Document:

Blueprint

 

Exhibit 4.3

 

NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE 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 EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

 

CORMEDIX INC.

THIRD AMENDED AND RESTATED

WARRANT TO PURCHASE COMMON STOCK

Warrant
No.: AR-5/2013-2

 

This
Third Amended and Restated Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “Warrant”) of CorMedix Inc. (the
“Company”) is issued
 this 31st day of December 2018, and amends and
restates the Warrant to Purchase Common Stock issued by the Company
on May 30, 2013 (the “Issuance
Date”) to
Manchester Securities Corp. (the “Holder”), pursuant to that certain
Securities Purchase Agreement dated May 23, 2013 (the “Securities Purchase
Agreement”), which
Warrant to Purchase Common Stock was subsequently amended and
restated on September 15, 2014 and March 3, 2015. The Company
hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Holder or its permitted assigns is entitled, subject to the terms
set forth below, to purchase from the Company, at the Exercise
Price (as defined below) then in effect, upon exercise of this
Warrant, at any time or times on or after May 30, 2014 (the
“Initial Exercisability
Date”), but not
after 11:59 p.m., New York time, on the Expiration Date (as defined
below), 500,000 (subject to
adjustment as provided herein) fully paid and nonassessable shares
of Common Stock (as defined below) (the “Warrant
Shares”).

 

Except
as otherwise defined herein, capitalized terms in this Warrant
shall have the meanings set forth in Section 16.

 

This
Warrant is one of the Warrants to Purchase Common Stock (the
“SPA Warrants”) issued pursuant to Section 1 of
the Securities Purchase Agreement.

 

1.

EXERCISE OF
WARRANT.

 

(a)
Mechanics
of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in
Section 1(f), this Warrant may be exercised by the Holder on any
day on or after the Initial Exercisability Date, in whole or in
part, by delivery (whether via facsimile or otherwise) of a written
notice, in the form attached hereto as Exhibit
A (the “Exercise
Notice”), of the
Holder’s election to
exercise this Warrant. Within one (1) Trading Day following an
exercise of this Warrant as aforesaid, the Holder shall deliver
payment to the Company of an amount equal to the Exercise Price in
effect on the date of such exercise multiplied by the number of
Warrant Shares as to which this Warrant was so exercised (the
“Aggregate Exercise
Price”) in cash or
via wire transfer of immediately available funds if the Holder did
not notify the Company in such Exercise Notice that such exercise
was made pursuant to a Cashless Exercise (as defined in Section
1(d)). The Holder shall not be required to deliver the original of
this Warrant in order to effect an exercise hereunder. Execution
and delivery of an Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original of this Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant
Shares. Execution and delivery of an Exercise Notice for all of the
then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the
Warrant Shares in accordance with the terms hereof. On or before
the first (1st) Trading Day following
the date on which the Company has received an Exercise Notice, the
Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form
attached hereto as Exhibit
B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or
before the third (3rd) Trading Day following
the date on which the Company has received such Exercise Notice,
the Company shall (X) provided that the Transfer Agent is
participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program and provided the shares of Common Stock which the Holder is
entitled to are registered on an effective registration statement
or may be sold without any restriction under Rule 144, upon the
request of the Holder, credit such aggregate number of shares of
Common Stock to which the Holder is entitled pursuant to such
exercise to the Holder’s
or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian
system, or (Y) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and deliver
to the Holder or, at the Holder’s instruction pursuant to the
Exercise Notice, the Holder’s agent or designee, in each case,
sent by reputable overnight courier to the address as specified in
the applicable Exercise Notice, a certificate, registered in the
Company’s share register
in the name of the Holder or its designee (as indicated in the
applicable Exercise Notice), for the number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise,
which may contain a restrictive legend if required to comply with
applicable securities laws. Upon delivery of an Exercise Notice,
the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to
which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificates evidencing such Warrant Shares (as the
case may be). If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant
Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an
exercise, then, at the request of the Holder, the Company shall as
soon as practicable and in no event later than three (3) Business
Days after any exercise and at its own expense, issue and deliver
to the Holder (or its designee) a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under
this Warrant, less the number of Warrant Shares with respect to
which this Warrant is exercised. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant, but
rather the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole number. The Company shall pay any
and all taxes and fees which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this
Warrant.

 

 

1

 

 

 

(b)
Exercise
Price. For purposes of this Warrant, “Exercise
Price” means
$0.001, subject to adjustment as provided herein.

 

(c)
Company’s
Failure to Timely Deliver Securities. If the Company shall
fail, for any reason or for no reason, to issue to the Holder
within the later of (i) three (3) Trading Days after receipt of the
applicable Exercise Notice and (ii) two (2) Trading Days after the
Company’s receipt of the
Aggregate Exercise Price (or valid notice of a Cashless Exercise)
(such later date, 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
balance account with DTC for such number of shares of Common Stock
to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the
case may be) (a “Delivery
Failure”), 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, or a sale of a
number of shares of Common Stock equal to all or any portion of the
number of shares of Common Stock, issuable upon such exercise 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 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 exercise 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
exercise 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 (A) such number of shares of Common Stock multiplied
by (B) the lowest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date of the
applicable Exercise Notice and ending on the date immediately
preceding the date of such issuance and payment under this clause
(ii).

 

(d)
Cashless
Exercise. Notwithstanding anything contained herein to the
contrary (other than Section 1(f) below), if at the time of
exercise hereof a registration statement is not effective (or the
prospectus contained therein is not available for use) for the
issuance by the Company to the Holder of all of the Warrant Shares,
then the Holder may, in its sole discretion, exercise this Warrant
in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of shares of Common Stock
determined according to the following formula (a “Cashless
Exercise”):

 

Net
Number = (A x B) - (A x
C)

        B

 

For
purposes of the foregoing formula:

 

	
 

	

A
=

	

the
total number of shares with respect to which this Warrant is then
being exercised.

 

	
 

	

B
=

	

as
applicable: (i) the Closing Sale Price of the Common Stock on the
Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and
delivered pursuant to Section 1(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of
Regulation NMS promulgated under the federal securities laws) on
such Trading Day, (ii) the Closing Bid Price of the Common Stock as
of the time of the Holder’s execution of the applicable
Exercise Notice if such Exercise Notice is executed during
“regular trading
hours” on a Trading Day
and is delivered within two (2) hours thereafter pursuant to
Section 1(a) hereof or (iii) the Closing Sale Price of the Common
Stock on the date of the applicable Exercise Notice if the date of
such Exercise Notice is a Trading Day and such Exercise Notice is
both executed and delivered pursuant to Section 1(a) hereof after
the close of “regular
trading hours” on such
Trading Day.

 

	
 

	

C
=

	

the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.

 

(e)
Disputes. In
the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the number of Warrant Shares to be
issued pursuant to the terms hereof, the Company shall promptly
issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section
13.

 

 

2

 

 

(f)
Limitations on
Exercises.

 

(i)
Beneficial
Ownership. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant shall not be exercisable by
the Holder hereof to the extent (but only to the extent) that after
giving effect to such exercise the Holder (together with any of its
affiliates) would beneficially own in excess of 9.99% (the
“Maximum
Percentage”) of
the Common Stock. To the extent the above limitation applies, the
determination of whether this Warrant shall be exercisable
(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 the case may be, as
among all such securities owned by the Holder) 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 exercise this
Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to
any subsequent determination of exercisability. For the 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 1934 Act (as defined in the
Securities Purchase Agreement) 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 Warrant. The holders of Common Stock shall be third
party beneficiaries of this paragraph and the Company may not amend
or 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 Warrant or securities issued pursuant
to the Securities Purchase Agreement. By written notice to the
Company, any Holder may increase or decrease the Maximum Percentage
to any other percentage 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 SPA Warrants.

 

(ii)
OMITTED.

