Document:

Exhibit 4.1

 

NEITHER
THIS SECURITY NOR
THE SECURITIES INTO WHICH
THIS SECURITY IS
CONVERTIBLE HAS NOT
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 BORROWER.
THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED
BROKER- DEALER OR OTHER LOAN WITH
A FINANCIAL INSTITUTION THAT
IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

 

Original
Issue Date: January
11, 2019

Principal Amount: $37,095.70

 

SECURED
CONVERTIBLE NOTE

DUE
January 11, 2021

 

THIS
CONVERTIBLE NOTE is one of a series
of duly authorized and validly
issued Notes of Omni Shrimp, Inc.,
a Nevada corporation, (the “Borrower”), having its principal place
of business at 517 Dumaine,
PH4, New Orleans, LA 70116, due January 11, 2021
(this note, the “Note” and, collectively
with the other notes of such series, the “Notes”).

 

The
Notes have been issued
in exchange for outstanding promissory notes of R Squared Technologies, Inc.,
a Delaware corporation (“R2”), and pursuant to an Exchange
Agreement dated the Original Issue Date
(the “Exchange Agreement”) among R2, securityholders of R2
and Borrower pursuant to which
R2 became a wholly-owned subsidiary
of Borrower. The original principal amount of each
Note is equal to the principal
amount of, and accrued and unpaid
interest on, the R2 promissory notes
so exchanged (the “Exchanged Notes”). The Exchanged
Notes were issued pursuant to separate purchase agreements or without
a purchase agreement. From and after the Original
Issue Date, (i) any and all purchase agreements
with R2 pursuant to which Exchanged Notes
were issued shall be merged into and
superseded by the Purchase Agreement,
and the Purchase Agreement shall
be deemed amended such that
it shall be deemed to cover
all Notes and the exclusive purchase agreement relating thereto and (ii)
Borrower shall be substituted for R2 with respect
to all covenants and agreements of
R2 in the Purchase Agreement that continue post-Original Issue Date, such that from
and after that date the same shall be deemed
to have been made by and apply
to Borrower with respect to itself and
the Notes and all provisions of the Purchase
Agreement shall be construed, mutatis mutandis, to give
effect to the same. In the event
of an inconsistency between the Purchase Agreement
and this Note, the terms of this Note
shall control.

 

FOR
VALUE RECEIVED, Borrower promises to pay to Chase
Financing Inc. Profit Sharing and 401(k) Plan or its registered
assigns (the “Holder”), with an address at: PO Box
403303, Miami Beach, Florida 33140 Fax: (212) 787-9268, or shall
have paid pursuant to the terms hereunder, the principal sum of Thirty
Seven Thousand Ninety Five Dollars and Seventy Cents ($37,095.70) on January
11, 2021 (the “Maturity Date”) or such
earlier date as this Note is required or permitted
to be repaid as provided hereunder,
and to pay interest, if any, to the Holder on the
aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.

 

    	 	1	 

     

    

 

 

The Holder
of this Note has been granted a security
interest in (i) assets of Borrower pursuant
to a stock pledge agreement dated on or about
the original issue date of this Note
and (ii) assets of Borrower’s subsidiary,
R Squared Technologies Inc., a Delaware corporation
(“R2”) pursuant to a security agreement with R2
dated on or about the original issue
date of this Note (together, the “Security
Agreement”).

 

This Note
is subject to the following additional provisions:

 

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

 

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

 

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

 

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

 

“Business
Day” means
any day except any Saturday, any Sunday,
any day which is a federal legal holiday
in the United States or any day on
which banking institutions in the State
of New York are required by law or other
governmental action to close.

 

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

 

“Change
of Control Transaction” means, other
than by means of conversion or exercise
of the Notes and the Securities
issued together with the Notes, the occurrence
after the date hereof of
any of (a) an acquisition after the date hereof
by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through
legal or beneficial ownership of capital
stock of Borrower, by contract
or otherwise) of in excess
of 50% of the
voting securities of Borrower, (b) Borrower merges
into or consolidates with any other Person,
or any Person merges into
or consolidates with Borrower and, after giving effect to such
transaction, the stockholders of Borrower
immediately prior to such transaction own less than 50%
of the aggregate voting power of Borrower
or the successor entity of such transaction,

(c) Borrower
sells or transfers all or substantially
all of its assets to another
Person and the stockholders of Borrower
immediately prior to such transaction own less than 50% of the
aggregate

 

    	 	2	 

     

    

 

voting
power of the acquiring entity immediately
after the transaction, (d) a replacement
at one time or within a three
year period of
more than one-half of the members
of the Board of Directors
which is not approved by a majority
of those individuals who are members of
the Board of Directors on the
Original Issue Date (or by those individuals who
are serving as members of the Board
of Directors on any date
whose nomination to the Board of Directors
was approved by a majority
of the members of the Board of Directors
who are members on the date
hereof), or (e) the execution by Borrower
of an agreement to which Borrower is
a party or by which it is bound, providing for
any of the events set forth in clauses (a) through (d) above.

 

“Closing
Price” means on any particular date (a) the
last reported closing bid price per share of
Common Stock on such date on the
Trading Market (as reported by Bloomberg
L.P. at 4:15 p.m. (New York City time)),
or (b) if there is no such price on such
date, then the closing bid price
on the Trading Market on
the date nearest preceding such date (as reported by Bloomberg

L.P.
at 4:15 p.m. (New York City time)), or
(c) if the Common Stock is not then listed or
quoted on a Trading Market and if
prices for the Common Stock are then reported
in the “pink sheets” published by OTC
Pink Marketplace (or a similar organization or agency
succeeding to its functions of
reporting prices), the most recent bid
price per share of
the Common Stock so reported,
or (d) if the shares of Common Stock are
not then publicly traded the fair market
value of a share of Common
Stock as determined by an independent appraiser
selected in good faith by the Holder
and reasonably acceptable to Borrower, the fees and expenses of which
shall be paid by Borrower.

 

“Common
Stock” means the common stock of Borrower, par value $0.0001 per share,
and any other class of securities
into which such securities may hereafter
be reclassified or changed.

 

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

 

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

 

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

 

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

 

“Conversion
Shares” means, collectively, the shares of Common
Stock issuable upon conversion of this Note
in accordance with the terms hereof.

 

“Dilutive
Issuance” shall have the meaning
set forth in Section 5(e).

 

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

 

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

 

“Interest
Payment Date”
shall have the meaning set forth
in Section 2(1).

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i)
the outstanding principal amount of this
Note divided by the Conversion Price on the
date the Mandatory Default

 

    	 	3	 

     

    

 

Amount
is either (A) demanded (if demand or notice
is required to create an Event of
Default) or otherwise due or
(B) paid in full, whichever has a lower
Conversion Price, multiplied by the VWAP on the date
the Mandatory Default Amount is either (x) demanded (if demand or notice
is required to create an Event
of Default) or otherwise
due or (y) paid in full,
whichever has a higher VWAP, or (ii)
120% of the outstanding principal amount of
this Note and (b) all other amounts, costs,
expenses and liquidated damages due in respect of
this Note.

 

“New York
Courts” shall have the meaning
set forth in Section 10(d).

 

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

 

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

 

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

 

“Other Holders”
means holders of Other Notes.

 

“Other
Notes” means Notes nearly identical to this Note issued to other
Holders pursuant to Exchange Agreement in exchange
for R2 promissory notes.

 

“Permitted
Indebtedness” means (a) any liabilities for borrowed
money or amounts owed not in excess
of $100,000 in the aggregate (other than trade
accounts payable incurred in the ordinary course of
business and liabilities existing on
the Original Issue Date immediately after consummation of the Exchange
Agreement, as well as any notes that
may be issued from time
to time by Borrower pursuant to a Securities
Purchase Agreement anticipated to be entered
into by Borrower with certain holders of
Borrower’s and R2’s notes
on the Original Issue Date immediately after consummation of the
Exchange Agreement), (b) all guaranties, endorsements and other contingent obligations
in respect of indebtedness of others,
whether or not the same are or
should be reflected in the Company’s consolidated
balance sheet (or the notes thereto) not affecting more than $100,000 in the
aggregate, except guaranties by endorsement
of negotiable instruments for deposit
or collection or similar transactions
in the ordinary course of business;
(c) the present value of any lease payments not in excess
of $100,000 due under leases required to be
capitalized in accordance with GAAP,
and (d) any liabilities for borrowed money that
are junior to the Note pursuant to
an intercreditor agreement acceptable to a majority
in interest of the Holders, and the
holders of which are not granted
any security interest, including a credit line
of up to $1,000,000 with a financial
institution engaged in providing credit whose business does not generally include
equity investing. Neither the Company
nor any Subsidiary is in default with respect
to any Indebtedness.

 

“Permitted
Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges
or levies not yet due or Liens for taxes,
assessments and other governmental charges or levies
being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management
of Borrower) have been established in
accordance with GAAP, (b) Liens
imposed by law which were incurred in the ordinary
course of Borrower’s business, such
as carriers’, warehousemen’s and mechanics’
Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of Borrower’s business,
and which (x) do not individually or
in the aggregate materially detract from
the value of such
property or assets or materially
impair the use thereof in the operation
of the business of
Borrower and its consolidated Subsidiaries
or (y) are being

 

    	 	4	 

     

    

 

contested
in good faith by appropriate proceedings,
which proceedings have the effect
of preventing for the foreseeable future the
forfeiture or sale of the property
or asset subject to such Lien, and (c)
Liens incurred prior to the consummation
of the Exchange Agreement
in connection with Permitted Indebtedness under clauses (a) and (b) thereunder,
and Liens incurred in connection with
Permitted Indebtedness under clause (c) thereunder,
provided that such Liens are not secured
by assets of Borrower or its
Subsidiaries other than the assets so acquired
or leased.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of September
21, 2018, between R2 and each of Alpha
Capital Anstalt and Chase Financing Inc., as amended,
modified or supplemented from time
to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

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

 

“VWAP”
means, for any date, the price determined
by the first of
the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of
the Common Stock for such date (or
the nearest preceding date) on the Trading
Market on which the Common Stock
is then listed or quoted as reported by
Bloomberg

L.P. 
(based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New
York City time)), (b) if any of the Nasdaq
markets or exchanges is not a Trading
Market, the volume weighted average price
of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock
is not then listed or quoted for trading
on the OTC Bulletin Board and if prices for
the Common Stock are then reported
on the OTCQX, OTCQB or OTC
Pink Marketplace maintained by the OTC
Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting
prices), the volume weighted average
price of the Common
Stock on the first such facility (or
a similar organization or agency succeeding
to its functions of reporting
prices), or (d) in all other
cases, the fair market value
of a share of Common Stock as determined
by an independent appraiser selected in good faith by a majority
in interest of the Holders and reasonably
acceptable to Borrower, the fees and expenses of which
shall be paid by Borrower.

 

Section
2. Interest and General Provisions.

 

a)                 
Interest Payable In Cash.
Holders shall be entitled to receive, and the Company
shall pay, interest on the outstanding principal amount of this
Note compounded daily at the annual rate of
ten percent (10%) (as subject to increase
as set forth in this Note) from the Original
Issue Date through the Maturity Date.
Interest shall be payable on
the Maturity Date when all amounts outstanding in connection
with this Note shall be due and payable (each
an “Interest Payment Date”)
(if any Interest Payment Date is
not a Business Day, the applicable
payment shall be due on the
next succeeding Business Day) in cash.

 

    	 	5	 

     

    

 

 

b)                 
Payment Grace Period. The Borrower shall not have any grace period
to pay any monetary amounts due under
this Note.

 

c)                 
Conversion Privileges. The Conversion Rights set forth in Section
4 shall remain in full force and effect
immediately from the date hereof and until
the Note is paid in full regardless
of the occurrence of an Event
of Default. This Note shall be payable
in full on the Maturity Date, unless previously
converted into Common Stock in accordance
with Section 4 hereof.

 

d)                 
Application of Payments.
Interest on this Note shall be
calculated on the basis of a 360-day
year and the actual number of days elapsed.
Payments made in connection with this Note shall be applied
first to amounts due hereunder other
than principal and interest, thereafter to interest
and finally to principal.

 

e)                 
Pari Passu. Except as otherwise
set forth herein, all payments made on this Note and the Other
Notes and all actions taken by the Borrower
with respect to this Note and the
Other Notes, shall be made and taken pari
passu with respect to this
Note and the Other Notes. Notwithstanding anything to the
contrary contained herein or in
the Transaction Documents, it shall not be considered
non-pari passu for a Holder or
Other Holder to elect
to receive interest paid in Common Stock
or for the Company to actually pay interest
in Common Stock to such electing Holder
or Other Holder.

 

f)                  
Manner and Place of
Payment. Principal and interest
on this Note and other payments in connection
with this Note shall be payable
at the Holder’s offices as designated
above in lawful money of the United
States of America in immediately available
funds without set-off, deduction
or counterclaim. Upon assignment of the interest
of Holder in this Note, Borrower shall instead
make its payment pursuant to the assignee’s
instructions upon receipt of written
notice thereof. Except as set forth in this
Note, this Note may not be prepaid, redeemed
or mandatorily converted without the consent of the Holder.

 

Section
3.Registration of Transfers
and Exchanges.

 

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

 

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

 

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

 

Section
4.Conversion.

 

a)                  
Voluntary Conversion. At any time after the Original Issue Date until
this Note is no longer outstanding, this Note including interest accrued hereon shall
be convertible, in whole or
in part, into shares of
Common Stock at the option of
the Holder, at any time and from
time to time (subject

    	 	6	 

     

    

 

to the conversion
limitations set forth in Section 4(d) hereof). The Holder
shall effect conversions by delivering to Borrower
a Notice of Conversion,
the form of which is attached
hereto as Annex A (each,
a “Notice of Conversion”),
specifying therein the principal amount of this
Note and accrued interest, if any, to be converted and the date on which
such conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in
a Notice of Conversion, the Conversion Date
shall be the date that such Notice
of Conversion is deemed delivered hereunder.
To effect conversions hereunder, the Holder
shall not be required to physically surrender this Note
to Borrower unless the entire principal amount of this
Note has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount
equal to the applicable conversion. The Holder and Borrower shall maintain records showing the principal
amount(s) converted and the date of such
conversion(s). Borrower may deliver
an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice
of Conversion. In the event
of any dispute or discrepancy, the records
of the Holder shall be controlling
and determinative in the absence of manifest
error. The Holder, and any assignee
by acceptance of
this Note, acknowledges and agrees that, by reason of
the provisions of this
paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal
amount of this Note may be less than the
amount stated on the face hereof.

 

b)                  
Conversion Price. The conversion price for the principal and interest, if any,
in connection with voluntary conversions by the
Holder shall be $.015 per share
of Common Stock, subject to adjustment
herein (the “Conversion Price”). In the event
the average VWAP for the consecutive five

(5) 
Trading Days preceding but not including
the six month anniversary of the Original Issue
Date of this Note is less than the then
Conversion Price in effect on such six
month anniversary date, then the Conversion Price with respect to unconverted
Principal and interest on the Note shall
be reduced (and only reduced) to eighty percent
(80%) of the VWAP for the
ten (10) Trading Days following
(but not including) such six month anniversary
date, subject to further reduction.

 

		c)	Mechanics of Conversion.

 

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

 

ii.                
Delivery of Certificate
Upon Conversion.
Not later than three (3) Trading Days
after each Conversion Date (the “Share Delivery Date”), Borrower shall
deliver, or cause to be delivered,
to the Holder a certificate or certificates
representing the Conversion Shares which , on or after
the earlier of (i) the six
month anniversary of the Original Issue
Date or (ii) Effective Date, shall
be free of restrictive
legends and trading restrictions (other than those which may
then be required by the Purchase Agreement
or which, in the good faith
opinion of Company counsel, shall be reasonably
required to ensure compliance with
applicable securities laws) representing the number
of Conversion Shares being acquired upon the conversion
of this Note. Without imposing any obligation
on Holder, if, in connection
with any issuance of Conversion Shares,
Borrower fails to obtain a legal opinion
regarding the applicability of restrictive
legends or trading restrictions, Borrower shall, at the request of
Holder, accept the legal opinion of Grushko
& Mittman or such other
counsel as shall be selected
by Holder (any such legal opinion to be
reasonably acceptable to Borrower’s counsel),
the reasonable cost of which legal opinion shall
be borne by Borrower. Borrower shall use
reasonable commercial efforts to deliver any certificate
or certificates required to be delivered
by Borrower under this Section 4(c) electronically through the Depository Trust Company
or another established clearing

 

    	 	7	 

     

    

 

corporation performing
similar functions if the securities are then
eligible to be so transferred.

 

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

 

iv.                
Obligation Absolute; Partial Liquidated Damages.
Borrower’s obligations to issue and deliver
the Conversion Shares upon conversion
of this Note in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any
waiver or consent with respect
to any provision hereof, the recovery
of any judgment against any Person or
any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged
breach by the Holder or any other Person
of any obligation to Borrower or any violation
or alleged violation of law by the Holder
or any other Person, and irrespective
of any other circumstance which might
otherwise limit such obligation of Borrower
to the Holder in connection with the issuance
of such Conversion Shares; provided,
however, that such delivery shall not
operate as a waiver by Borrower
of any such action Borrower may have against
the Holder. In the event the Holder
of this Note
shall elect to convert any or all
of the outstanding principal amount hereof, Borrower may
not refuse conversion based on any claim
that the Holder or anyone
associated or affiliated with the Holder
has been engaged in any violation of
law, agreement or for any
other reason, unless an injunction from
a court, on notice to Holder,
restraining and or enjoining conversion of
all or part
of this Note shall have been sought
and obtained, and Borrower posts a surety bond
for the benefit of the Holder in
the amount of 150%
of the outstanding principal amount of
this Note, which is subject to the injunction,
which bond shall remain in effect
until the completion of arbitration/litigation
of the underlying dispute and the proceeds
of which shall be payable
to the Holder to the extent it obtains
judgment. In the absence of such
injunction, Borrower shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. If
Borrower fails for any reason
to deliver to the Holder such certificate
or certificates pursuant to Section
4(c)(ii) by the Share Delivery Date, Borrower shall pay to the
Holder, in cash, as liquidated damages and not
as a penalty, for each $1,000 of principal amount
being converted, $10 per Trading Day
(increasing to $20 per Trading Day on the
fifth (5th) Trading Day after such liquidated damages being to accrue)
for each Trading Day after such Share Delivery Date until such certificates are delivered
or Holder rescinds such conversion. Nothing herein
shall limit a Holder’s right to pursue
actual damages or declare an Event
of Default pursuant to Section 8 hereof
for Borrower’s failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right
to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights
shall not prohibit the Holder
from seeking to enforce damages pursuant
to any other Section hereof or under applicable
law.

