Document:

Silver Dragon Resources Inc. - Exhibit 4.1 - Filed by newsfilecorp.com

SECURED CONVERTIBLE
PROMISSORY NOTE

	Effective Date: August 2, 2016 	U.S.$170,000.00 

            FOR
VALUE RECEIVED, SILVER DRAGON RESOURCES INC., a Delaware corporation
(“Borrower”), promises to pay to TONAQUINT, INC., a Utah corporation, or
its successors or assigns (“Lender”), $170,000.00 and any interest, fees,
charges, and late fees on February 28, 2017 (the “Maturity Date”) in
accordance with the terms set forth herein and to pay interest on the
Outstanding Balance at the rate of twelve percent (12%) per annum from the
Purchase Price Date until the same is paid in full. This Secured Convertible
Promissory Note (this “Note”) is issued and made effective as of August
2, 2016 (the “Effective Date”). This Note is issued pursuant to that
certain Settlement and Securities Purchase Agreement dated April 7, 2016, as the
same may be amended from time to time, by and between Borrower and Lender (the
“Purchase Agreement”). All interest calculations hereunder shall be
computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day
months, shall compound daily and shall be payable in accordance with the terms
of this Note. Certain capitalized terms used herein are defined in Attachment
1 attached hereto and incorporated herein by this reference. 

            This
Note carries an OID of $15,000.00 . In addition, Borrower agrees to pay
$5,000.00 to Lender to cover Lender’s legal fees, accounting costs, due
diligence, monitoring and other transaction costs incurred in connection with
the purchase and sale of this Note (the “Transaction Expense Amount”),
all of which amount is included in the initial principal balance of this Note.
The purchase price for this Note shall be $150,000.00 (the “Purchase
Price”), computed as follows: $170,000.00 original principal balance, less
the OID, less the Transaction Expense Amount. The Purchase Price (as defined in
the Purchase Agreement) shall be payable by a wire transfer of immediately
available funds in the amount of the Purchase Price.

            1.       
Payment; Prepayment. Provided there is an Outstanding Balance, on each
Installment Date (as defined below), Borrower shall pay to Lender an amount
equal to the Installment Amount (as defined below) due on such Installment Date
in accordance with Section 8. The entire remaining
Outstanding Balance of this Note shall be due and payable on the Maturity Date.
All payments owing hereunder shall be in lawful money of the United States of
America or Conversion Shares (as defined below), as provided for herein, and
delivered to Lender at the address furnished to Borrower for that purpose. All
payments shall be applied first to (a) costs of collection, if any, then to (b)
fees and charges, if any, then to (c) accrued and unpaid interest, and
thereafter, to (d) principal. Notwithstanding the foregoing, Borrower may, but
only with Lender&rsquo;s prior written consent, pay, without penalty, all or
any portion of the Outstanding Balance along with any accrued but unpaid
interest on this Note at any time prior to the Maturity Date.

            2.       
Security. This Note is secured by: (a) that certain Security Agreement
dated April 7, 2016 by and between Borrower and Lender, as the same may be
amended from time to time (the “Security Agreement”), whereby Borrower
granted a security interest in all of its assets in favor of Lender to secure
the performance of its obligations under this Note, as more specifically set
forth in the Security Agreement, all the terms and conditions of which are
hereby incorporated into and made a part of this Note; and (b) that certain
Pledge Agreement dated April 7, 2016 by and between Borrower and Lender, as the
same may be amended from time to time (the “Pledge Agreement”), whereby
Borrower pledged all of its right, title and interest in and to the Sino-Top
Interest to secure the performance of its obligations under this Note, as more
specifically set forth in the Pledge Agreement, all the terms and conditions of
which are hereby incorporated into and made a part of this Note. 

            3.        Lender
Optional Conversion. 

                          3.1.       
Lender Conversion Price. Subject to adjustment as set forth in this Note,
the conversion price for each Lender Conversion (as defined below) shall be
$0.015 (the “Lender Conversion Price”). However, in the event
the Market Capitalization falls below $4,000,000.00 at any time, then in
such event (a) the Lender Conversion Price for all Lender Conversions occurring
after the first date of such occurrence shall equal the lower of the Lender
Conversion Price and the Market Price as of any applicable date of Conversion,
and (b) the true-up provisions of Section 11 below shall apply to all Lender
Conversions that occur after the first date the Market Capitalization falls
below $4,000,000.00 provided that all references to the
“Installment Notice” in Section 11 shall be replaced with
references to a “Lender Conversion Notice” for purposes of
this Section 3.1, all references to “Installment Conversion
Shares” in Section 11 shall be replaced with references to
“Lender Conversion Shares” for purposes of this Section 3.1,
and all references to the “Installment Conversion Price” in
Section 11 shall be replaced with references to the “Lender Conversion
Price” for purposes of this Section 3.1. 

                          3.2.       
Lender Conversions. Lender has the right at any time after the six (6)
month anniversary of the Purchase Price Date until the Outstanding Balance has
been paid in full, including without limitation during or after any Fundamental
Default Measuring Period, at its election, to convert (each instance of
conversion is referred to herein as a “Lender Conversion”) all or any
part of the Outstanding Balance into shares (“Lender Conversion Shares”)
of fully paid and non-assessable common stock, $0.0001 par value per share
(“Common Stock”), of Borrower as per the following conversion formula:
the number of Lender Conversion Shares equals the amount being converted (the
“Conversion Amount”) divided by the Lender Conversion Price. Conversion
notices in the form attached hereto as Exhibit A (each, a “Lender
Conversion Notice”) may be effectively delivered to Borrower by
any method of Lender&rsquo;s choice (including but not limited to facsimile,
email, mail, overnight courier, or personal delivery), and all Lender
Conversions shall be cashless and not require further payment from Lender.
Borrower shall deliver the Lender Conversion Shares from any Lender Conversion
to Lender in accordance with Section 9 below.

                          3.3.       
Application to Installments. Notwithstanding anything to the contrary
herein, including without limitation Section 8 hereof,
Lender may, in its sole discretion, apply all or any portion of any Lender
Conversion toward any Installment Conversion (as defined below), even if such
Installment Conversion is pending, as determined in Lender&rsquo;s sole
discretion, by delivering written notice of such election (which notice may be
included as part of the applicable Lender Conversion Notice) to Borrower at any
date on or prior to the applicable Installment Date. In such event, Borrower may
not elect to allocate such portion of the Installment Amount being paid pursuant
to this Section 3.3 in the manner prescribed in Section 8.3; rather, Borrower
must reduce the applicable Installment Amount by the Conversion Amount described
in this Section 3.3 .

            4.    
     Defaults; Remedies. 

                          4.1.       
Defaults. The following are events of default under this Note (each, an
“Event of Default”): (a) Borrower shall fail to pay any principal,
interest, fees, charges, or any other amount when due and payable hereunder; (b)
Borrower shall fail to deliver any Lender Conversion Shares in accordance with
the terms hereof; (c) Borrower shall fail to deliver any Installment Conversion
Shares (as defined below) or True-Up Shares (as defined below) in accordance
with the terms hereof; (d) a receiver, trustee or other similar official shall
be appointed over Borrower or a material part of its assets and such appointment
shall remain uncontested for twenty (20) days or shall not be dismissed or
discharged within sixty (60) days; (e) Borrower shall become insolvent or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any; (f) Borrower shall
make a general assignment for the benefit of creditors; (g) Borrower shall file
a petition for relief under any bankruptcy, insolvency or similar law (domestic or
foreign); (h) an involuntary proceeding shall be commenced or filed against
Borrower; (i) Borrower shall default or otherwise fail to observe or perform any
covenant, obligation, condition or agreement of Borrower contained herein or in
any other Transaction Document (as defined in the Purchase Agreement), other
than those specifically set forth in this Section 4.1 and Section 6 of the
Purchase Agreement; (j) any representation, warranty or other statement made or
furnished by or on behalf of Borrower to Lender herein, in any Transaction
Document, or otherwise in connection with the issuance of this Note shall be
false, incorrect, incomplete or misleading in any material respect when made or
furnished; (k) the occurrence of a Fundamental Transaction without
Lender&rsquo;s prior written consent; (l) Borrower shall fail to put in
place and maintain the Share Reserve as required under the Purchase Agreement;
(m) Borrower effectuates a reverse split of its Common Stock without twenty (20)
Trading Days prior written notice to Lender; (n) any money judgment, writ or
similar process shall be entered or filed against Borrower or any subsidiary of
Borrower or any of its property or other assets for more than
$100,000.00, and shall remain unvacated, unbonded or unstayed for a
period of twenty (20) calendar days unless otherwise consented to by Lender; (o)
Borrower shall fail to be DWAC Eligible; or (p) Borrower shall fail to observe
or perform any covenant set forth in Section 6 of the Purchase Agreement. 