 

(g)
Insufficient
Authorized Shares. The Company shall at all times keep
reserved for issuance under this Warrant a number of shares of
Common Stock at least equal to the maximum number of shares of
Common Stock as shall be necessary to satisfy the
Company’s obligation to
issue shares of Common Stock hereunder (without regard to any
limitation otherwise contained herein with respect to the number of
shares of Common Stock that may be acquirable upon exercise of this
Warrant). If, notwithstanding the foregoing, and not in limitation
thereof, at any time while any of the SPA Warrants remain
outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve for issuance upon exercise of the SPA
Warrants at least a number of shares of Common Stock (the
“Required Reserve
Amount”) equal to
the number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of all of the SPA Warrants then
outstanding (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 all the SPA Warrants
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
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 an exercise of this Warrant 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 cancellation of such
portion of this Warrant exercisable 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 Exercise
Notice with respect to such Authorization Failure Shares to the
Company and ending on the date immediately preceding the date of
such issuance and payment under this Section 1(g) 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.

 

 

3

 

 

 

2.
ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise
Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in
this Section 2.

 

(a)
Stock
Dividends and Splits. Without limiting any provision of
Section 4, if the Company, at any time on or after the date of the
Securities Purchase Agreement, (i) pays a stock dividend on one or
more classes of its then outstanding shares of Common Stock or
otherwise makes a distribution on any class of capital stock that
is payable in shares of Common Stock, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more
classes of its then outstanding shares of Common Stock into a
larger number of shares or (iii) combines (by combination, reverse
stock split or otherwise) one or more classes of its then
outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of
Common Stock 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 clause (i) of this paragraph shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and
any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment
under this paragraph occurs during the period that an Exercise
Price is calculated hereunder, then the calculation of such
Exercise Price shall be adjusted appropriately to reflect such
event.

 

(b)
OMITTED.

 

(c)
Number of
Warrant Shares. Simultaneously with any adjustment to the
Exercise Price pursuant to paragraph (a) of this Section 2, the
number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased or decreased proportionately, so
that after such adjustment the aggregate Exercise Price payable
hereunder for the adjusted number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to
such adjustment (without regard to any limitations on exercise
contained herein).

 

(d)
OMITTED.

 

(e)
OMITTED.

 

(f)
Calculations.
All calculations under this Section 2 shall be made by rounding to
the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares
shall be considered an issue or sale of Common Stock.

 

(g)
OMITTED.

 

3. RIGHTS UPON
DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 2 above, if the Company shall 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”), at any time after the issuance of
this Warrant, then, in each such case, 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 Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Maximum Percentage)
immediately before the date on 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
Distributions would result in the Holder exceeding the Maximum
Percentage, then the Holder shall not be entitled to participate in
such Distribution to such extent (or the beneficial ownership of
any such shares of Common Stock as a result of such Distribution to
such extent) and such Distribution to such extent 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
Maximum Percentage).

 

4.
PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)
Purchase
Rights. In addition to any adjustments pursuant to Section 2
above, 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 all or
substantially all of 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 exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Maximum Percentage) 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 Maximum Percentage, 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 Maximum Percentage).

 

 

4

 

 

(b)
Fundamental
Transactions. (1) The Company shall not enter into or be
party to a Fundamental Transaction unless (i) the Successor Entity
(if different than the Company) assumes in writing all of the
obligations of the Company under this Warrant and the other
Transaction Documents (as defined in the Securities Purchase
Agreement) in accordance with the provisions of this Section
4(b)(1) including agreements to deliver to the Holder in exchange
for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to
this Warrant, including, without limitation, which is exercisable
for a corresponding number of shares of capital stock equivalent to
the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise 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
adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction) 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 consummation of each Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that
from and after the date of the applicable Fundamental Transaction,
the provisions of this Warrant 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 Warrant and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of each Fundamental Transaction,
the Successor Entity (if different from the Company) shall deliver
to the Holder confirmation that there shall be issued upon exercise
of this Warrant at any time after the consummation of the
applicable Fundamental Transaction, in lieu of the shares of Common
Stock (or other securities, cash, assets or other property (except
such items still issuable under Sections 3 and 4(a) above, which
shall continue to be receivable thereafter)) issuable upon the
exercise of this Warrant prior to the applicable Fundamental
Transaction, such shares of common stock (or its equivalent) of the
Successor Entity (including its Parent Entity) which the Holder
would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this
Warrant), as adjusted in accordance with the provisions of this
Warrant. In addition to and not in substitution for any other
rights hereunder, prior to the consummation of each 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 an exercise of this
Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu
of the shares of the Common Stock (or other securities, cash,
assets or other property (except such items still issuable under
Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants
or other purchase or subscription rights) which the Holder would
have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made
pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder.

 

(2)
Notwithstanding the provisions of Section 4(b)(1), the Company
shall have the right to require that Holder waive the requirements
of Section 4(b)(1) (the "Waiver") in an all cash
Fundamental Transaction in exchange for a payment of cash in an
amount equal to the Black Scholes Value, with the Waiver becoming
effective, and this Warrant cancelled, concurrently with such
payment of such cash amount (the "Fundamental Transaction
Amount") to the Holder on the Fundamental Transaction
Closing Date. Notwithstanding anything to the contrary in this
Section 4(b), but subject to Section 1(f), until such time that the
Holder receives the Fundamental Transaction Amount (at which point
this Warrant shall be cancelled), this Warrant may be exercised, in
whole or in part, by the Holder (x) prior to consummation of the
applicable Fundamental Transaction, into Common Stock pursuant to
Section 1, or (y) upon (which may be expressly conditioned upon the
consummation of the applicable Fundamental Transaction) or after
the consummation of the applicable Fundamental Transaction, into
any such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or
subscription rights, if applicable) which the Holder would have
been entitled to receive upon the happening of such Fundamental
Transaction had the Warrant been exercised immediately prior to the
consummation of such Fundamental Transaction.

 

(c)
OMITTED.

 

(d)
Application.
The provisions of this Section 4 shall apply similarly and equally
to successive Fundamental Transactions and Corporate Events and
shall be applied as if this Warrant (and any such subsequent
warrants) were fully exercisable and without regard to any
limitations on the exercise of this Warrant (provided that the
Holder shall continue to be entitled to the benefit of the Maximum
Percentage, applied however with respect to shares of capital stock
registered under the 1934 Act and thereafter receivable upon
exercise of this Warrant (or any such other warrant)).

 

 

5

 

 

5.
NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not,
by amendment of its Certificate of Incorporation (as defined in the
Securities Purchase Agreement), Bylaws (as defined in the
Securities Purchase Agreement) 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 Warrant, and will at all times in good faith
carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without
limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise 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 non-assessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, so long as any of the
SPA Warrants 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 exercise of
the SPA Warrants, the maximum number of shares of Common Stock as
shall from time to time be necessary to effect the exercise of the
SPA Warrants then outstanding (without regard to any limitations on
exercise).

 

6.
WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, the Holder, solely in its capacity as
a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company
for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in its capacity as the
Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive
upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.

 

7.
REISSUANCE
OF WARRANTS.

 

(a)
Transfer
of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder
may request, representing the right to purchase the number of
Warrant Shares being transferred by the Holder and, if less than
the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d))
to the Holder representing the right to purchase the number of
Warrant Shares not being transferred.

 

(b)
Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant (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 Warrant, the
Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 7(d)) representing the right to purchase
the Warrant Shares then underlying this Warrant.

 

(c)
Exchangeable for
Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section
7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each
such new Warrant will represent the right to purchase such portion
of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional
shares of Common Stock shall be given.

 

(d)
Issuance
of New Warrants. Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent,
as indicated on the face of such new Warrant, the right to purchase
the Warrant Shares then underlying this Warrant (or in the case of
a new Warrant being issued pursuant to Section 7(a) or Section
7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new
Warrants issued in connection with such issuance, does not exceed
the number of Warrant Shares then underlying this Warrant), (iii)
shall have an issuance date, as indicated on the face of such new
Warrant which is the same as the Issuance Date, and (iv) shall have
the same rights and conditions as this Warrant.

 

 

6

 

 

8.
NOTICES.
Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a
description of such action and the reason therefor. Without
limiting the generality of the foregoing, the Company will give
written notice to the Holder (i) immediately upon each adjustment
of the Exercise Price and the number of Warrant Shares, setting
forth in reasonable detail, and certifying, the calculation of such
adjustment(s) 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 shares of Common
Stock, (B) with respect to any grants, 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 and (iii) at least ten (10) Trading Days prior to the
consummation of any Fundamental Transaction. To the extent that any
notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of its
Subsidiaries, the Company shall simultaneously file such notice
with the SEC (as defined in the Securities Purchase Agreement)
pursuant to a Current Report on Form 8-K. It is expressly
understood and agreed that the time of execution specified by the
Holder in each Exercise Notice shall be definitive and may not be
disputed or challenged by the Company.