 

v.                   
Compensation for Buy-In on Failure
to Timely Deliver Certificates Upon Conversion.
In addition to any other
rights available to the Holder, if Borrower fails for any reason
to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such
Share Delivery Date the Holder is

    	 	8	 

     

    

 

required
by its brokerage firm to purchase (in
an open market transaction
or otherwise), or
the Holder or Holder’s
brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction
of a sale by the Holder of the
Conversion Shares which the Holder was entitled to receive
upon the conversion relating to such Share
Delivery Date (a “Buy- In”),
then Borrower shall (A) pay in cash to
the Holder (in addition to any other
remedies available to or elected by the
Holder) the amount, if any,
by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common
Stock so purchased exceeds (y) the product
of (1) the aggregate
number of shares of Common Stock
that the Holder was entitled
to receive from the conversion at issue
multiplied by (2) the actual sale price
at which the sell order giving rise to such
purchase obligation was executed (including any brokerage commissions) and
(B) at the option
of the Holder, either reissue (if surrendered)
this Note in a principal amount equal to the principal
amount of the attempted conversion (in which case such conversion shall be
deemed rescinded) or deliver
to the Holder the number of shares
of Common Stock that would have been issued if
Borrower had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder
purchases Common Stock having a
total purchase price of $11,000 to cover
a Buy-In with respect to an attempted
conversion of this Note with respect to which the actual
sale price of the Conversion Shares (including
any brokerage commissions) giving rise to such purchase
obligation was a total of $10,000 under
clause

		(A)	of the immediately preceding sentence, Borrower shall
be required to pay the Holder

$1,000.
The Holder shall provide Borrower written notice indicating the amounts
payable to the Holder in respect
of the Buy-In and, upon request of
Borrower, evidence of the amount of such
loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation,
a decree of specific performance and/or injunctive
relief with respect to Borrower’s failure to timely deliver certificates representing
shares of Common Stock upon conversion
of this Note as required
pursuant to the terms hereof.

 

vi.                
Reservation of Shares
Issuable Upon Conversion. Borrower covenants that it will at all times
use its best efforts to reserve and keep
available out of its authorized
and unissued shares of Common Stock for
the sole purpose of issuance upon conversion
of this Note as herein provided, free
from preemptive rights or any other
actual contingent purchase rights of Persons
other than the Holder (and the other
holders of the Notes), not less than 125%
of the aggregate number of shares
of the Common Stock as shall
be issuable (taking into account the adjustments
and restrictions of Section
5) upon the conversion of the then outstanding
principal amount of this Note and interest
which has accrued and would accrue on such principal amount assuming such principal
amount was not converted through the Maturity Date. Subject to having sufficient authorized
share, Borrower covenants that all shares of Common Stock that shall
be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and nonassessable.

 

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

 

viii.                
Transfer Taxes and Expenses. The issuance of certificates
for shares of the Common Stock on
conversion of this Note shall be made
without charge to the Holder hereof for any documentary
stamp or similar taxes that may
be payable in respect of the

    	 	9	 

     

    

 

issue
or delivery of such certificates, provided that,
Borrower shall not be required to pay
any tax that may be payable
in respect of any transfer involved in
the issuance and delivery of any such certificate
upon conversion in a name other than that of the
Holder of this Note so converted
and Borrower shall not be required to
issue or deliver such certificates unless
or until the Person or Persons
requesting the issuance thereof shall have paid to Borrower the amount
of such tax or shall have established
to the satisfaction of Borrower
that such tax has been paid. Borrower shall pay all
Transfer Agent fees required for same-day processing of any Notice of
Conversion.

 

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

 

    	 	10	 

     

    

 

issuance
of shares of
Common Stock upon conversion of this
Note held by the Holder and the Beneficial
Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any such increase
will not be effective until the 61st
day after such notice is delivered
to Borrower. The Beneficial Ownership Limitation provisions of this
paragraph shall be construed and implemented
in a manner otherwise than in strict conformity
with the terms of this Section 4(d) to
correct this paragraph (or any portion hereof)
which may be defective or
inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes
or supplements necessary or desirable
to properly give effect
to such limitation. The limitations contained
in this paragraph shall apply to a successor
holder of this Note.

 

Section
5.Certain Adjustments.

 

a)                  
Stock Dividends and Stock Splits. If Borrower,
at any time while this Note is outstanding:
(i) pays a stock dividend or otherwise
makes a distribution or
distributions payable in shares of Common
Stock on shares of Common Stock or any
Common Stock Equivalents (other than any such dividend
or distribution, if any,
payable pursuant to the terms
of Borrower’s Series F and Series
G Preferred Stock), (ii) subdivides outstanding shares of
Common Stock into a larger number
of shares, (iii) combines (including by way
of a reverse stock split) outstanding shares
of Common Stock into a smaller
number of shares or
(iv) issues, in the event of a
reclassification of shares
of the Common Stock, any shares of
capital stock of Borrower, then the Conversion
Price shall be multiplied by a fraction
of which the numerator shall be the
number of shares of Common
Stock (excluding any treasury shares
of Borrower) outstanding immediately before such event,
and of which the denominator shall be the number
of shares of Common Stock outstanding
immediately after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders
entitled to receive such dividend
or distribution and shall become effective immediately
after the effective date in the case
of a subdivision, combination or re-classification.

 

b)                 
Subsequent Equity Sales. In addition to the reductions
of the Conversion Price described in Section
4(b), if, at any time while this Note
is outstanding, the Company or any Subsidiary,
as applicable, sells or grants
any option to purchase or sells
or grants any right to reprice,
or otherwise disposes of or issues
(or announces any sale, grant or
any option to purchase or other
disposition), any Common Stock or Common
Stock Equivalents entitling any Person
to acquire Common Stock at an effective
price per share that is lower than the then
Conversion Price (such lower price, the “Base Conversion Price” and
such issuances, collectively, a “Dilutive
Issuance”) (if the holder of the
Common Stock or Common Stock Equivalents
so issued shall at any time, whether
by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due
to warrants, options or rights per share which
are issued in connection with such issuance,
be entitled to receive Common
Stock at an effective price per share that is lower
than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance),
then the Conversion Price shall be reduced to equal
the Base Conversion Price, subject to adjustment for reverse and forward stock
splits and the like. Such adjustment shall
be made whenever such Common Stock or
Common Stock Equivalents are issued. Notwithstanding
the foregoing, no adjustment will be
made under this Section 5(b) in respect
of any issuance, dividend or distribution,
if any, made pursuant to the terms
of Borrower’s Series F and Series
G Preferred Stock. If the Company
enters into a Variable Rate Transaction, despite
the prohibition set forth in the Purchase
Agreement, the Company shall be deemed
to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion
price at which such securities may be converted
or exercised. The Company
shall notify the Holder in writing, no
later than the Trading Day following the issuance
of any Common Stock or Common
Stock Equivalents subject to this Section 5(b),
indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance Notice”). For
purposes of clarification, whether or
not the Company provides a Dilutive Issuance
Notice pursuant to this Section 5(b), upon
the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Conversion Shares
based upon the

 

    	 	11	 

     

    

 

Base Conversion
Price on or after the date of
such Dilutive Issuance, regardless of whether
the Holder accurately refers to the Base Conversion
Price in the Notice of Conversion.

 

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

 

d)                 
Pro Rata Distributions. During such time as this
Note is outstanding, if Borrower shall declare or make any dividend
whether or not permitted, or
makes any 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
exercise of this Note (without regard
to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership
Limitation) immediately before the date of which
a record is taken for such Distribution,
or, if no such record is taken,
the date as of which
the record holders of shares
of Common Stock are to be determined
for the participation in such Distribution (provided,
however, to the extent that the Holder's
right to participate in any such Distribution
would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled
to participate in such Distribution to
such extent (or in the beneficial ownership
of any shares of Common Stock as a result
of such Distribution to such extent) and
the portion of such Distribution shall
be held in abeyance for the benefit of
the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

e)                   
Fundamental Transaction. If, at any time
while this Note is outstanding, (i) Borrower,
directly or indirectly, in one or more
related transactions effects any merger or consolidation
of Borrower with or into
another Person, (ii) Borrower, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of
all or substantially
all of its assets in one or a series
of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange
offer (whether by Borrower or another
Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property
and has been accepted by the holders of 50%
or more of the outstanding Common Stock,
(iv) Borrower, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization
of the Common Stock or any compulsory
share exchange pursuant to which the Common
Stock is effectively converted into or exchanged
for other securities, cash or property,
(v) Borrower, directly or indirectly, in one
or more related transactions consummates
a stock or share purchase agreement or other
business combination

    	 	12	 

     

    

 

(including,
without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another
Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not
including any shares of Common
Stock held by the other Person or other Persons
making or party to, or associated
or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental Transaction”), then,
upon any subsequent conversion of this Note,
the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in Section
4(d) on the conversion of this Note),
the number of shares of Common
Stock of the successor or acquiring
corporation or of Borrower, if it
is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result
of such Fundamental Transaction by a holder
of the number of shares
of Common Stock for which this Note is
convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section
4(d) on the conversion of this
Note). For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect
of one (1) share of
Common Stock in such Fundamental Transaction, and Borrower
shall apportion the Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of
any different components of the
Alternate Consideration. If holders
of Common Stock are given any choice
as to the securities, cash or property
to be received in a Fundamental Transaction,
then the Holder shall be given the same
choice as to the Alternate Consideration
it receives upon any conversion of this
Note following such Fundamental Transaction. Borrower shall cause any successor
entity in a Fundamental Transaction in which
Borrower is not the survivor (the “Successor Entity”) to
assume in writing all of
the obligations of Borrower under this Note
and the other Transaction Documents (as defined
in the Purchase Agreement) in accordance with
the provisions of this
Section 5(e) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option
of the holder of this
Note, deliver to the Holder in exchange
for this Note a security of the Successor
Entity evidenced by a written instrument substantially similar in form and
substance to this Note which is convertible
for a corresponding number of shares
of capital stock of such Successor Entity (or
its parent entity) equivalent to the shares of
Common Stock acquirable and receivable
upon conversion of this
Note (without regard to any limitations on the
conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price
which applies the conversion price hereunder to such
shares of capital stock (but taking
into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction
and the value of such shares of capital
stock, such number of shares of
capital stock and such conversion price being
for the purpose of protecting
the economic value of this
Note immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form
and substance to the Holder. Upon the occurrence
of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental
Transaction, the provisions of this Note and the other
Transaction Documents referring to the “Company” shall refer instead
to the Successor Entity), and may exercise
every right and power of Borrower and
shall assume all of the obligations
of Borrower under this Note and the
other Transaction Documents with the same effect as if such Successor Entity had been
named as Borrower herein.

 

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

 

		g)	Notice to the Holder.

 

i.                     
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this
Section 5, Borrower shall promptly deliver to

    	 	13	 

     

    

 

each Holder
a notice setting forth the Conversion Price
after such adjustment and setting forth
a brief statement of the
facts requiring such adjustment.

 

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

 

Section
6. Redemption. Upon 30 days’ prior
written notice from the Borrower, principal and accrued and unpaid
interest on this Note shall be redeemable
at the option of the Borrower
at a redemption price equal to (i) 120%
of the principal amount to be redeemed
plus (ii) accrued and unpaid interest thereon;
provided however that during such 30-day period, the
Holder shall have the right to convert
this Note at the then applicable Conversion
Price. At the expiration of such 30-day
period (the “Redemption Date”), this Note shall no longer
be convertible. Unless and except to
the extent converted prior thereto, payment of the redemption
price shall be made within 30-days after
the Redemption Date.

 

Section
7. Negative Covenants. As long as any portion
of this Note remains outstanding, unless the holders
of at least 51% in principal
amount of the then outstanding Notes shall have otherwise given prior written
consent, Borrower shall not, and shall not permit any of the Subsidiaries to,
directly or indirectly:

 

a)                 
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
suffer to exist any indebtedness
for borrowed money of any kind, including,
but not limited to, a guarantee,

    	 	14	 

     

    

 

on or with
respect to any of its property or assets
now owned or hereafter acquired
or any interest therein or any income
or profits therefrom;

 

b)                 
other than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind,
on or with respect to any of its property
or assets now owned or hereafter
acquired or any interest therein or any income
or profits therefrom;

 

c)                 
amend its charter documents, including, without limitation, its certificate
of incorporation and bylaws,
in any manner that materially and adversely
affects any rights of the Holder;

 

d)                 
repay, repurchase or offer
to repay, repurchase or otherwise acquire
more than a de minimis number
of shares of its
Common Stock or Common Stock Equivalents
other than (i) as to the Conversion Shares
as permitted or required under the Transaction
Documents or (ii) in connection with
the redemption of convertible redeemable promissory notes on terms
no more favorable to the holders thereof
than provided hereunder for redemption of
this Note;

 

e)                 
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 (other than the Notes
if on a pro-rata basis and other than
as provided in clause (d) above), whether by way
of payment in respect of principal
of (or premium, if any)
or interest on, such Indebtedness, the
foregoing restriction shall also apply to Permitted
Indebtedness from and after the occurrence
of an Event of Default;

 

f)                  
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,
liquidation, distribution, preferential payments in connection with any securities
or debt issuances, corporate rearrangement, scheme
of arrangement or other similar transaction;

 

g)                 
enter into any transaction with
any Affiliate of Borrower
which would be required to be disclosed
in any public filing with the Commission, unless
such transaction is made on an arm’s-
length basis and expressly approved by a majority of the
disinterested directors of Borrower (even
if less than a quorum otherwise required for
board approval); or

 

		h)	enter into any agreement
with respect to any of the foregoing.
Section 8.Events of
Default.

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

 

i.                   
any default in the payment
of (A) the principal or interest amount
of this Note or (B) liquidated damages
and other amounts owing to a Holder on
any Note, as and when the same shall
become due and payable (whether on a Conversion
Date or the Maturity Date or
by acceleration or otherwise) which default,
solely in the case of a default
under clause (B) above,
is not cured within 3 Trading Days
after Borrower has become or should have become
aware of such default;

    	 	15	 

     

    

 

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

 

iii.                
a default or event
of default (subject to any grace
or cure period provided in the
applicable agreement, document or instrument)
shall occur under (A) any of the
Transaction Documents, including but not limited
to failure to strictly comply with the
provisions of the Transaction Documents,
or (B) any other material
agreement, lease, document or instrument to which
Borrower or any Subsidiary is obligated
(and not covered by clause (vi)
below), which in the
case of subsection (B) would reasonably be expected
to have a Material Adverse Effect;

 

iv.                
any representation or warranty
made in this Note, any other Transaction Documents, any written statement pursuant
hereto or thereto or any other report,
financial statement or certificate made or delivered
to the Holder or any Other Holder shall
be untrue or incorrect
in any material respect as of the
date when made or deemed
made;

 

		v.	Borrower or any Subsidiary
shall be subject to a Bankruptcy Event;

 

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

 

		vii.	Reserved;

 

		viii.	Reserved;

 

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

 

x.                 
any Person shall breach any agreement
delivered to the initial Holders
pursuant to Section 2.2 of the
Purchase Agreement;

 

xi.                
any monetary judgment, writ or
similar final process shall be entered
or filed against Borrower, any subsidiary
or any of their respective property or
other assets for more than $50,000, and
such judgment, writ or similar
final process shall remain unvacated, unbonded or unstayed
for a period of 90 calendar days;

 

    	 	16	 

     

    

 

xii.             
any dissolution, liquidation or winding
up by Borrower or a material
Subsidiary of a substantial portion of
their business;

 

		xiii.	cessation of operations
by Borrower or a material Subsidiary;

 

xiv.           
a failure by Borrower to
notify Holder of any material event of
which Borrower is obligated to notify
Holder pursuant to the terms of
this Note or any
other Transaction Document;

 

xiv.           
a default by the Borrower of a
material term, covenant, warranty or undertaking
of any other agreement to which the Borrower
and Holder are parties, or the occurrence
of an event of
default under any such other agreement
to which Borrower and Holder are parties which is not cured
after any required notice and/or cure period;

 

		xv.	the occurrence of an Event
of Default under any Other Note;
or

 

xvi.           
any material 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 Borrower, or
the validity or enforceability thereof shall
be contested by Borrower,
or a proceeding shall be
commenced by Borrower or any
governmental authority having jurisdiction over Borrower or Holder,
seeking to establish the invalidity
or unenforceability thereof, or Borrower shall
deny in writing that it has any liability
or obligation purported to be created
under any Transaction Document.

 

In
the event more than one grace, cure or
notice period is applicable to an Event
of Default, then the shortest
grace, cure or notice period shall
be applicable thereto.