2 

                          4.2.       
Remedies. At any time and from time to time after Lender becoming aware
of the occurrence of any Event of Default, Lender may accelerate this Note by
written notice to Borrower, with the Outstanding Balance becoming immediately
due and payable in cash at the Mandatory Default Amount. Notwithstanding the
foregoing, at any time following the occurrence of any Event of Default, Lender
may, at its option, elect to increase the Outstanding Balance by applying the
Default Effect (subject to the limitation set forth below) via written notice to
Borrower without accelerating the Outstanding Balance, in which event the
Outstanding Balance shall be increased as of the date of the occurrence of the
applicable Event of Default pursuant to the Default Effect, but the Outstanding
Balance shall not be immediately due and payable unless so declared by Lender
(for the avoidance of doubt, if Lender elects to apply the Default Effect
pursuant to this sentence, it shall reserve the right to declare the Outstanding
Balance immediately due and payable at any time and no such election by Lender
shall be deemed to be a waiver of its right to declare the Outstanding Balance
immediately due and payable as set forth herein unless otherwise agreed to by
Lender in writing). Notwithstanding the foregoing, upon the occurrence of any
Event of Default described in clauses (d), (e), (f), (g) or (h) of Section 4.1,
the Outstanding Balance as of the date of acceleration shall become immediately
and automatically due and payable in cash at the Mandatory Default Amount,
without any written notice required by Lender. At any time following the
occurrence of any Event of Default, upon written notice given by Lender to
Borrower, interest shall accrue on the Outstanding Balance beginning on the date
the applicable Event of Default occurred at an interest rate equal to the lesser
of 22% per annum or the maximum rate permitted under applicable law
(“Default Interest”); provided, however, that no Default
Interest shall accrue during the Fundamental Default Measuring Period. For the
avoidance of doubt, Lender may continue making Lender Conversions at any time
following an Event of Default until such time as the Outstanding Balance is paid
in full. Additionally, following the occurrence of any Event of Default,
Borrower may, at its option, pay any Lender Conversion in cash instead of Lender
Conversion Shares by paying to Lender on or before the applicable Delivery Date
(as defined below) a cash amount equal to the number of Lender Conversion Shares
set forth in the applicable Lender Conversion Notice multiplied by the highest
intra-day trading price of the Common Stock that occurs during the period
beginning on the date the applicable Event of Default occurred and ending on the
date of the applicable Lender Conversion Notice. In connection with acceleration
described herein, Lender need not provide, and Borrower hereby waives, any
presentment, demand, protest or other notice of any kind, and Lender may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such acceleration may be rescinded and annulled by Lender at any
time prior to payment hereunder and Lender shall have all rights as a holder of
the Note until such time, if any, as Lender receives full payment pursuant to
this Section 4.2. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent
thereon. Nothing herein shall limit Lender’s right to pursue any other remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to Borrower’s failure
to timely deliver Conversion Shares upon Conversion of the Notes as required
pursuant to the terms hereof. 

3 

                          4.3.       
Fundamental Default Remedies. Notwithstanding anything to the contrary
herein, in addition to all other remedies set forth herein, the Fundamental
Liquidated Damages Amount shall be added to the Outstanding Balance upon
Lender’s delivery to Borrower of a notice (which notice Lender may deliver to
Borrower at any time following the occurrence of a Fundamental Default) setting
forth its election to declare a Fundamental Default and the Fundamental
Liquidated Damages Amount that will be added to the Outstanding Balance. 

                          4.4.        Certain
Additional Rights. Notwithstanding anything to the contrary herein, in the
event Borrower fails to make any payment or otherwise to deliver any Conversion
Shares as and when required under this Note, then (a) the Lender Conversion
Price for all Lender Conversions occurring after the date of such failure to pay
shall equal the lower of the Lender Conversion Price and the Market Price as of
any applicable date of Conversion, and (b) the true-up provisions of Section 11
below shall apply to all Lender Conversions that occur after the date of such
failure to pay, provided that all references to the “Installment
Notice” in Section 11 shall be replaced with references to a
“Lender Conversion Notice” for purposes of this Section 4.4,
all references to “Installment Conversion Shares” in Section
11 shall be replaced with references to “Lender Conversion
Shares” for purposes of this Section 4.4, and all references to the
“Installment Conversion Price” in Section 11 shall be
replaced with references to the “Lender Conversion Price”
for purposes of this Section 4.4. For the avoidance of doubt, Lender&rsquo;s
exercise of the rights granted to it pursuant to this Section 4.4 shall not
relieve Borrower of its obligation to continue paying the Installment Amount on
all future Installment Dates. 

                          4.5.       
Cross Default. A breach or default by Borrower of any covenant or other
term or condition contained in any Other Agreements shall, at the option of
Lender, be considered an Event of Default under this Note, in which event Lender
shall be entitled (but in no event required) to apply all rights and remedies of
Lender under the terms of this Note. 

            5.       
Unconditional Obligation; No Offset. Borrower acknowledges that this Note
is an unconditional, valid, binding and enforceable obligation of Borrower not
subject to offset, deduction or counterclaim of any kind. Borrower hereby waives
any rights of offset it now has or may have hereafter against Lender, its
successors and assigns, and agrees to make the payments or Conversions called
for herein in accordance with the terms of this Note. 

            6.       
Waiver. No waiver of any provision of this Note shall be effective unless
it is in the form of a writing signed by the party granting the waiver. No
waiver of any provision or consent to any prohibited action shall constitute a
waiver of any other provision or consent to any other prohibited action, whether
or not similar. No waiver or consent shall constitute a continuing waiver or
consent or commit a party to provide a waiver or consent in the future except to
the extent specifically set forth in writing. 

           
7.          Rights Upon Issuance of
Securities.

                          7.1.       
Subsequent Equity Sales. Except with respect to Excluded Securities, if
Borrower or any subsidiary thereof, as applicable, at any time this Note is
outstanding, shall sell, issue or grant any Common Stock, option to purchase
Common Stock, right to reprice, preferred shares convertible into Common Stock,
or debt, warrants, options or other instruments or securities to Lender or any
third party which are convertible into or exercisable for shares of Common Stock
(collectively, the “Equity Securities”), including without limitation any Deemed
Issuance, at an effective price per share less than the then effective Lender
Conversion Price (such issuance is referred to herein as a “Dilutive
Issuance”), then, the Lender Conversion Price shall be
automatically reduced and only reduced to equal such lower effective price per
share. If the holder of any Equity Securities 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 Dilutive
Issuance, be entitled to receive shares of Common Stock at an effective price
per share that is less than the Lender Conversion Price, such issuance shall be
deemed to have occurred for less than the Lender Conversion Price on the date of
such Dilutive Issuance, and the then effective Lender Conversion Price shall be
reduced and only reduced to equal such lower effective price per share. Such
adjustments described above to the Lender Conversion Price shall be permanent
(subject to additional adjustments under this section), and shall be made
whenever such Equity Securities are issued. Borrower shall notify Lender, in
writing, no later than the Trading Day following the issuance of any Equity
Securities subject to this Section 7.1, indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion price, or
other pricing terms (such notice, the “Dilutive Issuance
Notice”). For purposes of clarification, whether or not Borrower
provides a Dilutive Issuance Notice pursuant to this Section 7.1, upon the
occurrence of any Dilutive Issuance, on the date of such Dilutive Issuance the
Lender Conversion Price shall be lowered to equal the applicable effective price
per share regardless of whether Borrower or Lender accurately refers to such
lower effective price per share in any Installment Notice or Lender Conversion
Notice. 

4 

                          7.2.        Adjustment
of Lender Conversion Price upon Subdivision or Combination of Common
Stock. Without limiting any provision hereof, if Borrower at any time on or
after the Effective Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Lender Conversion Price in
effect immediately prior to such subdivision will be proportionately reduced.
Without limiting any provision hereof, if Borrower at any time on or after the
Effective Date combines (by combination, reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Lender Conversion Price in effect immediately prior to such
combination will be proportionately increased. Any adjustment pursuant to this
Section 7.2 shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
Section 7.2 occurs during the period that a Lender Conversion Price is
calculated hereunder, then the calculation of such Lender Conversion Price shall
be adjusted appropriately to reflect such event. 

                          7.3.       
Other Events. In the event that Borrower (or any subsidiary) shall take
any action to which the provisions hereof are not strictly applicable, or, if
applicable, would not operate to protect Lender from dilution or if any event
occurs of the type contemplated by the provisions of this Section 7 but not
expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then Borrower&rsquo;s board of directors shall in good
faith determine and implement an appropriate adjustment in the Lender Conversion
Price so as to protect the rights of Lender, provided that no such adjustment
pursuant to this Section 7.3 will increase the Lender Conversion Price as
otherwise determined pursuant to this Section 7, provided
further that if Lender does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then
Borrower&rsquo;s board of directors and Lender shall agree, in good faith,
upon an independent investment bank of nationally recognized standing to make
such appropriate adjustments, whose determination shall be final and binding and
whose fees and expenses shall be borne by Borrower. 

5 

            8.       
Borrower Installments. 

                          8.1.       
Installment Conversion Price. Subject to the adjustments set forth
herein, the conversion price for each Installment Conversion (the
“Installment Conversion Price”) shall be the lesser of (a) the Lender
Conversion Price, and (b) the Market Price.