 

9.
AMENDMENT
AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant (other than Section 1(f)) may be amended
and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the
Company has obtained the written consent of the Holder. The Holder
shall be entitled, at its option, to the benefit of any amendment
of (i) any other similar warrant issued under the Securities
Purchase Agreement or (ii) any other similar warrant. No waiver
shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.

 

10.
SEVERABILITY.
If any provision of this Warrant is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as
this Warrant as so modified continues to express, without material
change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The
parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable
provision(s).

 

11.
GOVERNING
LAW. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Warrant 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.
Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. 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 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 WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

12.
CONSTRUCTION;
HEADINGS. This Warrant 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 Warrant are
for convenience of reference and shall not form part of, or affect
the interpretation of, this Warrant. Terms used in this Warrant 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.

 

 

7

 

 

13.
DISPUTE
RESOLUTION

 

(a) In
the case of a dispute as to the determination of the Exercise
Price, the Closing Bid Price, the Closing Sale Price, the VWAP or
fair market value or the arithmetic calculation of the number of
Warrant Shares (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 (as the case may be) of the
Exercise Price, the Closing Sale Price or fair market value or the
number of Warrant Shares (as the case may be) within three (3)
Business Days of such disputed determination or arithmetic
calculation 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 Exercise
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 number of Warrant Shares to
the Company’s
independent, outside accountant. 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.

 

(b) The
Company expressly acknowledges and agrees that (i) this Section 13
constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the New
York Arbitration Act, as amended, (ii) a dispute relating to the
Exercise Price includes, without limitation, disputes as to (1) the
consideration per share at which an issuance or deemed issuance of
Common Stock occurred, and (2) whether an agreement, instrument,
security or the like constitutes and Option or Convertible
Security, (iii) the terms of this Warrant and each other applicable
Transaction Document shall serve as the basis for the selected
investment bank’s
resolution of the applicable dispute, such investment bank shall be
entitled (and is hereby expressly authorized) to make all findings,
determinations and the like that such investment bank determines
are required to be made by such investment bank in connection with
its resolution of such dispute (including, without limitation,
determining (1) the consideration per share at which an issuance or
deemed issuance of Common Stock occurred, and (2) whether an
agreement, instrument, security or the like constitutes and Option
or Convertible Security) and in resolving such dispute such
investment bank shall apply such findings, determinations and the
like to the terms of this Warrant and any other applicable
Transaction Documents, (iv) the terms of this Warrant and each
other applicable Transaction Document shall serve as the basis for
the selected accountant’s
or accounting firm’s
performance of the applicable arithmetic calculation of the number
of Warrant Shares, (v) for clarification purposes and without
implication that the contrary would otherwise be true, disputes
relating to matters described in Section 13(b) shall be governed by
Section 13(a) and not by Section 13(b), (vi) the Holder (and only
the Holder), in its sole discretion, shall have the right to submit
any dispute described in this Section 13 to any state or federal
court sitting in The City of New York, Borough of Manhattan in lieu
of utilizing the procedures set forth in this Section 13 and (vii)
nothing in this Section 13 shall limit the Holder from obtaining
any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in
Section 13(a) or Section 13(b).

 

14.
REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Warrant shall be
cumulative and in addition to all other remedies available under
this Warrant and 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 right of the
Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant. 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, exercises
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 of this Warrant
shall be entitled, in addition to all other available remedies, to
an injunction restraining any 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 Warrant (including, without limitation,
compliance with Section 2 (hereof). The issuance of shares and
certificates for shares as contemplated hereby upon the exercise of
this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the
Holder or its agent on its behalf.

 

 

8

 

 

15.
TRANSFER. This
Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company.

 

16.
CERTAIN
DEFINITIONS. For purposes of this Warrant, the following
terms shall have the following meanings:

 

(a)
“Approved Stock
Plan” means any
employee benefit plan (which has been approved by the board of
directors of the Company prior to or subsequent to the date hereof
pursuant to which shares of Common Stock, standard options to
purchase Common Stock or other equity awards may be issued to any
employee, officer or director for services provided to the Company
in their capacity as such.

 

(b)
“Black Scholes
Value” means the
value of the unexercised portion of this Warrant remaining on the
Fundamental Transaction Closing Date, which value is calculated
using the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg utilizing (i)
an underlying price per share equal to the sum of the price per
share being offered in cash in the applicable Change of Control (if
any) plus the value of the non-cash consideration being offered in
the applicable Change of Control (if any), (ii) a strike price
equal to the Exercise Price in effect on the Fundamental
Transaction Closing Date, (iii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of the Fundamental Transaction
Closing Date, (iv) a zero cost of borrow and (v) an expected
volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg (determined utilizing a
365 day annualization factor) as of the Trading Day immediately
following the earliest to occur of (x) the public disclosure of the
applicable Change of Control, (y) the consummation of the
applicable Change of Control and (z) the date on which the Holder
first became aware of the applicable Change of
Control.

 

(c)
“Bloomberg” means Bloomberg, L.P.

 

(d)
“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.

 

(e)
“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, or (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.

 

(f)
“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 City
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). If the Closing Bid Price or
the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price (as the case may be) 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 13. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such
period.

 

(g)
“Common Stock” means (i) the Company’s shares of common stock, $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.

 

 

9

 

 

(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)
“Eligible
Market” means The
New York Stock Exchange, the NYSE American, the Nasdaq Global
Select Market, the Nasdaq Global Market or the Principal
Market.

 

(j)
“Expiration
Date” means the
date that is the five year anniversary of the Initial
Exercisability Date, or, if such date falls on a day other than a
Business Day or on which trading does not take place on the
Principal Market (a “Holiday”), the next date that is not a
Holiday.

 

(k)
“Fundamental
Transaction” means
that 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) support any other Person in making 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).

 

(l)
“Fundamental Transaction Closing
Date” means the
date of consummation of the applicable Fundamental
Transaction.

 

(m)
“Market Price” means, for any given date, 90% of
the arithmetic average of the ten (10) lowest VWAPs of the Common
Stock during the twenty (20) consecutive Trading Day period ending
two (2) Trading Days immediately prior to such given date (such
period, the “Market Price Measuring
Period”). All such
determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or similar
transactions during such Market Price Measuring
Period.

 

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

 

(o)
“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.

 

(p)
“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.

 

(q)
“Principal
Market” means the
NYSE American.

 

(r)
“Subsidiary” means any Person in which the
Company, directly or indirectly, (i) owns any of the outstanding
capital stock or holds any 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 all of
the foregoing.

 

(s)
“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.

 

(t)
“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.

 

 

10

 

 

(u)
“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 or trustees 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).

 

(v)
“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
City time, and ending at 4:00:00 p.m., New York City 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 City time, and ending at 4:00:00 p.m., New York City
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 lowest
Closing Sale 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 the 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 13. 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]

 

 

11

 

 

 

IN WITNESS WHEREOF, the
Company has caused this Third Amended and Restated Warrant to
Purchase Common Stock to be duly executed as of the Issuance Date
set out above.

 

	
 

	

CORMEDIX INC.

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Khoso
Baluch

	
 

	
 

	
 

	

Chief
Executive Officer

	
 

	
 

	
 

	
 

	
 

 

12

 

 

EXHIBIT A

EXERCISE NOTICE

TO BE
EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

THIRD AMENDED AND RESTATED WARRANT TO PURCHASE COMMON
STOCK

CORMEDIX INC.

 

The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock (“Warrant
Shares”) of
CorMedix Inc., a Delaware corporation (the “Company”), evidenced by the Third Amended
and Restated Warrant to Purchase Common Stock No. AR-5/2013-2 (the
“Warrant”). Capitalized terms used herein and
not otherwise defined shall have the respective meanings set forth
in the Warrant.

 

1.

