Document:

ex10_2.htm

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 4, 2013, is made by and among BioTime, Inc., a California corporation (the “Company”), and each Shareholder (as defined below) who is the registered holder of Registrable Securities (as defined below).

WHEREAS, the parties hereto desire to provide for, among other things, the grant of registration rights with respect to the Registrable Securities.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.             Definitions and Interpretations.

(a)            Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

(i)             “Acquired Shares” means the Shares issued pursuant to that certain Stock and Warrant Purchase Agreement, dated January 4, 2013, between the Company and the Shareholders named on Schedule I, and any Shares issued or issuable upon the exercise of the Warrants.

(ii)           “Affiliate” means, with respect to a Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to a Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

(iii)          “Agreement” means this Registration Rights Agreement as the same may be amended, supplemented or modified in accordance with the terms.

(iv)           “Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 promulgated under the Securities Act.

(v)            “Board of Directors” means the Board of Directors of the Company (or any duly authorized committee thereof).

(vi)           “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York and San Francisco, California are authorized or required by law or executive order to close.

(vii)          “Commission” means the Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.

  

  

  

(viii)        “Company” has the meaning set forth in the preamble to this Agreement.

(ix)           “Company Free Writing Prospectus” means each Free Writing Prospectus prepared by or on behalf of the Company or used or referred to by the Company in connection with an offering of Registrable Securities.

(x)            “Disclosure Package” means, with respect to any offering of Registrable Securities, (i) the preliminary Prospectus, (ii) each Free Writing Prospectus and (iii) all other information, in each case, that is deemed, under Rule 159 promulgated under the Securities Act, to have been conveyed to purchasers of securities at the time of sale of such securities (including, without limitation, a contract of sale).

(xi)           “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

(xii)         “Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 promulgated under the Securities Act.

(xiii)        “Indemnified Party” has the meaning set forth in Section 4(c).

(xiv)         “Indemnifying Party” has the meaning set forth in Section 4(c).

(xv)          “Inspector” has the meaning set forth in Section 3(b).

(xvi)         “Liability” has the meaning set forth in Section 4(a).

(xvii)        “Permitted Assignee” means with respect to any Shareholder, to the extent applicable, (i) such Shareholder’s parents, spouse, siblings, siblings’ spouses, children (including stepchildren and adopted children), children’s spouses, grandchildren or grandchildren’s spouses (“Family Members”), (ii) a corporation, partnership or limited liability company, a majority of the beneficial interests of which shall be held by such Shareholder, such Shareholder’s Affiliates and/or such Shareholder’s Family Members, (iii) a trust, the beneficiaries of which are such Shareholder and/or such Shareholder’s Family Members, (iv) such Shareholder’s heirs, executors, administrators, estate or a trust under such Shareholder’s will, (v) an entity described in Section 501(c)(3) of the United States Internal Revenue Code of 1986, as amended, that is established by such Shareholder, and (vi) any Affiliate of such Shareholder.

(xviii)      “Person” means any individual, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

(xix)         “Pledgee” has the meaning set forth in Section 2(d)(i).

(xx)          “Prospectus” means the prospectus related to any Registration Statement (including, without limitation, a prospectus or prospectus supplement that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance on Rule 415, 430A, 430B or 430C under the Securities Act, as amended or supplemented by any amendment or prospectus supplement), including post-effective amendments, and all materials incorporated by reference in such prospectus.

  

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(xxi)         “Records” has the meaning set forth in Section 3(b)(viii).

(xxii)       “Registrable Securities” means, subject to Section 2(b) and Section 2(d)(i), (i) the Acquired Shares, (ii) the Warrants, and (iii) any other securities that are (A) distributed as a dividend or otherwise with respect to Acquired Shares, or (B) issued or issuable in exchange for or through conversion of the Acquired Shares or Warrants pursuant to a recapitalization, reorganization, merger, consolidation, sale of assets or other transaction.

(xxiii)      “Registration Expenses” has the meaning set forth in Section 3(f).

(xxiv)       “Registration Statement” means a registration statement filed pursuant to the Securities Act.

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

(xxvi)       “Shareholder” means (a) the Persons named on Schedule I, and (b) such Permitted Assignees or Pledgees of the Persons named on Schedule I to whom registration rights under this Agreement are validly transferred in accordance with Section 2(d)(i).

(xxvii)      “Shareholders’ Counsel” has the meaning set forth in Section 3(b).

(xxviii)    “Shares” means (i) the common shares, no par value, of the Company, (ii) any securities of the Company or any successor or assign of the Company into which such shares described in clause (i) are reclassified or reconstituted or into which such shares are converted or otherwise exchanged in connection with a combination of shares, recapitalization, merger, sale of assets, consolidation or other reorganization or otherwise or (iii) any securities received as a dividend or distribution in respect of the securities described in clauses (i) and (ii) above.

(xxix)       “Warrants” means warrants to purchase common shares of the Company issued to the Shareholders named on Schedule I pursuant to the Stock and Warrant Purchase Agreement, of even date, between the Company and such Shareholders.

  

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(b)            Interpretation. Unless otherwise noted:

(i)             All references to laws, rules, regulations and forms in this Agreement shall be deemed to be references to such laws, rules, regulations and forms, as amended from time to time or, to the extent replaced, the comparable successor laws, rules, regulations and forms thereto in effect at the time.

(ii)           All references to agencies, self-regulatory organizations or governmental entities in this Agreement shall be deemed to be references to the comparable successor thereto.

(iii)          All references to agreements and other contractual instruments shall be deemed to be references to such agreements or other instruments as they may be amended, waived, supplemented or modified from time to time.

(iv)           All references to any amount of securities (including Registrable Securities) shall be deemed to be a reference to such amount measured on an as-converted or as-exercised basis.

2.            General; Securities Subject to this Agreement

(a)            Grant of Rights. The Company hereby grants registration rights to the Shareholders upon the terms and conditions set forth in this Agreement.

(b)            Registrable Securities. For the purposes of this Agreement, Registrable Securities held by any Person will cease to be Registrable Securities when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the Commission and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (ii) the entire amount of the Registrable Securities held by a Person may be sold in a single sale, in the opinion of counsel reasonably satisfactory to the Company, without any limitation as to volume or manner of sale pursuant to Rule 144 promulgated under the Securities Act, (iii) the Registrable Securities have ceased to be outstanding, or (iv) the Registrable Securities have been transferred pursuant to a transfer or pledge otherwise than pursuant to Section 2(d).

(c)            Holders of Registrable Securities. A Person is deemed to be a holder of Registrable Securities whenever such Person owns of record Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company may act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Securities.

(d)            Transfer of Registration Rights.

(i)             A Shareholder may transfer or pledge Registrable Securities with the associated registration rights under this Agreement (including transfers occurring by operation of law or by reason of intestacy) to a Permitted Assignee or a pledgee (“Pledgee”) only if (1) such Permitted Assignee or Pledgee agrees in writing to be bound as a Shareholder by the provisions of this Agreement, such agreement being substantially in the form of Annex A hereto, and (2) immediately following such transfer or pledge, the further disposition of such Registrable Securities by such Permitted Assignee or Pledgee would be restricted under the Securities Act and the entire amount of all such Registrable Securities could not be sold in a single sale, in the opinion of counsel reasonably satisfactory to the Company, without any limitation as to volume or manner of sale pursuant to Rule 144 promulgated under the Securities Act. Upon any transfer or pledge of Registrable Securities other than as set forth in this Section 2(d), such securities shall no longer constitute Registrable Securities.

  

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(ii)           Subject to Section 2(b), if a Shareholder assigns its rights under this Agreement in connection with the transfer of less than all of its Registrable Securities, the Shareholder shall retain its rights under this Agreement with respect to its remaining Registrable Securities. If a Shareholder assigns its rights under this Agreement in connection with the transfer of all of its Registrable Securities, such Shareholder shall have no further rights or obligations under this Agreement, except under Section 4 in respect of offerings in which it participated.

3.             Registration Procedures

(a)            S-3 Registration. Promptly after the date on which Registrable Securities are first issued the Shareholders, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. Such Registration Statement filed hereunder shall be on Form S-3 or, if such form is not available to the Company, Form S-1. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof.

(b)            Obligations of the Company. In connection with the registration of Registrable Securities, the Company shall:

(i)             prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of such Registrable Securities in accordance with the intended method of distribution, and cause such Registration Statement to become effective; provided , however , that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including, without limitation, any documents incorporated by reference therein), or before using any Free Writing Prospectus, provide one firm of legal counsel selected by Shareholders holding a majority of the Registrable Securities being registered in such registration (“Shareholder’ Counsel”), any managing underwriter or broker/dealer participating in any disposition of such Registrable Securities pursuant to a Registration Statement and any attorney retained by any such managing underwriter or broker/dealer (each, an “Inspector” and collectively, the “Inspectors”) with an opportunity to review and comment on such Registration Statement and each Prospectus included therein (and each amendment or supplement thereto) and each Free Writing Prospectus to be filed with the Commission, subject to such documents being under the Company’s control. The Company shall notify the Shareholders’ Counsel and each seller of Registrable Securities pursuant to such Registration Statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

  

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(ii)           prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as shall be necessary to keep such Registration Statement effective for the lesser of (x) such period which will terminate when all Registrable Securities covered by such Registration Statement have been sold (or, if such Registration Statement is an Automatic Shelf Registration Statement, on the first anniversary of the date of filing of such Automatic Shelf Registration Statement) or (y) the securities covered by such Registration Statement are no longer Registrable Securities;

(iii)          furnish to each seller of Registrable Securities such number of copies of such Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus), any Prospectus filed under Rule 424 under the Securities Act and any Free Writing Prospectus as each such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; provided that the Company need not provide copies of exhibits to the Registration Statement.