                          8.2.       
Installment Conversions. Beginning on December 31, 2016 and on the same
day of each month thereafter until the Maturity Date (each, an “Installment
Date”), if paying in cash, Borrower shall pay to Lender the
applicable Installment Amount due on such date subject to the provisions of this
Section 8, and if paying in Installment Conversion Shares
(as defined below), Borrower shall deliver such Installment Conversion Shares on
or before the Delivery Date. Payments of each Installment Amount may be made (a)
in cash, or (b) by converting such Installment Amount into shares of Common
Stock (“Installment Conversion Shares”, and together with the
Lender Conversion Shares, the “Conversion Shares”) in accordance with
this Section 8 (each an “Installment Conversion”) per the following
formula: the number of Installment Conversion Shares equals the portion of the
applicable Installment Amount being converted divided by the Installment
Conversion Price, or (c) by any combination of the foregoing, so long as the
cash is delivered to Lender on the applicable Installment Date and the
Installment Conversion Shares are delivered to Lender on or before the
applicable Delivery Date. Notwithstanding the foregoing, Borrower will not be
entitled to elect an Installment Conversion with respect to any portion of any
applicable Installment Amount and shall be required to pay the entire amount of
such Installment Amount in cash if on the applicable Installment Date there is
an Equity Conditions Failure, and such failure is not waived in writing by
Lender. Moreover, in the event Borrower desires to pay all or any portion of any
Installment Amount in cash, it must notify Lender in writing of such election
and the portion of the applicable Installment Amount it elects to pay in cash
not more than twenty-five (25) or less than fifteen (15) Trading Days prior to
the applicable Installment Date. If Borrower fails to so notify Lender, it shall
not be permitted to elect to pay any portion of such Installment Amount in cash
unless otherwise agreed to by Lender in writing or proposed by Lender in an
Installment Notice delivered by Lender to Borrower. Notwithstanding that failure
to repay this Note in full by the Maturity Date is an Event of Default, the
Installment Dates shall continue after the Maturity Date pursuant to this
Section 8 until the Outstanding Balance is repaid in full, provided that Lender
shall, in Lender’s sole discretion, determine the Installment Amount for each
Installment Date after the Maturity Date. 

                          8.3.       
Allocation of Installment Amounts. Subject to Section 8.2 regarding an
Equity Conditions Failure, for each Installment Date, Borrower may elect to
allocate the amount of the applicable Installment Amount between cash and via an
Installment Conversion, by email or fax delivery of a notice to Lender
substantially in the form attached hereto as Exhibit B (each, an
“Installment Notice”), provided, that to be effective, each applicable
Installment Notice must be received by Lender not more than twenty-five (25) or
less than fifteen (15) Trading Days prior to the applicable Installment Date. If
Lender has not received an Installment Notice within such time period, then
Lender may prepare the Installment Notice and deliver the same to Borrower by
fax or email. Following its receipt of such Installment Notice, Borrower may
either ratify Lender’s proposed allocation in the applicable Installment Notice
or elect to change the allocation by written notice to Lender by email or fax on
or before 12:00 p.m. New York time on the applicable Installment Date, so long
as the sum of the cash payments and the amount of Installment Conversions equal
the applicable Installment Amount, provided that Lender must approve any
increase to the portion of the Installment Amount payable in cash. If Borrower
fails to notify Lender of its election to change the allocation prior to the
deadline set forth in the previous sentence (and seek approval to increase the
amount payable in cash), it shall be deemed to have ratified and accepted the
allocation set forth in the applicable Installment Notice prepared by Lender. If
neither Borrower nor Lender prepare and deliver to the other party an
Installment Notice as outlined above, then Borrower shall be deemed to have
elected that the entire Installment Amount be converted via an Installment
Conversion. 

6 

Borrower acknowledges and agrees that regardless of which party
prepares the applicable Installment Notice, the amounts and calculations set
forth thereon are subject to correction or adjustment because of error, mistake,
or any adjustment resulting from an Event of Default or other adjustment
permitted under the Transaction Documents (an “Adjustment”).
Furthermore, no error or mistake in the preparation of such notices, or failure
to apply any Adjustment that could have been applied prior to the preparation of
an Installment Notice may be deemed a waiver of Lender&rsquo;s right to
enforce the terms of any Note, even if such error, mistake, or failure to
include an Adjustment arises from Lender&rsquo;s own calculation. Borrower
shall deliver the Installment Conversion Shares from any Installment Conversion
to Lender in accordance with Section 9 below on or before each applicable
Delivery Date. 

            9.         
Method of Conversion Share Delivery. On or before the close of business
on the third (3rd) Trading Day following the Installment Date or the
third (3rd) Trading Day following the date of delivery of a Lender
Conversion Notice, as applicable (the “Delivery Date”), Borrower shall,
provided it is DWAC Eligible at such time, deliver or cause its transfer agent
to deliver the applicable Conversion Shares electronically via DWAC to the
account designated by Lender in the applicable Lender Conversion Notice or
Installment Notice. If Borrower is not DWAC Eligible, it shall deliver to
Lender or its broker (as designated in the Lender Conversion Notice or
Installment Notice, as applicable), via reputable overnight courier, a
certificate representing the number of shares of Common Stock equal to the
number of Conversion Shares to which Lender shall be entitled, registered in the
name of Lender or its designee. For the avoidance of doubt, Borrower has not met
its obligation to deliver Conversion Shares by the Delivery Date unless Lender
or its broker, as applicable, has actually received the certificate representing
the applicable Conversion Shares no later than the close of business on the
relevant Delivery Date pursuant to the terms set forth above. Moreover, and
notwithstanding anything to the contrary herein or in any other Transaction
Document, in the event Borrower or its transfer agent refuses to deliver any
Conversion Shares to Lender on grounds that such issuance is in violation of
Rule 144 under the Securities Act of 1933, as amended (“Rule
144”), Borrower shall deliver or cause its transfer agent to
deliver the applicable Conversion Shares to Lender with a restricted securities
legend, but otherwise in accordance with the provisions of this Section 9. In
conjunction therewith, Borrower will also deliver to Lender a written opinion
from its counsel or its transfer agent&rsquo;s counsel opining as to why the
issuance of the applicable Conversion Shares violates Rule 144.

            10.       
Conversion Delays. If Borrower fails to deliver Conversion Shares or
True-Up Shares in accordance with the timeframes stated in Sections 9 or 11, as
applicable, Lender, at any time prior to selling all of those Conversion Shares
or True-Up Shares, as applicable, may rescind in whole or in part that
particular Conversion attributable to the unsold Conversion Shares or True-Up
Shares, with a corresponding increase to the Outstanding Balance (any returned
amount will tack back to the Purchase Price Date for purposes of determining the
holding period under Rule 144). In addition, for each Lender Conversion, in the
event that Lender Conversion Shares are not delivered by the fourth Trading Day
(inclusive of the day of the Lender Conversion), a late fee equal to the greater
of (a) $500.00 and (b) 2% of the applicable Lender Conversion Share
Value rounded to the nearest multiple of $100.00 (but in any event the
cumulative amount of such late fees for each Lender Conversion shall not exceed
200% of the applicable Lender Conversion Share Value) will be assessed for each
day after the third Trading Day (inclusive of the day of the Lender Conversion)
until Lender Conversion Share delivery is made; and such late fee will be added
to the Outstanding Balance (such fees, the “Conversion Delay Late
Fees”). For illustration purposes only, if Lender delivers a Lender
Conversion Notice to Borrower pursuant to which Borrower is required to deliver
100,000 Lender Conversion Shares to Lender and on the Delivery Date such Lender
Conversion Shares have a Lender Conversion Share Value of $20,000.00 (assuming a
Closing Trade Price on the Delivery Date of $0.20 per share of Common Stock),
then in such event a Conversion Delay Late Fee in the amount of $500.00 per day
(the greater of $500.00 per day and $20,000.00 multiplied by 2%, which is
$400.00) would be added to the Outstanding Balance of the Note until such Lender
Conversion Shares are delivered to Lender. For purposes of this example, if the
Lender 

7 

Conversion Shares are delivered to Lender twenty (20) days
after the applicable Delivery Date, the total Conversion Delay Late Fees that
would be added to the Outstanding Balance would be $10,000.00 (20 days
multiplied by $500.00 per day). If the Lender
Conversion Shares are delivered to Lender one hundred (100) days after the
applicable Delivery Date, the total Conversion Delay Late Fees that would be
added to the Outstanding Balance would be $40,000.00 (100 days
multiplied by $500.00 per day, but capped at 200% of the Lender
Conversion Share Value). 