Form of Exercise
Price. The Holder intends that payment of the Exercise Price
shall be made as:

 

	
 

	

____________

	

a
“Cash Exercise” with respect to _________________
Warrant Shares; and/or

	
 

	

____________

	

a
“Cashless Exercise” with respect to _______________
Warrant Shares.

 

In the
event that the Holder has elected a Cashless Exercise with respect
to some or all of the Warrant Shares to be issued pursuant hereto,
the Holder hereby represents and warrants that (i) this Exercise
Notice was executed by the Holder at __________ [a.m.][p.m.] on the
date set forth below and (ii) if applicable, the Closing Bid Price
as of such time of execution of this Exercise Notice was
$________.

 

2.
Payment of
Exercise Price. In the event that the Holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to
be issued pursuant hereto, the Holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

 

3.
Delivery
of Warrant Shares. The Company shall deliver to Holder, or
its designee or agent as specified below, ________Warrant Shares in
accordance with the terms of the Warrant. Delivery shall be made to
Holder, or for its benefit, to the following address or DTC Account
number:

 

Date:
______________________

 

Name of
Registered Holder

By:

 

 

13

 

 

EXHIBIT B

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Exercise Notice and hereby directs
______________ to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions
dated _________, 20__, from the Company and acknowledged and agreed
to by _______________.

 

	
 

	

CORMEDIX INC.

	
 

	
 

	
 

	
 

	
 

	

Date:_____________________________

	

By:

	

__________________________________

	
 

	
 

	
 

	
 

	
 

	
 

	

Name:

	

__________________________________

 

	
 

	
 

	

Title:

	

__________________________________

 

	
 

 

 

 

 

14Blueprint

EXECUTION VERSION

 

Exhibit 4.4

 

FORM OF SENIOR SECURED CONVERTIBLE NOTE

 

THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED DIRECTLY OR
INDIRECTLY, ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE
BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE
WITH RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS PROVIDED THAT
THE HOLDER HAS FURNISHED TO THE COMPANY REASONABLE ASSURANCES, IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND
REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES.
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.

 

 

 

CORMEDIX INC.

 

SENIOR SECURED CONVERTIBLE NOTE

 

	

Issuance Date: December 31, 2018

	

Original Principal Amount: U.S. $7,500,000

 

FOR VALUE RECEIVED, CorMedix Inc., a
Delaware corporation (the “Company”), hereby promises to pay
to Manchester Securities Corp., a Delaware corporation, or its
registered assigns (“Holder”) the amount set out above
as the Original Principal Amount (as reduced pursuant to the terms
hereof pursuant to conversion or otherwise, the “Principal”) when due, whether upon
the Maturity Date (as defined below), or upon acceleration or
otherwise (in each case in accordance with the terms hereof) and to
pay interest (“Interest”) on any outstanding
Principal 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, acceleration, conversion, or otherwise (in each case in
accordance with the terms hereof). This Senior Secured Convertible
Note (including all Senior Secured Convertible Notes issued in
exchange, transfer or replacement hereof, this “Note”) is one of an issue of
Senior Secured Convertible Notes issued on the Closing Date
(collectively, the “Notes” and such other Senior
Secured Convertible Notes, the “Other Notes”) pursuant to the
Securities Purchase Agreement. Certain capitalized terms used
herein are defined in Section 26. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them
in the Securities Purchase Agreement.

 

1. PAYMENTS OF
PRINCIPAL.

 

(a) Payment Upon Maturity. On the
Maturity Date, the Company shall pay to the Holder an amount in
cash representing all outstanding Principal and accrued and unpaid
Interest on such Principal and Interest. Other than as specifically
permitted by this Note, the Company may not prepay any portion of
the outstanding Principal or accrued and unpaid
Interest.

 

 

 

1

 

 

(b) Prepayment Prior to Maturity.
On or after July 1, 2020, the Company, at its option, shall have
the right to prepay the amounts of Principal then outstanding on
this Note (the “Prepayment
Amount”) (i) in amounts of $2,000,000, or (ii) in
full, if less than $2,000,000 in Principal is outstanding, with
five (5) Trading Days’ prior written notice to the Investor
(the “Prepayment
Notice”). The amount required to prepay this Note in
full pursuant to this Section 1(b) shall be payable in cash at a
rate equal to the following: (x) if the prepayment occurs between
July 2, 2020 and March 30, 2021, at a rate equal to 110% of the
Prepayment Amount; and (y) if the prepayment occurs after March 31,
2021, at a rate equal to 105% of the Prepayment
Amount.

 

2. INTEREST; INTEREST
RATE.

 

(a) Interest on this
Note shall (i) accrue at the Interest Rate, compounded quarterly,
(ii) commence accruing on the Issuance Date and (iii) be computed
on the basis of a 360-day year and twelve 30-day
months.

 

(b) Interest on this
Note shall (i) be payable on the first Trading Day of each calendar
month beginning January 2, 2019 and ending on the Maturity Date
(the first Trading Day of each calendar month and the Maturity Date
are each referred to herein as an “Interest Payment
Date”).

 

(c) Interest shall be
paid by increasing the Principal outstanding under this Note by an
amount equal to the interest accrued but unpaid for the applicable
Interest period; provided, however, that the
Company shall have the right to pay accrued Interest in cash for
any calendar month during which the average Closing Sale Price of
the Common Stock averaged at least 150% of the Conversion
Price.

 

(d) From and after the
occurrence and during the continuance of any Event of Default, the
Interest Rate shall automatically be increased to fifteen percent
(15.0%) (the “Default
Rate”). In the event that such Event of Default is
subsequently cured, the automatic increase to the Interest Rate
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.

 

(e) In the event that
(A) Elliott provides the notice contemplated by Section 4(s) of the
Securities Purchase Agreement and (B) the Stockholder Approval is
not obtained at a Stockholder Meeting, for so long as the
Stockholder Approval has not been obtained, the Interest Rate shall
automatically be increased by three (3.0%) percent. In the event
that such Stockholder Approval is obtained, the automatic increase
to the Interest Rate 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 period in
which such Stockholder Approval had not been obtained shall
continue to apply to the extent relating to the days during which
such Stockholder Approval had not been obtained.

 

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(e), 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(d), 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, costs and expenses
(including, without limitation, fees and expenses of the Transfer
Agent (as defined below)) that may be payable with respect to the
issuance and delivery of Common Stock upon conversion of any
Conversion Amount.

 

 

 

2

 

 

(b) Automatic Conversion. The full
amount of Principal then outstanding under this Note, together with
any accrued and unpaid Interest hereon, shall automatically
convert, on the last Trading Day of the Automatic Conversion Period
(as defined below), at the Conversion Rate into shares of Common
Stock if, at any time prior to the Maturity Date, the average
Closing Sale Price of the Company’s Common Stock for any 20
Trading Days (whether or not consecutive) during any 30 consecutive
Trading Day period (such period, the “Automatic Conversion Period”)
equals or exceeds an amount equal to 150% of the Conversion
Price.

 

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

 

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

 

(ii) “Conversion
Price” means, as of any Conversion Date (as defined
below) or other date of determination, $1.50, subject to adjustment
as provided herein.

 

(d) 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 (A) deliver (whether via
facsimile, e-mail or otherwise), for receipt on or prior to 11:59
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 and (B) if required by Section
3(d)(iii), within three (3) Trading Days following a conversion of
this Note as aforesaid, 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
15(b)). On or before the first (1st) Trading Day
following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile an acknowledgment of confirmation, in
the form attached hereto as Exhibit II, of receipt of such
Conversion Notice to the Holder and the Company’s transfer
agent (the “Transfer
Agent”). 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
Depository Trust Company’s (“DTC”) Fast Automated Securities
Transfer Program, 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, 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(d)(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, following authentication of
such new Note, deliver to the Holder (or its designee) a new Note
(in accordance with Section 15(c)) 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. In the event
of a partial conversion of this Note pursuant hereto, the Principal
amount converted shall be deducted from the Principal as set forth
in the applicable Conversion Notice.

 

 

3

 

 

(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 completed
Conversion Notice (whether via facsimile, e-mail 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”) and if on or
after such Share Delivery Deadline the Holder (or any other Person
in respect, or on behalf, of 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, or a sale of a number of
shares of Common Stock equal to 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 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 (A) such number of
shares of Common Stock multiplied by (B) 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).