 

b)                   
Remedies Upon Event of Default, Fundamental Transaction and
Change of Control Transaction.
If any Event of Default
or a Fundamental Transaction or a Change
of Control Transaction occurs, the outstanding
principal amount of this Note, liquidated damages and other
amounts owing in respect thereof through the date
of acceleration, shall become, at the
Holder’s election, immediately due and payable
in cash at the Mandatory Default Amount. Commencing on the Maturity
Date and also five (5) days after the occurrence
of any Event of
Default interest on this Note shall accrue
at an interest rate equal to the lesser
of 18% per annum
or the maximum rate permitted under applicable
law. Upon the payment in full
of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by Borrower.
In connection with such acceleration described
herein, the Holder need not provide, and Borrower hereby waives, any presentment,
demand, protest or other notice
of any kind, and the Holder may
immediately and without expiration of
any grace period enforce any and all
of its rights and remedies
hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded
and annulled by Holder at any time
prior to payment hereunder and the Holder shall
have all rights as a holder of
the Note until such time, if any,
as the Holder receives full payment pursuant to this
Section 8(b). No such rescission or
annulment shall affect any subsequent Event
of Default or impair any right
consequent thereon.

 

Section
9. Security Interest/Waiver of
Automatic Stay.
This Note is secured
by a security interest granted to the Holder
pursuant to the Security Agreement, as delivered
by Borrower and R2 to Holder. The Borrower acknowledges and agrees
that should a proceeding under any bankruptcy
or insolvency law be commenced
by or against the Borrower
or a Subsidiary, or if any
of the Collateral (as defined in the Security
Agreement) should become the subject
of any bankruptcy or insolvency proceeding,
then the Holder should be entitled to, among
other relief to which the Holder
may be entitled under the Transaction Documents
and any other agreement to which
the Borrower or a Subsidiary
and Holder are

 

    	 	17	 

     

    

 

parties
(collectively, “Loan Documents”) and/or applicable law, an order from the
court granting immediate relief from the automatic stay pursuant to 11 U.S.C.
Section 362 to permit the Holder to exercise all of its
rights and remedies pursuant to the Loan
Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES
AND AGREES THAT NEITHER 11 U.S.C.
SECTION 362 NOR ANY OTHER SECTION OF
THE BANKRUPTCY CODE OR OTHER STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE
OR INHIBIT IN ANY WAY THE ABILITY OF
THE HOLDER TO ENFORCE ANY OF
ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Borrower
hereby consents to any motion for
relief from stay that may
be filed by the Holder in any bankruptcy or insolvency
proceeding initiated by or against the Borrower and, further,
agrees not to file any opposition to
any motion for relief from
stay filed by the
Holder. The Borrower represents,
acknowledges and agrees that this
provision is a specific and material
aspect of the Loan Documents, and
that the Holder would not
agree to the terms of
the loan Documents if this
waiver were not a part of this
Note. The Borrower further
represents, acknowledges and agrees that is waiver is knowingly,
intelligently and voluntarily made,
that neither the Holder nor any
person acting on behalf of the
Holder has made any representations to induce
this waiver, that the Borrower has been
represented (or has had the
opportunity to by represented) in the
signing of this Note and the Loan
Documents and in the making of
this waiver by independent
legal counsel selected by the Borrower
and that the Borrower has discussed
this waiver with counsel.

 

Section 10.Miscellaneous.

 

a)                     
Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited
in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, facsimile, or electronic mail,
addressed as set forth below or to such other
address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted
to be given hereunder shall be
deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address
or number designated below (if delivered
on a business day during normal business
hours where such notice is to be received),
or the first business day following such delivery
(if delivered other than on a business day during
normal business hours where such notice is to be received),
or (b) upon receipt, when sent by electronic
mail (provided confirmation of transmission
is electronically generated and keep
on file by the sending party), or
(c) on the second business day following
the date of mailing
by express courier service, fully prepaid, addressed to such
address, or upon actual receipt
of such mailing, whichever shall first occur. The addresses
for such communications shall be: (i) if to Borrower, to: Omni
Shrimp, Inc., 517 Dumaine, PH4, New Orleans,
LA 70116, Attn: CFO, and (ii) if
to the Holder, to: the address and fax
number indicated on the front page of
this Note, with an additional copy
by fax only to (which shall not constitute notice): Grushko & Mittman,
P.C., 515 Rockaway Avenue, Valley Stream,
New York 11581, fax: (212) 697-3575.

 

b)                  
Absolute Obligation. Except as expressly provided herein, no
provision of this Note shall alter or
impair the obligation of
Borrower, which is absolute and unconditional,
to pay the principal of, liquidated damages
and accrued interest, as applicable, on this
Note at the time, place, and rate,
and in the coin or currency, herein prescribed.
This Note is a direct debt obligation of Borrower.
This Note ranks pari passu with
all other Notes now or hereafter issued under the terms
set forth herein.

 

c)                  
Lost or Mutilated Note.
If this Note shall be mutilated,
lost, stolen or destroyed, Borrower shall execute and deliver,
in exchange and substitution for and upon cancellation
of a mutilated Note, or in lieu
of or in substitution for a lost, stolen
or destroyed Note, a new Note for the
principal amount

    	 	18	 

     

    

 

of this Note
so mutilated, lost, stolen or destroyed,
but only upon receipt of evidence of
such loss, theft or destruction
of such Note, and of the ownership hereof, reasonably
satisfactory to Borrower.

 

d)                 
Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of
this Note shall be governed by and construed
and enforced in accordance with the internal
laws of the State of
New York, without
regard to the principles of conflict
of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any
of the Transaction Documents (whether brought against a party
hereto or its respective Affiliates, directors, officers, shareholders, employees
or agents) shall be commenced
in the state and federal courts sitting in the
City of New York, Borough
of Manhattan (the
“New York Courts”).
Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith
or with any transaction contemplated
hereby or discussed herein (including
with respect to the enforcement of
any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert
in any suit, action or proceeding,
any claim that it is not personally subject
to the jurisdiction of such New York Courts,
or such New York Courts are improper
or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process
and consents to process being served in any such
suit, action or proceeding by mailing
a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery)
to such party at the address in effect
for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained
herein shall be deemed to limit
in any way any right to serve
process in any other manner permitted by applicable
law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of
or relating to this Note or the transactions
contemplated hereby. If any party shall
commence an action or proceeding to enforce
any provisions of this Note, then the
prevailing party in such action or
proceeding shall be reimbursed by the
other party for its attorneys fees and other
costs and expenses incurred in the investigation, preparation and prosecution
of such action or
proceeding. This Note shall
be deemed an unconditional obligation
of Borrower for the
payment of money and, without limitation
to any other remedies of Holder,
may be enforced against Borrower by
summary proceeding pursuant to New York
Civil Procedure Law and
Rules Section 3213 or any similar rule or statute
in the jurisdiction where enforcement
is sought. For purposes of
such rule or statute,
any other document or agreement
to which Holder and Borrower are parties
or which Borrower
delivered to Holder, which may be
convenient or necessary to determine
Holder’s rights hereunder or Borrower’s obligations to Holder
are deemed a part of this
Note, whether or not such other
document or agreement was delivered together
herewith or was executed apart from this
Note.

 

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

 

f)               
Severability. If any provision
of this Note is invalid,
illegal or unenforceable, the balance of
this Note shall remain in effect, and
if any provision is inapplicable to any
Person or circumstance,
it shall nevertheless remain applicable to all other Persons and circumstances.

 

g)               
Usury. If it shall
be found that any interest
or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of
interest due hereunder shall automatically be lowered
to equal the maximum rate of interest
permitted under applicable law. Borrower covenants (to the extent that it may
lawfully do so) that it shall
not at any time insist upon, plead, or
in any manner whatsoever claim or take
the benefit or advantage of, any
stay, extension or usury law or
other law

    	 	19	 

     

    

 

which
would prohibit or forgive Borrower
from paying all or any portion
of the principal of or interest
on this Note as contemplated herein, wherever
enacted, now or at any time hereafter
in force, or which
may affect the covenants or the
performance of this Note, and Borrower
(to the extent it may lawfully
do so) hereby expressly waives all benefits
or advantage of any such law,
and covenants that it will not, by resort
to any such law, hinder, delay or impede
the execution of any power herein granted
to the Holder, but will suffer
and permit the execution of every such
as though no such law has been
enacted.

 

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

 

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

 

j)                
Amendment. Unless otherwise provided for hereunder, this Note may
not be modified or amended or
the provisions hereof waived without the written consent of
Borrower and the Holder.

 

k)              
Facsimile Signature. In the event
that the Borrower’s signature is delivered
by facsimile transmission, PDF, electronic
signature or other similar electronic
means, such signature shall create a valid
and binding obligation of the Borrower
with the same force and effect
as if such signature page were an original thereof.

 

 

*********************

 

(Signature
Pages Follow)

    	 	20	 

     

    

 

 

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by an authorized officer as of January11, 2019.

 

 

OMNI Shrimp, Inc.

 

By: /s/ Colm Wrynn

Name: Colm Wrynn

Title: CEO

 

WITNESS:

 

 

____________________________________

 

 

 

 

 

CONSENTED AND AGREED:

 

Chase Financing Inc. Profit Sharing and 401(k)
Plan

 

		By:	Name:

          Title:

 

 

    	 	21	 

     

    

ANNEX
A NOTICE OF CONVERSION

The
undersigned hereby elects to convert principal
under the Convertible Note Due January 11, 2021 of Omni Shrimp,
Inc., a Delaware corporation (the “Company”), into shares
of common stock (the “Common Stock”),
of Borrower according to the conditions hereof,
as of the date written below. If shares
of Common Stock are to be issued
in the name of a person other than the
undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by Borrower
in accordance therewith. No fee will
be charged to the holder for any conversion,
except for such transfer taxes, if any.

 

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

 

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

 

Conversion calculations:

 

   Date to Effect
Conversion: __________________________

 

Principal
Amount of Note to be Converted:
$ ______________

 

Accrued
Interest to be Converted, if any:
$ _______________

 

Conversion
Price: $ __________________

 

Number
of shares of Common Stock to be issued:
__________

 

Signature:
______________

 

Name:
________________

 

Address for
Delivery of Common Stock Certificates:
_________

________________________________________________

________________________________________________

 

 

 

 

 

Or

 

DWAC Instructions:
____________

 

Broker
No: __________________  

Account No: _________________

 

    	 	22	 

     

    

 

NEITHER
THIS SECURITY NOR
THE SECURITIES INTO WHICH
THIS SECURITY IS
CONVERTIBLE HAS NOT
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 BORROWER.
THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED
BROKER- DEALER OR OTHER LOAN WITH
A FINANCIAL INSTITUTION THAT
IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

 

Original
Issue Date: January
11, 2019

Principal Amount: $391,609.24

 

SECURED
CONVERTIBLE NOTE

DUE
January 11, 2021

 

THIS
CONVERTIBLE NOTE is one of a series
of duly authorized and validly
issued Notes of Omni Shrimp, Inc.,
a Nevada corporation, (the “Borrower”), having its principal place
of business at 517 Dumaine,
PH4, New Orleans, LA 70116, due January 11, 2021
(this note, the “Note” and, collectively
with the other notes of such series, the “Notes”).

 

The
Notes have been issued
in exchange for outstanding promissory notes of R Squared Technologies, Inc.,
a Delaware corporation (“R2”), and pursuant to an Exchange
Agreement dated the Original Issue Date
(the “Exchange Agreement”) among R2, securityholders of R2
and Borrower pursuant to which
R2 became a wholly-owned subsidiary
of Borrower. The original principal amount of each
Note is equal to the principal
amount of, and accrued and unpaid
interest on, the R2 promissory notes
so exchanged (the “Exchanged Notes”). The Exchanged
Notes were issued pursuant to separate purchase agreements or without
a purchase agreement. From and after the Original
Issue Date, (i) any and all purchase agreements
with R2 pursuant to which Exchanged Notes
were issued shall be merged into and
superseded by the Purchase Agreement,
and the Purchase Agreement shall
be deemed amended such that
it shall be deemed to cover
all Notes and the exclusive purchase agreement relating thereto and (ii)
Borrower shall be substituted for R2 with respect
to all covenants and agreements of
R2 in the Purchase Agreement that continue post-Original Issue Date, such that from
and after that date the same shall be deemed
to have been made by and apply
to Borrower with respect to itself and
the Notes and all provisions of the Purchase
Agreement shall be construed, mutatis mutandis, to give
effect to the same. In the event
of an inconsistency between the Purchase Agreement
and this Note, the terms of this Note
shall control.

 

FOR
VALUE RECEIVED, Borrower promises to pay
to Chase Financing Inc. or its registered
assigns (the “Holder”), with an address
at: PO Box 403303, Miami Beach, Florida 33140 Fax: (212) 787- 9268, or shall
have paid pursuant to the terms
hereunder, the principal sum of Three
Hundred Ninety One Thousand Six Hundred Nine Dollars and Twenty Four Cents
($391,609.24) on January 11,
2021 (the “Maturity Date”)
or such earlier date as this Note is required
or permitted to be repaid as provided

 

    	 	23	 

     

    

 

hereunder,
and to pay interest, if any, to the Holder
on the aggregate unconverted and then
outstanding principal amount of this Note in
accordance with the provisions hereof.

 

The Holder
of this Note has been granted a security
interest in (i) assets of Borrower pursuant
to a stock pledge agreement dated on or about
the original issue date of this Note
and (ii) assets of Borrower’s subsidiary,
R Squared Technologies Inc., a Delaware corporation
(“R2”) pursuant to a security agreement with R2
dated on or about the original issue
date of this Note (together, the “Security
Agreement”).

 

This Note
is subject to the following additional provisions:

 

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

 

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

 

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

 

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

 

“Business
Day” means
any day except any Saturday, any Sunday,
any day which is a federal legal holiday
in the United States or any day on
which banking institutions in the State
of New York are required by law or other
governmental action to close.

 

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

 

“Change
of Control Transaction” means, other
than by means of conversion or exercise
of the Notes and the Securities
issued together with the Notes, the occurrence
after the date hereof of
any of (a) an acquisition after the date hereof
by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through
legal or beneficial ownership of capital
stock of Borrower, by contract
or otherwise) of in excess
of 50% of the
voting securities of Borrower, (b) Borrower merges
into or consolidates with any other Person,
or any Person merges into
or consolidates with Borrower and, after giving effect to such
transaction, the stockholders of Borrower
immediately prior to such transaction own less than 50%
of the aggregate voting power of Borrower
or the successor entity of such transaction,

(c) Borrower
sells or transfers all or substantially
all of its assets to another
Person and the stockholders of Borrower
immediately prior to such transaction own less than 50% of the
aggregate

 

    	 	24	 

     

    

 

voting
power of the acquiring entity immediately
after the transaction, (d) a replacement
at one time or within a three
year period of
more than one-half of the members
of the Board of Directors
which is not approved by a majority
of those individuals who are members of
the Board of Directors on the
Original Issue Date (or by those individuals who
are serving as members of the Board
of Directors on any date
whose nomination to the Board of Directors
was approved by a majority
of the members of the Board of Directors
who are members on the date
hereof), or (e) the execution by Borrower
of an agreement to which Borrower is
a party or by which it is bound, providing for
any of the events set forth in clauses (a) through (d) above.

 

“Closing
Price” means on any particular date (a) the
last reported closing bid price per share of
Common Stock on such date on the
Trading Market (as reported by Bloomberg
L.P. at 4:15 p.m. (New York City time)),
or (b) if there is no such price on such
date, then the closing bid price
on the Trading Market on
the date nearest preceding such date (as reported by Bloomberg

L.P.
at 4:15 p.m. (New York City time)), or
(c) if the Common Stock is not then listed or
quoted on a Trading Market and if
prices for the Common Stock are then reported
in the “pink sheets” published by OTC
Pink Marketplace (or a similar organization or agency
succeeding to its functions of
reporting prices), the most recent bid
price per share of
the Common Stock so reported,
or (d) if the shares of Common Stock are
not then publicly traded the fair market
value of a share of Common
Stock as determined by an independent appraiser
selected in good faith by the Holder
and reasonably acceptable to Borrower, the fees and expenses of which
shall be paid by Borrower.

 

“Common
Stock” means the common stock of Borrower, par value $0.0001 per share,
and any other class of securities
into which such securities may hereafter
be reclassified or changed.

 

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

 

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

 

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

 

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

 

“Conversion
Shares” means, collectively, the shares of Common
Stock issuable upon conversion of this Note
in accordance with the terms hereof.

 

“Dilutive
Issuance” shall have the meaning
set forth in Section 5(e).

 

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

 

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

 

“Interest
Payment Date”
shall have the meaning set forth
in Section 2(1).

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i)
the outstanding principal amount of this
Note divided by the Conversion Price on the
date the Mandatory Default

    	 	25	 

     

    

 

Amount
is either (A) demanded (if demand or notice
is required to create an Event of
Default) or otherwise due or
(B) paid in full, whichever has a lower
Conversion Price, multiplied by the VWAP on the date
the Mandatory Default Amount is either (x) demanded (if demand or notice
is required to create an Event
of Default) or otherwise
due or (y) paid in full,
whichever has a higher VWAP, or (ii)
120% of the outstanding principal amount of
this Note and (b) all other amounts, costs,
expenses and liquidated damages due in respect of
this Note.

 

“New York
Courts” shall have the meaning
set forth in Section 10(d).

 

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

 

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

 

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

 

“Other Holders”
means holders of Other Notes.

 

“Other
Notes” means Notes nearly identical to this Note issued to other
Holders pursuant to Exchange Agreement in exchange
for R2 promissory notes.