            11.       
True-Up. On the date that is twenty (20) Trading Days (a “True-Up
Date”) from each date that the Installment Conversion Shares delivered by
Borrower to Lender become Free Trading, there shall be a true-up where Borrower
shall deliver to Lender additional Installment Conversion Shares (“True-Up
Shares”) if the Installment Conversion Price as of the True-Up Date is less
than the Installment Conversion Price used in the applicable Installment Notice.
In such event, Borrower shall deliver to Lender within three (3) Trading Days of
the True-Up Date (the “True-Up Share Delivery Date”) a number of True-Up
Shares equal to the difference between the number of Installment Conversion
Shares that would have been delivered to Lender on the True-Up Date based on the
Installment Conversion Price as of the True-Up Date and the number of
Installment Conversion Shares originally delivered to Lender pursuant to the
applicable Installment Notice. For the avoidance of doubt, if the Installment
Conversion Price as of the True-Up Date is higher than the Installment
Conversion Price set forth in the applicable Installment Notice, then Borrower
shall have no obligation to deliver True-Up Shares to Lender, nor shall Lender
have any obligation to return any excess Installment Conversion Shares to
Borrower under any circumstance. For the convenience of Borrower only, Lender
may, in its sole discretion, deliver to Borrower a notice (pursuant to a form of
notice substantially in the form attached hereto as Exhibit C) informing
Borrower of the number of True-Up Shares it is obligated to deliver to Lender as
of any given True-Up Date, provided that if Lender does not deliver any such
notice, Borrower shall not be relieved of its obligation to deliver True-Up
Shares pursuant to this Section 11. Notwithstanding the foregoing, if Borrower
fails to deliver any required True-Up Shares on or before any applicable True-Up
Share Delivery Date, then in such event the Outstanding Balance of this Note
will automatically increase by a sum equal to the number of True-Up Shares
deliverable as of the applicable True-Up Date multiplied by the Market Price for
the Common Stock as of the applicable True-Up Date (under Lender’s and
Borrower’s expectations that any such increase will tack back to the Purchase
Price Date for purposes of determining the holding period under Rule 144).

            12.       
Sale of Sino-Top Interest.

                          12.1.     
Upon the sale, transfer, assignment, pledge, hypothecation, or any other
encumbrance of 40% or more of the Sino-Top Interest (an “Interest Sale”)
or all or substantially all of Borrower’s assets, Lender may, at its election,
cause Borrower to redeem this Note at the greater of (a) the Outstanding
Balance, and (b) the Redemption Amount (either (a) or (b) above, whichever is
greater, the “Payoff Amount”). 

                          12.2.    
 In furtherance of the foregoing, at any time while this Note is
outstanding, if Borrower desires to engage in an Interest Sale, then the
following will apply: (a) Borrower will notify Lender in writing of the final
terms and conditions of the Interest Sale and (i) if the purchase price (in U.S.
Dollars) of the Interest Sale is greater than the Payoff Amount, request a
Payoff Letter from Lender, or (ii) if the purchase price (in U.S. Dollars) of
the Interest Sale is less than the Payoff Amount, request Lender’s consent to
the Interest Sale and a Payoff Letter from Lender; (b) if applicable, Lender
will provide the Payoff Amount by delivering a Payoff Letter to Borrower; (c)
upon the closing of the Interest Sale, Borrower shall cause the buyer to deliver
the Payoff Amount directly to the account designated by Lender in the Payoff
Letter; and (d) upon receipt of the Payoff Amount, Lender shall promptly confirm
such receipt and take any actions reasonably necessary to release Lender’s lien
on and security interest in the Sino-Top Interest.

8 

            13.       
Ownership Limitation. Notwithstanding anything to the contrary contained
in this Note or the other Transaction Documents, if at any time Lender shall or
would be issued shares of Common Stock under any of the Transaction Documents,
but such issuance would cause Lender (together with its affiliates) to
beneficially own a number of shares exceeding 9.99% of the number of shares of
Common Stock outstanding on such date (including for such purpose the shares of
Common Stock issuable upon such issuance) (the “Maximum Percentage”),
then Borrower must not issue to Lender shares of Common Stock which would exceed
the Maximum Percentage. For purposes of this section, beneficial ownership of
Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. The
shares of Common Stock issuable to Lender that would cause the Maximum
Percentage to be exceeded are referred to herein as the “Ownership
Limitation Shares”. Borrower will reserve the Ownership Limitation
Shares for the exclusive benefit of Lender. From time to time, Lender may notify
Borrower in writing of the number of the Ownership Limitation Shares that may be
issued to Lender without causing Lender to exceed the Maximum Percentage. Upon
receipt of such notice, Borrower shall be unconditionally obligated to
immediately issue such designated shares to Lender, with a corresponding
reduction in the number of the Ownership Limitation Shares. By written notice to
Borrower, Lender may increase, decrease or waive the Maximum Percentage as to
itself but any such waiver will not be effective until the 61st day after
delivery thereof. The foregoing 61-day notice requirement is enforceable,
unconditional and non-waivable and shall apply to all affiliates and assigns of
Lender. 

            14.       
Payment of Collection Costs. If this Note is placed in the hands of an
attorney for collection or enforcement prior to commencing arbitration or legal
proceedings, or is collected or enforced through any arbitration or legal
proceeding, or Lender otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note, then Borrower shall pay the
costs incurred by Lender for such collection, enforcement or action including,
without limitation, attorneys’ fees and disbursements. Borrower also agrees to
pay for any costs, fees or charges of its transfer agent that are charged to
Lender pursuant to any Conversion or issuance of shares pursuant to this Note.

            15.       
Opinion of Counsel. In the event that an opinion of counsel is needed for
any matter related to this Note, Lender has the right to have any such opinion
provided by its counsel. Lender also has the right to have any such opinion
provided by Borrower’s counsel. 

            16.       
Governing Law; Venue. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of Utah, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Utah. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this
reference. 

            17.       
Resolution of Disputes.

                          17.1.    
 Arbitration of Disputes. By its acceptance of this Note, each party
agrees to be bound by the Arbitration Provisions (as defined in the Purchase
Agreement) set forth as an exhibit to the Purchase Agreement. 

                          17.2.    
 Calculation Disputes. Notwithstanding the Arbitration Provisions,
in the case of a dispute as to any Calculation (as defined in the Purchase
Agreement), such dispute will be resolved in the manner set forth in the
Purchase Agreement. 

            18.       
Cancellation. After repayment or conversion of the entire Outstanding
Balance (including without limitation delivery of True-Up Shares pursuant to the
payment of the final Installment Amount, if applicable), this Note shall be deemed paid in full, shall
automatically be deemed canceled, and shall not be reissued. 

9 

            19.       
Amendments. The prior written consent of both parties hereto shall be
required for any change or amendment to this Note. 

            20.       
Assignments. Borrower may not assign this Note without the prior written
consent of Lender. This Note and any shares of Common Stock issued upon
conversion of this Note may be offered, sold, assigned or transferred by Lender
without the consent of Borrower. 

            21.       
Time is of the Essence. Time is expressly made of the essence with
respect to each and every provision of this Note and the documents and
instruments entered into in connection herewith. 

            22.       
Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with the
subsection of the Purchase Agreement titled “Notices.” 

            23.       
Liquidated Damages. Lender and Borrower agree that in the event Borrower
fails to comply with any of the terms or provisions of this Note, Lender’s
damages would be uncertain and difficult (if not impossible) to accurately
estimate because of the parties’ inability to predict future interest rates,
future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments,
Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated
damages (under Lender’s and Borrower’s expectations that any such liquidated
damages will tack back to the Purchase Price Date for purposes of determining
the holding period under Rule 144). 

            24.       
Waiver of Jury Trial. EACH OF LENDER AND BORROWER IRREVOCABLY WAIVES ANY
AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE
RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY
AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY
APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO
ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY. 

            25.       
Voluntary Agreement. Borrower has carefully read this Note and has asked
any questions needed for Borrower to understand the terms, consequences and
binding effect of this Note and fully understand them. Borrower has had the
opportunity to seek the advice of an attorney of Borrower’s choosing, or has
waived the right to do so, and is executing this Note voluntarily and without
any duress or undue influence by Lender or anyone else. 

            26.       
Severability. If any part of this Note is construed to be in violation of
any law, such part shall be modified to achieve the objective of Borrower and
Lender to the fullest extent permitted by law and the balance of this Note shall
remain in full force and effect. 

10 

            27.       
Par Value Adjustments. If at any time Lender delivers a Lender Conversion
Notice to Borrower and as of such date the Lender Conversion Price would be less
than the Par Value, then, as liquidated damages, Borrower must pay to Lender the
Par Value Adjustment Amount in cash within one (1) Trading Day of delivery of
the applicable Conversion Notice (a “Par Value Adjustment”). If Borrower
does not deliver the Par Value Adjustment Amount as required, then such amount
shall automatically be added to the Outstanding Balance. The number
of Conversion Shares deliverable pursuant to any relevant Lender Conversion
Notice following a Par Value Adjustment shall be equal to (a) the Conversion
Amount, divided by (b) the Par Value. In the event of a Par Value Adjustment,
Lender will use a Lender Conversion Notice in substantially the form attached
hereto as Exhibit D. 

[Remainder of page intentionally left blank; signature page
follows]

11 

            IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date. 

	 	BORROWER: 

    SILVER DRAGON RESOURCES INC. 

	 	 
	 	 
	 	By:  /s/ Marc Hazout                            
	 	Name: Marc Hazout                              
	 	Title: Marc Hazout, President & CEO 

ACKNOWLEDGED, ACCEPTED AND AGREED: 

LENDER: 

TONAQUINT, INC. 

By: /s/ John M. Fife

       John M. Fife, President

 

ATTACHMENT 1 
DEFINITIONS 

            For
purposes of this Note, the following terms shall have the following
meanings:

            A1.        “Adjusted Outstanding Balance” means the Outstanding
Balance of this Note as of the date the applicable Fundamental Default occurred
less any Conversion Delay Late Fees included in such Outstanding Balance. 

            A2,       
“Approved Stock Plan” means any stock option plan which has been approved
by the board of directors of Borrower and is in effect as of the Purchase Price
Date, pursuant to which Borrower’s securities may be issued to any employee,
officer or director for services provided to Borrower. 

