PROXY CARD
ADITX THERAPEUTICS, INC.
PROXY FOR ANNUAL MEETING TO BE HELD ON
, 2021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, Amro Albanna
and Corinne Pankovcin, as proxies with full power of substitution, to represent and to vote all the shares of common stock of
Aditx Therapeutics, Inc. (the “Company”), which the undersigned would be entitled to vote, at the Company’s
Annual Meeting of Stockholders to be held on
, 2021 and at any adjournments thereof, subject to the directions indicated on this Proxy Card.
In his discretion, the proxy is authorized to
vote upon any other matter that may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED BY THE PROXY HOLDERS FOR THE ELECTION OF ALL NOMINEES
AND FOR THE PROPOSALS LISTED ON THE REVERSE SIDE AND IN THEIR DISCRETION ON ANY OTHER MATTERS THAT ARE PROPERLY PRESENTED AT THE
MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
IMPORTANT — This Proxy must be signed and
dated below.
The Annual Meeting of Stockholders of Aditx
Therapeutics, Inc. will be held on
, 2021 at 12:00 p.m. Eastern Time at
.
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to attend the Annual Meeting
of Stockholders of Aditx Therapeutics, Inc. to be held at
, on , 2021 beginning at 12:00
p.m. Eastern Time.
Please read the proxy statement which describes
the proposals and presents other important information, and complete, sign and return your proxy promptly in the enclosed envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS
1-5.
1. Election of Director Nominees
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FOR
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WITHHOLD
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01 – Amro Albanna
02 – Laura Anthony
03 – Brian Brady
04 – Namvar Kiaie
05 – Jeffrey Runge, M.D.
06 – Shahrokh Shabahang, MS, Ph.D.
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2. Proposal to ratify dbbmckennon as the Company’s independent registered public accountants for the fiscal year ending December 31, 2021.
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FOR
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AGAINST
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ABSTAIN
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3. Proposal to approve and adopt the 2021 Plan and the reservation of 3,000,000 shares of common stock for issuance thereunder.
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FOR
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AGAINST
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ABSTAIN
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4. Proposal to amend the Company’s amended and restated certificate of incorporation to increase the number of shares of authorized common stock from 27,000,000 to 100,000,000.
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FOR
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AGAINST
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ABSTAIN
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5. Proposal to approve, for the purposes of Nasdaq Listing Rule 5635, the issuance of shares of common stock underlying a Senior Secured Convertible Promissory Note and an accompanying warrant issued by the Company in the January 2021 Transaction.
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FOR
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AGAINST
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ABSTAIN
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NOTE: Such other business as may properly
come before the meeting or any adjournment thereof will be voted on by the proxy holders in their discretion.
Please indicate if you plan to attend this meeting:
[ ] Yes [ ] No
Important: Please sign exactly as name appears
on this proxy. When signing as attorney, executor, trustee, guardian, corporate officer, etc., please indicate full title.
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Dated:________________, 2021
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Signature
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Signature
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(Joint Owners)
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Name (printed)
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APPENDIX A
ADITX THERAPEUTICS, INC.
2021 OMNIBUS EQUITY INCENTIVE PLAN
Section 1.
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Purpose of Plan.
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The name of the Plan is the
Aditx Therapeutics, Inc. (the “Company” or “Aditxt”) 2021 Omnibus Equity Incentive Plan
(the “Plan”).The purposes of the Plan are to (i) provide an additional incentive to selected employees,
directors, and independent contractors of the Company or its Affiliates whose contributions are essential to the growth and success
of the Company, (ii) strengthen the commitment of such individuals to the Company and its Affiliates, (iii) motivate
those individuals to faithfully and diligently perform their responsibilities and (iv) attract and retain competent and dedicated
individuals whose efforts will result in the long-term growth and profitability of the Company. To accomplish these purposes,
the Plan provides that the Company may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other
Stock-Based Awards or any combination of the foregoing.
For purposes of the Plan, the
following terms shall be defined as set forth below:
(a) “Administrator”
means the Board, or, if and to the extent the Board does not administer the Plan, the Committee in accordance with Section 3 hereof.
(b) “Affiliate”
means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified as of any date of determination.
(c) “Applicable Laws”
means the applicable requirements under U.S. federal and state corporate laws, U.S. federal and state securities laws, including
the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any
other country or jurisdiction where Awards are granted under the Plan, as are in effect from time to time.
(d) “Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Other Stock-Based Award granted under the
Plan.
(e) “Award Agreement”
means any written notice, agreement, contract or other instrument or document evidencing an Award, including through electronic
medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent
with the Plan.
(f) “Beneficial Owner” (or
any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.
(g) “Board”
means the Board of Directors of the Company.
(h) “Bylaws”
mean the bylaws of the Company, as may be amended and/or restated from time to time.
(i) “Cause”
has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the
Participant or, if no such agreement exists or if such agreement does not define “Cause,” then “Cause”
means (i) a continuing material breach or material breach or material default (including, without limitation, any material
dereliction of duty) by the Participant of any agreement between the Participant and the Company, except for any such breach or
default which is caused by the physical disability of the Participant (as determined by a neutral physician), or a continuing
failure by the Participant to follow the direction of a duly authorized representative of the Company; (ii) gross negligence,
willful misfeasance or breach of fiduciary duty by the Participant; (iii) the commission by the Participant of an act of
fraud, embezzlement or any felony or other crime of dishonesty in connection with the Participant’s duties; or (iv) conviction
of the Participant of a felony or any other crime that would materially and adversely affect: (A) the business reputation
of the Company or (B) the performance of the Participant’s duties to the Company. Any voluntary termination of employment
or service by the Participant in anticipation of an involuntary termination of the Participant’s employment or service,
as applicable, for Cause shall be deemed to be a termination for Cause.