 

(iii) Registration;
Book-Entry. The Company shall maintain a register (the
“Register”) for
the recordation of the names and addresses of the holders of each
Note and the principal amount of the Notes held by such holders
(the “Registered
Notes”). The entries in the Register shall be
conclusive and binding for all purposes absent manifest error. The
Company and the holders of the Notes shall treat each Person whose
name is recorded in the Register as the owner of a Note for all
purposes (including, without limitation, the right to receive
payments of Principal and Interest hereunder) notwithstanding
notice to the contrary. A Registered Note may be assigned,
transferred or sold in whole or in part only by registration of
such assignment or sale on the Register and in compliance with
applicable securities laws. Upon its receipt of a proper request to
assign, transfer or sell all or part of any Registered Note by the
holder thereof, the Company shall record the information contained
therein in the Register and issue one or more new Registered Notes
in the same aggregate principal amount as the principal amount of
the surrendered Registered Note to the designated assignee or
transferee pursuant to Section 15, provided that if the Company
does not so record an assignment, transfer or sale (as the case may
be) of all or part of any Registered Note within two (2) Business
Days of such a request, then the Register shall be automatically
updated to reflect such assignment, transfer or sale (as the case
may be). 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
and Interest converted and/or paid (as the case may be) and the
dates of such conversions and/or payments (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.

 

 

 

4

 

 

(iv) Pro
Rata Conversion; Disputes. In the event that the Company
receives a Conversion Notice from more than one holder of Notes for
the same Conversion Date and the Company can convert some, but not
all, of such portions of the Notes submitted for conversion, the
Company, subject to Section 3(d)(i) and Section 3(e), shall convert
from each holder of Notes electing to have Notes converted on such
date a pro rata amount of such holder’s portion of its Notes
submitted for conversion based on the principal amount of Notes
submitted for conversion on such date by such holder relative to
the aggregate principal amount of all Notes submitted for
conversion on such date.

 

(e) Limitations on
Conversions.

 

(i) [RESERVED]

 

(ii) Principal
Market Regulation. The Company shall not issue any shares of
Common Stock upon conversion of this Note or otherwise pursuant to
the terms of this Note if the issuance of such shares of Common
Stock would exceed the aggregate number of shares of Common Stock
which the Company may issue upon conversion or exercise (as the
case may be) of the Notes and the Warrants or otherwise pursuant to
the terms of this Note without breaching the Company’s
obligations under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such
rules and regulations, the “Exchange Cap”), except that such
limitation shall not apply in the event that the Company (A)
obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of shares of
Common Stock in excess of such amount, (B) obtains a written
opinion from outside counsel to the Company that such approval is
not required, which opinion shall be reasonably satisfactory to the
Holder or (C) obtain a waiver from the Principal Market of the
applicable rules of such Principal Market for the issuance of
Shares of Common Stock in excess of such amount. Until such
approval or such written opinion is obtained, no Buyer shall be
issued in the aggregate, upon conversion or exercise (as the case
may be) of any Notes or any of the Warrants or otherwise pursuant
to the terms of this Note, shares of Common Stock in an amount
greater than the product of (i) the Exchange Cap multiplied by (ii)
the quotient of (1) the aggregate original principal amount of
Notes issued to such Buyer pursuant to the Securities Purchase
Agreement on the Closing Date divided by (2) the aggregate original
principal amount of all Notes issued to the Buyers pursuant to the
Securities Purchase Agreement on the Closing Date (with respect to
each Buyer, the “Exchange Cap
Allocation”). In the event that any Buyer shall sell
or otherwise transfer, in accordance with this Agreement, any of
such Buyer’s Notes, the transferee shall be allocated a pro
rata portion of such Buyer’s Exchange Cap Allocation with
respect to such portion of such Notes so transferred, and the
restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Exchange Cap Allocation so
allocated to such transferee. Upon conversion and exercise in full
of a holder’s Notes (including Interest Shares) and Warrants,
the difference (if any) between such holder’s Exchange Cap
Allocation and the number of shares of Common Stock actually issued
to such holder upon such holder’s conversion in full of such
holder’s Notes (including Interest Shares) and exercise in
full of such Warrants shall be allocated to the respective Exchange
Cap Allocations of the remaining holders of Notes and Warrants on a
pro rata basis in proportion to the shares of Common Stock
underlying the Notes and Warrants then held by each such holder. In
the event that the Company is prohibited from issuing shares of
Common Stock pursuant to this Section 3(e)(ii) (the
“Exchange Cap
Shares”), the Company shall pay cash (each, an
“Exchange Cap Share
Cancellation Amount”) in exchange for the cancellation
of such shares of Common Stock at a price equal to the sum of (i)
the product of (x) such number of Exchange Cap 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 Exchange Cap
Shares to the Company and ending on the date of such issuance and
payment under this Section 3(e)(ii) 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 Exchange Cap Shares, any brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

 

 

 

5

 

 

4. RIGHTS UPON EVENT OF DEFAULT.
Each of the following events shall constitute an
“Event of
Default”:

 

(a) 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 five (5)
consecutive days or for more than an aggregate of ten (10) days in
any 365-day period;

 

(b) the Company’s
(A) failure to cure a Conversion Failure or a Delivery Failure (as
defined in the Warrants) by delivery of the required number of
shares of Common Stock within five (5) Trading Days after the
applicable Conversion Date or exercise date (as the case may be) or
(B) notice, written or oral, to any holder of the Notes or
Warrants, including, without limitation, by way of public
announcement or through any of its agents, at any time, of its
intention not to comply, as required, with a request for conversion
of any Notes into shares of Common Stock that is requested in
accordance with the provisions of the Notes, other than pursuant to
Section 3(d), or a request for exercise of any Warrants for shares
of Common Stock in accordance with the provisions of the
Warrants;

 

(c) the Company’s
failure to pay to the Holder any amount of Principal, Interest, or
other amounts when and as due under this Note 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 when and as due, in which case only if such failure
remains uncured for a period of at least five (5)
days;

 

(d) the Company fails
to remove any restrictive legend on any certificate or any shares
of Common Stock issued to the Holder upon conversion or exercise
(as the case may be) of any Securities acquired by the Holder under
the Securities Purchase Agreement (including this Note) as and when
required by such Securities or the Securities Purchase Agreement,
and any such failure remains uncured for at least five (5)
days;

 

(e) at any time
following the tenth (10th) consecutive day
that the Holder’s Authorized Share Allocation (as defined
herein) is less than the number of shares of Common Stock that the
Holder would be entitled to receive upon a conversion of the full
Conversion Amount of this Note (without regard to any limitations
on conversion set forth in Section 3(e) or otherwise);

 

(f) the occurrence of
any default under or acceleration prior to maturity of Indebtedness
of the Company or any of its Subsidiaries, in the aggregate, in
excess of $250,000;

 

(g) 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;

 

(h) 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 against the Company or any Subsidiary or any
of their respective assets to commence a Uniform Commercial Code
foreclosure sale or any other similar action under federal, state
or foreign law;

 

 

6

 

 

(i) 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 forty-five (45) consecutive days;

 

(j) a final judgment,
judgments, any arbitration or mediation award or any settlement of
any litigation or any other satisfaction of any claim made by any
Person pursuant to any litigation, as applicable, (each a
“Judgment”, and
collectively, the “Judgments”) with respect to the
payment of cash, securities and/or other assets with an aggregate
fair value in excess of $250,000 are rendered against, agreed to or
otherwise accepted by, the Company and/or any of its Subsidiaries
and which Judgments are not, within forty-five (45) days after the
entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within forty-five (45) days after the expiration of
such stay; provided, however, any Judgment which is covered by
insurance or an indemnity from a credit worthy party shall not be
included in calculating the $250,000 amount set forth above so long
as the Company provides the Holder a written statement from such
insurer or indemnity provider (which written statement shall be
reasonably satisfactory to the Holder) to the effect that such
Judgment is covered by insurance or an indemnity and the Company or
such Subsidiary (as the case may be) will receive the proceeds of
such insurance or indemnity within a reasonable period of time
following the issuance of such Judgment;

 