            A3.       “Bloomberg” means Bloomberg L.P. (or if that service is not then
reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by Lender and reasonably
satisfactory to Borrower). 

            A4.       
“Book Value Per Share” means the value of all of Company’s assets,
including, but not limited to, all current assets, all long term assets, and any
proceeds received or to be received in connection with an Interest Sale
(regardless of any contingencies or conditions to Company receiving the full
proceeds thereof), less the Company’s outstanding payables and notes payable
(other than any outstanding payables or notes to Investor), divided by the
number of Company’s issued and outstanding shares of Common Stock.

            A5.       
“Closing Bid Price” and “Closing Trade Price” means the
last closing bid price and last closing trade price, respectively, for the
Common Stock on its principal market, as reported by Bloomberg, or, if its
principal market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price (as the case may be)
then the last bid price or last trade price, respectively, of the Common Stock
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if its
principal market is not the principal securities exchange or trading market for
the Common Stock, the last closing bid price or last trade price, respectively,
of the Common Stock on the principal securities exchange or trading market where
the Common Stock is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price or last trade price,
respectively, of the Common Stock in the over-the-counter market on the
electronic bulletin board for the Common Stock as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for the
Common Stock by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for the Common Stock as reported by OTC
Markets Group, Inc., and any successor thereto. If the Closing Bid Price or the
Closing Trade Price cannot be calculated for the Common Stock on a particular
date on any of the foregoing bases, the Closing Bid Price or the Closing Trade
Price (as the case may be) of the Common Stock on such date shall be the fair
market value as mutually determined by Lender and Borrower. If Lender and
Borrower are unable to agree upon the fair market value of the Common Stock,
then such dispute shall be resolved in accordance with the procedures in Section
16.2. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during
such period. 

            A6.       
“Conversion” means a Lender Conversion under Section 3 or an
Installment Conversion under Section 8. 

            A7.       
“Conversion Factor” means 70%, subject to the following adjustments. If
at any time after the Effective Date, Borrower is not DWAC Eligible, then the
then-current Conversion Factor will automatically be reduced by 5% for all
future Conversions. If at any time after the Effective Date, the Conversion
Shares are not DTC Eligible, then the then-current Conversion Factor will
automatically be reduced by an additional 5% for all future Conversions.
Finally, in addition to the Default Effect, if any Major Default occurs after
the Effective Date, the Conversion Factor shall automatically be reduced for all
future Conversions by an additional 5% for each of the first three (3) Major
Defaults that occur after the Effective Date (for the avoidance of doubt, each
occurrence of any Major Default shall be deemed to be a separate occurrence for
purposes of the foregoing reductions in Conversion Factor, even if the same
Major Default occurs three (3) separate times). For example, the first time
Borrower is not DWAC Eligible, the Conversion Factor for future Conversions
thereafter will be reduced from 70% to 65% for purposes of this example.
Following such event, the first time the Conversion Shares are no longer DTC
Eligible, the Conversion Factor for future Conversions thereafter will be
reduced from 65% to 60% for purposes of this example. If, thereafter, there are
three (3) separate occurrences of a Major Default pursuant to Section 4.1(c),
then for purposes of this example the Conversion Factor would be
reduced by 5% for the first such occurrence, and so on for each of the second
and third occurrences of such Major Default. 

Attachment 1 to Secured Convertible Promissory Note, Page 1 

            A8.     
    “Deemed Issuance” means an issuance of
Common Stock that shall be deemed to have occurred on the latest possible
permitted date pursuant to the terms hereof in the event Borrower fails to
deliver Conversion Shares as and when required pursuant to Section 9 of the
Note. For the avoidance of doubt, if Borrower has elected or is deemed under
Section 8.3 to have elected to pay an Installment Amount in Installment
Conversion Shares and fails to deliver such Installment Conversion Shares, such
failure shall be considered a Deemed Issuance hereunder even if an Equity
Conditions Failure exists at that time or other relevant date of determination.

            A9.         
“Deemed Redemption Shares” means the number of shares of Common Stock
Lender would receive as of the date the Payoff Letter is delivered if it were to
convert the entire Outstanding Balance of this Note into Common Stock at the
lower of (a) the Market Price, and (b) the Lender Conversion Price (even if such
shares could not otherwise be issued as a result of the Ownership Limitation,
Rule 144 eligibility, lack of authorized shares or for any other reason).

            A10.       
“Default Effect” means multiplying the Outstanding Balance as of the date
the applicable Event of Default occurred by (a) 15% for each occurrence of any
Major Default, or (b) 5% for each occurrence of any Minor Default, and then
adding the resulting product to the Outstanding Balance as of the date the
applicable Event of Default occurred, with the sum of the foregoing then
becoming the Outstanding Balance under this Note as of the date the applicable
Event of Default occurred; provided that the Default Effect may only be applied
three (3) times hereunder with respect to Major Defaults and three (3) times
hereunder with respect to Minor Defaults; and provided further that the Default
Effect shall not apply to any Event of Default pursuant to Section 4.1(b)
hereof. 

            A11.       
“DTC” means the Depository Trust Company or any successor thereto. 

            A12.       
“DTC Eligible” means, with respect to the Common Stock, that such Common
Stock is eligible to be deposited in certificate form at the DTC, cleared and
converted into electronic shares by the DTC and held in the name of the clearing
firm servicing Lender’s brokerage firm for the benefit of Lender. 

            A13.       
“DTC/FAST Program” means the DTC&rsquo;s Fast Automated
Securities Transfer program. A14. “DWAC” means the
DTC’s Deposit/Withdrawal at Custodian system. 

            A15.       
“DWAC Eligible” means that (a) Borrower’s Common Stock is eligible at DTC
for full services pursuant to DTC’s operational arrangements, including without
limitation transfer through DTC’s DWAC system, (b) Borrower has been approved
(without revocation) by DTC’s underwriting department, (c) Borrower’s transfer
agent is approved as an agent in the DTC/FAST Program, (d) the Conversion Shares
are otherwise eligible for delivery via DWAC; (e) Borrower has previously
delivered all Conversion Shares to Lender via DWAC; and (f) Borrower’s transfer
agent does not have a policy prohibiting or limiting delivery of the Conversion
Shares via DWAC. 

            A16.       
“Equity Conditions Failure” means that any of the following conditions
has not been satisfied during any applicable Equity Conditions Measuring Period
(as defined below): (a) with respect to the applicable date of determination all
of the Conversion Shares would be freely tradable under Rule 144 or without the
need for registration under any applicable federal or state securities laws (in
each case, disregarding any limitation on conversion of this Note); (b) on each
day during the period beginning one month prior to the applicable date of
determination and ending on and including the applicable date of determination
(the “Equity Conditions Measuring Period”), the Common Stock is listed or
designated for quotation (as applicable) on any of NYSE, NASDAQ, OTCQX, or OTCQB
(each, an “Eligible Market”) and shall not have been suspended from
trading on any such Eligible Market (other than suspensions of not more than two
(2) Trading Days and occurring prior to the applicable date of determination due
to business announcements by Borrower); (c) on each day during the Equity
Conditions Measuring Period, Borrower shall have delivered all shares of Common
Stock issuable upon conversion of this Note on a timely basis as set forth in
Section 9 hereof and all other shares of capital stock required to be delivered
by Borrower on a timely basis as set forth in the other Transaction Documents;
(d) any shares of Common Stock to be issued in connection with the event
requiring determination may be issued in full without violating Section 12
hereof (Lender acknowledges that Borrower shall be entitled to assume that this
condition has been met for all purposes hereunder absent written notice from
Lender); (e) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating the rules
or regulations of the Eligible Market on which the Common Stock is then listed
or designated for quotation (as applicable); (f) on each day during the Equity Conditions Measuring Period, no
public announcement of a pending, proposed or intended Fundamental Transaction
shall have occurred which has not been abandoned, terminated or consummated; (g)
Borrower shall have no knowledge of any fact that would reasonably be expected
to cause any of the Conversion Shares to not be freely tradable without the need
for registration under any applicable state securities laws (in each case,
disregarding any limitation on conversion of this Note); (h) on each day during
the Equity Conditions Measuring Period, Borrower otherwise shall have been in
material compliance with each, and shall not have breached any, term, provision,
covenant, representation or warranty of any Transaction Document; (i) without
limiting clause (j) above, on each day during the Equity Conditions Measuring
Period, there shall not have occurred an Event of Default or an event that with
the passage of time or giving of notice would constitute an Event of Default;
(k) on each Installment Date, the average and median daily dollar volume of the
Common Stock on its principal market for the previous twenty (20) Trading Days
shall be greater than $2,500.00 (l) the ten (10) day average VWAP of the Common
Stock is greater than $0.005, and (m) the Common Stock shall be DWAC Eligible as
of each applicable Installment Date or other date of determination.

Attachment 1 to Secured Convertible Promissory Note, Page 2 

            A17.       
“Excluded Securities” means any shares of Common Stock, options, or
convertible securities issued or issuable in connection with any Approved Stock
Plan; provided that the option term, exercise price or similar provisions
of any issuances pursuant to such Approved Stock Plan are not amended, modified
or changed on or after the Purchase Price Date. 