 

“Permitted
Indebtedness” means (a) any liabilities for borrowed
money or amounts owed not in excess
of $100,000 in the aggregate (other than trade
accounts payable incurred in the ordinary course of
business and liabilities existing on
the Original Issue Date immediately after consummation of the Exchange
Agreement, as well as any notes that
may be issued from time
to time by Borrower pursuant to a Securities
Purchase Agreement anticipated to be entered
into by Borrower with certain holders of
Borrower’s and R2’s notes
on the Original Issue Date immediately after consummation of the
Exchange Agreement), (b) all guaranties, endorsements and other contingent obligations
in respect of indebtedness of others,
whether or not the same are or
should be reflected in the Company’s consolidated
balance sheet (or the notes thereto) not affecting more than $100,000 in the
aggregate, except guaranties by endorsement
of negotiable instruments for deposit
or collection or similar transactions
in the ordinary course of business;
(c) the present value of any lease payments not in excess
of $100,000 due under leases required
to be capitalized in accordance
with GAAP, and (d) any liabilities
for borrowed money that are junior to the Note
pursuant to an intercreditor agreement acceptable to a majority
in interest of the Holders, and the
holders of which are not granted
any security interest, including a credit line
of up to $1,000,000 with a financial
institution engaged in providing credit whose business does not generally include
equity investing. Neither the Company
nor any Subsidiary is in default with respect
to any Indebtedness.

 

“Permitted
Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges
or levies not yet due or Liens for taxes,
assessments and other governmental charges or levies
being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management
of Borrower) have been established in
accordance with GAAP, (b) Liens
imposed by law which were incurred in the ordinary
course of Borrower’s business, such
as carriers’, warehousemen’s and mechanics’
Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of Borrower’s business,
and which (x) do not individually or
in the aggregate materially detract from
the value of such
property or assets or materially
impair the use thereof in the operation of
the business of Borrower
and its consolidated Subsidiaries or (y)
are being

 

    	 	26	 

     

    

 

contested
in good faith by appropriate proceedings,
which proceedings have the effect
of preventing for the foreseeable future the
forfeiture or sale of the property
or asset subject to such Lien, and (c)
Liens incurred prior to the consummation
of the Exchange Agreement
in connection with Permitted Indebtedness under clauses (a) and (b) thereunder,
and Liens incurred in connection with
Permitted Indebtedness under clause (c) thereunder,
provided that such Liens are not secured
by assets of Borrower or its
Subsidiaries other than the assets so acquired
or leased.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of September
21, 2018, between R2 and each of Alpha
Capital Anstalt and Chase Financing Inc., as amended,
modified or supplemented from time
to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

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

 

“VWAP”
means, for any date, the price determined
by the first of
the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of
the Common Stock for such date (or
the nearest preceding date) on the Trading
Market on which the Common Stock
is then listed or quoted as reported by
Bloomberg

L.P. 
(based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New
York City time)), (b) if any of the Nasdaq
markets or exchanges is not a Trading
Market, the volume weighted average price
of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock
is not then listed or quoted for trading
on the OTC Bulletin Board and if prices for
the Common Stock are then reported
on the OTCQX, OTCQB or OTC
Pink Marketplace maintained by the OTC
Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting
prices), the volume weighted average
price of the Common
Stock on the first such facility (or
a similar organization or agency succeeding
to its functions of reporting
prices), or (d) in all other
cases, the fair market value
of a share of Common Stock as determined
by an independent appraiser selected in good faith by a majority
in interest of the Holders and reasonably
acceptable to Borrower, the fees and expenses of which
shall be paid by Borrower.

 

Section
2. Interest and General Provisions.

 

a)                 
Interest Payable In Cash.
Holders shall be entitled to receive, and the Company
shall pay, interest on the outstanding principal amount of this
Note compounded daily at the annual rate of
ten percent (10%) (as subject to increase
as set forth in this Note) from the Original
Issue Date through the Maturity Date.
Interest shall be payable on
the Maturity Date when all amounts outstanding in connection
with this Note shall be due and payable (each
an “Interest Payment Date”)
(if any Interest Payment Date is
not a Business Day, the applicable
payment shall be due on the
next succeeding Business Day) in cash.

    	 	27	 

     

    

 

b)                 
Payment Grace Period. The Borrower shall not have any grace period
to pay any monetary amounts due under
this Note.

 

c)                 
Conversion Privileges. The Conversion Rights set forth in Section
4 shall remain in full force and effect
immediately from the date hereof and until
the Note is paid in full regardless
of the occurrence of an Event
of Default. This Note shall be payable
in full on the Maturity Date, unless previously
converted into Common Stock in accordance
with Section 4 hereof.

 

d)                 
Application of Payments.
Interest on this Note shall be
calculated on the basis of a 360-day
year and the actual number of days elapsed.
Payments made in connection with this Note shall be applied
first to amounts due hereunder other
than principal and interest, thereafter to interest
and finally to principal.

 

e)                 
Pari Passu. Except as otherwise
set forth herein, all payments made on this Note and the Other
Notes and all actions taken by the Borrower
with respect to this Note and the
Other Notes, shall be made and taken pari
passu with respect to this
Note and the Other Notes. Notwithstanding anything to the
contrary contained herein or in
the Transaction Documents, it shall not be considered
non-pari passu for a Holder or
Other Holder to elect
to receive interest paid in Common Stock
or for the Company to actually pay interest
in Common Stock to such electing Holder
or Other Holder.

 

f)                  
Manner and Place of
Payment. Principal and interest
on this Note and other payments in connection
with this Note shall be payable
at the Holder’s offices as designated
above in lawful money of the United
States of America in immediately available
funds without set-off, deduction
or counterclaim. Upon assignment of the interest
of Holder in this Note, Borrower shall instead
make its payment pursuant to the assignee’s
instructions upon receipt of written
notice thereof. Except as set forth in this
Note, this Note may not be prepaid, redeemed
or mandatorily converted without the consent of the Holder.

 

Section
3.Registration of Transfers
and Exchanges.

 

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

 

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

 

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

 

Section
4.Conversion.

 

a)                  
Voluntary Conversion. At any time after the Original Issue Date until
this Note is no longer outstanding, this Note including interest accrued hereon shall
be convertible, in whole or
in part, into shares of
Common Stock at the option of
the Holder, at any time and from
time to time (subject

    	 	28	 

     

    

 

to the conversion
limitations set forth in Section 4(d) hereof). The Holder
shall effect conversions by delivering to Borrower
a Notice of Conversion,
the form of which is attached
hereto as Annex A (each,
a “Notice of Conversion”),
specifying therein the principal amount of this
Note and accrued interest, if any, to be converted and the date on which
such conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in
a Notice of Conversion, the Conversion Date
shall be the date that such Notice
of Conversion is deemed delivered hereunder.
To effect conversions hereunder, the Holder
shall not be required to physically surrender this Note
to Borrower unless the entire principal amount of this
Note has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount
equal to the applicable conversion. The Holder and Borrower
shall maintain records showing the principal amount(s) converted and the date
of such conversion(s). Borrower may deliver
an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice
of Conversion. In the event
of any dispute or discrepancy, the records
of the Holder shall be controlling
and determinative in the absence of manifest
error. The Holder, and any assignee
by acceptance of
this Note, acknowledges and agrees that, by reason of
the provisions of this
paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal
amount of this Note may be less than the
amount stated on the face hereof.

 

b)                  
Conversion Price. The conversion price for the principal and interest, if any,
in connection with voluntary conversions by the
Holder shall be $.015 per share
of Common Stock, subject to adjustment
herein (the “Conversion Price”). In the event
the average VWAP for the consecutive five

(5) 
Trading Days preceding but not including
the six month anniversary of the Original Issue
Date of this Note is less than the then
Conversion Price in effect on such six
month anniversary date, then the Conversion Price with respect to unconverted
Principal and interest on the Note shall
be reduced (and only reduced) to eighty percent
(80%) of the VWAP for the
ten (10) Trading Days following
(but not including) such six month anniversary
date, subject to further reduction.

 

		c)	Mechanics of Conversion.

 

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

 

ii.                
Delivery of Certificate
Upon Conversion.
Not later than three (3) Trading Days
after each Conversion Date (the “Share Delivery Date”), Borrower shall
deliver, or cause to be delivered,
to the Holder a certificate or certificates
representing the Conversion Shares which , on or after
the earlier of (i) the six
month anniversary of the Original Issue
Date or (ii) Effective Date, shall
be free of restrictive
legends and trading restrictions (other than those which may
then be required by the Purchase Agreement
or which, in the good faith
opinion of Company counsel, shall be reasonably
required to ensure compliance with
applicable securities laws) representing the number
of Conversion Shares being acquired upon the conversion
of this Note. Without imposing any obligation
on Holder, if, in connection
with any issuance of Conversion Shares,
Borrower fails to obtain a legal opinion
regarding the applicability of restrictive
legends or trading restrictions, Borrower shall, at the request of
Holder, accept the legal opinion of Grushko
& Mittman or such other
counsel as shall be selected
by Holder (any such legal opinion to be
reasonably acceptable to Borrower’s counsel),
the reasonable cost of which legal opinion shall
be borne by Borrower. Borrower shall use
reasonable commercial efforts to deliver any certificate
or certificates required to be delivered
by Borrower under this Section 4(c) electronically through the Depository Trust Company
or another established clearing

 

    	 	29	 

     

    

 

corporation performing
similar functions if the securities are then
eligible to be so transferred.

 

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

 

iv.                
Obligation Absolute; Partial Liquidated Damages.
Borrower’s obligations to issue and deliver
the Conversion Shares upon conversion
of this Note in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any
waiver or consent with respect
to any provision hereof, the recovery
of any judgment against any Person or
any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged
breach by the Holder or any other Person
of any obligation to Borrower or any violation
or alleged violation of law by the Holder
or any other Person, and irrespective
of any other circumstance which might
otherwise limit such obligation of Borrower
to the Holder in connection with the issuance
of such Conversion Shares; provided,
however, that such delivery shall not
operate as a waiver by Borrower
of any such action Borrower may have against
the Holder. In the event the Holder
of this Note
shall elect to convert any or all
of the outstanding principal amount hereof, Borrower
may not refuse conversion based on
any claim that the Holder or anyone
associated or affiliated with the Holder
has been engaged in any violation of
law, agreement or for any
other reason, unless an injunction from
a court, on notice to Holder,
restraining and or enjoining conversion of
all or part
of this Note shall have been sought
and obtained, and Borrower posts a surety bond
for the benefit of the Holder in
the amount of 150%
of the outstanding principal amount of
this Note, which is subject to the injunction,
which bond shall remain in effect
until the completion of arbitration/litigation
of the underlying dispute and the proceeds
of which shall be payable
to the Holder to the extent it obtains
judgment. In the absence of such
injunction, Borrower shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. If
Borrower fails for any reason
to deliver to the Holder such certificate
or certificates pursuant to Section
4(c)(ii) by the Share Delivery Date, Borrower shall pay to the
Holder, in cash, as liquidated damages and not
as a penalty, for each $1,000 of principal amount
being converted, $10 per Trading Day
(increasing to $20 per Trading Day on the
fifth (5th) Trading Day after such liquidated damages being to accrue)
for each Trading Day after such Share Delivery Date until such certificates are delivered
or Holder rescinds such conversion. Nothing herein
shall limit a Holder’s right to pursue
actual damages or declare an Event
of Default pursuant to Section 8 hereof
for Borrower’s failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue
all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall
not prohibit the Holder from seeking
to enforce damages pursuant to any other Section
hereof or under applicable law.

 

v.                   
Compensation for Buy-In on Failure
to Timely Deliver Certificates Upon Conversion.
In addition to any other
rights available to the Holder, if Borrower fails for any reason
to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such
Share Delivery Date the Holder is

    	 	30	 

     

    

 

required
by its brokerage firm to purchase (in
an open market transaction
or otherwise), or
the Holder or Holder’s
brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction
of a sale by the Holder of the
Conversion Shares which the Holder was entitled to receive
upon the conversion relating to such Share
Delivery Date (a “Buy- In”), then Borrower shall (A)
pay in cash to the Holder (in addition to
any other remedies available to or elected
by the Holder) the amount, if any,
by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common
Stock so purchased exceeds (y) the product
of (1) the aggregate
number of shares of Common Stock
that the Holder was entitled
to receive from the conversion at issue
multiplied by (2) the actual sale price
at which the sell order giving rise to such
purchase obligation was executed (including any brokerage commissions) and
(B) at the option
of the Holder, either reissue (if surrendered)
this Note in a principal amount equal to the principal
amount of the attempted conversion (in which case such conversion shall be
deemed rescinded) or deliver
to the Holder the number of shares
of Common Stock that would have been issued if
Borrower had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder
purchases Common Stock having a
total purchase price of $11,000 to cover
a Buy-In with respect to an attempted
conversion of this Note with respect to which the actual
sale price of the Conversion Shares (including
any brokerage commissions) giving rise
to such purchase obligation was a total
of $10,000 under clause

		(A)	of the immediately preceding sentence, Borrower shall
be required to pay the Holder

$1,000. The Holder
shall provide Borrower written notice indicating the amounts payable to the
Holder in respect of the Buy-In
and, upon request of Borrower,
evidence of the amount of such loss.
Nothing herein shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including,
without limitation, a decree of specific
performance and/or injunctive relief with respect to Borrower’s failure to timely
deliver certificates representing shares of Common Stock upon conversion
of this Note as required
pursuant to the terms hereof.

 

vi.                
Reservation of Shares
Issuable Upon Conversion. Borrower covenants that it will at all times
use its best efforts to reserve and keep
available out of its authorized
and unissued shares of Common Stock for
the sole purpose of issuance upon conversion
of this Note as herein provided, free
from preemptive rights or any other
actual contingent purchase rights of Persons
other than the Holder (and the other
holders of the Notes), not less than 125%
of the aggregate number of shares
of the Common Stock as shall
be issuable (taking into account the adjustments
and restrictions of Section
5) upon the conversion of the then outstanding
principal amount of this Note and interest
which has accrued and would accrue on such principal amount assuming such principal
amount was not converted through the Maturity Date. Subject to having sufficient authorized
share, Borrower covenants that all shares of Common Stock that shall
be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and nonassessable.

 

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

 

viii.                
Transfer Taxes and Expenses. The issuance of certificates
for shares of the Common Stock on
conversion of this Note shall be made
without charge to the Holder hereof for any documentary
stamp or similar taxes that may
be payable in respect of the

    	 	31	 

     

    

 

issue
or delivery of such certificates, provided that,
Borrower shall not be required to pay
any tax that may be payable
in respect of any transfer involved in
the issuance and delivery of any such certificate
upon conversion in a name other than that of the
Holder of this Note so converted
and Borrower shall not be required to
issue or deliver such certificates unless
or until the Person or Persons
requesting the issuance thereof shall have paid to Borrower the amount
of such tax or shall have established
to the satisfaction of Borrower
that such tax has been paid. Borrower shall pay all
Transfer Agent fees required for same-day processing of any Notice of
Conversion.

 

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

 

    	 	32	 

     

    

 

issuance
of shares of
Common Stock upon conversion of this
Note held by the Holder and the Beneficial
Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any such increase
will not be effective until the 61st
day after such notice is delivered
to Borrower. The Beneficial Ownership Limitation provisions of this
paragraph shall be construed and implemented
in a manner otherwise than in strict conformity
with the terms of this Section 4(d) to
correct this paragraph (or any portion hereof)
which may be defective or
inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes
or supplements necessary or desirable
to properly give effect
to such limitation. The limitations contained
in this paragraph shall apply to a successor
holder of this Note.

 

Section
5.Certain Adjustments.

 

a)                  
Stock Dividends and Stock Splits. If Borrower,
at any time while this Note is outstanding:
(i) pays a stock dividend or otherwise
makes a distribution or
distributions payable in shares of Common
Stock on shares of Common Stock or any
Common Stock Equivalents (other than any such dividend
or distribution, if any,
payable pursuant to the terms
of Borrower’s Series F and Series
G Preferred Stock), (ii) subdivides outstanding shares of
Common Stock into a larger number
of shares, (iii) combines (including by way
of a reverse stock split) outstanding shares
of Common Stock into a smaller
number of shares or
(iv) issues, in the event of a
reclassification of shares
of the Common Stock, any shares
of capital stock of Borrower,
then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the
number of shares of Common
Stock (excluding any treasury shares
of Borrower) outstanding immediately before such event,
and of which the denominator shall be the number
of shares of Common Stock outstanding
immediately after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders
entitled to receive such dividend
or distribution and shall become effective immediately
after the effective date in the case
of a subdivision, combination or re-classification.

 

b)                 
Subsequent Equity Sales. In addition to the reductions
of the Conversion Price described in Section
4(b), if, at any time while this Note
is outstanding, the Company or any Subsidiary,
as applicable, sells or grants
any option to purchase or sells
or grants any right to reprice,
or otherwise disposes of or issues
(or announces any sale, grant or
any option to purchase or other
disposition), any Common Stock or Common
Stock Equivalents entitling any Person
to acquire Common Stock at an effective
price per share that is lower than the then
Conversion Price (such lower price, the “Base Conversion Price” and
such issuances, collectively, a “Dilutive
Issuance”) (if the holder of the
Common Stock or Common Stock Equivalents
so issued shall at any time, whether
by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due
to warrants, options or rights per share which
are issued in connection with such issuance,
be entitled to receive Common
Stock at an effective price per share that is lower
than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance),
then the Conversion Price shall be reduced to equal
the Base Conversion Price, subject to adjustment for reverse and forward stock
splits and the like. Such adjustment shall
be made whenever such Common Stock or
Common Stock Equivalents are issued. Notwithstanding
the foregoing, no adjustment will be
made under this Section 5(b) in respect
of any issuance, dividend or distribution,
if any, made pursuant to the terms
of Borrower’s Series F and Series
G Preferred Stock. If the Company
enters into a Variable Rate Transaction, despite
the prohibition set forth in the Purchase
Agreement, the Company shall be deemed
to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion
price at which such securities may be converted
or exercised. The Company
shall notify the Holder in writing, no
later than the Trading Day following the issuance
of any Common Stock or Common
Stock Equivalents subject to this Section 5(b),
indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance Notice”). For
purposes of clarification, whether or
not the Company provides a Dilutive Issuance
Notice pursuant to this Section 5(b), upon
the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Conversion Shares
based upon the

    	 	33	 

     

    

 

Base Conversion
Price on or after the date of
such Dilutive Issuance, regardless of whether
the Holder accurately refers to the Base Conversion
Price in the Notice of Conversion.

