
or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the
market for the Common Stock (other than pursuant to terms and conditions applicable to such Common Stock Equivalents in effect
as of the date hereof and disclosed in filings of the Company with the Commission prior to the date hereof), provided that the
sale of Common Stock pursuant to the Sales Agreement or similar agreement with H. C. Wainwright, LLC shall not constitute a Variable
Rate Transaction.

 

    		 17	 

     

    

 

		iii.	So long as this Note remains outstanding, the Company
shall, in the absence of the Holder’s prior written consent, be prohibited from effecting or entering into an agreement
to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination
of units thereof) involving an equity line of credit, at-the-market offering (as defined in SEC Rule 415) or similarly structured
transaction, whereby the Company may issue securities at a future determined price, other than the sale of Common Stock pursuant
to the Sales Agreement or a similar agreement with H. C. Wainwright, LLC.

 

		iv.	So long as this Note is outstanding, the Company shall
not enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to Section 3(a)(l0)
of the Securities Act.

 

		v.	The Holder shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance in this Section 5(i) (without the need for the posting of any bond or similar
item, which the Company hereby expressly and irrevocably waives the requirement for), which remedy shall be in addition to any
right to collect damages.

 

j)            Most Favored Nation Status. From the date hereof through the date that no Notes are outstanding, in the event that
the Company issues or sells any notes, if the Purchaser then holding Notes reasonably believes that the terms and conditions appurtenant
to such issuance or sale provide anti-dilution or other full-ratchet protective provisions to such investors that were not granted
to the Purchaser hereunder, upon notice to the Company by such Purchaser within five (5) Trading Days after the Company’s
disclosure of such issuance or sale, the Company shall amend the terms of the Notes as to such Purchaser only, so as to give such
Purchaser the benefit of such anti-dilution or other full-ratchet protective provisions.

 

 Section 6.             Events of Default.

 

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

   

    		 18	 

     

    

 

i.            any default
in the payment of (A) the principal amount of this Note or (B) interest, liquidated damages and other amounts owing to a Holder
on this Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration
or otherwise) which default is not cured within seven (7) Trading Days;

 

ii.            the Company
shall fail to observe or perform any other covenant, provision, or agreement contained in this Note (and other than a breach by
the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause
(ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) seven (7) Trading Days after notice
of such failure sent by the Holder or by any other Holder to the Company and (B) ten (10) Trading Days after the Company has become
or should have become aware of such failure;

 

iii.           a material
default or material event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under any of the Transaction Documents;

 

iv.           any representation
or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto, any other agreement,
contract, lease, document or instrument to which the Company or any Subsidiary is obligated (including those covered by clause
(vi) below), or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall
be untrue or incorrect in any material respect as of the date when made or deemed made;

 

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

 

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

 

vii.          the Common
Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing
or quotation for trading thereon within seven (7) Trading Days;

 

    		 19	 

     

    

 

viii.         the Company
does not meet the current public information requirements under Rule 144, which failure is not cured, if possible to cure, within
seven (7) Trading Days after the expiration of the applicable grace period permitted under
Rule 12b-25 of the Exchange Act, further provided that the Company files a Form 12b-25 for the relevant report required to meet
the current public information requirements under Rule 144;

  

ix.           the Company
shall fail for any reason to deliver certificates to a Holder prior to the seventh (7th) Trading Day after a Conversion Date pursuant
to Section 4(c), or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the
Company’s intention to not honor requests for conversions of this Note in accordance with the terms hereof;

 

x.            the Company
fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance
with Rule 144(c)(1) (or Rule 144(i)(2), if applicable), which failure is not cured, if possible to cure, within seven (7) Trading
Days after the expiration of the applicable grace period permitted under Rule 12b-25 of the
Exchange Act, further provided that the Company files a Form 12b-25 for such report;

 

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

 

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

 

xiii.         the occurrence
of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or any Subsidiary
having an aggregate fair value or repair cost (as the case may be) in excess of $250,000 individually or in the aggregate, and
any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;

 

    		 20	 

     

    

 

xiv.         the Company
shall fail to maintain the Reserve Amount and such failure is not cured within seven (7) Trading Days;

 

xv.          any monetary
judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective
property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded
or unstayed for a period of forty-five (45) calendar days;

 

xvi.         [Reserved];

 

xvii.        the Company
shall fail to respond to any comments from the principal Trading Market regarding approval of the sale and issuance of the Conversion
Shares within five (5) Trading Days of receipt of such comments;

 

xviii.       the Company
shall fail to obtain all necessary approvals of the sale and issuance of the Conversion Shares consistent with the rules and regulations
of the principal Trading Market within twenty-five (25) days of the Closing Date;

 

xix.         the Company
shall fail to file the Registration Statement (as defined in the Registration Rights Agreement) within twenty-one (21) days after
the Closing Date; or

 

xx.          the Company
shall fail to register the Registrable Securities (as defined in the Registration Rights Agreement) within ninety (90) days of
the Closing Date on a registration statement declared effective by the Commission in accordance with the terms of the Registration
Rights Agreement.

 

b)           Remedies Upon Event of Default. Subject to the Beneficial Ownership Limitation as set forth in Section 4(d), if any
Event of Default occurs, then the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages
and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash at the Mandatory Default Amount. After the occurrence of
any Event of Default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an
additional interest rate equal to the lesser of one and one-half percent (1.5%) per month (eighteen percent (18.0%) per annum)
or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall
promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder
need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind (other than the Holder’s
election to declare such acceleration), and the Holder may immediately and without expiration of any grace period enforce any and
all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the
Note until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent thereon.