(iv)           use its commercially reasonable efforts to expeditiously register or qualify such Registrable Securities under such other securities or “blue sky” laws of California and New York if required by the laws of such states, and continue such registration or qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such seller requests or until all of such Registrable Securities are sold or are “covered securities” under the Securities Act, whichever is shortest, and do any and all other acts and things which may be reasonably necessary or advisable to enable any such seller to consummate the disposition of the Registrable Securities owned by such seller in such jurisdictions; provided, however, that the Company shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(b)(iv), (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction;

(v)             following its actual knowledge thereof, notify each seller of Registrable Securities: (A) when a Prospectus, any Prospectus supplement, any Free Writing Prospectus, a Registration Statement or a post-effective amendment to a Registration Statement has been filed with the Commission, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (B) of any request by the Commission for amendments or supplements to a Registration Statement, related Prospectus or Free Writing Prospectus or for additional information; (C) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; and (D) of the existence of any fact or happening of any event of which the Company has knowledge which makes any statement of a material fact in such Registration Statement, related Prospectus or Free Writing Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue or which would require the making of any changes in the Registration Statement, Prospectus or Free Writing Prospectus in order that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of such Prospectus or Free Writing Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that the Company need not disclose any facts or events that have not bee publicly disclosed by the Company;

  

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(vi)           upon the occurrence of any event contemplated by Section 3(b)(v)(D), as promptly as practicable, prepare a supplement or amendment to such Registration Statement, related Prospectus or Free Writing Prospectus and furnish to each seller of Registrable Securities a reasonable number of copies of such supplement to, or amendment of, such Registration Statement, Prospectus or Free Writing Prospectus as may be necessary so that, after delivery to the purchasers of such Registrable Securities, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of such Prospectus or Free Writing Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(vii)          enter into and perform customary agreements and take such other actions as are reasonably required in order to facilitate the disposition of such Registrable Securities and shall provide all reasonable cooperation, including causing counsel to the Company to deliver customary legal opinions in connection with any such underwriting agreements;

(viii)        make available at reasonable times for inspection by any Inspector all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s and its subsidiaries’ officers, directors, managers and employees, and the Company’s independent registered public accounting firm, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement. Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in writing in advance to the Company if the Company shall so request) unless (x) the disclosure of such Records is necessary, in the Company’s reasonable judgment, to avoid or correct a misstatement or omission in the Registration Statement, (y) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (z) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public. Each seller of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, promptly give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential;

(ix)           if such sale is pursuant to an underwritten offering, obtain a “cold comfort” letter dated the effective date of the Registration Statement and the date of the closing under the underwriting agreement from the Company’s independent registered public accounting firm in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing underwriter reasonably requests;

  

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(x)            furnish, at the request of any seller of Registrable Securities on the date such securities are delivered to the underwriters for sale pursuant to such registration, an opinion, dated such date, of counsel representing the Company for the purposes of such registration, addressed to the underwriters, covering such legal matters with respect to the registration in respect of which such opinion is being given as the underwriters, may reasonably request and are customarily included in such opinions;

(xi)           cause any Shares included in the Registration Statement to be listed on each securities exchange on which the Shares are then listed. The Company shall pay all fees and expenses in connection with satisfying its obligation to list such Shares.

(xii)         make all required filings of all Prospectuses and Free Writing Prospectuses with the Commission;

(xiii)        make all required filing fee payments in respect of any Registration Statement or Prospectus used under this Agreement (and any offering covered thereby); and

(xiv)         take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby.

(c)            Seller Requirements. In connection with any offering under any Registration Statement under this Agreement, each Shareholder (i) shall promptly furnish to the Company in writing such information with respect to the Shareholder and the intended method of disposition of its Registrable Securities as the Company may reasonably request or as may be required by law or regulations for use in connection with any related Registration Statement or Prospectus (or amendment or supplement thereto) and all information required to be disclosed in order to make the information previously furnished to the Company by the Shareholder not contain a material misstatement of fact or necessary to cause such Registration Statement or Prospectus (or amendment or supplement thereto) not to omit a material fact with respect to the Shareholder necessary in order to make the statements therein not misleading; (ii) shall comply with the Securities Act and the Exchange Act and all applicable state securities laws and comply with all applicable regulations in connection with the registration and the disposition of the Registrable Securities; and (iii) shall not use any Free Writing Prospectus without the prior written consent of the Company. If any seller of Registrable Securities fails to provide such information required to be included in such Registration Statement by applicable securities laws or otherwise necessary or desirable in connection with the disposition of such Registrable Securities, within ten (10) calendar days after written request therefor, the Company may exclude such seller’s Registrable Securities from the registration statement.

(d)            Exception for Valid Business Reason. Notwithstanding any other provision of this Section 3, if the Board of Directors of the Company, in its good faith judgment, determines that any registration of Registrable Securities should not be made or continued because it would materially interfere with any material financing, acquisition, reorganization or merger or other transaction involving the Company or require the Company to disclose any material nonpublic information which would reasonably be likely to be detrimental to the Company (a “Valid Business Reason”), (x) the Company may postpone filing a Registration Statement (but not the preparation of the Registration Statement) until the occurrence of the Valid Business Reason or until the Valid Business Reason no longer exists, and (y) in case a Registration Statement has been filed, the Company may postpone amending or supplementing such Registration Statement or requesting that the Registration Statement become effective under the Securities Act. The Company shall give written notice to all Shareholders of its determination to postpone filing, amending, supplementing, requesting effectiveness of a Registration Statement, and of the fact that the Valid Business Reason for such postponement no longer exists, in each case, promptly after the occurrence thereof.

  

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(e)            Notice to Discontinue. Each Shareholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(b)(v)(D), the Shareholder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until the Shareholder’s receipt of the copies of the supplemented or amended Prospectus or Free Writing Prospectus contemplated by Section 3(b)(vi) (or if no supplemental or amended prospectus or Free Writing Prospectus is required, upon confirmation from the Company that use of the Prospectus or Free Writing Prospectus is once again permitted) and, if so directed by the Company, the Shareholder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in the Shareholder’s possession, of the Prospectus or Free Writing Prospectus covering such Registrable Securities which is current at the time of receipt of such notice.

(f)            Registration Expenses. The Company shall pay all expenses arising from or incident to its performance of, or compliance with, this Agreement, including, without limitation, (i) Commission filing fees, (ii) all fees and expenses incurred in complying with state securities or “blue sky” laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with “blue sky” qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (iii) all printing, messenger and delivery expenses, and (iv) the fees, charges and expenses of counsel to the Company and of its independent registered public accounting firm and any other accounting fees, charges and expenses incurred by the Company (including, without limitation, any expenses arising from any “cold comfort” letters and the reasonable and documented legal fees, charges and expenses of Shareholder’s Counsel and regardless of whether such Registration Statement is declared effective. All of the expenses described in the preceding sentence of this Section 3(f) are referred to herein as “Registration Expenses”.

4.             Indemnification; Contribution

(a)            Indemnification by the Company. The Company agrees to indemnify and hold harmless the Shareholders, and each of their respective partners, directors, officers, Affiliates, stockholders, members, employees, trustees, legal counsel and accountants and each Person who controls (within the meaning of Section 15 of the Securities Act) any Shareholder, from and against any and all losses, claims, damages, liabilities and expenses, or any action or proceeding in respect thereof (including reasonable costs of investigation and reasonable attorneys’ fees and expenses) (each, a “Liability” and collectively, “Liabilities”), arising out of or based upon (a) in the case of the Registration Statement or any amendment thereto, the Disclosure Package, the Prospectus, any Free Writing Prospectus, or in any supplement thereto, any untrue, or allegedly untrue, statement of a material fact or omission, or alleged omission, to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (b) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement; provided, however, that the Company shall not be held liable in any such case to the extent that any such Liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission contained in such Disclosure Package, Registration Statement, Prospectus, Free Writing Prospectus or such amendment or supplement thereto solely in reliance upon and in conformity with information concerning any Shareholder furnished in writing to the Company by or on behalf of a Shareholder expressly for use therein, including, without limitation, the information furnished to the Company pursuant to Section 3(c). The Company shall also provide customary indemnities to any underwriters of the Registrable Securities, their officers, directors and employees and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as provided above with respect to the indemnification of the Shareholders.

  

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(b)            Indemnification by Shareholders. In connection with any offering in which any Shareholder is participating pursuant to this Agreement, each participating Shareholder agrees severally to indemnify and hold harmless the Company, any underwriter retained by the Company, each of their respective partners, directors, officers, Affiliates, stockholders, managers, members, employees, trustees, legal counsel and accountants, and each Person who controls the Company or such underwriter (within the meaning of Section 15 of the Securities Act) to the same extent as the foregoing indemnity from the Company to the Shareholders, but only to the extent that Liabilities arise out of or are based upon a statement or alleged statement or an omission or alleged omission that was made solely in reliance upon and in conformity with information with respect to such Shareholder furnished in writing to the Company by or on behalf of the Shareholder expressly for use in such Disclosure Package, Registration Statement, Prospectus, Free Writing Prospectus or such amendment or supplement thereto, including, without limitation, the information furnished to the Company pursuant to Section 3(c). In no event shall the liability of a Shareholder hereunder be greater in amount than the net proceeds received by the Shareholder upon the sale of the Registrable Securities giving rise to such indemnification obligation except in the case of fraud by the Shareholder.