 

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

 

d)                 
Pro Rata Distributions. During such time as this
Note is outstanding, if Borrower shall declare or make any dividend
whether or not permitted, or
makes any 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
exercise of this Note (without regard
to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership
Limitation) immediately before the date of which
a record is taken for such Distribution,
or, if no such record is taken,
the date as of which
the record holders of shares
of Common Stock are to be determined
for the participation in such Distribution (provided,
however, to the extent that the Holder's
right to participate in any such Distribution
would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled
to participate in such Distribution to
such extent (or in the beneficial ownership
of any shares of Common Stock as a result
of such Distribution to such extent) and
the portion of such Distribution shall
be held in abeyance for the benefit of
the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

e)                   
Fundamental Transaction. If, at any time
while this Note is outstanding, (i) Borrower,
directly or indirectly, in one or more
related transactions effects any merger or consolidation
of Borrower with or into
another Person, (ii) Borrower, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of
all or substantially
all of its assets in one or a series
of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange
offer (whether by Borrower or another
Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property
and has been accepted by the holders
of 50% or more of the outstanding
Common Stock, (iv) Borrower, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization
of the Common Stock or any compulsory
share exchange pursuant to which the Common
Stock is effectively converted into or exchanged
for other securities, cash or property,
(v) Borrower, directly or indirectly, in one
or more related transactions consummates
a stock or share purchase agreement or other
business combination

    	 	34	 

     

    

 

(including,
without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another
Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not
including any shares of Common
Stock held by the other Person or other Persons
making or party to, or associated
or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental Transaction”), then,
upon any subsequent conversion of this Note,
the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in Section
4(d) on the conversion of this Note),
the number of shares of Common
Stock of the successor or acquiring
corporation or of Borrower, if it
is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result
of such Fundamental Transaction by a holder
of the number of shares
of Common Stock for which this Note is
convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section
4(d) on the conversion of this
Note). For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect
of one (1) share of
Common Stock in such Fundamental Transaction, and Borrower
shall apportion the Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of
any different components of the
Alternate Consideration. If holders
of Common Stock are given any choice
as to the securities, cash or property
to be received in a Fundamental Transaction,
then the Holder shall be given the same
choice as to the Alternate Consideration
it receives upon any conversion of this
Note following such Fundamental Transaction. Borrower shall cause any successor
entity in a Fundamental Transaction in which
Borrower is not the survivor (the “Successor Entity”) to
assume in writing all of
the obligations of Borrower under this Note
and the other Transaction Documents (as defined
in the Purchase Agreement) in accordance with
the provisions of this
Section 5(e) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option
of the holder of this
Note, deliver to the Holder in exchange
for this Note a security of the Successor
Entity evidenced by a written instrument substantially similar in form and
substance to this Note which is convertible
for a corresponding number of shares
of capital stock of such Successor Entity (or
its parent entity) equivalent to the shares of
Common Stock acquirable and receivable
upon conversion of this
Note (without regard to any limitations on the
conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price
which applies the conversion price hereunder to such
shares of capital stock (but taking
into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction
and the value of such shares of capital
stock, such number of shares of
capital stock and such conversion price being
for the purpose of protecting
the economic value of this
Note immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form
and substance to the Holder. Upon the occurrence
of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental
Transaction, the provisions of this Note and the other
Transaction Documents referring to the “Company” shall refer instead
to the Successor Entity), and may exercise
every right and power of Borrower and
shall assume all of the obligations
of Borrower under this Note and the
other Transaction Documents with the same effect as if such Successor Entity had been
named as Borrower herein.

 

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

 

		g)	Notice to the Holder.

 

i.                     
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this
Section 5, Borrower shall promptly deliver to

    	 	35	 

     

    

 

each Holder
a notice setting forth the Conversion Price
after such adjustment and setting forth a brief
statement of the facts requiring
such adjustment.

 

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

 

Section
6. Redemption. Upon 30 days’ prior
written notice from the Borrower, principal and accrued and unpaid
interest on this Note shall be redeemable
at the option of the Borrower
at a redemption price equal to (i) 120%
of the principal amount to be redeemed
plus (ii) accrued and unpaid interest thereon;
provided however that during such 30-day period, the
Holder shall have the right to convert
this Note at the then applicable Conversion
Price. At the expiration of such 30-day
period (the “Redemption Date”), this Note shall no longer
be convertible. Unless and except to
the extent converted prior thereto, payment of the redemption
price shall be made within 30-days after
the Redemption Date.

 

Section
7. Negative Covenants. As long as any portion
of this Note remains outstanding, unless the holders
of at least 51% in principal
amount of the then outstanding Notes shall have otherwise given prior written
consent, Borrower shall not, and shall not permit any of the Subsidiaries to,
directly or indirectly:

 

a)                 
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
suffer to exist any indebtedness
for borrowed money of any kind, including,
but not limited to, a guarantee,

 

    	 	36	 

     

    

 

on or with
respect to any of its property or assets
now owned or hereafter acquired
or any interest therein or any income
or profits therefrom;

 

b)                 
other than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind,
on or with respect to any of its property
or assets now owned or hereafter
acquired or any interest therein or any income
or profits therefrom;

 

c)                 
amend its charter documents, including, without limitation, its certificate
of incorporation and bylaws,
in any manner that materially and adversely
affects any rights of the Holder;

 

d)                 
repay, repurchase or offer
to repay, repurchase or otherwise acquire
more than a de minimis number
of shares of its
Common Stock or Common Stock Equivalents
other than (i) as to the Conversion Shares
as permitted or required under the Transaction
Documents or (ii) in connection with
the redemption of convertible redeemable promissory notes on terms
no more favorable to the holders thereof
than provided hereunder for redemption of
this Note;

 

e)                 
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 (other than the Notes
if on a pro-rata basis and other than
as provided in clause (d) above), whether by way
of payment in respect of principal
of (or premium, if any)
or interest on, such Indebtedness, the
foregoing restriction shall also apply to Permitted
Indebtedness from and after the occurrence
of an Event of Default;

 

f)                  
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,
liquidation, distribution, preferential payments in connection with any securities
or debt issuances, corporate rearrangement, scheme
of arrangement or other similar transaction;

 

g)                 
enter into any transaction with
any Affiliate of Borrower
which would be required to be disclosed
in any public filing with the Commission, unless
such transaction is made on an arm’s-
length basis and expressly approved by a majority of the
disinterested directors of Borrower (even
if less than a quorum otherwise required for
board approval); or

 

		h)	enter into any agreement
with respect to any of the foregoing.
Section 8.Events of
Default.

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

 

i.                   
any default in the payment
of (A) the principal or interest amount
of this Note or (B) liquidated damages
and other amounts owing to a Holder on
any Note, as and when the same shall
become due and payable (whether on a Conversion
Date or the Maturity Date or
by acceleration or otherwise) which default,
solely in the case of a default
under clause (B) above,
is not cured within 3 Trading Days
after Borrower has become or should have become
aware of such default;

 

    	 	37	 

     

    

 

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

 

iii.                
a default or event
of default (subject to any grace
or cure period provided in the
applicable agreement, document or instrument)
shall occur under (A) any of the
Transaction Documents, including but not limited
to failure to strictly comply with the
provisions of the Transaction Documents,
or (B) any other material
agreement, lease, document or instrument to which
Borrower or any Subsidiary is obligated
(and not covered by clause (vi)
below), which in the
case of subsection (B) would reasonably be expected
to have a Material Adverse Effect;

 

iv.                
any representation or warranty
made in this Note, any other Transaction Documents, any written statement pursuant
hereto or thereto or any other report,
financial statement or certificate made or delivered
to the Holder or any Other Holder shall
be untrue or incorrect
in any material respect as of the
date when made or deemed
made;

 

		v.	Borrower or any Subsidiary
shall be subject to a Bankruptcy Event;

 

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

 

		vii.	Reserved;

 

		viii.	Reserved;

 

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

 

x.                 
any Person shall breach any agreement
delivered to the initial Holders
pursuant to Section 2.2 of the
Purchase Agreement;

 

xi.                
any monetary judgment, writ or
similar final process shall be entered
or filed against Borrower, any subsidiary
or any of their respective property or
other assets for more than $50,000, and
such judgment, writ or similar
final process shall remain unvacated, unbonded or unstayed
for a period of 90 calendar days;

 

    	 	38	 

     

    

 

xii.             
any dissolution, liquidation or winding
up by Borrower or a material
Subsidiary of a substantial portion of
their business;

 

		xiii.	cessation of operations
by Borrower or a material Subsidiary;

 

xiv.           
a failure by Borrower to
notify Holder of any material event of
which Borrower is obligated to notify
Holder pursuant to the terms of
this Note or any
other Transaction Document;

 

xiv.           
a default by the Borrower of a
material term, covenant, warranty or undertaking
of any other agreement to which the Borrower
and Holder are parties, or the occurrence
of an event of
default under any such other agreement
to which Borrower and Holder are parties which is not cured
after any required notice and/or cure period;

 

		xv.	the occurrence of an Event
of Default under any Other Note;
or

 

xvi.           
any material 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 Borrower, or
the validity or enforceability thereof shall
be contested by Borrower,
or a proceeding shall be
commenced by Borrower or any
governmental authority having jurisdiction over Borrower or Holder,
seeking to establish the invalidity
or unenforceability thereof, or Borrower shall
deny in writing that it has any liability
or obligation purported to be created
under any Transaction Document.

 

In
the event more than one grace, cure or
notice period is applicable to an Event
of Default, then the shortest
grace, cure or notice period shall
be applicable thereto.

 

b)                   
Remedies Upon Event of Default, Fundamental Transaction and
Change of Control Transaction.
If any Event of Default
or a Fundamental Transaction or a Change
of Control Transaction occurs, the outstanding
principal amount of this Note, liquidated damages and other
amounts owing in respect thereof through the date
of acceleration, shall become, at the
Holder’s election, immediately due and payable
in cash at the Mandatory Default Amount. Commencing on the Maturity
Date and also five (5) days after the occurrence
of any Event of
Default interest on this Note shall accrue
at an interest rate equal to the lesser
of 18% per annum
or the maximum rate permitted under applicable
law. Upon the payment in full
of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by Borrower.
In connection with such acceleration described
herein, the Holder need not provide, and Borrower hereby waives, any presentment,
demand, protest or other notice
of any kind, and the Holder may
immediately and without expiration of
any grace period enforce any and all
of its rights and remedies
hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded
and annulled by Holder at any time
prior to payment hereunder and the Holder shall
have all rights as a holder of
the Note until such time, if any,
as the Holder receives full payment pursuant to this
Section 8(b). No such rescission or
annulment shall affect any subsequent Event
of Default or impair any right
consequent thereon.

 

Section
9. Security Interest/Waiver of
Automatic Stay.
This Note is secured
by a security interest granted to the Holder
pursuant to the Security Agreement, as delivered
by Borrower and R2 to Holder. The Borrower acknowledges and agrees
that should a proceeding under any bankruptcy
or insolvency law be commenced
by or against the Borrower
or a Subsidiary, or if any
of the Collateral (as defined in the Security
Agreement) should become the subject
of any bankruptcy or insolvency proceeding,
then the Holder should be entitled to, among
other relief to which the Holder
may be entitled under the Transaction Documents
and any other agreement to which
the Borrower or a Subsidiary
and Holder are

 

    	 	39	 

     

    

 

parties
(collectively, “Loan Documents”) and/or applicable law, an order from the
court granting immediate relief from the automatic stay pursuant to 11 U.S.C.
Section 362 to permit the Holder to exercise all of its
rights and remedies pursuant to the Loan
Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES
AND AGREES THAT NEITHER 11 U.S.C.
SECTION 362 NOR ANY OTHER SECTION OF
THE BANKRUPTCY CODE OR OTHER STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE
OR INHIBIT IN ANY WAY THE ABILITY OF
THE HOLDER TO ENFORCE ANY OF
ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Borrower
hereby consents to any motion for
relief from stay that may
be filed by the Holder in any bankruptcy or insolvency
proceeding initiated by or against the Borrower and, further,
agrees not to file any opposition to
any motion for relief from
stay filed by the
Holder. The Borrower represents,
acknowledges and agrees that this
provision is a specific and material
aspect of the Loan Documents, and
that the Holder would not
agree to the terms of
the loan Documents if this
waiver were not a part of this
Note. The Borrower further
represents, acknowledges and agrees that is waiver is knowingly,
intelligently and voluntarily made,
that neither the Holder nor any
person acting on behalf of the
Holder has made any representations to induce
this waiver, that the Borrower has been
represented (or has had the
opportunity to by represented) in the
signing of this Note and the Loan
Documents and in the making of
this waiver by independent
legal counsel selected by the Borrower
and that the Borrower has discussed
this waiver with counsel.

 

Section 10.Miscellaneous.

 

a)                     
Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited
in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, facsimile, or electronic mail,
addressed as set forth below or to such other
address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted
to be given hereunder shall be
deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address
or number designated below (if delivered
on a business day during normal business
hours where such notice is to be received),
or the first business day following such delivery
(if delivered other than on a business day during
normal business hours where such notice is to be received),
or (b) upon receipt, when sent by electronic
mail (provided confirmation of transmission
is electronically generated and keep
on file by the sending party), or
(c) on the second business day following
the date of mailing
by express courier service, fully prepaid, addressed to such
address, or upon actual receipt
of such mailing, whichever shall first occur. The addresses
for such communications shall be: (i) if to Borrower, to: Omni
Shrimp, Inc., 517 Dumaine, PH4, New Orleans,
LA 70116, Attn: CFO, and (ii) if
to the Holder, to: the address and fax
number indicated on the front page of
this Note, with an additional copy
by fax only to (which shall not constitute notice): Grushko & Mittman,
P.C., 515 Rockaway Avenue, Valley Stream,
New York 11581, fax: (212) 697-3575.

 

b)                  
Absolute Obligation. Except as expressly provided herein, no
provision of this Note shall alter or
impair the obligation of
Borrower, which is absolute and unconditional,
to pay the principal of, liquidated damages
and accrued interest, as applicable, on this
Note at the time, place, and rate,
and in the coin or currency, herein prescribed.
This Note is a direct debt obligation of Borrower.
This Note ranks pari passu with
all other Notes now or hereafter issued under the terms
set forth herein.

 

c)                  
Lost or Mutilated Note.
If this Note shall be mutilated,
lost, stolen or destroyed, Borrower shall execute and deliver,
in exchange and substitution for and upon cancellation
of a mutilated Note, or in lieu
of or in substitution for a lost, stolen
or destroyed Note, a new Note for the
principal amount

    	 	40	 

     

    

 

of this Note
so mutilated, lost, stolen or destroyed,
but only upon receipt of evidence of
such loss, theft or destruction
of such Note, and of the ownership hereof, reasonably
satisfactory to Borrower.

 

d)                 
Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of
this Note shall be governed by and construed
and enforced in accordance with the internal
laws of the State of
New York, without
regard to the principles of conflict
of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any
of the Transaction Documents (whether brought against a party
hereto or its respective Affiliates, directors, officers, shareholders, employees
or agents) shall be commenced
in the state and federal courts sitting in the
City of New York, Borough
of Manhattan (the
“New York Courts”).
Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith
or with any transaction contemplated
hereby or discussed herein (including
with respect to the enforcement of
any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert
in any suit, action or proceeding,
any claim that it is not personally subject
to the jurisdiction of such New York Courts,
or such New York Courts are improper
or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process
and consents to process being served in any such
suit, action or proceeding by mailing
a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery)
to such party at the address in effect
for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained
herein shall be deemed to limit
in any way any right to serve
process in any other manner permitted by applicable
law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of
or relating to this Note or the transactions
contemplated hereby. If any party shall
commence an action or proceeding to enforce
any provisions of this Note, then the
prevailing party in such action or
proceeding shall be reimbursed by the
other party for its attorneys fees and other
costs and expenses incurred in the investigation, preparation and prosecution
of such action or
proceeding. This Note shall
be deemed an unconditional obligation
of Borrower for the
payment of money and, without limitation
to any other remedies of Holder,
may be enforced against Borrower by
summary proceeding pursuant to New York
Civil Procedure Law and
Rules Section 3213 or any similar rule or statute
in the jurisdiction where enforcement
is sought. For purposes of
such rule or statute,
any other document or agreement
to which Holder and Borrower are parties
or which Borrower
delivered to Holder, which may be
convenient or necessary to determine
Holder’s rights hereunder or Borrower’s obligations to Holder
are deemed a part of this
Note, whether or not such other
document or agreement was delivered together
herewith or was executed apart from this
Note.

 

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

 

f)               
Severability. If any provision
of this Note is invalid,
illegal or unenforceable, the balance of
this Note shall remain in effect, and
if any provision is inapplicable to any
Person or circumstance,
it shall nevertheless remain applicable to all other Persons and circumstances.

 

g)               
Usury. If it shall
be found that any interest
or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of
interest due hereunder shall automatically be lowered
to equal the maximum rate of interest
permitted under applicable law. Borrower covenants (to the extent that it may
lawfully do so) that it shall
not at any time insist upon, plead, or
in any manner whatsoever claim or take
the benefit or advantage of, any
stay, extension or usury law or
other law

 

    	 	41	 

     

    

 

which
would prohibit or forgive Borrower
from paying all or any portion
of the principal of or interest
on this Note as contemplated herein, wherever
enacted, now or at any time hereafter
in force, or which
may affect the covenants or the
performance of this Note, and Borrower
(to the extent it may lawfully
do so) hereby expressly waives all benefits
or advantage of any such law,
and covenants that it will not, by resort
to any such law, hinder, delay or impede
the execution of any power herein granted
to the Holder, but will suffer
and permit the execution of every such
as though no such law has been
enacted.