(k) the Company and/or
any Subsidiary, individually or in the aggregate, either (i) fails
to pay, when due, or within any applicable grace period, any
payment with respect to any Indebtedness in excess of $500,000 due
to any third party (other than, with respect to unsecured
Indebtedness only, payments contested by the Company and/or such
Subsidiary (as the case may be) in good faith by proper proceedings
and with respect to which adequate reserves have been set aside for
the payment thereof in accordance with GAAP) or is otherwise in
breach or violation of any agreement for monies owed or owing in an
amount in excess of $500,000, which breach or violation permits the
other party thereto to declare a default or otherwise accelerate
amounts due thereunder, or (ii) suffer to exist any other
circumstance or event that would, with or without the passage of
time or the giving of notice, result in a default or event of
default under any agreement binding the Company or any Subsidiary,
which default or event of default would or is likely to have a
material adverse effect on the business, assets, operations
(including results thereof), liabilities, properties, condition
(including financial condition) or prospects of the Company or any
of its Subsidiaries, individually or in the aggregate;

 

(l) other than as
specifically set forth in another clause of this Section 4(a), the
Company or any Subsidiary breaches any representation, warranty,
covenant or other term or condition of any Transaction Document,
and only 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 thirty (30) consecutive calendar days;

 

(m) any breach or
failure in any respect by the Company or any Subsidiary to comply
with any provisions of Sections 9 or 11 of this Note;

 

(n) any provision of
any Transaction Document shall at any time for any reason (other
than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against the parties thereto, or the
validity or enforceability thereof shall be contested by any party
thereto, or a proceeding shall be commenced by the Company or any
Subsidiary or any governmental authority having jurisdiction over
any of them, seeking to establish the invalidity or
unenforceability thereof, or the Company or any Subsidiary shall
deny in writing that it has any liability or obligation purported
to be created under any Transaction Document to which it is a
party;

 

 

7

 

 

(o) any Material
Adverse Effect occurs;

 

(p) the Security
Documents shall for any reason fail or cease to create a separate
valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority Lien on the Collateral (as
defined in the Security Agreement, in favor of each of the Secured
Parties (as defined in the Security Agreement); or

 

(q) any Event of
Default (as defined in the Other Notes) occurs with respect to any
Other Notes.

 

Upon
the occurrence of an Event of Default with respect to this Note,
the Company shall promptly, but in any event within one (1)
Business Day, deliver written notice thereof via facsimile or
e-mail and overnight courier (with next day delivery specified) (an
“Event of Default
Notice”) to the Holder, and all amounts due and owing
under this Note, as calculated pursuant to this Section 4(b) shall
become immediately due and owing without any action on the part of
the Holder. Such Event of Default Notice shall describe the Event
of Default in sufficient detail, including the date on which such
Event of Default occurred. For avoidance of doubt, the Holder shall
be entitled to enforce its rights pursuant to the terms and
conditions of the Security Agreement.

 

5. RIGHTS UPON FUNDAMENTAL
TRANSACTION.

 

(a) The Company shall
not enter into or be party to a Fundamental Transaction unless the
Successor Entity (if different than the Company) 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
reasonably 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. 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 immediately following the applicable Fundamental
Transaction. In addition to the foregoing, upon consummation of a
Fundamental Transaction, the Successor Entity (if different than
the Company) shall deliver to the Holder confirmation that there
shall also be issued upon conversion of this Note at any time after
the consummation of such Fundamental Transaction, in lieu of the
shares of the Common Stock (or other securities, cash, assets or
other property (except such items still issuable under Sections 6
and 12, which shall continue to be receivable thereafter) issuable
upon the conversion of the Notes prior to such Fundamental
Transaction, such shares of the 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.

 

 

8

 

 

(b) Notwithstanding the
provisions of Section 5(a), (1) the Company shall have the right to
require that Holder waive the requirements of Section 5(a) (the
“Waiver”) in a
Fundamental Transaction in which the definitive documentation
relating to such Fundamental Transaction provides that the Buyer
shall receive proceeds equal to the product of (A) the number of
shares of Common Stock into which this Note is convertible assuming
the Holder had converted the outstanding principal balance of this
Note and accrued but unpaid interest hereon into Common Stock as of
the earlier of the applicable record date for determining
entitlement to proceeds of such Fundamental Transaction or
immediately prior to the consummation of such Fundamental
Transaction and (B) purchase price per share of Common Stock in
such Fundamental Transaction (such product, “Fundamental Transaction Amount”)
and (2) the Holder shall have the right to receive the Fundamental
Transaction Amount or, if the consideration paid to holders of
Common Stock in respect of such Fundamental Transaction includes
non-cash consideration, such securities or other assets (including
cash) received by the holders of shares of Common Stock in
connection with the consummation of such Fundamental Transaction in
such amounts as the Holder would have been entitled to receive had
this Note been converted into Common Stock as of immediately prior
to the earlier of the record date for determining entitlement to
such consideration or as of immediately prior to the consummation
of such Fundamental Transaction, in lieu of the assumption
contemplated by Section 5(a). Notwithstanding anything to the
contrary in this Section 5(a), until such time that the Holder
receives the Fundamental Transaction Amount (at which point this
Note shall be cancelled), this Note may be exercised, in whole or
in part, by the Holder (x) prior to consummation of the applicable
Fundamental Transaction, into Common Stock pursuant to Section 3,
or (y) upon (which may be expressly conditioned upon the
consummation of the applicable Fundamental Transaction) or after
the consummation of the applicable Fundamental Transaction, into
any such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or
subscription rights, if applicable) which the Holder would have
been entitled to receive upon the happening of such Fundamental
Transaction had the Note been exercised immediately prior to the
consummation of such Fundamental Transaction.

 

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

 

6. RIGHTS UPON ISSUANCE OF PURCHASE
RIGHTS AND OTHER CORPORATE EVENTS.

 

(a) Purchase Rights. In addition to
any adjustments pursuant to Section 7 below, 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 all or substantially all of 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.

 

(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 reasonably satisfactory to the
Holder. The provisions of this Section 6(b) shall apply similarly
and equally to successive Corporate Events and shall be applied
without regard to any limitations on the conversion of this
Note.

 

 

9

 

 

7. RIGHTS UPON ISSUANCE OF OTHER
SECURITIES.

 

(a) Adjustment of Conversion Price upon
Subdivision or Combination of Common Stock. Without limiting
any provision of Section 5, if the Company at any time on or after
the Subscription Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. Without limiting any
provision of Section 5, if the Company at any time on or after the
Subscription Date combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in
effect immediately prior to such combination will be
proportionately increased. Any adjustment pursuant to this Section
7(a) shall become effective immediately after the effective date of
such subdivision or combination. If any event requiring an
adjustment under this Section 7(a) occurs during the period that a
Conversion Price is calculated hereunder, then the calculation of
such Conversion Price shall be adjusted appropriately to reflect
such event.

 

(b) Calculations. All calculations
under this Section 7 shall be made by rounding to the nearest cent
or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares
shall be considered an issue or sale of Common Stock.

 

8. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate 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, (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 reasonably necessary
to reserve and keep available, no later than April 30, 2019, 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).

 

9. RESERVATION OF AUTHORIZED
SHARES.

 

(a) Reservation. As soon as
practicable but in no event later than April 20, 2019, the Company
shall initially reserve out of its authorized and unissued Common
Stock and for 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, at least
such number of shares of Common Stock for each of the Notes equal
to 125% the maximum number of Conversion Shares issued and issuable
pursuant to the Notes (determined without taking into account any
limitations on the conversion of the Notes set forth therein and
assuming that the Notes are convertible at the Company Conversion
Price) and for issuance upon exercise of the Warrants issuable
pursuant to the Securities Purchase Agreement (collectively, the
“Required Reserve
Amount”). The initial number of shares of Common Stock
reserved for conversions of the Notes and each increase in the
number of shares so reserved shall be allocated pro rata among the
holders of the Notes based on the original principal amount of the
Notes held by each holder on the Closing Date or increase in the
number of reserved shares (as the case may be) (the
“Authorized Share
Allocation”). In the event that a holder shall sell or
otherwise transfer any of such holder’s Notes, each
transferee shall be allocated a pro rata portion of such
holder’s Authorized Share Allocation. Any shares of Common
Stock reserved and allocated to any Person which ceases to hold any
Notes shall be allocated to the remaining holders of Notes, pro
rata based on the principal amount of the Notes then held by such
holders.