(c)            Conduct of Indemnification Proceedings. Any Person entitled to indemnification or contribution hereunder (the “Indemnified Party”) agrees to give prompt written notice to the indemnifying party (the “Indemnifying Party”) after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of any Liability that it may have to the Indemnified Party hereunder (except to the extent that the Indemnifying Party is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure). If notice of commencement of any such action is given to the Indemnifying Party as provided in this Section 4(c), the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. Each Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the reasonable and documented out-of-pocket fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action with counsel reasonably satisfactory to the Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and such parties have been advised by such counsel that either (x) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (y) there may be one or more legal defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party. In any of such cases, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not be liable for the reasonable and documented out-of-pocket fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Parties and all such reasonable and documented out-of-pocket fees and expenses shall be reimbursed as incurred. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the consent of such Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is a party and indemnity has been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability for claims that are the subject matter of such proceeding.

  

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(d)            Contribution. (i) If the indemnification provided for in this Section 4 from the Indemnifying Party is unavailable to an Indemnified Party hereunder or insufficient to hold harmless an Indemnified Party in respect of any Liabilities referred to herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Liabilities, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 4(a), 4(b), and 4(c) , any reasonable and documented out-of-pocket legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding.

(ii)            The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4(d)) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. In no event shall a Shareholder be required to contribute an amount under this Section 4(d) in excess of the net proceeds received by the Shareholder upon the sale of the Shareholder’s Registrable Securities pursuant to the Registration Statement giving rise to such contribution obligation, except in the case of fraud by the Shareholder.

  

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5.             Reports Under Exchange Act

(a)            With a view to making available to the Shareholders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the Commission that may at any time permit the Shareholders to sell Registrable Shares of the Company to the public without registration, the Company agrees for the period of at least one year from the date hereof, to:

(i)             Make and keep public information available, as those terms are used in Rule 144, at all times;

(ii)           File with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act and the rules and regulations of any applicable securities exchanges;

(iii)          Furnish to the Shareholders, so long as the Shareholders own any Registrable Shares, forthwith on request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 and the Exchange Act, and (ii) a copy of the most recent annual or quarterly report of the Company filed under the Exchange Act; and

(iv)           Undertake any additional actions reasonably necessary to maintain the availability of the use of Rule 144 for the resale of the Registrable Securities.

6.             Miscellaneous

(a)            Share Splits, etc. The provisions of this Agreement shall be appropriately adjusted for any share dividends, splits, reverse splits, combinations recapitalizations and the like occurring after the date.

(b)            Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions may not be given unless consented to in writing by the Company and the Shareholders.

(c)            Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be made by telecopy, electronic mail, air courier service or personal delivery:

  

12

  

	
If to the Company:

	
BioTime, Inc.

	  	
1301 Harbor Bay Parkway, Suite 100

	  	
Alameda, California 94502

	  	
Attention:

	
Peter S. Garcia, Chief Financial Officer

	  	  	
pgarcia@biotimemail.com

  

13

  

	  	
with a copy to:

	  	
Thompson, Welch, Soroko & Gilbert LLP

	  	
235 Pine Street, 13th Floor

	  	
San Francisco, California 94104

	  	
Attention: Richard S. Soroko

	  	
rsoroko@twsglaw.com

If to a Shareholder, at the most recent address for such Shareholder as shown in the Company’s register of its stockholders.

All such notices, demands and other communications shall be deemed to have been duly given when delivered in the manner provided in this Section 6(c). Any party may by notice given in accordance with this Section 6(c) designate another address or Person for receipt of notices hereunder.

(d)            Permitted Assignees; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Company and the Shareholders (including the Permitted Assignees and Pledgees of Shareholders as provided in Section 2(d)(i)), and, except as provided in Section 4, no other Person is intended to be a beneficiary of this Agreement.

(e)            Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(f)             Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning.

(g)            Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of California, without regard to the principles of conflicts of law.

(h)            Jurisdiction. (i) Any action or proceeding against any party hereto relating in any way to this Agreement or the transactions contemplated hereby may be brought and enforced in the federal or state courts in the State of California, and each party, on behalf of itself and its respective successors and assigns, irrevocably consents to the jurisdiction of each such court in respect of any such action or proceeding. Each party, on behalf of itself and its respective successors and assigns, irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, return receipt requested, to such person or entity at the address for such person or entity set forth in Section 6(c) or such other address such person or entity shall notify the other in writing. The foregoing shall not limit the right of any person or entity to serve process in any other manner permitted by law or to bring any action or proceeding, or to obtain execution of any judgment, in any other jurisdiction.

  

14

  

(ii)            Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising under or relating to this Agreement or the transactions contemplated hereby in any court located in the State of California or located in any other jurisdiction chosen by the Company in accordance with Section 6(h)(i). Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives any claim that a court located in the State of California is not a convenient forum for any such action or proceeding.

(iii)           Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives, to the fullest extent permitted by applicable United States federal and state law, all immunity from jurisdiction, service of process, attachment (both before and after judgment) and execution to which it might otherwise be entitled in any action or proceeding relating in any way to this Agreement or the transactions contemplated hereby in the courts of the State of California, of the United States or of any other country or jurisdiction, and hereby waives any right he might otherwise have to raise or claim or cause to be pleaded any such immunity at or in respect of any such action or proceeding.

(i)             Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not be in any way impaired.

(j)             Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement. Terms defined in the singular have a comparable meaning when used in the plural, and vice versa.

(k)            Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter. There are no restrictions, promises, representations, warranties or undertakings with respect to the subject matter, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter.

(l)             Further Assurances. Each of the parties shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

(m)           Other Agreements. Nothing contained in this Agreement shall be deemed to be a waiver of, or release from, any obligations any party hereto may have under, or any restrictions on the transfer of Registrable Securities or other securities of the Company imposed by, any other agreement.

  

15

  

IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.

	
BIOTIME, INC.

	  
	  	  	  
	
By:

	
s/Michael D. West

	  
	
Title:

	
Chief Executive Officer

	  
	  	  	  
	
SHAREHOLDERS

	  
	  	  	  
	
Romulus Films Ltd.

	  
	  	  	  
	
By:

	
s/Jonathan C. Woolf

	  
	  	
(Please Print Name)

	  
	  	  	  
	
Title:

	
Director

	  

  

16

  

ANNEX A

[Name and Address of Transferee]

________

[Address]

[Name and Address of Transferor]

________, 20__

Ladies and Gentlemen:

Reference is made to the Registration Rights Agreement, dated as of January ___, 2013 (the “Registration Rights Agreement”), by and among BioTime, Inc. a California corporation, and the persons named therein as Shareholders. All capitalized terms used herein but not otherwise defined shall have the meanings given to them in the Registration Rights Agreement.

In connection with the transfer by [Name of Transferor] of Registrable Securities with associated registration rights under the Registration Rights Agreement to [Name of Transferee] as transferee (the “Transferee”), the Transferee hereby agrees to be bound as a Shareholder by the provisions of the Registration Rights Agreement as provided under Section 2(d)(i)) thereto.

This consent shall be governed by California law.

	  	
Yours sincerely,

	  	  	  
	  	
[Name of Transferee]

	  	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

  

17

  

SCHEDULE I

Shareholders

Romulus Films Ltd.

 

 

18ELITE PHARMACEUTICALS, INC.

 

CERTIFICATE OF DESIGNATIONS OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES G PREFERRED STOCK

Pursuant to NRS 78.1955

 

The undersigned, Chris Dick, hereby certifies
that:

 

1.              He
is the President, of Elite Pharmaceuticals, Inc., a Nevada corporation (the “Corporation”).

 

2.              The
Corporation is authorized to issue 15,000 shares of preferred stock.

 

3.              Pursuant
to the Corporation’s Articles of Incorporation, 1,100 of the authorized shares of preferred stock were designated as Series
F (the “Series F”), which shares could only be issued pursuant to the terms of a December 30, 2011 Securities
Purchase Agreement (the “2011 SPA”).

 

4.              The
2011 SPA was terminated prior to the date hereof and none of the Series F shares were ever issued, nor are any Series F shares
outstanding.

 

5.              As
no Series F shares have been or can be issued, all 1,100 shares designated as Series F shares are available for designation as
a different series of preferred stock.

 

6.              The
following resolutions were duly adopted by the Corporation’s Board of Directors:

 

“WHEREAS, the
Articles of Incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, comprised of
15,000 shares, $0.01 par value per share (the Preferred Stock”), issuable from time to time in one or more series;

 

WHEREAS, the Corporation’s
Articles of Incorporation, designated 1,100 shares of the Preferred Stock as Series F (the “Series F”), which
shares could only be issued pursuant to the terms of a December 30, 2011 Securities Purchase Agreement (the “2011 SPA”);

 

WHEREAS, the 2011 SPA
has been terminated and none of the Series F shares were ever issued, nor are any Series F shares outstanding and, as a result,
no Series F shares can be issued and all 1,100 shares designated as Series F shares are available for designation as a different
series of preferred stock;

 

WHEREAS, the Board
of Directors of the Corporation is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights
and terms of redemption and liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting
any series and the designation thereof, of any of them; and

 

    	 

    	 

    

 

WHEREAS, it is the
desire of the Board of Directors of the Corporation, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions
and other matters relating to a series of Preferred Stock, which shall consist of up to 1,375shares of the Preferred Stock
which the Corporation has the authority to issue, as follows:

 

NOW, THEREFORE, BE
IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of Preferred Stock for cash or exchange
of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters
relating to such series of Preferred Stock as follows:

 

TERMS OF PREFERRED STOCK

 

‘Series G 8% Convertible Preferred
Stock. The total number of shares of Series G 8% Convertible Preferred Stock the Corporation shall have the authority to issue
is ONE THOUSAND THREE HUNDRED SEVENTY FIVE (1,375), with a par value of $0.01 per share and a stated value equal to $1,000 (the
"STATED VALUE") per share. The designations, powers, preferences, rights and restrictions granted or imposed upon the
Series G 8% Convertible Preferred Stock and holders thereof are as follows:

 

SECTION 1. DEFINITIONS. Capitalized terms
used and not otherwise defined herein that are defined in the 2007 Purchase Agreement shall have the meanings given such terms
in the 2007 Purchase Agreement. A copy of the 2007 Purchase Agreement as in effect on the date hereof shall be provided without
charge to any holder of Common Stock or Preferred Stock upon written request therefore For the purposes hereof, the following terms
shall have the following meanings:

 

"ALTERNATE CONSIDERATION” shall
have the meaning set forth in Section 7(e).