 

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

 

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

 

j)                
Amendment. Unless otherwise provided for hereunder, this Note may
not be modified or amended or
the provisions hereof waived without the written consent of
Borrower and the Holder.

 

k)              
Facsimile Signature. In the event
that the Borrower’s signature is delivered
by facsimile transmission, PDF, electronic
signature or other similar electronic
means, such signature shall create a valid
and binding obligation of the Borrower
with the same force and effect
as if such signature page were an original thereof.

 

 

*********************

 

(Signature
Pages Follow)

 

 

    	 	42	 

     

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized
officer as of January 11,  2019.

 

 

OMNI Shrimp, Inc

By: /s/ Colm Wrynn

Name: Colm Wrynn

Title: CEO

 

WITNESS:

 

 

     _______________________________________

 

 

 

 

 

CONSENTED AND AGREED:

 

Chase Financing Inc.

 

 

By:___________________________

 

     Name:

     Title:

    	 	43	 

     

    

 

 

ANNEX
A NOTICE OF CONVERSION

The
undersigned hereby elects to convert principal
under the Convertible Note Due January 11, 2021 of Omni Shrimp,
Inc., a Delaware corporation (the “Company”), into shares
of common stock (the “Common Stock”),
of Borrower according to the conditions hereof,
as of the date written below. If shares
of Common Stock are to be issued
in the name of a person other than the
undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by Borrower
in accordance therewith. No fee will
be charged to the holder for any conversion,
except for such transfer taxes, if any.

 

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

 

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

 

Conversion calculations:

 

   Date to Effect
Conversion: __________________________

 

Principal
Amount of Note to be Converted:
$ ______________

 

Accrued
Interest to be Converted, if any:
$ _______________

 

Conversion
Price: $ __________________

 

Number
of shares of Common Stock to be issued:
__________

 

Signature:
______________

 

Name:
________________

 

Address for
Delivery of Common Stock Certificates:
_________

________________________________________________

________________________________________________

 

 

 

 

 

Or

 

DWAC Instructions:
____________

 

Broker
No: __________________  

Account No: _________________

 

    	 	44	 

     

    

 

NEITHER
THIS SECURITY NOR
THE SECURITIES INTO WHICH
THIS SECURITY IS
CONVERTIBLE HAS NOT
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 BORROWER.
THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED
BROKER- DEALER OR OTHER LOAN WITH
A FINANCIAL INSTITUTION THAT
IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

 

Original
Issue Date: January
11, 2019

Principal Amount: $37,095.70

 

SECURED
CONVERTIBLE NOTE

DUE
January 11, 2021

 

THIS
CONVERTIBLE NOTE is one of a series
of duly authorized and validly
issued Notes of Omni Shrimp, Inc.,
a Nevada corporation, (the “Borrower”), having its principal place
of business at 517 Dumaine,
PH4, New Orleans, LA 70116, due January 11, 2021
(this note, the “Note” and, collectively
with the other notes of such series, the “Notes”).

 

The
Notes have been issued
in exchange for outstanding promissory notes of R Squared Technologies, Inc.,
a Delaware corporation (“R2”), and pursuant to an Exchange
Agreement dated the Original Issue Date
(the “Exchange Agreement”) among R2, securityholders of R2
and Borrower pursuant to which
R2 became a wholly-owned subsidiary
of Borrower. The original principal amount of each
Note is equal to the principal
amount of, and accrued and unpaid
interest on, the R2 promissory notes
so exchanged (the “Exchanged Notes”). The Exchanged
Notes were issued pursuant to separate purchase agreements or without
a purchase agreement. From and after the Original
Issue Date, (i) any and all purchase agreements
with R2 pursuant to which Exchanged Notes
were issued shall be merged into and
superseded by the Purchase Agreement,
and the Purchase Agreement shall
be deemed amended such that
it shall be deemed to cover
all Notes and the exclusive purchase agreement relating thereto and (ii)
Borrower shall be substituted for R2 with respect
to all covenants and agreements of
R2 in the Purchase Agreement that continue post-Original Issue Date, such that from
and after that date the same shall be deemed
to have been made by and apply
to Borrower with respect to itself and
the Notes and all provisions of the Purchase
Agreement shall be construed, mutatis mutandis, to give
effect to the same. In the event
of an inconsistency between the Purchase Agreement
and this Note, the terms of this Note
shall control.

 

FOR
VALUE RECEIVED, Borrower promises to pay to Chase
Financing Inc. Profit Sharing and 401(k) Plan or its registered assigns
(the “Holder”), with an address at: PO Box 403303, Miami
Beach, Florida 33140 Fax: (212) 787-9268, or shall have paid pursuant to the
terms hereunder, the principal sum of Thirty Seven Thousand Ninety Five Dollars
and Seventy Cents ($37,095.70) on January 11, 2021
(the “Maturity Date”) or such
earlier date as this Note is required or permitted
to be repaid as provided

 

    	 	45	 

     

    

 

hereunder,
and to pay interest, if any, to the Holder
on the aggregate unconverted and then
outstanding principal amount of this Note in
accordance with the provisions hereof.

 

The Holder
of this Note has been granted a security
interest in (i) assets of Borrower pursuant
to a stock pledge agreement dated on or about
the original issue date of this Note
and (ii) assets of Borrower’s subsidiary,
R Squared Technologies Inc., a Delaware corporation
(“R2”) pursuant to a security agreement with R2
dated on or about the original issue
date of this Note (together, the “Security
Agreement”).

 

This Note
is subject to the following additional provisions:

 

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

 

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

 

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

 

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

 

“Business
Day” means
any day except any Saturday, any Sunday,
any day which is a federal legal holiday
in the United States or any day on
which banking institutions in the State
of New York are required by law or other
governmental action to close.

 

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

 

“Change
of Control Transaction” means, other
than by means of conversion or exercise
of the Notes and the Securities
issued together with the Notes, the occurrence
after the date hereof of
any of (a) an acquisition after the date hereof
by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through
legal or beneficial ownership of capital
stock of Borrower, by contract
or otherwise) of in excess
of 50% of the
voting securities of Borrower, (b) Borrower merges
into or consolidates with any other Person,
or any Person merges into
or consolidates with Borrower and, after giving effect to such
transaction, the stockholders of Borrower
immediately prior to such transaction own less than 50%
of the aggregate voting power of Borrower
or the successor entity of such transaction,

(c) Borrower
sells or transfers all or substantially
all of its assets to another
Person and the stockholders of Borrower
immediately prior to such transaction own less than 50% of the
aggregate

 

    	 	46	 

     

    

 

voting
power of the acquiring entity immediately
after the transaction, (d) a replacement
at one time or within a three
year period of
more than one-half of the members
of the Board of Directors
which is not approved by a majority
of those individuals who are members of
the Board of Directors on the
Original Issue Date (or by those individuals who
are serving as members of the Board
of Directors on any date
whose nomination to the Board of Directors
was approved by a majority
of the members of the Board of Directors
who are members on the date
hereof), or (e) the execution by Borrower
of an agreement to which Borrower is
a party or by which it is bound, providing for
any of the events set forth in clauses (a) through (d) above.

 

“Closing
Price” means on any particular date (a) the
last reported closing bid price per share of
Common Stock on such date on
the Trading Market (as reported by Bloomberg
L.P. at 4:15 p.m. (New York City time)), or (b)
if there is no such price on such date,
then the closing bid price on the
Trading Market on the date nearest
preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York City
time)), or (c) if the Common Stock
is not then listed or quoted on a
Trading Market and if prices for the Common Stock
are then reported in the “pink sheets” published by OTC Pink Marketplace (or a similar organization or agency
succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock
so reported, or (d) if the shares of Common Stock
are not then publicly traded the fair market value
of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holder and
reasonably acceptable to Borrower, the fees and expenses of which shall be paid by Borrower.

 

“Common
Stock” means the common stock of Borrower, par value $0.0001 per share,
and any other class of securities
into which such securities may hereafter
be reclassified or changed.

 

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

 

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

 

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

 

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

 

“Conversion
Shares” means, collectively, the shares of Common
Stock issuable upon conversion of this Note
in accordance with the terms hereof.

 

“Dilutive
Issuance” shall have the meaning
set forth in Section 5(e).

 

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

 

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

 

“Interest
Payment Date”
shall have the meaning set forth
in Section 2(1).

 

“Mandatory
Default Amount” means the sum of (a) the greater of (i)
the outstanding principal amount of this
Note divided by the Conversion Price on the
date the Mandatory Default

 

    	 	47	 

     

    

 

Amount
is either (A) demanded (if demand or notice
is required to create an Event of
Default) or otherwise due or
(B) paid in full, whichever has a lower
Conversion Price, multiplied by the VWAP on the date
the Mandatory Default Amount is either (x) demanded (if demand or notice
is required to create an Event
of Default) or otherwise
due or (y) paid in full,
whichever has a higher VWAP, or (ii)
120% of the outstanding principal amount of
this Note and (b) all other amounts, costs,
expenses and liquidated damages due in respect of
this Note.

 

“New York
Courts” shall have the meaning
set forth in Section 10(d).

 

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

 

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

 

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

 

“Other Holders”
means holders of Other Notes.

 

“Other
Notes” means Notes nearly identical to this Note issued to other
Holders pursuant to Exchange Agreement in exchange
for R2 promissory notes.

 

“Permitted
Indebtedness” means (a) any liabilities for borrowed
money or amounts owed not in excess
of $100,000 in the aggregate (other than trade
accounts payable incurred in the ordinary course of
business and liabilities existing on
the Original Issue Date immediately after consummation of the Exchange
Agreement, as well as any notes that
may be issued from time
to time by Borrower pursuant to a Securities
Purchase Agreement anticipated to be entered
into by Borrower with certain holders of
Borrower’s and R2’s notes
on the Original Issue Date immediately after consummation of the
Exchange Agreement), (b) all guaranties, endorsements and other contingent obligations
in respect of indebtedness of others,
whether or not the same are or
should be reflected in the Company’s consolidated
balance sheet (or the notes thereto) not affecting more than $100,000 in the
aggregate, except guaranties by endorsement
of negotiable instruments for deposit
or collection or similar transactions
in the ordinary course of business;
(c) the present value of any lease payments not in excess
of $100,000 due under leases required to be
capitalized in accordance with GAAP,
and (d) any liabilities for borrowed money that
are junior to the Note pursuant to
an intercreditor agreement acceptable to a majority
in interest of the Holders, and the
holders of which are not granted
any security interest, including a credit line
of up to $1,000,000 with a financial
institution engaged in providing credit whose business does not generally include
equity investing. Neither the Company
nor any Subsidiary is in default with respect
to any Indebtedness.

 

“Permitted
Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges
or levies not yet due or Liens for taxes,
assessments and other governmental charges or levies
being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management
of Borrower) have been established in
accordance with GAAP, (b) Liens
imposed by law which were incurred in the ordinary
course of Borrower’s business, such
as carriers’, warehousemen’s and mechanics’
Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of Borrower’s business,
and which (x) do not individually or
in the aggregate materially detract from
the value of such
property or assets or materially
impair the use thereof in the operation
of the business of
Borrower and its consolidated Subsidiaries
or (y) are being

 

    	 	48	 

     

    

 

contested
in good faith by appropriate proceedings,
which proceedings have the effect
of preventing for the foreseeable future the
forfeiture or sale of the property
or asset subject to such Lien, and (c)
Liens incurred prior to the consummation
of the Exchange Agreement
in connection with Permitted Indebtedness under clauses (a) and (b) thereunder,
and Liens incurred in connection with
Permitted Indebtedness under clause (c) thereunder,
provided that such Liens are not secured
by assets of Borrower or its
Subsidiaries other than the assets so acquired
or leased.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of September
21, 2018, between R2 and each of Alpha
Capital Anstalt and Chase Financing Inc., as amended,
modified or supplemented from time
to time in accordance with its terms.

 

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

 

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

 

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

 

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

 

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

 

“VWAP”
means, for any date, the price determined
by the first of
the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of
the Common Stock for such date (or
the nearest preceding date) on the Trading
Market on which the Common Stock
is then listed or quoted as reported by
Bloomberg

L.P. 
(based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New
York City time)), (b) if any of the Nasdaq
markets or exchanges is not a Trading
Market, the volume weighted average price
of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock
is not then listed or quoted for trading
on the OTC Bulletin Board and if prices for
the Common Stock are then reported
on the OTCQX, OTCQB or OTC
Pink Marketplace maintained by the OTC
Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting
prices), the volume weighted average
price of the Common
Stock on the first such facility (or
a similar organization or agency succeeding
to its functions of reporting
prices), or (d) in all other
cases, the fair market value
of a share of Common Stock as determined
by an independent appraiser selected in good faith by a majority
in interest of the Holders and reasonably
acceptable to Borrower, the fees and expenses of which
shall be paid by Borrower.

 

Section
2. Interest and General Provisions.

 

a)                 
Interest Payable In Cash.
Holders shall be entitled to receive, and the Company
shall pay, interest on the outstanding principal amount of this
Note compounded daily at the annual rate of
ten percent (10%) (as subject to increase
as set forth in this Note) from the Original
Issue Date through the Maturity Date.
Interest shall be payable on
the Maturity Date when all amounts outstanding in connection
with this Note shall be due and payable (each
an “Interest Payment Date”)
(if any Interest Payment Date is
not a Business Day, the applicable
payment shall be due on the
next succeeding Business Day) in cash.

    	 	49	 

     

    

 

 

b)                 
Payment Grace Period. The Borrower shall not have any grace period
to pay any monetary amounts due under
this Note.

 

c)                 
Conversion Privileges. The Conversion Rights set forth in Section
4 shall remain in full force and effect
immediately from the date hereof and until
the Note is paid in full regardless
of the occurrence of an Event
of Default. This Note shall be payable
in full on the Maturity Date, unless previously
converted into Common Stock in accordance
with Section 4 hereof.

 

d)                 
Application of Payments.
Interest on this Note shall be
calculated on the basis of a 360-day
year and the actual number of days elapsed.
Payments made in connection with this Note shall be applied
first to amounts due hereunder other
than principal and interest, thereafter to interest
and finally to principal.

 

e)                 
Pari Passu. Except as otherwise
set forth herein, all payments made on this Note and the Other
Notes and all actions taken by the Borrower
with respect to this Note and the
Other Notes, shall be made and taken pari
passu with respect to this
Note and the Other Notes. Notwithstanding anything to the
contrary contained herein or in
the Transaction Documents, it shall not be considered
non-pari passu for a Holder or
Other Holder to elect
to receive interest paid in Common Stock
or for the Company to actually pay interest
in Common Stock to such electing Holder
or Other Holder.

 

f)                  
Manner and Place of
Payment. Principal and interest
on this Note and other payments in connection
with this Note shall be payable
at the Holder’s offices as designated
above in lawful money of the United
States of America in immediately available
funds without set-off, deduction
or counterclaim. Upon assignment of the interest
of Holder in this Note, Borrower shall instead
make its payment pursuant to the assignee’s
instructions upon receipt of written
notice thereof. Except as set forth in this
Note, this Note may not be prepaid, redeemed
or mandatorily converted without the consent of the Holder.

 

Section
3.Registration of Transfers
and Exchanges.

 

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

 

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

 

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

 

Section
4.Conversion.

 

a)                  
Voluntary Conversion. At any time after the Original Issue Date until
this Note is no longer outstanding, this Note including interest accrued hereon shall
be convertible, in whole or
in part, into shares of
Common Stock at the option of
the Holder, at any time and from
time to time (subject

    	 	50	 

     

    

 

to the conversion
limitations set forth in Section 4(d) hereof). The Holder
shall effect conversions by delivering to Borrower
a Notice of Conversion,
the form of which is attached
hereto as Annex A (each,
a “Notice of Conversion”),
specifying therein the principal amount of this
Note and accrued interest, if any, to be converted and the date on which
such conversion shall be effected (such date, the “Conversion Date”).
If no Conversion Date is specified in
a Notice of Conversion, the Conversion Date
shall be the date that such Notice
of Conversion is deemed delivered hereunder.
To effect conversions hereunder, the Holder
shall not be required to physically surrender this Note
to Borrower unless the entire principal amount of this
Note has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount
equal to the applicable conversion. The Holder and Borrower shall maintain records showing the principal
amount(s) converted and the date of such
conversion(s). Borrower may deliver
an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice
of Conversion. In the event
of any dispute or discrepancy, the records
of the Holder shall be controlling
and determinative in the absence of manifest
error. The Holder, and any assignee
by acceptance of
this Note, acknowledges and agrees that, by reason of
the provisions of this
paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal
amount of this Note may be less than the
amount stated on the face hereof.

 

b)                  
Conversion Price. The conversion price for the principal and interest, if any,
in connection with voluntary conversions by the
Holder shall be $.015 per share
of Common Stock, subject to adjustment
herein (the “Conversion Price”). In the event
the average VWAP for the consecutive five

(5) 
Trading Days preceding but not including
the six month anniversary of the Original Issue
Date of this Note is less than the then
Conversion Price in effect on such six
month anniversary date, then the Conversion Price with respect to unconverted
Principal and interest on the Note shall
be reduced (and only reduced) to eighty percent
(80%) of the VWAP for the
ten (10) Trading Days following
(but not including) such six month anniversary
date, subject to further reduction.

 

		c)	Mechanics of Conversion.