            A18.       
“Free Trading” means that (a) the shares or certificate(s) representing
the applicable shares of Common Stock have been cleared and approved for public
resale by the compliance departments of Lender’s brokerage firm and the clearing
firm servicing such brokerage, and (b) such shares are held in the name of the
clearing firm servicing Lender’s brokerage firm and have been deposited into
such clearing firm’s account for the benefit of Lender. 

            A19.       
“Fundamental Default” means that Borrower either fails to pay
the entire Outstanding Balance to Lender on or before the Maturity Date or fails
to pay the Mandatory Default Amount within three (3) Trading Days of the date
Lender delivers any notice of acceleration to Borrower pursuant to Section 4.2 of this Note. 

            A20.       
“Fundamental Default Conversion Value” means the Adjusted Outstanding
Balance multiplied by the highest Fundamental Default Ratio that occurs during
the Fundamental Default Measuring Period. 

            A21.       
“Fundamental Default Measuring Period” means a number of months equal to
the Outstanding Balance as of the date the Fundamental Default occurred divided
by the Installment Amount, with such number being rounded up to the next whole
month; provided, however, that if Borrower repays the entire Outstanding
Balance prior to the conclusion of the Fundamental Default Measuring Period, the
Fundamental Default Measuring Period shall end on the date of repayment. For
illustration purposes only, if the Outstanding Balance were equal to $125,000.00
as of the date a Fundamental Default occurred and if the Installment Amount were
$28,500.00, then the Fundamental Default Measuring Period would equal five (5)
months calculated as follows: $125,000.00/ $28,500.00 equals 4.386, rounded up
to five (5). 

            A22.       
“Fundamental Default Ratio” means a ratio that will be calculated on each
Trading Day during the Fundamental Default Measuring Period by dividing the
Closing Trade Price for the Common Stock on a given Trading Day by the Lender
Conversion Price (as adjusted pursuant to the terms hereof) in effect for such
Trading Day. 

            A23.       
“Fundamental Liquidated Damages Amount” means the greater of (a) (i) the
quotient of the Outstanding Balance on the date the Fundamental Default occurred
divided by the then-current Conversion Factor, minus (ii) the Outstanding
Balance on the date the Fundamental Default occurred, or (b) the Fundamental
Default Conversion Value. 

            A24.       
“Fundamental Transaction” means that (a) (i) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions,
consolidate or merge with or into (whether or not Borrower or any of its
subsidiaries is the surviving corporation) any other person or entity, or (ii)
Borrower or any of its subsidiaries shall, directly or indirectly, in one or
more related transactions, sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or
assets to any other person or entity, or (iii) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions,
allow any other person or entity to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding shares of
voting stock of Borrower (not including any shares of voting stock of Borrower
held by the person or persons making or party to, or associated or affiliated
with the persons or entities making or party to, such purchase, tender or exchange offer), or (iv) Borrower or
any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other person or entity whereby such
other person or entity acquires more than 50% of the outstanding shares of
voting stock of Borrower (not including any shares of voting stock of Borrower
held by the other persons or entities making or party to, or associated or
affiliated with the other persons or entities making or party to, such stock or
share purchase agreement or other business combination), or (v) Borrower or any
of its subsidiaries shall, directly or indirectly, in one or more related
transactions, reorganize, recapitalize or reclassify the Common Stock, other
than an increase in the number of authorized shares of Borrower’s Common Stock,
or (b) any “person” or “group” (as these terms are used for purposes of Sections
13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated
thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary
voting power represented by issued and outstanding voting stock of Borrower, or
(vi) a change in the composition Borrower’s board of directors occurs whereby
fewer than a majority of the members of Borrower’s board of directors are
Incumbent Directors (for example, if there are currently four (4) members of
Borrower’s board of directors, then a Fundamental Transaction shall have
occurred if two (2) such Incumbent Directors are replaced with directors who are
not Incumbent Directors and the number of members of the board of directors
remains at four (4); likewise, if the number of members of the board of
directors is increased to eight (8), then a Fundamental Transaction will also
have occurred even if four (4) of such directors are Incumbent Directors). 

Attachment 1 to Secured Convertible Promissory Note, Page 3 

            A25      
.. “Incumbent Directors” means members of Borrower’s board of directors
who either (i) are directors as of the Effective Date, or (ii) are elected, or
nominated for election, to Borrower’s board of directors with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to Borrower). 

            A26.       
“Installment Amount” means $55,000.00 . 

            A27.       
“Lender Conversion Share Value” means the product of the number of Lender
Conversion Shares deliverable pursuant to any Lender Conversion multiplied by
the Closing Trade Price of the Common Stock on the Delivery Date for such Lender
Conversion. 

            A28.       
“Major Default” means any Event of Default occurring under
Sections 4.1(a) (payments), 4.1(c) (delivery of Installment Conversion Shares or
True-Up Shares), 4.1(l) (Share Reserve), or 4.1(p) (breach of certain covenants)
of this Note. 

            A29.       
“Mandatory Default Amount” means the greater of (a) the Outstanding
Balance divided by the Installment Conversion Price on the date the Mandatory
Default Amount is demanded, multiplied by the VWAP on the date the Mandatory
Default Amount is demanded, or (b) the Outstanding Balance following the
application of the Default Effect. 

            A30.       
“Market Capitalization” means the product equal to (a) the average VWAP
of the Common Stock for the immediately preceding fifteen (15) Trading Days,
multiplied by (b) the aggregate number of outstanding shares of Common Stock as
reported on Borrower’s most recently filed Form 10-Q or Form 10-K. 

            A31.       
“Market Price” means the Conversion Factor multiplied by the average of
the ten (10) lowest Closing Bid Prices in the twenty (20) Trading Days
immediately preceding the applicable Conversion. 

            A32.       
“Minor Default” means any Event of Default that is not a Major Default or
a Fundamental Default. 

            A33.       
“OID” means an original issue discount. 

            A34.       
“Optional Prepayment Liquidated Damages Amount” means an amount equal to
the difference between (a) the product of (i) the number of shares of Common
Stock obtained by dividing (1) the applicable Optional Prepayment Amount by (2)
the Lender Conversion Price as of the date Borrower delivered the applicable
Optional Prepayment Amount to Lender, multiplied by (ii) the Closing Trade Price
of the Common Stock on the date Borrower delivered the applicable Optional
Prepayment Amount to Lender, and (b) the applicable Optional Prepayment Amount
paid by Borrower to Lender. For illustration purposes only, if the applicable
Optional Prepayment Amount were $50,000.00, the Lender Conversion Price as of
the date the Optional Prepayment Amount was paid to Lender was equal to $0.75
per share of Common Stock, and the Closing Trade Price of a share of Common Stock as of such date was equal to $1.00, then the
Optional Prepayment Liquidated Damages Amount would equal $16,666.67 computed as
follows: (a) $66,666.67 (calculated as (i) (1) $50,000.00 divided by (2) $0.75
multiplied by (ii) $1.00) minus (b) $50,000.00. 

Attachment 1 to Secured Convertible Promissory Note, Page 4 

            A35.       
“Other Agreements” means, collectively, (a) all existing and future
agreements and instruments between, among or by Borrower (or an affiliate), on
the one hand, and Lender (or an affiliate), on the other hand, and (b) any
financing agreement or a material agreement that affects Borrower’s ongoing
business operations. 

            A36.       
“Outstanding Balance” means as of any date of determination, the Purchase
Price, as reduced or increased, as the case may be, pursuant to the terms hereof
for payment, Conversion, offset, or otherwise, plus the Transaction Expense
Amount, accrued but unpaid interest, collection and enforcements costs
(including attorneys’ fees) incurred by Lender, transfer, stamp, issuance and
similar taxes and fees related to Conversions, and any other fees or charges
(including without limitation Conversion Delay Late Fees) incurred under this
Note. 

            A37.       
“Payoff Letter” means the letter sent by Lender to Borrower with the
Payoff Amount and wire transfer instructions.

            A38.       
“Par Value” means the par value of the Common Stock on any relevant date
of determination. The Par Value as of the Effective Date is $0.0001. 

            A39.       
“Par Value Adjustment Amount” means an amount calculated as follows: (a)
the number of Lender Conversion Shares deliverable under a particular Lender
Conversion Notice (prior to any Par Value Adjustment) multiplied by the Par
Value, less (b) the Conversion Amount (prior to any Par Value Adjustment), plus
(c) $500.00. For illustration purposes only, if for a given Conversion, the
Conversion Amount was $20,000.00, the Conversion Price was $0.0008 and the Par
Value was $0.001 then the Par Value Adjustment Amount would be $5,500.00
(25,000,000 Conversion Shares ($20,000.00/ $0.0008) multiplied by the Par Value
of $0.001 ($25,000.00) minus the Conversion Amount of $20,000.00 plus $500.00
equals $5,500.00) . 

            A40.       
“Purchase Price Date” means the date the Purchase Price is delivered by
Lender to Borrower. A41. “Redemption Amount” means the Deemed Redemption
Shares multiplied by the Book Value Per Share; provided, however, that in
no event shall the Redemption Amount exceed three (3) times the Outstanding
Balance on the date the Payoff Letter is delivered.