 

"BUSINESS DAY” means any day
except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions
in the State of New York are authorized or required by law or other governmental action to close.

 

"BUY-IN” shall have the meaning
set forth in Section 6(e)(iii).

 

    	2

    	 

    

 

"CHANGE OF CONTROL TRANSACTION”
means the occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual, 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 the Corporation, by contract or otherwise) of in excess of 40% of the voting securities
of the Corporation (other than by means of conversion or exercise of Preferred Stock and the Securities issued together with the
Preferred Stock), or (ii) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates
with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation immediately prior to such
transaction own less than 60% of the aggregate voting power of the Corporation or the successor entity of such transaction, or
(iii) the Corporation sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation
immediately prior to such transaction own less than 60% of the aggregate voting power of the acquiring entity immediately after
the transaction, or (iv) a replacement at one time or within a one year period of more than one-half of the members of the Corporation's
board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date
hereof (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 (v) the
execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of
the events set forth in clauses (i) through (iv) above.

 

"COMMISSION” means the Securities
and Exchange Commission.

 

"COMMON STOCK” means the Corporation's
common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be
reclassified or changed into.

 

"COMMON STOCK EQUIVALENTS” means
any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

"CONVERSION AMOUNT” means the
sum of the Stated Value at issue.

 

"CONVERSION DATE” shall have
the meaning set forth in Section 6(a).

 

"CONVERSION PRICE” shall have
the meaning set forth in Section 6(b).

 

"CONVERSION SHARES” means, collectively,
the shares of Common Stock issuable upon conversion of the shares of Series G Preferred Stock in accordance with the terms hereof.

 

"CONVERSION SHARES REGISTRATION STATEMENT”
means a registration statement that registers the resale of all Conversion Shares of the Holder, who shall be named as a "selling
stockholder” therein and meets the requirements of the Registration Rights Agreement.

 

"DILUTIVE ISSUANCE” shall have
the meaning set forth in Section 7(b).

 

"DILUTIVE ISSUANCE NOTICE” shall
have the meaning set forth in Section 7(b).

 

"DIVIDEND PAYMENT DATE” shall
have the meaning set forth in Section 3(a).

 

"DIVIDEND SHARE AMOUNT” shall
have the meaning set forth in Section 3(a).

 

    	3

    	 

    

 

"EFFECTIVE DATE” means the date
that the Conversion Shares Registration Statement is declared effective by the Commission.

 

"EQUITY CONDITIONS” means, during
the period in question, as to a Holder, (i) the Corporation shall have duly honored all conversions scheduled to occur or occurring
by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested or required, if any,
(ii) the Corporation shall have paid all liquidated damages and other amounts owing to such Holder in respect of the Preferred
Stock, (iii) there is an effective Conversion Shares Registration Statement pursuant to which such Holder is permitted to utilize
the prospectus thereunder to resell all of the shares of Common Stock issuable to such Holder pursuant to the Transaction Documents
(and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future),
(iv) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed
for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common Stock on a Trading
Market will continue uninterrupted for the foreseeable future), (v) there is a sufficient number of authorized, but unissued and
otherwise unreserved, shares of Common Stock for the issuance of all of the shares of Common Stock issuable to such Holder pursuant
to the Transaction Documents, (vi) the issuance of the shares in question (or, in the event of an Optional Redemption, of the issuance
of all the Conversion Shares underlying the Series G Preferred Stock) to such Holder would not violate the limitations set forth
in Section 6(c) and Section 6(d) herein, (vii) except with respect to Section 8(b), there has been no public announcement of a
pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, and (viii) such Holder
is not in possession of any information that constitutes, or may constitute, material non-public information as a result of the
disclosure of such information by the Corporation or any of its Affiliates.

 

“EQUITY CREDIT LINE” means
an agreement pursuant to which a funding source is obligated to purchase Common Stock at a purchase price that is no less than
the then current Conversion Price on the date of any takedown pursuant to such Equity Credit Line.

 

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

 

    	4

    	 

    

 

"EXEMPT ISSUANCE” means the
issuance of (a) shares of Common Stock or options to employees, consultants, officers or directors of the Corporation pursuant
to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation
or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise
or exchange of or conversion of the Securities issued pursuant to the 2007 Purchase Agreement and/or other securities exercisable
or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the 2007 Purchase Agreement,
provided that such securities have not been amended since the date of the 2007 Purchase Agreement to increase the number of such
securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the disinterested directors, provided any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating company in, or an individual that operates, a business
synergistic with the business of the Corporation and in which the Corporation receives benefits in addition to the investment of
funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities (each such transaction, a "STRATEGIC TRANSACTION"),
(d) up to a maximum of 1,500,000 shares of Common Stock or Common Stock Equivalents in any rolling 12 month period issued to consultants,
vendors, financial institutions or lessors in connection with services (including the provision of Permitted Indebtedness) provided
by such Persons referred to in this clause (d), but shall not include a transaction in which the Corporation is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and provided that
none of such shares may be registered for sale or resale by any of such holders; (e) securities issued as a dividend or distribution
any of the Securities pursuant to the terms of the Transaction Documents; (f) securities issued in connection with any stock split,
stock dividend or recapitalization of the Common Stock (g) Securities issued pursuant to the Strategic Alliance Agreement with
Epic Pharma, LLC and Epic Investments, LLC, as amended, (h) Common Stock issued pursuant to the Equity Credit Line, (i) additional
shares of Common Stock issued to the funding source of the Equity Credit Line as a commitment fee, such shares to equal an amount
representing (i) 2.5% of the maximum dollar amount under the Equity Credit Line plus (ii) up to an additional 2.5% of the maximum
dollar amount under the Equity Credit Line, pro rata, only as the Company receives funding from the Equity Credit Line up to maximum
dollar amount under the Equity Credit Line (the purchase price for such shares shall be computed based upon the average of the
closing sale prices of the Common Stock for the twenty (20) consecutive Business Days prior to the date of execution of the letter
of intent with regard to the Equity Credit Line), (j) shares of Common Stock issuable as a “Commitment Fee” pursuant
to and as defined in the December 30, 2011 Securities Purchase Agreement with Socius CG II, Ltd., as amended and (k) Common Stock
issuable pursuant to the Class D Common Stock Purchase Warrants issued on or about September 15, 2008, as amended, that expire
on September 15 2013.

 

"FORCED CONVERSION AMOUNT” means
the sum of (i) 100% of the aggregate Stated Value then outstanding, (ii) accrued but unpaid dividends and (iii) all liquidated
damages and other amounts due in respect of the Series G Preferred Stock.

 

"FORCED CONVERSION DATE” shall
have the meaning set forth in Section 8(a).

 

"FORCED CONVERSION NOTICE” shall
have the meaning set forth in Section 8(a).

 

"FORCED CONVERSION NOTICE DATE”
shall have the meaning set forth in Section 8(a).

 

"FUNDAMENTAL TRANSACTION” shall
have the meaning set forth in Section 7(e).

 

"HOLDER” or "HOLDERS”
means the holder or holders, as the case may be, of Series G Preferred Stock.

 

    	5

    	 

    

 

"INDEBTEDNESS” means (a) any
liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (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 balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved.

 

"JUNIOR SECURITIES” means the
Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior
or PARI PASSU to the Series G Preferred Stock in dividend rights or liquidation preference.

 

"LIQUIDATION” shall have the
meaning set forth in Section 5.

 

"NEW YORK COURTS” shall have
the meaning set forth in Section 11(d).

 

"NOTICE OF CONVERSION” shall
have the meaning set forth in Section 6(a).

 

"OPTIONAL REDEMPTION AMOUNT”
means the sum of (i) prior to September 15, 2011, 115% of the aggregate Stated Value then outstanding or after such date, 100%
of the aggregate Stated Value then outstanding, (ii) accrued but unpaid dividends and (iii) all liquidated damages and other amounts
due in respect of the Preferred Stock.

 

"OPTIONAL REDEMPTION” shall
have the meaning set forth in Section 8(b).

 

"OPTIONAL REDEMPTION DATE” shall
have the meaning set forth in Section 8(b).

 

"OPTIONAL REDEMPTION NOTICE”
shall have the meaning set forth in Section 8(b).

 

"OPTIONAL REDEMPTION NOTICE DATE”
shall have the meaning set forth in Section 8(b).

 

"ORIGINAL ISSUE DATE” means
the date of the first issuance of any shares of the Series G Preferred Stock regardless of the number of transfers of any particular
shares of Series G Preferred Stock and regardless of the number of certificates which may be issued to evidence such Series G Preferred
Stock.

 

"2007 ORIGINAL ISSUE DATE” means
the date of the first issuance of any shares of the Series C Preferred Stock regardless of the number of transfers of any particular
shares of Series C Preferred Stock and regardless of the number of certificates which may be issued to evidence such Series C Preferred
Stock.

 

"PERMITTED INDEBTEDNESS” means
(a) the Indebtedness existing on the 2007 Original Issue Date as set forth on the Disclosure Schedules attached to the 2007 Purchase
Agreement and (b) non-equity linked lines of credit or term loans from a regulated financial institution, lease obligations and
purchase money indebtedness of up to $3,000,000 in the aggregate.