 

 

10

 

 

(b) Insufficient Authorized Shares.
If, notwithstanding Section 9(a), and not in limitation thereof, at
any time while any of the Notes remain outstanding the Company does
not have a sufficient number of authorized and otherwise 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 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 (each, an “Authorized
Failure Share Cancellation Amount”) in exchange for
the redemption of such portion of the Conversion Amount convertible
into such Authorized Failure Shares at an amount 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 9(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. Nothing contained in Section 9(a)
or this Section 9(b) shall limit any obligations of the Company
under any provision of the Securities Purchase
Agreement.

 

10. VOTING RIGHTS. The Holder shall
have no voting rights as the holder of this Note, except as
required by law (including, but not limited to, the Delaware
General Corporation Law), and as expressly provided in this
Note.

 

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

 

(a) Rank. All payments due under
this Note (i) shall rank pari
passu with all Other Notes and (ii) shall be senior to all
other Indebtedness of the Company, including without limitation any
Intercompany Notes.

 

(b) Incurrence of Indebtedness. The
Company shall not, and the Company shall cause each of its
Subsidiaries to not, directly or indirectly, incur or guarantee,
assume or suffer to exist any Indebtedness (other than Permitted
Indebtedness).

 

(c) Existence of Liens. The Company
shall not, and the Company shall cause each of its Subsidiaries to
not, directly or indirectly, allow or suffer to exist any Liens (as
defined in the Security Agreement) other than Permitted
Liens.

 

(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.

 

 

11

 

 

(e) 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 pay any cash dividend or distribution on any
of its capital stock (other than Permitted
Distributions).

 

(f) Maturity of Indebtedness. The
Company shall not, and the Company shall cause each of its
Subsidiaries to not, directly or indirectly, permit any
Indebtedness of the Company or any of the Subsidiaries to
accelerate prior to the Maturity Date without the prior written
express consent of the Required Holders.

 

(g) Payment of Indebtedness.
Subject to Section 11(d) above, the Company shall not, and the
Company shall cause each of its Subsidiaries to not, directly or
indirectly, redeem, repurchase or prepay any Indebtedness without
the prior written express consent of the Required
Holders.

 

(h) 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 corporate structure or purpose.

 

(i) New Subsidiaries.
Simultaneously with the acquisition or formation of each New
Subsidiary, the Company shall cause such New Subsidiary to execute,
and deliver to each holder of Notes, all Security Documents as
requested by the Holder. The Company shall not, and the Company
shall cause each of its Subsidiaries to not, directly or
indirectly, acquire or form any New Subsidiary if such New
Subsidiary would not be wholly-owned, directly or indirectly, by
the Company.

 

(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
loss or forfeiture thereof or thereunder.

 

(l) 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.

 

(m) Investments. The Company shall
not, and the Company shall cause each of its Subsidiaries to not,
directly or indirectly, without the prior written express consent
of the Required Holders, lend money or credit (by way of guarantee
or otherwise) or make advances to any Subsidiary, or purchase or
acquire any stock, bonds, notes, debentures or other obligations or
securities of, or any other interest in, or make any capital
contribution to, any Subsidiary.

 

 

12

 

 

(n) 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, convey or otherwise dispose of
any 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 that are in
the ordinary course of their respective businesses and, after
giving effect thereto, would not result in a Material Adverse
Change and (ii) sales of product, inventory or receivables in the
ordinary course of business.

 

12. PARTICIPATION. In addition to
any adjustments pursuant to Section 7, if the Company shall 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”), at any time after
the issuance of this Note, then, in each such case, 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 conversion of this Note (without regard to any
limitations on conversion hereof) immediately before the date on
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.

 

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

 

14. TRANSFER. Except as required by
United States Securities laws, this Note and any shares of Common
Stock issued upon conversion of this Note may be offered, sold,
assigned or transferred by the Holder to any Person that is an
affiliate (as defined in Rule 144 under the Securities Act of 1933,
as amended) of the Holder or is controlled or managed by, or under
common control or management with, Elliott Management Corporation
or any of its affiliates, without the consent of the
Company.

 

15. REISSUANCE OF THIS
NOTE.

 

(a) Transfer. If this Note is to be
transferred, the Holder shall surrender this Note to the Company
along with a duly executed copy of the transfer instrument attached
hereto as Exhibit
III, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section
15(c)), 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 15(c)) 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(d)(iii) following
conversion 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 15(c))
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 15(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.

 

 

 

13

 

 

(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 15(a) or Section 15(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 on the
Principal and Interest of this Note, from the Issuance
Date.

 

16. 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 (including, without
limitation, compliance with Section 7).

 

17. 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.

 

18. 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.

 

19. 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.

 

 

 

14

 

 

20. 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 Section 9(f)
of the Securities Purchase 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 with
respect to (A) any dividend or distribution upon the Common Stock,
(B) any grants, 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 generally or
(C) any determination of rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation; provided that
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 principal,
interest and other amounts owing under this Note or any Transaction
Document that, in accordance with their terms, are paid in cash,
shall be paid in United States Dollars (“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).

 

(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 (which address, in
the case of each of the Buyers, shall initially be as set forth on
the Schedule of Buyers attached to the Securities Purchase
Agreement), 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.

 

21. CANCELLATION. After all
Principal, accrued Interest 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.

 

22. 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 Securities Purchase
Agreement.

 

23. 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. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. 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.

 

 

15

 

 

24. 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.

 

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

 

(a) “Approved Stock Plan” means any
employee benefit plan which has been approved by the board of
directors of the Company prior to or subsequent to the date hereof
pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer, or
director for services provided to the Company in their capacity as
such.

 

(b) “Bloomberg” means Bloomberg,
L.P.

 

(c) “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.

 

(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).
If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price
(as the case may be) of such security on such date shall be the
fair market value as mutually determined by the Company and the
Holder. All such determinations shall be appropriately adjusted for
any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transaction during such
period.

 

(e) “Closing Date” shall have the
meaning ascribed to such term in the Securities Purchase Agreement,
which date is the date the Company initially issued the Notes
pursuant to the Securities Purchase Agreement.

 

(f) “Common Stock” means (i) the
Company’s shares of common stock, $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) “Company Conversion Price” means,
with respect to a particular date of determination, the lower of
(i) the Conversion Price then in effect and (ii) the Market Price.
All such determinations to be appropriately adjusted for any stock
split, stock dividend, stock combination, or other similar
transaction during any such measuring period.

 

 

16

 

 

(h) “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.

 

(i) “Convertible Securities” means any
stock, note, debenture or other security (other than Options) that
is, or may become, 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.

 

(j) “Eligible Market” means The New
York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market,
the Nasdaq Global Market or the Principal Market.

 

(k) “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.

 

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

 

(m) “Holder Pro Rata Amount” means a
fraction (i) the numerator of which is the original Principal
amount of this Note on the Closing Date and (ii) the denominator of
which is the aggregate original principal amount of all Notes
issued to the initial purchasers pursuant to the Securities
Purchase Agreement on the Closing Date.

 

(n) “Intercompany Notes” means the
intercompany notes issued by Subsidiaries of the Company in favor
of the Company or a guarantor to evidence advances by the Company
or any such guarantor, in each case, in the form attached as
Exhibit IV
hereto.

 

(o) “Interest Rate” means ten percent
(10%) per annum, as may be adjusted from time to time in accordance
with Section 2.

 

 

17

 

 

(p) “Interest Shares” has the meaning
ascribed to such term in the Securities Purchase
Agreement.

 

(q) “Market Price” means, for any given
date, 90% of the arithmetic average of the ten (10) lowest VWAPs of
the Common Stock during the twenty (20) consecutive Trading Day
period ending and two (2) Trading Days prior immediately prior to
such given date (such period, the “Market Price Measuring Period”).
All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or
similar transactions during such Market Price Measuring
Period.

 

(r) “Maturity Date” means December 30,
2021; 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 public
announcement on a Current Report on Form 8-K of the consummation of
a Fundamental Transaction in the event that a Fundamental
Transaction is publicly announced 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(e) hereunder, the Maturity
Date shall automatically be extended until such time as such
provision shall not limit the conversion of this Note.