 

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

 

ii.                
Delivery of Certificate
Upon Conversion.
Not later than three (3) Trading Days
after each Conversion Date (the “Share Delivery Date”), Borrower shall
deliver, or cause to be delivered,
to the Holder a certificate or certificates
representing the Conversion Shares which , on or after
the earlier of (i) the six
month anniversary of the Original Issue
Date or (ii) Effective Date, shall
be free of restrictive
legends and trading restrictions (other than those which may
then be required by the Purchase Agreement
or which, in the good faith
opinion of Company counsel, shall be reasonably
required to ensure compliance with
applicable securities laws) representing the number
of Conversion Shares being acquired upon the conversion
of this Note. Without imposing any obligation
on Holder, if, in connection
with any issuance of Conversion Shares,
Borrower fails to obtain a legal opinion
regarding the applicability of restrictive
legends or trading restrictions, Borrower shall, at the request of
Holder, accept the legal opinion of Grushko
& Mittman or such other
counsel as shall be selected
by Holder (any such legal opinion to be
reasonably acceptable to Borrower’s counsel),
the reasonable cost of which legal opinion shall
be borne by Borrower. Borrower shall use
reasonable commercial efforts to deliver any certificate
or certificates required to be delivered
by Borrower under this Section 4(c) electronically through the Depository Trust Company
or another established clearing

    	 	51	 

     

    

 

corporation performing
similar functions if the securities are then
eligible to be so transferred.

 

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

 

iv.                
Obligation Absolute; Partial Liquidated Damages.
Borrower’s obligations to issue and deliver
the Conversion Shares upon conversion
of this Note in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any
waiver or consent with respect
to any provision hereof, the recovery
of any judgment against any Person or
any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged
breach by the Holder or any other Person
of any obligation to Borrower or any violation
or alleged violation of law by the Holder
or any other Person, and irrespective
of any other circumstance which might
otherwise limit such obligation of Borrower
to the Holder in connection with the issuance
of such Conversion Shares; provided,
however, that such delivery shall not
operate as a waiver by Borrower
of any such action Borrower may have against
the Holder. In the event the Holder
of this Note
shall elect to convert any or all
of the outstanding principal amount hereof, Borrower may
not refuse conversion based on any claim
that the Holder or anyone
associated or affiliated with the Holder
has been engaged in any violation of
law, agreement or for any
other reason, unless an injunction from
a court, on notice to Holder,
restraining and or enjoining conversion of
all or part
of this Note shall have been sought
and obtained, and Borrower posts a surety bond
for the benefit of the Holder in
the amount of 150%
of the outstanding principal amount of
this Note, which is subject to the injunction,
which bond shall remain in effect
until the completion of arbitration/litigation
of the underlying dispute and the proceeds
of which shall be payable
to the Holder to the extent it obtains
judgment. In the absence of such
injunction, Borrower shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. If
Borrower fails for any reason
to deliver to the Holder such certificate
or certificates pursuant to Section
4(c)(ii) by the Share Delivery Date, Borrower shall pay to the
Holder, in cash, as liquidated damages and not
as a penalty, for each $1,000 of principal amount
being converted, $10 per Trading Day
(increasing to $20 per Trading Day on the
fifth (5th) Trading Day after such liquidated damages being to accrue)
for each Trading Day after such Share Delivery Date until such certificates are delivered
or Holder rescinds such conversion. Nothing herein
shall limit a Holder’s right to pursue
actual damages or declare an Event
of Default pursuant to Section 8 hereof
for Borrower’s failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right
to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights
shall not prohibit the Holder
from seeking to enforce damages pursuant
to any other Section hereof or under applicable
law.

 

v.                   
Compensation for Buy-In on Failure
to Timely Deliver Certificates Upon Conversion.
In addition to any other
rights available to the Holder, if Borrower fails for any reason
to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such
Share Delivery Date the Holder is

 

    	 	52	 

     

    

 

required
by its brokerage firm to purchase (in
an open market transaction
or otherwise), or
the Holder or Holder’s
brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction
of a sale by the Holder of the
Conversion Shares which the Holder was entitled to receive
upon the conversion relating to such Share
Delivery Date (a “Buy- In”),
then Borrower shall (A) pay in cash to
the Holder (in addition to any other
remedies available to or elected by the
Holder) the amount, if any,
by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common
Stock so purchased exceeds (y) the product
of (1) the aggregate
number of shares of Common Stock
that the Holder was entitled
to receive from the conversion at issue
multiplied by (2) the actual sale price
at which the sell order giving rise to such
purchase obligation was executed (including any brokerage commissions) and
(B) at the option
of the Holder, either reissue (if surrendered)
this Note in a principal amount equal to the principal
amount of the attempted conversion (in which case such conversion shall be
deemed rescinded) or deliver
to the Holder the number of shares
of Common Stock that would have been issued if
Borrower had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder
purchases Common Stock having a
total purchase price of $11,000 to cover
a Buy-In with respect to an attempted
conversion of this Note with respect to which the actual
sale price of the Conversion Shares (including
any brokerage commissions) giving rise to such purchase
obligation was a total of $10,000 under
clause

		(A)	of the immediately preceding sentence, Borrower shall
be required to pay the Holder

$1,000.
The Holder shall provide Borrower written notice indicating the amounts
payable to the Holder in respect
of the Buy-In and, upon request of
Borrower, evidence of the amount of such
loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation,
a decree of specific performance and/or injunctive
relief with respect to Borrower’s failure to timely deliver certificates representing
shares of Common Stock upon conversion
of this Note as required
pursuant to the terms hereof.

 

vi.                
Reservation of Shares
Issuable Upon Conversion. Borrower covenants that it will at all times
use its best efforts to reserve and keep
available out of its authorized
and unissued shares of Common Stock for
the sole purpose of issuance upon conversion
of this Note as herein provided, free
from preemptive rights or any other
actual contingent purchase rights of Persons
other than the Holder (and the other
holders of the Notes), not less than 125%
of the aggregate number of shares
of the Common Stock as shall
be issuable (taking into account the adjustments
and restrictions of Section
5) upon the conversion of the then outstanding
principal amount of this Note and interest
which has accrued and would accrue on such principal amount assuming such principal
amount was not converted through the Maturity Date. Subject to having sufficient authorized
share, Borrower covenants that all shares of Common Stock that shall
be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and nonassessable.

 

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

 

viii.                
Transfer Taxes and Expenses. The issuance of certificates
for shares of the Common Stock on
conversion of this Note shall be made
without charge to the Holder hereof for any documentary
stamp or similar taxes that may
be payable in respect of the

    	 	53	 

     

    

 

issue
or delivery of such certificates, provided that,
Borrower shall not be required to pay
any tax that may be payable
in respect of any transfer involved in
the issuance and delivery of any such certificate
upon conversion in a name other than that of the
Holder of this Note so converted
and Borrower shall not be required to
issue or deliver such certificates unless
or until the Person or Persons
requesting the issuance thereof shall have paid to Borrower the amount
of such tax or shall have established
to the satisfaction of Borrower
that such tax has been paid. Borrower shall pay all
Transfer Agent fees required for same-day processing of any Notice of
Conversion.

 

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

    	 	54	 

     

    

 

issuance
of shares of
Common Stock upon conversion of this
Note held by the Holder and the Beneficial
Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any such increase
will not be effective until the 61st
day after such notice is delivered
to Borrower. The Beneficial Ownership Limitation provisions of this
paragraph shall be construed and implemented
in a manner otherwise than in strict conformity
with the terms of this Section 4(d) to
correct this paragraph (or any portion hereof)
which may be defective or
inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes
or supplements necessary or desirable
to properly give effect
to such limitation. The limitations contained
in this paragraph shall apply to a successor
holder of this Note.

 

Section
5.Certain Adjustments.

 

a)                  
Stock Dividends and Stock Splits. If Borrower,
at any time while this Note is outstanding:
(i) pays a stock dividend or otherwise
makes a distribution or
distributions payable in shares of Common
Stock on shares of Common Stock or any
Common Stock Equivalents (other than any such dividend
or distribution, if any,
payable pursuant to the terms
of Borrower’s Series F and Series
G Preferred Stock), (ii) subdivides outstanding shares of
Common Stock into a larger number
of shares, (iii) combines (including by way
of a reverse stock split) outstanding shares
of Common Stock into a smaller
number of shares or
(iv) issues, in the event of a
reclassification of shares
of the Common Stock, any shares of
capital stock of Borrower, then the Conversion
Price shall be multiplied by a fraction
of which the numerator shall be the
number of shares of Common
Stock (excluding any treasury shares
of Borrower) outstanding immediately before such event,
and of which the denominator shall be the number
of shares of Common Stock outstanding
immediately after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders
entitled to receive such dividend
or distribution and shall become effective immediately
after the effective date in the case
of a subdivision, combination or re-classification.

 

b)                 
Subsequent Equity Sales. In addition to the reductions
of the Conversion Price described in Section
4(b), if, at any time while this Note
is outstanding, the Company or any Subsidiary,
as applicable, sells or grants
any option to purchase or sells
or grants any right to reprice,
or otherwise disposes of or issues
(or announces any sale, grant or
any option to purchase or other
disposition), any Common Stock or Common
Stock Equivalents entitling any Person
to acquire Common Stock at an effective
price per share that is lower than the then
Conversion Price (such lower price, the “Base Conversion Price” and
such issuances, collectively, a “Dilutive
Issuance”) (if the holder of the
Common Stock or Common Stock Equivalents
so issued shall at any time, whether
by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due
to warrants, options or rights per share which
are issued in connection with such issuance,
be entitled to receive Common
Stock at an effective price per share that is lower
than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance),
then the Conversion Price shall be reduced to equal
the Base Conversion Price, subject to adjustment for reverse and forward stock
splits and the like. Such adjustment shall
be made whenever such Common Stock or
Common Stock Equivalents are issued. Notwithstanding
the foregoing, no adjustment will be
made under this Section 5(b) in respect
of any issuance, dividend or distribution,
if any, made pursuant to the terms
of Borrower’s Series F and Series
G Preferred Stock. If the Company
enters into a Variable Rate Transaction, despite
the prohibition set forth in the Purchase
Agreement, the Company shall be deemed
to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion
price at which such securities may be converted
or exercised. The Company
shall notify the Holder in writing, no
later than the Trading Day following the issuance
of any Common Stock or Common
Stock Equivalents subject to this Section 5(b),
indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance Notice”). For
purposes of clarification, whether or
not the Company provides a Dilutive Issuance
Notice pursuant to this Section 5(b), upon
the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Conversion Shares
based upon the

    	 	55	 

     

    

 

Base Conversion
Price on or after the date of
such Dilutive Issuance, regardless of whether
the Holder accurately refers to the Base Conversion
Price in the Notice of Conversion.

 

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

 

d)                 
Pro Rata Distributions. During such time as this
Note is outstanding, if Borrower shall declare or make any dividend
whether or not permitted, or
makes any 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
exercise of this Note (without regard
to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership
Limitation) immediately before the date of which
a record is taken for such Distribution,
or, if no such record is taken,
the date as of which
the record holders of shares
of Common Stock are to be determined
for the participation in such Distribution (provided,
however, to the extent that the Holder's
right to participate in any such Distribution
would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled
to participate in such Distribution to
such extent (or in the beneficial ownership
of any shares of Common Stock as a result
of such Distribution to such extent) and
the portion of such Distribution shall
be held in abeyance for the benefit of
the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

e)                   
Fundamental Transaction. If, at any time
while this Note is outstanding, (i) Borrower,
directly or indirectly, in one or more
related transactions effects any merger or consolidation
of Borrower with or into
another Person, (ii) Borrower, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of
all or substantially
all of its assets in one or a series
of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange
offer (whether by Borrower or another
Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property
and has been accepted by the holders of 50%
or more of the outstanding Common Stock,
(iv) Borrower, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization
of the Common Stock or any compulsory
share exchange pursuant to which the Common
Stock is effectively converted into or exchanged
for other securities, cash or property,
(v) Borrower, directly or indirectly, in one
or more related transactions consummates
a stock or share purchase agreement or other
business combination

    	 	56	 

     

    

 

(including,
without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another
Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not
including any shares of Common
Stock held by the other Person or other Persons
making or party to, or associated
or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental Transaction”), then,
upon any subsequent conversion of this Note,
the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in Section
4(d) on the conversion of this Note),
the number of shares of Common
Stock of the successor or acquiring
corporation or of Borrower, if it
is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result
of such Fundamental Transaction by a holder
of the number of shares
of Common Stock for which this Note is
convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section
4(d) on the conversion of this
Note). For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect
of one (1) share of
Common Stock in such Fundamental Transaction, and Borrower
shall apportion the Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of
any different components of the
Alternate Consideration. If holders
of Common Stock are given any choice
as to the securities, cash or property
to be received in a Fundamental Transaction,
then the Holder shall be given the same
choice as to the Alternate Consideration
it receives upon any conversion of this
Note following such Fundamental Transaction. Borrower shall cause any successor
entity in a Fundamental Transaction in which
Borrower is not the survivor (the “Successor Entity”) to
assume in writing all of
the obligations of Borrower under this Note
and the other Transaction Documents (as defined
in the Purchase Agreement) in accordance with
the provisions of this
Section 5(e) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option
of the holder of this
Note, deliver to the Holder in exchange
for this Note a security of the Successor
Entity evidenced by a written instrument substantially similar in form and
substance to this Note which is convertible
for a corresponding number of shares
of capital stock of such Successor Entity (or
its parent entity) equivalent to the shares of
Common Stock acquirable and receivable
upon conversion of this
Note (without regard to any limitations on the
conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price
which applies the conversion price hereunder to such
shares of capital stock (but taking
into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction
and the value of such shares of capital
stock, such number of shares of
capital stock and such conversion price being
for the purpose of protecting
the economic value of this
Note immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form
and substance to the Holder. Upon the occurrence
of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental
Transaction, the provisions of this Note and the other
Transaction Documents referring to the “Company” shall refer instead
to the Successor Entity), and may exercise
every right and power of Borrower and
shall assume all of the obligations
of Borrower under this Note and the
other Transaction Documents with the same effect as if such Successor Entity had been
named as Borrower herein.

 

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

 

		g)	Notice to the Holder.

 

i.                     
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this
Section 5, Borrower shall promptly deliver to

 

    	 	57	 

     

    

 

each Holder
a notice setting forth the Conversion Price
after such adjustment and setting forth
a brief statement of the
facts requiring such adjustment.

 

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

 

Section
6. Redemption. Upon 30 days’ prior
written notice from the Borrower, principal and accrued and unpaid
interest on this Note shall be redeemable
at the option of the Borrower
at a redemption price equal to (i) 120%
of the principal amount to be redeemed
plus (ii) accrued and unpaid interest thereon;
provided however that during such 30-day period, the
Holder shall have the right to convert
this Note at the then applicable Conversion
Price. At the expiration of such 30-day
period (the “Redemption Date”), this Note shall no longer
be convertible. Unless and except to
the extent converted prior thereto, payment of the redemption
price shall be made within 30-days after
the Redemption Date.

 

Section
7. Negative Covenants. As long as any portion
of this Note remains outstanding, unless the holders
of at least 51% in principal
amount of the then outstanding Notes shall have otherwise given prior written
consent, Borrower shall not, and shall not permit any of the Subsidiaries to,
directly or indirectly:

 

a)                 
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
suffer to exist any indebtedness
for borrowed money of any kind, including,
but not limited to, a guarantee,

 

    	 	58	 

     

    

 

on or with
respect to any of its property or assets
now owned or hereafter acquired
or any interest therein or any income
or profits therefrom;

 

b)                 
other than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind,
on or with respect to any of its property
or assets now owned or hereafter
acquired or any interest therein or any income
or profits therefrom;

 

c)                 
amend its charter documents, including, without limitation, its certificate
of incorporation and bylaws,
in any manner that materially and adversely
affects any rights of the Holder;

 

d)                 
repay, repurchase or offer
to repay, repurchase or otherwise acquire
more than a de minimis number
of shares of its
Common Stock or Common Stock Equivalents
other than (i) as to the Conversion Shares
as permitted or required under the Transaction
Documents or (ii) in connection with
the redemption of convertible redeemable promissory notes on terms
no more favorable to the holders thereof
than provided hereunder for redemption of
this Note;

 

e)                 
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 (other than the Notes
if on a pro-rata basis and other than
as provided in clause (d) above), whether by way
of payment in respect of principal
of (or premium, if any)
or interest on, such Indebtedness, the
foregoing restriction shall also apply to Permitted
Indebtedness from and after the occurrence
of an Event of Default;

 

f)                  
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,
liquidation, distribution, preferential payments in connection with any securities
or debt issuances, corporate rearrangement, scheme
of arrangement or other similar transaction;

 

g)                 
enter into any transaction with
any Affiliate of Borrower
which would be required to be disclosed
in any public filing with the Commission, unless
such transaction is made on an arm’s-
length basis and expressly approved by a majority of the
disinterested directors of Borrower (even
if less than a quorum otherwise required for
board approval); or

 

		h)	enter into any agreement
with respect to any of the foregoing.
Section 8.Events of
Default.