 

    	6

    	 

    

 

"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 the Corporation) have been established in accordance
with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Corporation's business, such as carriers',
warehousemen's and mechanics' Liens, statutory landlords' Liens, and other similar Liens arising in the ordinary course of the
Corporation'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 the Corporation and its consolidated Subsidiaries
or (y) which are being 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 in connection
with Permitted Indebtedness under clause (b) thereunder, provided that such Liens are not secured by assets of the Corporation
or its Subsidiaries other than the assets so acquired or leased, except that any line of credit or term loan from a regulated financial
institution may be secured by a general Lien on all assets of the Corporation.

 

"PREFERRED STOCK”
means the Series C Preferred Stock, the Series G Preferred Stock and the Series E Preferred Stock collectively.

 

"2007 PURCHASE AGREEMENT” means
the Securities Purchase Agreement, dated as of April 25, 2007, to which the Corporation and the original Holders are parties, as
amended, modified or supplemented from time to time in accordance with its terms related, inter alia, to the purchase of Series
C Preferred Stock.

 

"REGISTRATION RIGHTS AGREEMENT”
means the Registration Rights Agreement, dated as of the date of the 2007 Purchase Agreement, to which the Corporation and the
original Holder are parties, 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.

 

"SERIES G PREFERRED STOCK” shall
have the meaning set forth in Section 2.

 

“SHARE DELIVERY DATE” shall
have the meaning set forth in Section 6(e).

 

"SHAREHOLDER APPROVAL” shall
have the meaning set forth in Section 6(d).

 

"STATED VALUE” shall have the
meaning set forth in Section 2.

 

"SUBSIDIARY” shall have the
meaning set forth in the 2007 Purchase Agreement.

 

"THRESHOLD PERIOD” shall have
the meaning set forth in Section 8(a).

 

    	7

    	 

    

 

"TRADING DAY” means a day on
which the principal Trading Market is open for business.

 

"TRADING MARKET” means the following
markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market,
the Nasdaq Global Select Market, the Nasdaq Global Market, the NYSE; MKT, the New York Stock Exchange, the OTC Bulletin Board or,
if the Common Stock is not then listed or quoted on any of the foregoing, the highest market place operated by the OTC Markets
Group (or a similar organization or agency succeeding to its functions of reporting prices).

 

"TRANSACTION DOCUMENTS” shall
have the meaning set forth in the 2007 Purchase Agreement.

 

"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 for trading as reported by Bloomberg Financial 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 the Trading Market is the OTC Bulletin
Board, 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 quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are
then reported in the highest market place operated by the OTC Markets Group (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) 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 the Purchasers
and reasonably acceptable to the Corporation.

 

SECTION 2. DESIGNATION, RANK, AMOUNT AND
PAR VALUE. This series of preferred stock shall be designated as its Series G 8% Convertible Preferred Stock (the "SERIES
G PREFERRED STOCK") and the number of shares so designated shall be 1,375 (which shall not be subject to increase without
the requisite affirmative vote of the holders of Preferred Stock as set forth in Section 4). Each share of Series G Preferred Stock
shall have a par value of $0.01 per share and a stated value equal to $1,000 (the "STATED VALUE"). The Series G Preferred
Stock shall, with respect to dividend rights, redemption rights and rights upon liquidation, dissolution or winding up, rank senior
to the Common Stock.

 

    	8

    	 

    

 

SECTION 3. DIVIDENDS.

 

a) DIVIDENDS IN CASH OR IN KIND. Holders
shall be entitled to receive, and the Corporation shall pay, cumulative dividends at the rate per share (as a percentage of the
Stated Value per share) of 8% per annum, (subject to increases pursuant to Section 9(b)), payable quarterly on January 1, April
1, July 1 and October 1, beginning on the first such date after the Original Issue Date and on each Conversion Date (except that,
if such date is not a Trading Day, the payment date shall be the next succeeding Trading Day) (each such date, a "DIVIDEND
PAYMENT DATE") in cash or duly authorized, validly issued, fully paid and non-assessable shares of Common Stock as set forth
in this Section (a), or a combination thereof (the amount to be paid in shares of Common Stock, the "DIVIDEND SHARE AMOUNT").
The form of dividend payments to each Holder shall be determined in the following order of priority: (i) if funds are legally available
for the payment of dividends and the Equity Conditions have not been met during the 20 consecutive Trading Days immediately prior
to the applicable Dividend Payment Date, in cash only; (ii) if funds are legally available for the payment of dividends and the
Equity Conditions have been met during the 20 consecutive Trading Days immediately prior to the applicable Dividend Payment Date,
at the sole election of the Corporation, in cash or shares of Common Stock which shall be valued solely for such purpose at 95%
of the average of the VWAPs for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the Dividend
Payment Date; (iii) if funds are not legally available for the payment of dividends and the Equity Conditions have been met during
the 20 consecutive Trading Days immediately prior to the applicable Dividend Payment Date, in shares of Common Stock which shall
be valued solely for such purpose at 95% of the average of the VWAPs for the 20 consecutive Trading Days ending on the Trading
Day that is immediately prior to the Dividend Payment Date. The Holders shall have the same rights and remedies with respect to
the delivery of any such shares as if such shares were being issued pursuant to Section 6. Dividends on the Series G Preferred
Stock shall be calculated on the basis of a 360-day year, shall accrue daily commencing on the Original Issue Date, and shall be
deemed to accrue from such date whether or not earned or declared and whether or not there are profits, surplus or other funds
of the Corporation legally available for the payment of dividends. Except as otherwise provided herein, if at any time the Corporation
pays dividends partially in cash and partially in shares, then such payment shall be distributed ratably among the Holders based
upon the number of shares of Series G Preferred Stock held by each Holder on such Dividend Payment Date. Any dividends, whether
paid in cash or shares of Common Stock, that are not paid within five Trading Days following a Dividend Payment Date shall continue
to accrue and shall entail a late fee, which must be paid in cash, at the rate of 18% per annum or the lesser rate permitted by
applicable law (such fees to accrue daily, from the Dividend Payment Date through and including the date of payment). If at any
time the Corporation delivers a notice to the Holders of its election to pay the dividends in shares of Common Stock, the Corporation
shall timely file a prospectus supplement pursuant to Rule 424 disclosing such election, to the extent required by applicable law.

 

b) So long as any Series
G Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise
acquire directly or indirectly any Junior Securities except as expressly permitted by Section 9(a)(ix). So long as any Series G
Preferred Stock shall remain outstanding, (i) neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay
or declare any dividend or make any distribution upon (other than a dividend or distribution described in Section 6 or dividends
due and paid in the ordinary course on preferred stock of the Corporation at such times when the Corporation is in compliance with
its payment and other obligations hereunder), (ii) nor shall any distribution be made in respect of, any Junior Securities as long
as any dividends due on the Series G Preferred Stock remain unpaid, (iii) nor shall any monies be set aside for or applied to the
purchase or redemption (through a sinking fund or otherwise) of any Junior Securities or shares PARI PASSU with the Series G Preferred
Stock.

 

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c) The Corporation acknowledges and agrees
that the capital of the Corporation (as such term is used in NRS) in respect of the Series G Preferred Stock and any future issuances
of the Corporation's capital stock shall be equal to the aggregate par value of such Series G Preferred Stock or capital stock,
as the case may be, and that, on or after the date of the 2007 Purchase Agreement, it shall not increase the capital of the Corporation
with respect to any shares of the Corporation's capital stock issued and outstanding on such date. The Corporation also acknowledges
and agrees that it shall not create any special reserves out of funds of the corporation available for dividends for any purpose
without the prior written consent of each Holder.

 

SECTION 4. VOTING RIGHTS. Except as otherwise
provided herein or as otherwise required by law, the Series G Preferred Stock shall have no voting rights. However, as long as
any shares of Series G Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the holders
of at least 50%, in the aggregate, of the then outstanding shares of the Series G Preferred Stock, (a) alter or change adversely
the powers, preferences or rights given to the Series G Preferred Stock or alter or amend this Certificate of Designations, (b)
authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined
in Section 5) senior to or otherwise PARI PASSU with the Series G Preferred Stock, (c) amend its articles of incorporation or other
charter documents in any manner that adversely affects any rights of the holders of Series G Preferred Stock, (d) increase the
authorized number of shares of Preferred Stock, (e) increase the number of shares designated as Series G Preferred Stock, or (f)
enter into any agreement with respect to any of the foregoing. Notwithstanding the above, this Section 4 shall not apply to any
security issued in connection with a Strategic Transaction that ranks as to dividends, redemption or distribution of assets upon
a Liquidation that is PARI PASSU with or junior to the Series G Preferred Stock.

 

SECTION 5. LIQUIDATION. Upon any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary (a "LIQUIDATION"), the Holders shall be
entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus
any accrued and unpaid dividends thereon and any other fees or liquidated damages owing thereon, for each share of Series G Preferred
Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation
shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed
among the holders of all outstanding shares of Series G Preferred Stock in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control Transaction
shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior
to the payment date stated therein, to each Holder.

 

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SECTION 6. CONVERSION.