            A42.       
“Sino-Top” means Sanhe Sino-Tip Resources & Technologies, Ltd., a
Chinese foreign cooperative joint venture. 

            A43.       
“Sino-Top Interest” means all equity interests held by Borrower in
Sino-Top or any other claims, rights or interests Borrower has in or against
Sino-Top.

      
     A44.       
“Trading Day” means any day on which the New York Stock Exchange is open
for trading. A45. “VWAP” means the volume weighted average price of the
Common stock on the principal market for a particular Trading Day or set of
Trading Days, as the case may be, as reported by Bloomberg. 

Attachment 1 to Secured Convertible Promissory Note, Page 5 

EXHIBIT A 

Tonaquint, Inc. 
303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601 

	Silver Dragon Resources Inc. 	Date: ________________________
	Attn: Marc Hazout, CEO 	  
	200 Davenport Road 	  
	Toronto, ONT M5R 1J2 Canada 	  

LENDER CONVERSION NOTICE 

The above-captioned Lender hereby gives notice to Silver
Dragon Resources Inc., a Delaware corporation (the “Borrower”), pursuant
to that certain Secured Convertible Promissory Note made by Borrower in favor of
Lender on August 2, 2016 (the “Note”), that Lender elects to convert the
portion of the Note balance set forth below into fully paid and non-assessable
shares of Common Stock of Borrower as of the date of conversion specified below.
Said conversion shall be based on the Lender Conversion Price set forth below.
In the event of a conflict between this Lender Conversion Notice and the Note,
the Note shall govern, or, in the alternative, at the election of Lender in its
sole discretion, Lender may provide a new form of Lender Conversion Notice to
conform to the Note. Capitalized terms used in this notice without definition
shall have the meanings given to them in the Note. 

	 	A. 	
      Date of Conversion: ____________

	 	B. 	
      Lender Conversion #: ____________

	 	C. 	
      Conversion Amount: ____________

	 	D. 	
      Lender Conversion Price: _______________

	 	E. 	
      Lender Conversion Shares: _______________ (C
      divided by D)

	 	F. 	
      Remaining Outstanding Balance of Note:
    ____________*

* Subject to adjustments for corrections, defaults, interest
and other adjustments permitted by the Transaction Documents (as defined in the
Purchase Agreement), the terms of which shall control in the event of any
dispute between the terms of this Lender Conversion Notice and such Transaction
Documents. 

$_________________ of the Conversion Amount converted hereunder
shall be deducted from the Installment Amount(s) relating to the following
Installment Date(s): __________________________________________. 

Please transfer the Lender Conversion Shares
electronically (via DWAC) to the following account: 

	Broker: __________________________________	Address:           
      ___________________________________
	DTC#: ___________________________________	                            ___________________________________
	Account #: _______________________________	                           
      ___________________________________
	Account Name: ____________________________	  

     To the extent the Lender Conversion
Shares are not able to be delivered to Lender electronically via the DWAC
system, deliver all such certificated shares to Lender via reputable overnight
courier after receipt of this Lender Conversion Notice (by facsimile
transmission or otherwise) to: 

_____________________________________

_____________________________________

_____________________________________

Exhibit A to Secured Convertible Promissory Note, Page 1 

Sincerely, 

Lender:

TONAQUINT, INC.

 

 

By:
_________________________
       John M. Fife,
President 

 

 

 

Exhibit A to Secured Convertible Promissory Note, Page 2 

EXHIBIT B 

Silver Dragon Resources Inc. 
200 Davenport Road 
Toronto,
ONT M5R 1J2 Canada 

	Tonaquint, Inc. 	Date: ______________________
	Attn: John Fife 	  
	303 East Wacker Drive, Suite 1040 	  
	Chicago, Illinois 60601 	  

INSTALLMENT NOTICE 

The above-captioned Borrower hereby gives notice to Tonaquint,
Inc., a Utah corporation (the “Lender”), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on August 2,
2016 (the “Note”), of certain Borrower elections and certifications
related to payment of the Installment Amount of $_________________ due on
___________, 201_ (the “Installment Date”). In the event of a conflict
between this Installment Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Installment Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note. 

INSTALLMENT CONVERSION AND CERTIFICATIONS

AS OF THE INSTALLMENT DATE 

A.      
 INSTALLMENT CONVERSION 

	 	A. 	
      Installment Date: ____________, 201_

	 	B. 	
      Installment Amount: ____________

	 	C. 	
      Portion of Installment Amount to be Paid in Cash:
      ____________

	 	D. 	
      Portion of Installment Amount to be Converted into Common
      Stock: ____________(B minus C)

	 	E. 	
      Installment Conversion Price: _______________(lower of
      (i) Lender Conversion Price in effect and (ii) Market Price as of
      Installment Date)

	 	F. 	
      Installment Conversion Shares: _______________(D divided
      by E)

	 	G. 	
      Remaining Outstanding Balance of Note:
    ____________*

* Subject to adjustments for corrections, defaults, interest
and other adjustments permitted by the Transaction Documents (as defined in the
Purchase Agreement), the terms of which shall control in the event of any
dispute between the terms of this Installment Notice and such Transaction
Documents. 

B.       
EQUITY CONDITIONS CERTIFICATION 

	1. 	
      Market
Capitalization:________________

(Check One) 

	2. 	
      _________ Borrower herby certifies that no Equity
      Conditions Failure exists as of the Installment Date.

	 	 
	3. 	
      _________ Borrower hereby gives notice that an Equity
      Conditions Failure has occurred and requests a waiver from Lender with
      respect thereto. The Equity Conditions Failure is as
  follows:

Exhibit B to Secured Convertible Promissory Note, Page 1 

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

Sincerely, 

Borrower: 

SILVER DRAGON RESOURCES
INC. 

 

By: _________________________________________________

Name: _______________________________________________

Title: ________________________________________________

 

ACKNOWLEDGED AND CERTIFIED BY: 

Lender: 

TONAQUINT, INC.

 

By:
_________________________
       John M. Fife,
President 

Exhibit B to Secured Convertible Promissory Note, Page 2 

EXHIBIT C 

Tonaquint, Inc. 
303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601 

	Silver Dragon Resources Inc. 	Date: ______________________________
	Attn: Marc Hazout, CEO 	  
	200 Davenport Road 	  
	Toronto, ONT M5R 1J2 Canada 	  

TRUE-UP NOTICE 

The above-captioned Lender hereby gives notice to Silver Dragon
Resources Inc., a Delaware corporation (the “Borrower”), pursuant to that
certain Secured Convertible Promissory Note made by Borrower in favor of Lender
on August 2, 2016 (the “Note”), of True-Up Conversion Shares related to
_____________ , 201_ (the “Installment Date”). In the event of a conflict
between this True-Up Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of True-Up Notice to conform to the Note. Capitalized terms
used in this notice without definition shall have the meanings given to them in
the Note. 

TRUE-UP CONVERSION SHARES AND
CERTIFICATIONS 
AS OF THE TRUE-UP DATE

1.       
TRUE-UP CONVERSION SHARES 

	 	A. 	
      Installment Date: ____________, 201_

	 	 	
       

	 	B. 	
      True-Up Date: ____________, 201_

	 	 	
       

	 	C. 	
      Portion of Installment Amount Converted into Common
      Stock: _____________

	 	 	
       

	 	D. 	
      True-Up Conversion Price: _______________(lower of (i)
      Lender Conversion Price in effect and (ii) Market Price as of True-Up
      Date)

	 	 	
       

	 	E. 	
      True-Up Conversion Shares: _______________(C divided by
      D)

	 	 	
       

	 	F. 	
      Installment Conversion Shares Delivered:
      ________________

	 	 	
       

	 	G. 	
      True-Up Conversion Shares to be Delivered:
      ________________ (only applicable if E minus F is greater than
  zero)

2.       
EQUITY CONDITIONS CERTIFICATION (Section to be completed by Borrower)

	 	A. 	
      Market Capitalization:
________________

(Check One) 

	 	B. 	
      _________ Borrower herby certifies that no Equity
      Conditions Failure exists as of the applicable True-Up
  Date.

Exhibit C to Secured Convertible Promissory Note, Page 1 

	 	C. 	
      _________ Borrower hereby gives notice that an Equity
      Conditions Failure has occurred and requests a waiver from Lender with
      respect thereto. The Equity Conditions Failure is as
  follows:

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

 

Sincerely, 

Lender:

TONAQUINT, INC.

 

By:  
_________________________
        
John M. Fife, President 

Exhibit C to Secured Convertible Promissory Note, Page 2 

EXHIBIT D 

Tonaquint, Inc. 
303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601 

	Silver Dragon Resources Inc. 	Date: ________________________
	Attn: Marc Hazout, CEO 	  
	200 Davenport Road 	  
	Toronto, ONT M5R 1J2 Canada 	  

LENDER CONVERSION NOTICE 

           
The above-captioned Lender hereby gives notice to Silver Dragon Resources Inc.,
a Delaware corporation (the “Borrower”), pursuant to that certain Secured
Convertible Promissory Note made by Borrower in favor of Lender on August 2,
2016 (the “Note”), that Lender elects to convert the portion of the Note
balance set forth below into fully paid and non-assessable shares of Common
Stock of Borrower as of the date of conversion specified below. Said conversion
shall be based on the Conversion Price set forth below. In the event of a
conflict between this Conversion Notice and the Note, the Note shall govern, or,
in the alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Conversion Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note. 