 

    		 21	 

     

    

 

Section 7.             Miscellaneous.

 

a)           Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including,
without limitation, any Notice of Conversion, shall be in writing and delivered personally, by email or facsimile, or sent by a
nationally recognized overnight courier service, addressed to the Company at 201 Shipyard Way, Newport Beach, CA 92663, or such
other address, facsimile number, or email address as the Company may specify for such purposes by notice to the Holder delivered
in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service
addressed to each Holder at the email address, facsimile number, or address of the Holder appearing on the books of the Company,
or if no such email address, facsimile number, or address appears on the books of the Company, at the principal place of business
of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest (i)
the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email
address set forth on the signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number
or email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

b)           Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable,
on this Note at the time, place, and rate, and in the coin, currency, virtual currency, or cryptocurrency herein prescribed. Provided
that the Company has not been notified by the Holder in writing, which may be effected via electronic mail to the following electronic
mail address: Todd@DPWHoldings.com, at least two (2) Business Days in advance, the Company may make any payment authorized under
this Section 7(b) in Bitcoin (“BTC”) that the Company has mined directly. The payment shall be considered received
only when the Holder shall have received an amount in U.S. dollars equal to the amount due in BTC times 1.10. The amount of BTC
due shall be determined using Bloomberg XBTUSD Currency index at 11 a.m. (Eastern Time) on the day the payment is due. In order
for the payment to be considered satisfied, the Holder must receive BTC by 2:00 P.M. (Eastern Time) on the same day, and at least
six (6) confirmations shall have been generated. Payments shall be made to the Holder’s BTC Wallet provided for separately.
This Note is a direct debt obligation of the Company.  

 

    		 22	 

     

    

 

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

 

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

 

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

 

    		 23	 

     

    

 

f)           Amendments. The prior written consent of 50.1% in interest of the Holders,
which shall be calculated based on the principal amount of all Notes outstanding at the time of such consent, shall be required
for any change or amendment to the Notes.

 

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

 

h)          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.

 

    		 24	 

     

    

 

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

 

j)           Payment of Collection, Enforcement and Other Costs. If (i) 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 (ii) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company
shall pay the reasonable and documented out-of-pocket costs incurred by the Holder for such collection, enforcement or action or
in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’
fees and disbursements.

 

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

 

 

 

[Signature Pages Follow]

 

 

    		 25	 

     

    

 

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

 

	 	DPW HOLDINGS, INC.
	 	 	 
	 	By:	  	 
	 	 	Name: Milton C. Ault III
	 	 	Title: Chief Executive Officer
	 	 	 
	 	Facsimile No. for delivery of Notices:

  

    		 26	 

     

    

 

ANNEX A

 

 NOTICE OF CONVERSION

 

 

 

The undersigned hereby
elects to convert principal under the Senior Secured Convertible Promissory Note, due February 28, 2019 of DPW Holdings, Inc.,
a Delaware corporation (the “Company”), into shares of common stock of the Company (the “Common Stock”),
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder
for any conversion, except for such transfer taxes, if any.

 

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

 

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

 

Conversion calculations: 

 

	 	Date to Effect Conversion:
	 	 
	 	Principal Amount of Note to be Converted:
	 	 
	 	Payment of Interest in Common
Stock __ Yes __ No
	 	 
	 	If Yes, $_____ of Interest Accrued
on Account of Conversion at Issue.
	 	 
	 	Number of Shares of Common Stock
to be Issued:
	 	 
	 	Signature:
	 	 
	 	Name:
	 	 
	 	Delivery Instructions:

  

    		 27	 

     

    

 

Schedule 1

 

CONVERSION SCHEDULE

 

This Senior Secured Convertible Promissory
Note, due February 28, 2019, in the original principal amount of $2,000,000 is issued by DPW Holdings, Inc., a Delaware corporation.
This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.

 

Dated:

 

	
        Date of Conversion

        (or for first entry, 

Original Issue
Date)
	
        Amount of 

Conversion
	
         

        Aggregate 

Principal 

Amount 

Remaining

Subsequent to

 Conversion 

(or original 

Principal 

Amount)
	
        Company Attest

		 	 	 
		 	 	 
		 	 	 
		 	 	 
		 	 	 
		 	 	 

 

    		 28	 

     

    

 

Schedule 2(e)

 

Mandatory Prepayment

 

On May 15, 2018,
the Company entered into a Securities Purchase Agreements with certain institutional investors (the “Investors”)
for the sale and issuance of up to an aggregate of $6,000,000 of shares (the “Shares”) of the Company’s
Class A common stock (the “Common Stock”) and five-year warrants (the “Warrants”) to purchase
such number of shares of Series A or B Common Stock equal to the Shares purchased by each Investor (collectively, the “Warrant
Shares”), with an exercise price of $0.94 per share.

 

On February 27,
2018, the Company entered into a Sales Agreement with H.C. Wainwright & Co., LLC (“HCW”) to sell shares
of its Common Stock, par value $0.001, having an aggregate offering price of up to $50,000,000 from time to time, through an “at
the market offering” program under which HCW will act as sales agent. The Company shall not be obligated to pay to the Holder
any amounts raised from the Sales Agreement for a period of ninety (90) days from the Original Issue Date, but shall be required
to pay the Holder fifty percent (50%) of any net proceeds raised therefrom thereafter.

 

 

		29

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