 

a) CONVERSIONS AT OPTION OF HOLDER. Each
share of Series G Preferred Stock shall be convertible at the option of the Holder, at any time and from time to time from and
after the Original Issue Date into that number of shares of Common Stock (subject to the limitations set forth in Section 6(c)
and Section 6(d)) determined by dividing the Stated Value of such share of Series G Preferred Stock by the Conversion Price. Holders
shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as ANNEX A (a "NOTICE
OF CONVERSION"). Each Notice of Conversion shall specify the number of shares of Series G Preferred Stock to be converted,
the number of shares of Series G Preferred Stock owned prior to the conversion at issue, the number of shares of Series G Preferred
Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be
prior to the date the Holder delivers by facsimile such Notice of Conversion to the Corporation (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
to the Corporation is deemed delivered hereunder. The calculations and entries set forth in the Notice of Conversion shall control
in the absence of manifest or mathematical error. To effect conversions, as the case may be, of shares of Series G Preferred Stock,
a Holder shall not be required to surrender the certificate(s) representing such shares of Series G Preferred Stock to the Corporation
unless all of the shares of Series G Preferred Stock represented thereby are so converted, in which case the Holder shall deliver
the certificate representing such shares of Series G Preferred Stock promptly following the Conversion Date at issue. Shares of
Series G Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall
not be reissued.

 

b) CONVERSION PRICE. The conversion price
for the Series G Preferred Stock shall be equal to the lesser of: (i) the lowest sale price of the Common Stock on the Conversion
Date on the Trading Market or (ii) the average of the three (3) lowest closing sale prices of the Common Stock during the twelve
(12) Business Days prior to the Conversion Date on the Trading Market, subject to adjustment herein; but in no event shall the
Conversion Price be below $0.07 (the "CONVERSION PRICE").

 

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c) BENEFICIAL OWNERSHIP
LIMITATION. The Corporation shall not effect any conversion of the Series G Preferred Stock, and a Holder shall not have the right
to convert any portion of the Series G Preferred Stock, to the extent that, after giving effect to the conversion set forth on
the applicable Notice of Conversion, such Holder (together with such Holder's Affiliates, and any other person or entity acting
as a group together with such Holder or any of such Holder's Affiliates) would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). The Corporation shall not give effect to any voting rights of the shares of Series G Preferred Stock,
and any Holder shall not have the right to exercise voting rights with respect to any Series G Preferred Stock pursuant hereto,
to the extent that giving effect to such voting rights would result in such Holder (together with its affiliates) being deemed
to beneficially own in excess of the Beneficial Ownership Limitation of the number of shares of Common Stock outstanding immediately
after giving effect to such exercise, assuming such exercise as being equivalent to conversion. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of
Common Stock issuable upon conversion of the Series G Preferred Stock with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Stated
Value of Series G Preferred Stock beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation on conversion or exercise
analogous to the limitation contained herein (including the Warrants) beneficially owned by such Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 6(c), 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 6(c) applies, the determination of whether the Series G Preferred Stock is convertible (in relation to
other securities owned by such Holder together with any Affiliates) and of how many shares of Series G Preferred Stock are convertible
shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder's
determination of whether the shares of Series G Preferred Stock may be converted (in relation to other securities owned by such
Holder together with any Affiliates) and how many shares of the Series G Preferred Stock are convertible, in each case subject
to such aggregate percentage limitations. To ensure compliance with this restriction, each Holder will be deemed to represent to
the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set
forth in this paragraph and the Corporation 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 6(c), in determining the number
of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most
recent of the following: (A) the Corporation's most recent Form 10-Q or Form 10-K, as the case may be, (B) a more recent public
announcement by the Corporation or (C) a more recent notice by the Corporation or the Corporation's transfer agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Corporation shall within two
Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Corporation, including the Series G Preferred Stock, by such 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 Series G Preferred Stock held by the Holder. By written notice to the Corporation, any Holder may from time to time
increase or decrease the Beneficial Ownership Limitation to any other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the
Corporation, and (ii) any such increase or decrease will apply only to such Holder providing such written notice and not to any
other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 6(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained 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 Series G Preferred
Stock. This Section 6(c) shall not apply to the Corporation's exercise of its rights under Section 8.

 

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d) TRADING MARKET LIMITATIONS. Notwithstanding
anything herein to the contrary, if the Corporation is listed on a Trading Market and has not obtained Shareholder Approval (as
defined below), then the Corporation may not issue upon conversion of the Series G Preferred Stock, a number of shares of Common
Stock, which, when aggregated with any shares of Common Stock issued prior to such Conversion Date (A) upon conversion of or as
payment of dividends on the Series G Preferred Stock, (B) upon exercise of the Warrants issued pursuant to that certain 2007 Purchase
Agreement and (C) pursuant to any warrants issued to any registered broker-dealer as a fee in connection with the Securities issued
pursuant to the 2007 Purchase Agreement, would exceed 19.999% of the number of shares of Common Stock outstanding on the Trading
Day immediately preceding the 2007 Original Issue Date (such number of shares, the "ISSUABLE MAXIMUM"). Each Holder shall
be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) such the number of shares of Series
G Preferred Stock initially purchased by such Holder by (y) the aggregate number of shares purchased by all Holders. Such portion
shall be adjusted upward ratably in the event all of the shares of Series G Preferred Stock initially purchased by any Holder are
no longer outstanding. If at any time (i) the number of shares of Common Stock which could, notwithstanding the limitation set
forth herein, be issued to all Holders during the following 12 months (assuming all dividends are paid in shares of Common Stock
during such period of determination based upon the VWAP at the time of any such determination) equals or exceeds the Issuable Maximum
and (ii) the Corporation's voting shareholders shall not have previously approved the transactions contemplated by the Transaction
Documents as may be required by an applicable rule or listing policy of a Trading Market (the "SHAREHOLDER APPROVAL"),
then the Corporation shall issue to the Holder requesting conversion a number of shares of Common Stock equal to such Holder's
pro-rata portion (which shall be calculated pursuant to the terms hereof) of the Issuable Maximum, and with respect to the remainder
of the Series G Preferred Stock (including any accrued dividends) then held by such Holder for which a conversion in accordance
with the applicable Conversion Price would result in an issuance of shares of Common Stock in excess of such Holder's pro-rata
portion (which shall be calculated pursuant to the terms hereof) of the Issuable Maximum (the "EXCESS PREFERRED"), the
Corporation shall be prohibited from converting such Excess Preferred, and shall promptly notify the Holder of the reason therefore.
The Excess Preferred shall thereafter be unconvertible to such extent until and unless Shareholder Approval is subsequently obtained,
but the rights and preferences of the Series G Preferred Stock otherwise set forth in this Certificate of Designations shall otherwise
remain in full force and effect.

 

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e) MECHANICS OF CONVERSION

 

i. DELIVERY OF CERTIFICATE UPON CONVERSION.
Not later than three Trading Days after each Conversion Date (the "SHARE DELIVERY DATE"), the Corporation shall deliver,
or cause to be delivered, to the Holder (A) a certificate or certificates which, on or after the Effective Date, representing the
number of shares of Common Stock being acquired upon the conversion of shares of Series G Preferred Stock, and (B) a bank check
in the amount of accrued and unpaid dividends (if the Corporation has elected or is required to pay accrued dividends in cash).
On or after the Effective Date, the Corporation shall, upon request of the Holder, use its commercially reasonable efforts to deliver
any certificate or certificates required to be delivered by the Corporation under this Section 6 electronically through the Depository
Trust Company or another established clearing corporation performing similar functions. 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 fifth Trading Day after the
Conversion Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt
of such certificate or certificates, to rescind such Conversion Notice by written notice to the Corporation, in which event the
Corporation shall promptly return to the Holder any original Series G Preferred Stock certificate delivered to the Corporation
and the Holder shall promptly return any Common Stock certificates representing the shares of Series G Preferred Stock tendered
for conversion to the Corporation.

 

ii. OBLIGATION ABSOLUTE; PARTIAL LIQUIDATED
DAMAGES. The Corporation's obligation to issue and deliver the Conversion Shares upon conversion of Series G Preferred Stock in
accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to the
Holder in connection with the issuance of such Conversion Shares; PROVIDED, HOWEVER, that such delivery shall not operate as a
waiver by the Corporation of any such action that the Corporation may have against the Holder. In the event a Holder shall elect
to convert any or all of the Stated Value of its Series G Preferred Stock, the Corporation may not refuse conversion based on any
claim that such Holder or any one 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 the Series G Preferred Stock of the Holder shall have been sought and obtained. In the absence of such injunction, the
Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails
to deliver to the Holder such certificate or certificates pursuant to Section 6(e)(i) on the second Trading Day after the Share
Delivery Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Stated Value of Series G Preferred Stock being converted, $10 per Trading Day (increasing to $20
per Trading Day on the third Trading Day after such damages begin to accrue) for each Trading Day after such second Trading Day
after the Share Delivery Date until such certificates are delivered. Nothing herein shall limit a Holder's right to pursue actual
damages for the Corporation's failure to deliver Conversion Shares within the period specified herein and such 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.

 

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iii. COMPENSATION FOR BUY-IN ON FAILURE
TO TIMELY DELIVER CERTIFICATES UPON CONVERSION. If the Corporation fails to deliver to the Holder such certificate or certificates
by the Share Delivery Date pursuant to Section 6(e)(i), and if after such Share Delivery Date the Holder is required by its brokerage
firm to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date
(a "BUY-IN"), then the Corporation shall (A) pay in cash to the Holder (in addition to any other remedies available to
or elected by the Holder) the amount by which (x) the Holder's total purchase price (including any brokerage commissions) for the
shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such 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) the shares of Series G Preferred Stock equal to the number of shares of Series G Preferred Stock submitted for
conversion or deliver to the Holder the number of shares of Common Stock that would have been issued if the Corporation had timely
complied with its delivery requirements under Section 6(e)(i). For example, if the Holder purchases shares of Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series G Preferred Stock
with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a
total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay the Holder $1,000.
The Holder shall provide the Corporation written notice indicating the amounts payable to the Holder in respect of the Buy-In and,
upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder's right to pursue any
other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Corporation's failure to timely deliver certificates representing shares of Common Stock
upon conversion of the shares of Series G Preferred Stock as required pursuant to the terms hereof.