	 	A. 	
      Date of Conversion: ____________

	 	B. 	
      Lender Conversion #: ____________

	 	C. 	
      Conversion Amount: ____________

	 	D. 	
      Par Value Adjustment Amount: _______________

	 	E. 	
      Lender Conversion Price: _______________(Par
  Value)

	 	F. 	
      Lender Conversion Shares: _______________(C divided by
      E)

	 	G. 	
      Remaining Outstanding Balance of Note:
    ____________*

* Subject to adjustments for corrections, defaults, interest
and other adjustments permitted by the Transaction Documents (as defined in the
Purchase Agreement), the terms of which shall control in the event of any
dispute between the terms of this Lender Conversion Notice and such Transaction
Documents. 

$ _________________ of the Conversion Amount converted
hereunder shall be deducted from the Installment Amount(s) relating to the
following Installment Date(s): __________________________________________
.

Please transfer the Lender Conversion Shares
electronically (via DWAC) to the following account: 

	Broker: ________________________________________	Address:    
      ________________________________________
	DTC#:  ________________________________________	                    
      ________________________________________
	Account #: _____________________________________	                    
      ________________________________________
	Account Name: __________________________________	  

To the extent the Lender Conversion Shares are not able to be
delivered to Lender electronically via the DWAC system, deliver all such
certificated shares to Lender via reputable overnight courier after receipt of
this Lender Conversion Notice (by facsimile transmission or otherwise) to: 

_____________________________________

_____________________________________

_____________________________________

Exhibit D to Secured Convertible Promissory Note, Page 1 

The Par Value Adjustment Amount must be paid in cash within one
(1) Trading Day of your receipt of this Conversion Notice. 

Sincerely, 

Lender:

TONAQUINT, INC.

 

By: 
_________________________
        John M.
Fife, President 

Exhibit D to Secured Convertible Promissory Note, Page 2Exhibit 10.2

 

ALBANY MOLECULAR RESEARCH, INC.

SENIOR EXECUTIVE CASH INCENTIVE BONUS PLAN

 

SECTION 1.  PURPOSE

 

This Senior Executive Cash Incentive Bonus
Plan (the “Incentive Plan”) is intended to provide an incentive for superior work and to motivate eligible executives
of Albany Molecular Research, Inc. (the “Company”) and its subsidiaries toward even higher achievement and business
results, to tie their goals and interests to those of the Company and its stockholders and to enable the Company to attract and
retain highly qualified executives. The Incentive Plan is for the benefit of Covered Executives (as defined below). Bonus payments
under the Incentive Plan are intended to be “performance-based” compensation within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”) if paid to a
Covered Executive who is a “covered employee” within the meaning of Section 162(m) of the Code.

 

SECTION 2.  COVERED EXECUTIVES

 

From time to time, the Compensation Committee
of the Board of Directors of the Company (the “Compensation Committee”) may select certain key executives and
other key employees (the “Covered Executives”) to participate in the Incentive Plan. Participation in this Incentive
Plan does not change the “at will” nature of a Covered Executive’s employment with the Company and participation
in the Incentive Plan in one performance period does not guarantee participation in subsequent performance periods.

 

SECTION 3.  ADMINISTRATION

 

The Compensation Committee shall have the
sole discretion and authority to administer and interpret the Incentive Plan. Each member of the Compensation Committee shall be
an “outside director” within the meaning of Section 162(m) of the Code.

 

SECTION 4.  BONUS DETERMINATIONS

 

(a) Performance Goals.  A
Covered Executive may receive a bonus payment under the Incentive Plan based upon the attainment of one or more performance objectives
that are established by the Compensation Committee and relate to financial and operational metrics with respect to the Company
or any of its subsidiaries, units, divisions or groups (the “Performance Goals”), including, but not limited
to, the following: earnings before interest, taxes, depreciation and amortization, net income (loss) (either before or after interest,
taxes, depreciation and/or amortization), changes in the market price of the Company’s common stock, economic value-added,
funds from operations or similar measure, sales or revenue, acquisitions or strategic transactions, operating income (loss), cash
flow (including, but not limited to, operating cash flow and free cash flow), return on capital assets, equity or investment, stockholder
returns, return on sales, gross or net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction,
working capital, earnings (loss) per share of common stock of the Company, sales or market shares and number of customers, customer
satisfaction, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to
results of a peer group and any of which may be measured either in accordance with GAAP or in accordance with pro forma measures
as established by the Company and communicated to the shareholders of the Company. Within the first 90 days of each performance
period (or, if shorter, within one-quarter of the performance period if the period is shorter than one year), the Compensation
Committee shall select the Performance Goals applicable for each Covered Executive for the performance period. The Performance
Goals may differ from Covered Executive to Covered Executive.

 

(b) Calculation of Performance Goals.  At
the beginning of each applicable performance period, the Compensation Committee will determine whether any significant element(s)
will be included in or excluded from the calculation of any Performance Goal with respect to any Covered Executive, including a
change in accounting standards or an acquisition or disposition during the fiscal year in question. In all other respects, Performance
Goals will be calculated in accordance with the Company’s financial statements, generally accepted accounting principles,
or under a methodology established by the Compensation Committee at the beginning of the performance period and which is consistently
applied with respect to a Performance Goal in the relevant performance period.

 

     

     

    

 

(c) Target; Threshold; Superior.  Each
Performance Goal shall have a “target” (100 percent attainment of the Performance Goal) and may also have a “threshold”
hurdle and/or a “superior” payment amount. In the event that the actual corporate performance shall fall between any
of the levels set forth for achievement, linear interpolation shall be used to determine the actual payout under each Performance
Goal.

 

(d) Bonus Requirements.  
(i) Any bonuses paid to “covered employees” who are also Covered Executives under the Incentive Plan shall be based
upon objectively determinable bonus formulas that tie such bonuses to one or more performance targets relating to the Performance
Goals, (ii) bonus formulas for Covered Executives shall be adopted in each performance period by the Compensation Committee and
communicated to each Covered Executive at the beginning of each performance period and (iii) no bonuses shall be paid to Covered
Executives unless and until the Compensation Committee certifies in writing whether, and to what extent, Performance Goals for
the performance period have been achieved. Notwithstanding the foregoing, the Compensation Committee may apply negative discretion
to reduce, but not increase, the amount of the bonuses payable to Covered Executives under the Incentive Plan.

 

(e) Individual Target Bonuses and Maximum
Bonuses.  The Compensation Committee shall establish a target bonus opportunity for each Covered Executive for each
performance period. The maximum amount of bonus for each Covered Executive in any performance period shall not exceed $5 million.

 

(f) Employment Requirement.  Subject
to any additional terms contained in a written agreement between the Covered Executive and the Company, in the discretion of the
Compensation Committee, the payment of a bonus to a Covered Executive with respect to a performance period may be conditioned upon
the Covered Executive’s employment by the Company on the bonus payment date. If a Covered Executive was not employed for
an entire performance period, the Compensation Committee may pro rate the bonus based on the number of days employed during such
period.

 

SECTION 5.  TIMING OF PAYMENT

 

(a) With respect to Performance Goals established
and measured on a basis more frequently than annually (e.g., quarterly or semi-annually), the Performance Goals will be measured
at the end of each performance period after the Company’s financial reports with respect to such period(s) have been published.
If the Performance Goals and/or individual goals for such period are met, payments will be made as soon as practicable following
the end of such period, but not later 74 days after the end of the fiscal year in which such performance period ends.

 

(b) With respect to Performance Goals established
and measured on an annual or multi-year basis, Performance Goals will be measured as of the end of each such performance period
(e.g., the end of each fiscal year) after the Company’s financial reports with respect to such period(s) have been published.
If the Performance Goals and/or individual goals for any such period are met, bonus payments will be made as soon as practicable,
but not later than 74 days after the end of the relevant fiscal year.

 

(c) For the avoidance of doubt, bonuses earned
at any time in a fiscal year must be paid no later than 74 days after the last day of such fiscal year.

 

SECTION 6.  WITHHOLDING

 

Distributions pursuant to this Incentive
Plan an shall be subject to all applicable withholding and other taxes and all contributions or deductions required by law to be
deducted or withheld in accordance with procedures established by the Company.

 

SECTION 7.  AMENDMENT AND TERMINATION

 

The Company reserves the right to amend or
terminate the Incentive Plan at any time in its sole discretion; provided, however, that amendments shall be subject to stockholder
approval to the extent required by Section 162(m) of the Code. In the case of any Covered Executive employed outside the United
States, the Company may vary the provisions of this Incentive Plan as deemed appropriate to conform with, as required by, or made
desirable by, local laws, practices and procedures.

 

     

     

    

 

SECTION 8.  GOVERNING LAW

 

This Incentive Plan shall be governed by
the laws of the State of Delaware.

 

SECTION 9.  STOCKHOLDER APPROVAL

		 	
	DATE APPROVED BY BOARD OF DIRECTORS:	 	February 5, 2016
	DATE APPROVED BY STOCK HOLDERS:	 	June 1, 2016

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