 

(s) “Material Adverse Change” shall
mean any set of circumstances or events which occur, arise or
otherwise take place from and after the Issuance Date which (a) has
or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Note or any
other Transaction Document, (b) is or could reasonably be expected
to be material and adverse to the business properties, assets,
financial condition, results of operations or prospects of the
Company or the Company and any of Subsidiaries on a collective
basis, (c) impairs materially or could reasonably be expected to
impair materially the ability of the Company to duly and punctually
pay or perform any its obligations under this Note or any other
Transaction Document, or (d) materially impairs or could reasonably
be expected to materially impair the ability of Holder, to the
extent permitted, to enforce its legal rights and remedies pursuant
to this Note or any other Transaction Document.

 

(t) “New Subsidiary” means, as of any
date of determination, any Person in which the Company after the
Subscription Date, directly or indirectly, (i) owns or acquires any
of the outstanding capital stock or holds any 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 all of the foregoing, collectively, “New Subsidiaries.”

 

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

 

(v) “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.

 

(w) “Permitted Distributions” means
dividends by Subsidiaries of the Company to the Company or other
Subsidiaries of the Company.

 

(x) “Permitted Indebtedness” means (i)
Indebtedness evidenced by this Note and the Other Notes; (ii)
Indebtedness listed on the Disclosure Schedule to the Securities
Purchase Agreement; (iii) trade payables incurred in the ordinary
course of business consistent with past practice; and (iv)
Subordinated Indebtedness not to exceed $5,000,000 in the aggregate
at any time.

 

 

18

 

 

(y) “Permitted Liens” means (i) any
Lien for taxes not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves have
been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of law with
respect to a liability that is not yet due or delinquent, (iii) any
Lien created by operation of law, such as materialmen’s
liens, mechanics’ liens and other similar liens, arising in
the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith
by appropriate proceedings and (iv) and Liens granted to the
Collateral Agent pursuant to the Security Agreement.

 

(z) “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.

 

(aa) “Principal
Market” means the NYSE American.

 

(bb) “Required
Holders” means the holders of Notes representing at
least two-thirds of the aggregate principal amount of the Notes
then outstanding (excluding any Notes held by the Company or any of
its Subsidiaries).

 

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

 

(dd) “Securities
Purchase Agreement” means that certain securities
purchase agreement, dated as of the Subscription Date, by and among
the Company and the initial holders of the Notes pursuant to which
the Company issued the Notes and the Warrants, as may be amended,
modified or supplemented from time to time.

 

(ee) “Subordinated
Indebtedness” means, with respect to the Company or a
guarantor, any indebtedness of the Company or such guarantor
(whether outstanding on the Issuance Date or thereafter incurred)
that is expressly subordinated in right of payment (including
without limitation, all cash interest and principal payments with
respect thereto) to the Company’s obligations under this
Note.

 

(ff) “Subscription
Date” means December 31, 2018.

 

(gg) “Subsidiary”
means any Person in which the Company, directly or indirectly, (i)
owns any of the outstanding capital stock or holds any 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 all of the foregoing.

 

(hh) “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.

 

(ii) “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 City time) unless such day is
otherwise designated as a Trading Day in writing by the
Holder.

 

 

19

 

 

(jj) “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).

 

(kk) “Warrants”
has the meaning ascribed to such term in the Securities Purchase
Agreement, and shall include all warrants issued in exchange
therefor or replacement thereof.

 

(ll) “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 City time, and ending at
4:00:00 p.m., New York City 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 City time, and ending at 4:00:00 p.m., New York City
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 Sale 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 the 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. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination, or other similar
transaction during such period.

 

26. DISCLOSURE. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Note, unless the Company has in good faith determined that
the matters relating to such notice do not constitute material,
non-public information relating to the Company or any of its
Subsidiaries, the Company shall within one (1) Business Day after
any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or
otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to such
Holder contemporaneously with delivery of such notice, and in the
absence of any such indication, the Holder shall be allowed to
presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its
Subsidiaries. Nothing contained in this Section 26 shall limit any
obligations of the Company, or any rights of the Holder, under
Section 4(i) of the Securities Purchase Agreement. Unless Holder
provides written instructions to the Company to the contrary, any
notice under this Note to Holder containing material non-public
information shall be delivered only to the legal counsel of such
Holder identified on the Schedule of Buyers to the Securities
Purchase Agreement and not to the Holder unless otherwise directed
in writing by such counsel.

 

27. Secured Obligation. The Secured
Obligations (as defined in the Security Agreement) of the Company
under this Note are secured by a first lien on the Collateral
pursuant to the Security Agreement.

 

[signature
page follows]

 

 

20

 

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

 

	
 

	

CORMEDIX INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	

 Khoso Baluch

	
 

	
 

	
 

	

Title:

	

Chief Executive Officer

	
 

 

 

	

Attest:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	

Title:

	

Secretary

	
 

 

 

 

21

 

EXHIBIT I

 

CorMedix Inc.

 

CONVERSION
NOTICE

 

Reference is made
to the Subordinated Convertible Note (the “Note”) issued to the undersigned
by CorMedix Inc. (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, $0.001 par value per share (the
“Common Stock”),
of the Company, as of the date specified below.

 

	

Date of
Conversion:

	
 

	

Aggregate
Principal to be converted:

	
 

	

Aggregate
accrued and unpaid Interest 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)

	
 

	
 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Conversion Notice and hereby
directs _________________ to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent
Instructions dated _____________, 20__ from the Company and
acknowledged and agreed to by
________________________.

 

	
 

	

CORMEDIX INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

 

 

 

 

 

22

 

EXHIBIT III

 

FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto [NAME OF
ASSIGNEE] the within instrument of CORMEDIX INC. and does
hereby irrevocably constitute and appoint [_________] Attorney to
transfer said instrument on the books of the within-named Company,
with full power of substitution in the premises.

 

Please
Insert Social Security or Other Identifying Number of
Assignee:

 

Dated:
______________ ____, 201_

 

 

 

	

By:

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	

Title:

	
 

	
 

 

 

NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the within instrument in every
particular, without alteration or enlargement or any change
whatever.

 

 

23

 

EXHIBIT IV

 

FORM OF INTERCOMPANY NOTE

 

$_____________________                                                                                                                                 

400 Connell Drive,
Suite 5000

Berkeley
Heights, NJ 07922

 

 

PROMISSORY NOTE

 

FOR VALUE
RECEIVED, [name of subsidiary
of CorMedix Inc.], a _______ [corporation/limited liability
company] (hereinafter “Maker”), promises to pay on demand to CORMEDIX
INC. (“Holder”), or order, at the address set forth
above, or such other place as may be designated from time to time
by the holder hereof, the principal sum of _________________
($__________), with interest from the date of the making of the
loan evidenced hereby, on the terms and conditions set forth
herein. The rate of interest on the unpaid principal balance of
this Promissory Note (this “Note”) shall be ____% per annum. Maker shall
make monthly payments of interest on the outstanding principal
balance hereof at the aforementioned rate on or before the day of
each month during which the principal amount remains outstanding,
commencing on the day of the first month following the date of this
Note, and until this Note shall have been paid in full. Maker
reserves the right to prepay this Note at any time, wholly or
partially, without penalty.

 

This
Note and the indebtedness evidenced hereby is unsecured. The
payment of the principal amount of, interest on or any other
amounts due under this Note shall not be subordinated in right of
payment to any other existing or future indebtedness of the
Maker.

 

In
the event any payments required by this Note are not paid when due,
or in the event Maker violates any of the terms and conditions of
this Note, then the whole sum of both principal and interest shall
become due and payable at once without further notice at the option
of the Holder.

 

Maker hereby waives presentation of payment,
notice of dishonor, protest and notice of
protest. Holder’s failure to exercise any right or option hereunder
on certain occasions shall not constitute a waiver of the right to
exercise such right or option on any other
occasion.

 

Maker
hereby executes and delivers this Note as of the ___day of ______,
_____________.

 

	
 

	
 

	
 

[MAKER]

 

 

 

By:
________________________

Name:

Title:

 

 

24

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