 

iv. RESERVATION OF SHARES ISSUABLE UPON
CONVERSION. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares
of Common Stock for the sole purpose of issuance upon conversion of the Series G Preferred Stock and payment of dividends on the
Series G Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of
Persons other than the Holders of the Series G Preferred Stock, not less than such aggregate number of shares of the Common Stock
as shall (subject to the terms and conditions in the 2007 Purchase Agreement) be issuable (taking into account the adjustments
and restrictions of Section 7) upon the conversion of all outstanding shares of Series G Preferred Stock and payment of dividends
hereunder. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized,
validly issued, fully paid and nonassessable and, if the Conversion Shares Registration Statement is then effective under the Securities
Act, shall be registered for public sale in accordance with such Conversion Shares Registration Statement.

 

 

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v. FRACTIONAL SHARES. Upon a conversion
hereunder, the Corporation shall not be required to issue stock certificates representing fractions of shares of Common Stock,
but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the VWAP at such time.
If the Corporation elects not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of the
final fraction of a share, one whole share of Common Stock.

 

vi. TRANSFER TAXES. The issuance of certificates
for shares of the Common Stock on conversion of this Series G Preferred Stock shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided
that the Corporation 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 such shares of Series G Preferred
Stock so converted and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or
Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to
the satisfaction of the Corporation that such tax has been paid.

 

SECTION 7. CERTAIN ADJUSTMENTS.

 

a) STOCK DIVIDENDS AND STOCK SPLITS. If
the Corporation, at any time while this Series G Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents
(which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment
of a dividend on, this Series G Preferred Stock); (B) subdivides outstanding shares of Common Stock into a larger number of shares;
(C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or
(D) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, 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 the Corporation) 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 7(a) 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.

 

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b) SUBSEQUENT EQUITY SALES. If the Corporation
or any Subsidiary thereof, at any time while this Series G Preferred Stock is outstanding, sells or grants any option to purchase
or sells or grants any right to reprice its securities, 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 shares of
Common Stock at an effective price per share that is lower than the then applicable Conversion Price (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 shares of
Common Stock at an effective price per share that is lower than the then applicable Conversion Price, such issuance shall be deemed
to have occurred for less than the then applicable Conversion Price on such date of the Dilutive Issuance), then the then applicable
Conversion Price shall be reduced to a price determined by multiplying the then applicable Conversion Price by a fraction, the
numerator of which is the sum of (A) the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive
Issuance plus (B) the number of shares of Common Stock issuable upon conversion or exercise of Common Stock Equivalents issued
and outstanding immediately prior to the Dilutive Issuance plus (C) the number of shares of Common Stock which the offering price
for such Dilutive Issuance would purchase at the then applicable Conversion Price, and the denominator of which shall be the sum
of (X) the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus (Y) the number
of shares of Common Stock issuable upon conversion or exercise of Common Stock Equivalents issued and outstanding immediately prior
to the Dilutive Issuance plus (Z) the number of shares of Common Stock so issued or issuable in connection with the Dilutive Issuance.
Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance or any exchange
of shares of any outstanding preferred stock of the Corporation for shares of a validly authorized, newly-created series of preferred
stock. The Corporation shall notify the Holder in writing, no later than the Business Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section 7(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 Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b),
upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the adjusted
Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the adjusted
Conversion Price in the Notice of Conversion.

 

c) SUBSEQUENT RIGHTS OFFERINGS. If the
Corporation, at any time while this Series G Preferred Stock is outstanding, shall issue rights, options or warrants to all holders
of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share that
is lower than the VWAP on the record date referenced below, then the Conversion Price shall be multiplied by a fraction of which
the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be
the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares
which the aggregate offering price of the total number of shares so offered (assuming delivery to the Corporation in full of all
consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights, options or warrants. If any such rights, options or warrants expire without having
been exercise, the Conversion Price as adjusted upon the issuance of such rights, options or warrants shall be readjusted to the
Conversion Price which would have been in effect had an adjustment been made on the basis that only additional shares of Common
Stock so issued were the additional shares of Common Stock, if any, actually issued or sold on the exercise of such rights, options
or warrants and such additional shares of Common Stock, if any, were issued or sold for the consideration actually received by
the Corporation upon such exercise, plus the consideration, if any, actually received by the Corporation for the granting of all
such rights, options or warrants, whether or not exercised, provided that such readjustment shall not apply to prior conversions
of the Series G Preferred Stock

 

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d) PRO RATA DISTRIBUTIONS. If the Corporation,
at any time while this Series G Preferred Stock is outstanding, distributes to all holders of Common Stock (and not to Holders)
evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase
any security (other than Common Stock, which shall be subject to Section 7(b)), then in each such case the Conversion Price shall
be adjusted by multiplying such Conversion Price in effect immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record
date of the portion of such assets, evidence of indebtedness or rights or warrants so distributed applicable to one outstanding
share of the Common Stock as determined by the Board of Directors of the Corporation in good faith. In either case the adjustments
shall be described in a statement delivered to the Holder describing the portion of assets or evidences of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned above.

 

e) FUNDAMENTAL TRANSACTION. If, at any
time while this Series G Preferred Stock is outstanding, (A) the Corporation effects any merger or consolidation of the Corporation
with or into another Person, (B) the Corporation effects any sale of all or substantially all of its assets in one transaction
or a series of related transactions, (C) any tender offer or exchange offer (whether by the Corporation or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property,
or (D) the Corporation effects any reclassification 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 (in any such case, a "FUNDAMENTAL
TRANSACTION"), then, upon any subsequent conversion of this Series G Preferred Stock, 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, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common
Stock (the "ALTERNATE CONSIDERATION"). 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 share of Common Stock in such Fundamental Transaction, and the Corporation 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 Series G Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions,
any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation
of the Series G Preferred Stock with the same terms and conditions and issue to the Holder new preferred stock consistent with
the foregoing provisions and evidencing the Holder's right to convert such preferred stock into Alternate Consideration. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this Section 7(e) and insuring that this Series G Preferred Stock (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

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f) CALCULATIONS. All calculations under
this Section 7 shall be made to the nearest 1/100th of a cent or the nearest share, as the case may be. For purposes of this Section
7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

g) NOTICE TO THE HOLDERS.

 

i. ADJUSTMENT TO CONVERSION PRICE. Whenever
the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly mail to 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) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation
shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall authorize
the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of
all or substantially all of the assets of the Corporation, of any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or
agency maintained for the purpose of conversion of this Series G Preferred Stock, and shall cause to be delivered to each Holder
at its last address as it shall appear upon the stock books of the Corporation, at least 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. The Holder is entitled to convert
the Conversion Amount of this Series G Preferred Stock (or any part hereof) during the 20-day period commencing on the date of
such notice through the effective date of the event triggering such notice.

 

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SECTION 8. FORCED CONVERSION; OPTIONAL
REDEMPTION; AUTOMATIC MONTHLY CONVERSION.

 

a) FORCED CONVERSION. Notwithstanding anything
herein to the contrary, to the extent that VWAP for each of any 20 consecutive Trading Day period exceeds the then applicable Conversion
Price (such 20 consecutive Trading Day period, the "THRESHOLD PERIOD"), if (i)(x) the VWAP during the Threshold Period
exceeds $1.00 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like) and
(y) the daily trading volume for each Trading Day during such Threshold Period exceeds 250,000 shares of Common Stock (subject
to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like), (ii)(x) the VWAP during the
Threshold Period exceeds $1.25 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends
and the like) and (y) the daily trading volume for each Trading Day during such Threshold Period exceeds 200,000 shares of Common
Stock (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like), (iii)(x) the
VWAP during the Threshold Period exceeds $1.50 (subject to adjustment for forward and reverse stock splits, recapitalizations,
stock dividends and the like) and (y) the daily trading volume for each Trading Day during such Threshold Period exceeds 150,000
shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the
like), or (iv)(x) the VWAP during the Threshold Period exceeds $1.75 (subject to adjustment for forward and reverse stock splits,
recapitalizations, stock dividends and the like) and (y) the daily trading volume for each Trading Day during such Threshold Period
exceeds 100,000 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends
and the like), then the Corporation may, within two Trading Days after the end of any such Threshold Period, deliver a written
notice to all Holders (a "FORCED CONVERSION NOTICE” and the date such notice is delivered to all Holders, the "FORCED
CONVERSION NOTICE DATE") to cause each Holder to convert all or part of such Holder's Series G Preferred Stock (as specified
in such Forced Conversion Notice) plus all accrued but unpaid dividends thereon and all liquidated damages and other amounts due
in respect of the Series G Preferred Stock pursuant to Section 6, it being agreed that the "Conversion Date” for purposes
of Section 6 shall be deemed to occur on the third Trading Day following the Forced Conversion Notice Date (such third Trading
Day, the "FORCED CONVERSION DATE"). The Corporation may not deliver a Forced Conversion Notice, and any Forced Conversion
Notice delivered by the Corporation shall not be effective, unless all of the Equity Conditions have been met on each Trading Day
occurring during the applicable Threshold Period through and including the later of the Forced Conversion Date and the Trading
Day after the date that the Conversion Shares issuable pursuant to such conversion are actually delivered to the Holder pursuant
to the Forced Conversion Notice. Any Forced Conversion Notices shall be applied ratably to all of the holders of Preferred Stock
based on the number of shares of Preferred Stock held by each holder of Preferred Stock as of the forced Conversion Date, provided
that any voluntary conversions by a Holder shall be applied against such Holder's pro-rata allocation, thereby decreasing the aggregate
amount forcibly converted hereunder if less than all shares of the Preferred Stock are forcibly converted. For purposes of clarification,
a Forced Conversion shall be subject to all of the provisions of Section 6, including, without limitation, the provisions requiring
payment of liquidated damages and limitations on conversions.