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

 

i.                   
any default in the payment
of (A) the principal or interest amount
of this Note or (B) liquidated damages
and other amounts owing to a Holder on
any Note, as and when the same shall
become due and payable (whether on a Conversion
Date or the Maturity Date or
by acceleration or otherwise) which default,
solely in the case of a default
under clause (B) above,
is not cured within 3 Trading Days
after Borrower has become or should have become
aware of such default;

 

    	 	59	 

     

    

 

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

 

iii.                
a default or event
of default (subject to any grace
or cure period provided in the
applicable agreement, document or instrument)
shall occur under (A) any of the
Transaction Documents, including but not limited
to failure to strictly comply with the
provisions of the Transaction Documents,
or (B) any other material
agreement, lease, document or instrument to which
Borrower or any Subsidiary is obligated
(and not covered by clause (vi)
below), which in the
case of subsection (B) would reasonably be expected
to have a Material Adverse Effect;

 

iv.                
any representation or warranty
made in this Note, any other Transaction Documents, any written statement pursuant
hereto or thereto or any other report,
financial statement or certificate made or delivered
to the Holder or any Other Holder shall
be untrue or incorrect
in any material respect as of the
date when made or deemed
made;

 

		v.	Borrower or any Subsidiary
shall be subject to a Bankruptcy Event;

 

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

 

		vii.	Reserved;

 

		viii.	Reserved;

 

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

 

x.                 
any Person shall breach any agreement
delivered to the initial Holders
pursuant to Section 2.2 of the
Purchase Agreement;

 

xi.                
any monetary judgment, writ or
similar final process shall be entered
or filed against Borrower, any subsidiary
or any of their respective property or
other assets for more than $50,000, and
such judgment, writ or similar
final process shall remain unvacated, unbonded or unstayed
for a period of 90 calendar days;

 

    	 	60	 

     

    

 

xii.             
any dissolution, liquidation or winding
up by Borrower or a material
Subsidiary of a substantial portion of
their business;

 

		xiii.	cessation of operations
by Borrower or a material Subsidiary;

 

xiv.           
a failure by Borrower to
notify Holder of any material event of
which Borrower is obligated to notify
Holder pursuant to the terms of
this Note or any
other Transaction Document;

 

xiv.           
a default by the Borrower of a
material term, covenant, warranty or undertaking
of any other agreement to which the Borrower
and Holder are parties, or the occurrence
of an event of
default under any such other agreement
to which Borrower and Holder are parties which is not cured
after any required notice and/or cure period;

 

		xv.	the occurrence of an Event
of Default under any Other Note;
or

 

xvi.           
any material 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 Borrower, or
the validity or enforceability thereof shall
be contested by Borrower,
or a proceeding shall be
commenced by Borrower or any
governmental authority having jurisdiction over Borrower or Holder,
seeking to establish the invalidity
or unenforceability thereof, or Borrower shall
deny in writing that it has any liability
or obligation purported to be created
under any Transaction Document.

 

In
the event more than one grace, cure or
notice period is applicable to an Event
of Default, then the shortest
grace, cure or notice period shall
be applicable thereto.

 

b)                   
Remedies Upon Event of Default, Fundamental Transaction and
Change of Control Transaction.
If any Event of Default
or a Fundamental Transaction or a Change
of Control Transaction occurs, the outstanding
principal amount of this Note, liquidated damages and other
amounts owing in respect thereof through the date
of acceleration, shall become, at the
Holder’s election, immediately due and payable
in cash at the Mandatory Default Amount. Commencing on the Maturity
Date and also five (5) days after the occurrence
of any Event of
Default interest on this Note shall accrue
at an interest rate equal to the lesser
of 18% per annum
or the maximum rate permitted under applicable
law. Upon the payment in full
of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by Borrower.
In connection with such acceleration described
herein, the Holder need not provide, and Borrower hereby waives, any presentment,
demand, protest or other notice
of any kind, and the Holder may
immediately and without expiration of
any grace period enforce any and all
of its rights and remedies
hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded
and annulled by Holder at any time
prior to payment hereunder and the Holder shall
have all rights as a holder of
the Note until such time, if any,
as the Holder receives full payment pursuant to this
Section 8(b). No such rescission or
annulment shall affect any subsequent Event
of Default or impair any right
consequent thereon.

 

Section
9. Security Interest/Waiver of
Automatic Stay.
This Note is secured
by a security interest granted to the Holder
pursuant to the Security Agreement, as delivered
by Borrower and R2 to Holder. The Borrower acknowledges and agrees
that should a proceeding under any bankruptcy
or insolvency law be commenced
by or against the Borrower
or a Subsidiary, or if any
of the Collateral (as defined in the Security
Agreement) should become the subject
of any bankruptcy or insolvency proceeding,
then the Holder should be entitled to, among
other relief to which the Holder
may be entitled under the Transaction Documents
and any other agreement to which
the Borrower or a Subsidiary
and Holder are

    	 	61	 

     

    

 

parties
(collectively, “Loan Documents”) and/or applicable law, an order from the
court granting immediate relief from the automatic stay pursuant to 11 U.S.C.
Section 362 to permit the Holder to exercise all of its
rights and remedies pursuant to the Loan
Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES
AND AGREES THAT NEITHER 11 U.S.C.
SECTION 362 NOR ANY OTHER SECTION OF
THE BANKRUPTCY CODE OR OTHER STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE
OR INHIBIT IN ANY WAY THE ABILITY OF
THE HOLDER TO ENFORCE ANY OF
ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Borrower
hereby consents to any motion for
relief from stay that may
be filed by the Holder in any bankruptcy or insolvency
proceeding initiated by or against the Borrower and, further,
agrees not to file any opposition to
any motion for relief from
stay filed by the
Holder. The Borrower represents,
acknowledges and agrees that this
provision is a specific and material
aspect of the Loan Documents, and
that the Holder would not
agree to the terms of
the loan Documents if this
waiver were not a part of this
Note. The Borrower further
represents, acknowledges and agrees that is waiver is knowingly,
intelligently and voluntarily made,
that neither the Holder nor any
person acting on behalf of the
Holder has made any representations to induce
this waiver, that the Borrower has been
represented (or has had the
opportunity to by represented) in the
signing of this Note and the Loan
Documents and in the making of
this waiver by independent
legal counsel selected by the Borrower
and that the Borrower has discussed
this waiver with counsel.

 

Section 10.Miscellaneous.

 

a)                     
Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited
in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, facsimile, or electronic mail,
addressed as set forth below or to such other
address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted
to be given hereunder shall be
deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address
or number designated below (if delivered
on a business day during normal business
hours where such notice is to be received),
or the first business day following such delivery
(if delivered other than on a business day during
normal business hours where such notice is to be received),
or (b) upon receipt, when sent by electronic
mail (provided confirmation of transmission
is electronically generated and keep
on file by the sending party), or
(c) on the second business day following
the date of mailing
by express courier service, fully prepaid, addressed to such
address, or upon actual receipt
of such mailing, whichever shall first occur. The addresses
for such communications shall be: (i) if to Borrower, to: Omni
Shrimp, Inc., 517 Dumaine, PH4, New Orleans,
LA 70116, Attn: CFO, and (ii) if
to the Holder, to: the address and fax
number indicated on the front page of
this Note, with an additional copy
by fax only to (which shall not constitute notice): Grushko & Mittman,
P.C., 515 Rockaway Avenue, Valley Stream,
New York 11581, fax: (212) 697-3575.

 

b)                  
Absolute Obligation. Except as expressly provided herein, no
provision of this Note shall alter or
impair the obligation of
Borrower, which is absolute and unconditional,
to pay the principal of, liquidated damages
and accrued interest, as applicable, on this
Note at the time, place, and rate,
and in the coin or currency, herein prescribed.
This Note is a direct debt obligation of Borrower.
This Note ranks pari passu with
all other Notes now or hereafter issued under the terms
set forth herein.

 

c)                  
Lost or Mutilated Note.
If this Note shall be mutilated,
lost, stolen or destroyed, Borrower shall execute and deliver,
in exchange and substitution for and upon cancellation
of a mutilated Note, or in lieu
of or in substitution for a lost, stolen
or destroyed Note, a new Note for the
principal amount

 

    	 	62	 

     

    

 

of this Note
so mutilated, lost, stolen or destroyed,
but only upon receipt of evidence of
such loss, theft or destruction
of such Note, and of the ownership hereof, reasonably
satisfactory to Borrower.

 

d)                 
Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of
this Note shall be governed by and construed
and enforced in accordance with the internal
laws of the State of
New York, without
regard to the principles of conflict
of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any
of the Transaction Documents (whether brought against a party
hereto or its respective Affiliates, directors, officers, shareholders, employees
or agents) shall be commenced
in the state and federal courts sitting in the
City of New York, Borough
of Manhattan (the
“New York Courts”).
Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith
or with any transaction contemplated
hereby or discussed herein (including
with respect to the enforcement of
any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert
in any suit, action or proceeding,
any claim that it is not personally subject
to the jurisdiction of such New York Courts,
or such New York Courts are improper
or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process
and consents to process being served in any such
suit, action or proceeding by mailing
a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery)
to such party at the address in effect
for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained
herein shall be deemed to limit
in any way any right to serve
process in any other manner permitted by applicable
law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of
or relating to this Note or the transactions
contemplated hereby. If any party shall
commence an action or proceeding to enforce
any provisions of this Note, then the
prevailing party in such action or
proceeding shall be reimbursed by the
other party for its attorneys fees and other
costs and expenses incurred in the investigation, preparation and prosecution
of such action or
proceeding. This Note shall
be deemed an unconditional obligation
of Borrower for the
payment of money and, without limitation
to any other remedies of Holder,
may be enforced against Borrower by
summary proceeding pursuant to New York
Civil Procedure Law and
Rules Section 3213 or any similar rule or statute
in the jurisdiction where enforcement
is sought. For purposes of
such rule or statute,
any other document or agreement
to which Holder and Borrower are parties
or which Borrower
delivered to Holder, which may be
convenient or necessary to determine
Holder’s rights hereunder or Borrower’s obligations to Holder
are deemed a part of this
Note, whether or not such other
document or agreement was delivered together
herewith or was executed apart from this
Note.

 

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

 

f)               
Severability. If any provision
of this Note is invalid,
illegal or unenforceable, the balance of
this Note shall remain in effect, and
if any provision is inapplicable to any
Person or circumstance,
it shall nevertheless remain applicable to all other Persons and circumstances.

 

g)               
Usury. If it shall
be found that any interest
or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of
interest due hereunder shall automatically be lowered
to equal the maximum rate of interest
permitted under applicable law. Borrower covenants (to the extent that it may
lawfully do so) that it shall
not at any time insist upon, plead, or
in any manner whatsoever claim or take
the benefit or advantage of, any
stay, extension or usury law or
other law

    	 	63	 

     

    

 

which
would prohibit or forgive Borrower
from paying all or any portion
of the principal of or interest
on this Note as contemplated herein, wherever
enacted, now or at any time hereafter
in force, or which
may affect the covenants or the
performance of this Note, and Borrower
(to the extent it may lawfully
do so) hereby expressly waives all benefits
or advantage of any such law,
and covenants that it will not, by resort
to any such law, hinder, delay or impede
the execution of any power herein granted
to the Holder, but will suffer
and permit the execution of every such
as though no such law has been
enacted.

 

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

 

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

 

j)                
Amendment. Unless otherwise provided for hereunder, this Note may
not be modified or amended or
the provisions hereof waived without the written consent of
Borrower and the Holder.

 

k)              
Facsimile Signature. In the event
that the Borrower’s signature is delivered
by facsimile transmission, PDF, electronic
signature or other similar electronic
means, such signature shall create a valid
and binding obligation of the Borrower
with the same force and effect
as if such signature page were an original thereof.

 

 

*********************

 

(Signature
Pages Follow)

    	 	64	 

     

    

 

 

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by an authorized officer as of January11, 2019.

 

OMNI Shrimp, Inc.

 

By: 

 

By: /s/ Colm Wrynn

Name: Colm Wrynn

Title: CEO

 

WITNESS:

 

 

_________________________________

 

 

 

 

 

 

 

 

CONSENTED AND AGREED:

 

Chase Financing Inc. Profit Sharing and 401(k)
Plan

 

		By:	____________________________ 

                                                                                Name:

          Title:

 

    	 	65	 

     

    

 

ANNEX
A NOTICE OF CONVERSION

The
undersigned hereby elects to convert principal
under the Convertible Note Due January 11, 2021 of Omni Shrimp,
Inc., a Delaware corporation (the “Company”), into shares
of common stock (the “Common Stock”),
of Borrower according to the conditions hereof,
as of the date written below. If shares
of Common Stock are to be issued
in the name of a person other than the
undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by Borrower
in accordance therewith. No fee will
be charged to the holder for any conversion,
except for such transfer taxes, if any.

 

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

 

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

 

Conversion calculations:

 

   Date to Effect
Conversion: __________________________

 

Principal
Amount of Note to be Converted:
$ ______________

 

Accrued
Interest to be Converted, if any:
$ _______________

 

Conversion
Price: $ __________________

 

Number
of shares of Common Stock to be issued:
__________

 

Signature:
______________

 

Name:
________________

 

Address for
Delivery of Common Stock Certificates:
_________

________________________________________________

________________________________________________

 

 

 

 

 

Or

 

DWAC Instructions:
____________

 

Broker
No: __________________  

Account No: _________________

    	 	66EX-4.1

 Exhibit 4.1 

SECOND SUPPLEMENTAL INDENTURE, dated as of January 25, 2019 (this “Supplemental Indenture”), by and among
Broadcom Corporation, a California corporation, as issuer (the “Company”), Broadcom Cayman Finance Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands, as co-issuer (the “Co-Issuer” and, together with the Company, the “Issuers”), Broadcom Technologies Inc., a Delaware corporation
(“Broadcom Technologies”), and Wilmington Trust, National Association, as trustee (the “Trustee”). 

WHEREAS, the Issuers, Broadcom Limited, a public limited company incorporated under the laws of the Republic of Singapore, as a guarantor
(“Old Broadcom Parent”), Broadcom Cayman L.P., an exempted limited partnership registered under the laws of the Cayman Islands, acting through Old Broadcom Parent its general partner, as a guarantor, and the Trustee executed
an Indenture, dated as of January 19, 2017, as amended by that First Supplemental Indenture, dated as of April 9, 2018 (the “First Supplemental Indenture”), by and among the Issuers, Broadcom Inc., a Delaware
corporation, and the Trustee, and as amended, supplemented, or otherwise modified (the “Indenture”), relating to the Issuers’ 2.375% Senior Notes due 2020, the Issuers’ 3.000% Senior Notes due 2022, the
Issuers’ 3.625% Senior Notes due 2024 and the Issuers’ 3.875% Senior Notes due 2027; 
 WHEREAS, pursuant to a series of
transactions completed in connection with the establishment of a new parent holding company and other corporate reorganization actions, among other things, Old Broadcom Parent filed a special resolution approving its conversion from a public limited
company to a private company limited by shares incorporated under the laws of the Republic of Singapore with the Accounting and Corporate Regulatory Authority of Singapore, and changed its legal name from “Broadcom Limited” to
“Broadcom Pte. Ltd.;” 
 WHEREAS, Old Broadcom Parent has filed a special resolution to be wound up voluntarily pursuant to
Section 290(1) of the Companies Act (Cap. 50) of Singapore pursuant to which, among other things, Old Broadcom Parent has distributed all the common shares of the Company and all of the ordinary shares of the
Co-Issuer, to Broadcom Technologies; 
 WHEREAS, Section 5.01 of the Indenture provides that an
Obligor may convey all or substantially all of its properties and assets to any Person if, among other things, such Person expressly assumes by supplemental indenture such Obligor’s obligations on the Notes and under the Indenture; 

WHEREAS, Section 9.01(2) of the Indenture provides that without the consent of any Holders, the Issuers and the Trustee may enter into a
supplemental indenture to evidence that another Person has become a successor of an Obligor and that the successor assumes such Obligor’s covenants, agreements, and obligations in the Indenture and in the Notes in accordance with the Indenture;

 WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture;
and 
 WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture
have the meanings specified in the Indenture; 
 NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit
of the other parties and for the equal and ratable benefit of the Holders of the Notes, as follows: 
 ARTICLE 1 

ASSUMPTION AND RELEASE 

Section 1.01. Assumption. Broadcom Technologies hereby agrees to become a Guarantor bound by the guarantee of the Notes on the
terms set forth in Article 11 of the Indenture and assumes Old Broadcom Parent’s covenants, agreements, and obligations in the Indenture and in the Notes in accordance with the Indenture. 

 Section 1.02 Release. Upon the assumption made pursuant to Section 1.01
above, Old Broadcom Parent is automatically and unconditionally released from its guarantee of the Notes in accordance with Section 11.03(a)(1). 

ARTICLE 2 
 MISCELLANEOUS
PROVISIONS 
 Section 2.01. Indenture. Except as amended hereby, the Indenture and the Notes are in all respects ratified
and confirmed and all their terms shall remain in full force and effect. 
 Section 2.02. Trustee’s Disclaimer. The Trustee
shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuers and Broadcom Technologies. 

Section 2.03. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. EACH OF THE ISSUERS, BROADCOM TECHNOLOGIES AND THE TRUSTEE BY ITS ACCEPTANCE THEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY. 
 Section 2.04. Counterparts. The
parties may sign any number of copies of this Supplemental Indenture. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by
facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto
transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. 
 Section 2.05. Headings. The
Article and Section headings in this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and will in no way modify or restrict any of the terms or provisions
hereof. 
 (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 

  
 2 

 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed, all as of the date first written above. 
  

			
	BROADCOM CAYMAN FINANCE LIMITED
		
	By:	 	/s/ Thomas H. Krause, Jr.
		 	Name:  Thomas H. Krause, Jr.
		 	Title:    Director

  

			
	BROADCOM CORPORATION
		
	By:	 	/s/ Thomas H. Krause, Jr.
		 	Name:  Thomas H. Krause, Jr.
		 	Title:    Vice President, Chief Financial Officer
		 	             and Secretary

  

			
	BROADCOM TECHNOLOGIES INC.
		
	By:	 	/s/ Thomas H. Krause, Jr.
		 	Name:  Thomas H. Krause, Jr.
		 	Title:    Chief Financial Officer and Treasurer

  
 [Signature Page to
Second Supplemental Indenture] 

 
			
	 WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

		
	By:	 	/s/ Sarah Vilhauer
		 	Name:  Sarah Vilhauer
		 	Title:    Banking Officer

  
 [Signature Page to
Second Supplemental Indenture]

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