 

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b) OPTIONAL REDEMPTION. Subject to the
provisions of this Section 8, the Corporation may deliver a notice to the Holders (an "OPTIONAL REDEMPTION NOTICE” and
the date such notice is deemed delivered hereunder, the "OPTIONAL REDEMPTION NOTICE DATE") of its irrevocable election
to redeem some or all of the then outstanding Series G Preferred Stock, for cash in an amount equal to the Optional Redemption
Amount on the 20th Trading Day following the Optional Redemption Notice Date (such date, the "OPTIONAL REDEMPTION DATE”
and such redemption, the "OPTIONAL REDEMPTION"). The Optional Redemption Amount is payable in full on the Optional Redemption
Date. The Corporation may only effect an Optional Redemption if each of the Equity Conditions shall have been met on each Trading
Day occurring during the period commencing on the Optional Redemption Notice Date through to the Optional Redemption Date and through
and including the date payment of the Optional Redemption Amount is actually made. If any of the Equity Conditions shall cease
to be satisfied at any time during such 20 Trading Day period, then a Holder may elect to nullify the Optional Redemption Notice
as to such Holder by notice to the Corporation within 3 Trading Days after the first day on which any such Equity Condition has
not been met (provided that if the Corporation is obligated to notify the Holders of the non-existence of an Equity Condition,
such notice period shall be extended to the third Trading Day after proper notice from the Corporation) in which case the Optional
Redemption Notice shall be null and void, AB INITIO. The Corporation covenants and agrees that it will honor all Notices of Conversion
tendered from the time of delivery of the Optional Redemption Notice through the date the Optional Redemption Amount is paid in
full. Any Optional Redemption Notices shall be applied ratably to all of the holders of Preferred Stock based the number of shares
of Preferred Stock held by each holder of Preferred Stock as of the Optional Redemption Date, provided that any voluntary conversions
by a Holder shall be applied against such Holder's pro-rata allocation, thereby decreasing the aggregate amount redeemed hereunder
if less than all shares of the Preferred Stock are redeemed.

 

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c) AUTOMATIC MONTHLY CONVERSIONS. Subject
to the terms herein, on each Monthly Conversion Date (as defined below), a number of shares of Series G Preferred Stock equal to
each Holder’s pro-rata portion (based on the shares of Series G Preferred Stock held by each Holder on April 1, 2013) of
the Monthly Conversion Amount (as defined below) shall automatically convert into shares of Common Stock at the then-effective
Conversion Price (each such conversion, a (the “Monthly Conversion”). Each Holder may convert, pursuant to Section
6(a), all or a portion of its Series G Preferred Stock subject to a Monthly Conversion at any time prior to a Monthly Conversion
Date. Any Series G Preferred Stock converted (other than pursuant to a Monthly Conversion) during the calendar month immediately
prior to a Monthly Conversion Date shall be applied to such Holder’s pro rata portion of such Monthly Conversion Amount (up
to such Holder’s pro rata portion for such month). Notwithstanding anything to the contrary set forth herein, the Corporation
shall not be permitted to effect a Monthly Conversion on a Monthly Conversion Date unless (i) the Common Stock shall be listed
or quoted for trading on a Trading Market, (ii) there is a sufficient number of authorized shares of Common Stock for issuance
of all Common Stock to be issued upon such Monthly Conversion, (iii) as to any Holder, the issuance of the shares shall not cause
a breach of any provision of Section 6(c) herein, (iv) if requested by the Holder and a Rule 144 Rep Letter (as defined below)
shall have been provided by such Holder after request from the Corporation, the Conversion Shares are delivered electronically
through the Depository Trust Company or another established clearing corporation performing similar functions, may be resold by
the Holder pursuant to an exemption under the Securities Act and are otherwise free of restrictive legends and trading restrictions
on the Holder (in this regard, the Corporation shall at its expense provide an opinion of counsel, or, if requested by Holder,
reputable counsel selected by the Holder shall provide an opinion, to the Corporation and its transfer agent that the Conversion
Shares may be resold by the Holder pursuant to an exemption under the Securities Act and are otherwise free of restrictive legends
and trading restrictions on the Holder), (v) there has been no public announcement of a pending or proposed Fundamental Transaction
or Change of Control Transaction that has not been consummated, (vi) the applicable Holder is not in possession of any information
provided to the applicable Holder by the Corporation that constitutes material non-public information, and (vii) the average VWAP
for the 20 Trading Days immediately prior to the applicable Monthly Conversion Date equals or exceeds the then-effective Conversion
Price. As used herein, the following terms shall have the following meanings: (i) “Monthly Conversion Date “means the
first day of each month, commencing on April 1, 2013, and terminating on the date the Series G Preferred Stock is no longer outstanding;
(ii) “Monthly Conversion Amount “means an aggregate Stated Value of Series G Preferred Stock among all Holders that
is equal to 35% of aggregate dollar trading volume of the Common Stock during the 20 Trading Days immediately prior to the applicable
Monthly Conversion Date (such 20 Trading Day period, the “Measurement Period”), increasing to 50% of the aggregate
dollar trading volume during the Measurement Period if the average VWAP during such Measurement Period equals or exceeds $0.20
(subject to adjustment for forward and reverse stock splits and the like that occur after April 1, 2013) and further increasing
to 70% of the aggregate dollar trading volume during such Measurement Period if the average VWAP during such Measurement Period
equals or exceeds $0.25 (subject to adjustment for forward and reverse stock splits and the like that occur after April 1, 2013).
All shares of Common Stock issued on a Monthly Conversion Date shall be delivered otherwise in accordance with the procedures and
time frames set forth in Section 6 above. Upon the request of the Corporation, each Holder shall provide to the Corporation, a
customary Rule 144 representation letter relating to all shares of Common Stock to be issued upon each Monthly Conversion (a “Rule
144 Rep Letter ”).

 

SECTION 9. [intentionally omitted]

 

SECTION 10. NEGATIVE COVENANTS. So long
as any shares of Series G Preferred Stock are outstanding, the Corporation shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, without the affirmative written consent of the holders of at least 50%, in the aggregate, of the then
outstanding shares of the Series G Preferred Stock:

 

a) other than Permitted Indebtedness, for
a period of three years from the 2007 Original Issue Date, 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, 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;

 

    	22

    	 

    

 

b) other than Permitted Liens, for a period
of three years from the 2007 Original Issue Date, 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 articles of incorporation,
bylaws or other charter documents so as to materially and adversely affect any rights of any Holder;

 

d) repay, repurchase or offer to repay,
repurchase or otherwise acquire more than a DE MINIMIS number of shares of its Common Stock, Common Stock Equivalents or Junior
Securities, except for the Conversion Shares to the extent permitted or required under the Transaction Documents or as otherwise
permitted by the Transaction Documents;

 

e) enter into any agreement or understanding
with respect to any of the foregoing; or

 

f) pay cash dividends or distributions
on Junior Securities of the Corporation.

 

SECTION 11. MISCELLANEOUS.

 

a) NOTICES. Any and all notices or other
communications or deliveries to be provided by the Holder hereunder including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to
the Corporation, at the address set forth above, facsimile number 201-750-2755, Attn: Chief Executive Officer, or such other facsimile
number or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section
11. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the
facsimile number or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address
appears on the books of the Corporation, at the principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section 11 prior to 5:30 p.m. (New York City time) on any
date, (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section 11 between 5:30 p.m. and 11:59 p.m. (New York City time) on any date, (iii) the
second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.

 

b) ABSOLUTE OBLIGATION. Except as expressly
provided herein, no provision of this Certificate of Designations shall alter or impair the obligation of the Corporation, which
is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest, as applicable, on the shares
of Series G Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

    	23

    	 

    

 

c) LOST OR MUTILATED SERIES G PREFERRED
STOCK CERTIFICATE. If a Holder's Series G Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation
shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or
in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series G Preferred Stock so mutilated,
lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the
ownership hereof reasonably satisfactory to the Corporation.

 

d) GOVERNING LAW. All questions concerning
the construction, validity, enforcement and interpretation of the Certificate of Designations shall be governed by and construed
and enforced in accordance with the internal laws of the State of Nevada, 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 Certificate of Designations 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 Certificate of Designations
or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this
Certificate of Designations, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorneys' fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

e) WAIVER. Any waiver by the Corporation
or the Holder of a breach of any provision of this Certificate of Designations 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 Certificate of Designations. The failure
of the Corporation or the Holder to insist upon strict adherence to any term of this Certificate of Designations 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 Certificate of Designations. Any waiver by the Corporation or the Holder must be in writing.

 

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f) SEVERABILITY. If any provision of this
Certificate of Designations is invalid, illegal or unenforceable, the balance of this Certificate of Designations shall remain
in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other
Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law.

 

g) 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.

 

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

 

i) STATUS OF CONVERTED OR REDEEMED SERIES
G PREFERRED STOCK. If any shares of Series G Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such
shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series
G 8% Convertible Preferred Stock.’

 

RESOLVED, FURTHER,
that the chairman, chief executive officer, president, chief financial officer, or any vice-president, and the secretary or any
assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file a Certificate of Designation
of Preferences, Rights and Limitations of Series G Preferred Stock in accordance with the foregoing resolution and the provisions
of Nevada law.”

 

IN WITNESS WHEREOF,
the undersigned have executed and acknowledged this Certificate this 18th day of April 2013.

 

	 	By:	s/Chris Dick	 
	 	 	Chris Dick, President	 

 

    	25

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