(j) “Change in Capitalization”
means any (i) merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization
or corporate transaction or event, (ii) special or extraordinary dividend or other extraordinary distribution (whether in
the form of cash, Common Stock or other property), stock split, reverse stock split, share subdivision or consolidation, (iii) combination
or exchange of shares or (iv) other change in corporate structure, which, in any such case, the Administrator determines,
in its sole discretion, affects the Shares such that an adjustment pursuant to Section 5 hereof is appropriate.
(k) “Change in Control”
means the first occurrence of an event set forth in any one of the following paragraphs following the Effective Date:
(1) any Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned
by such Person which were acquired directly from the Company or any Affiliate thereof) representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in clause (i) of paragraph (3) below; or
(2) the date on which individuals
who constitute the Board as of the Effective Date and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including, but not limited to, a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either
were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended
cease for any reason to constitute a majority of the number of directors serving on the Board; or
(3) there is consummated a
merger or consolidation of the Company or any direct or indirect Subsidiary with any other corporation or other entity, other
than (i) a merger or consolidation (A) which results in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any Subsidiary, fifty percent (50%) or more of the combined
voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation and (B) following which the individuals who comprise the Board immediately prior thereto constitute
at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company
or the entity surviving such merger or consolidation is then a Subsidiary, the ultimate parent thereof, or (ii) a merger
or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned
by such Person any securities acquired directly from the Company or its Affiliates) representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities; or
(4) the stockholders of the
Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale
or disposition by the Company of all or substantially all of the Company’s assets, other than (A) a sale or disposition
by the Company of all or substantially all of the Company’s assets to an entity, more than fifty percent (50%) of the combined
voting power of the voting securities of which are owned by stockholders of the Company following the completion of such transaction
in substantially the same proportions as their ownership of the Company immediately prior to such sale or (B) a sale or disposition
of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed
or, if such entity is a subsidiary, the ultimate parent thereof.
Notwithstanding the foregoing, (i) a Change
in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions
immediately following which the holders of Common Stock immediately prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions and (ii) to the extent required to avoid accelerated taxation
and/or tax penalties under Section 409A of the Code, a Change in Control shall be deemed to have occurred under the Plan with
respect to any Award that constitutes deferred compensation under Section 409A of the Code only if a change in the ownership or
effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be
deemed to have occurred under Section 409A of the Code. For purposes of this definition of Change in Control, the term “Person”
shall not include (i) the Company or any Subsidiary thereof, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any Subsidiary thereof, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of shares of the Company.
(l) “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
(m) “Committee”
means any committee or subcommittee the Board may appoint to administer the Plan. Subject to the discretion of the Board, the
Committee shall be composed entirely of individuals who meet the qualifications of a “non-employee director” within
the meaning of Rule 16b-3 under the Exchange Act and any other qualifications required by the applicable stock exchange on which
the Common Stock is traded.
(n) “Common Stock”
means the common stock of the Company, par value $0.001.
(o) “Company”
means Aditx Therapeutics, Inc., a Delaware corporation (or any successor company, except as the term “Company” is
used in the definition of “Change in Control” above).
(p) “Disability”
has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the
Participant or, if no such agreement exists or if such agreement does not define “Disability,” then “Disability”
means that a Participant, as determined by the Administrator in its sole discretion, (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death
or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months
under an accident and health plan covering employees of the Company or an Affiliate thereof.
(q) “Effective Date”
has the meaning set forth in Section 17 hereof.
(r) “Eligible Recipient”
means an employee, director or independent contractor of the Company or any Affiliate of the Company who has been selected as
an eligible participant by the Administrator; provided, however, to the extent required to avoid accelerated
taxation and/or tax penalties under Section 409A of the Code, an Eligible Recipient of an Option or a Stock Appreciation Right
means an employee, non-employee director or independent contractor of the Company or any Affiliate of the Company with respect
to whom the Company is an “eligible issuer of service recipient stock” within the meaning of Section 409A of the Code.
(s) “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time.
(t) “Exempt Award”
shall mean the following:
(1) An Award granted in assumption
of, or in substitution for, outstanding awards previously granted by a corporation or other entity acquired by the Company or
any of its Subsidiaries or with which the Company or any of its Subsidiaries combines by merger or otherwise. The terms and conditions
of any such Awards may vary from the terms and conditions set forth in the Plan to the extent the Administrator at the time of
grant may deem appropriate, subject to Applicable Laws.
(2) An award that an Eligible
Recipient purchases at Fair Market Value (including awards that an Eligible Recipient elects to receive in lieu of fully vested
compensation that is otherwise due) whether or not the Shares are delivered immediately or on a deferred basis.
(u) “Exercise Price”
means, (i) with respect to any Option, the per share price at which a holder of such Option may purchase Shares issuable
upon exercise of such Award, and (ii) with respect to a Stock Appreciation Right, the base price per share of such Stock
Appreciation Right.
(v) “Fair Market Value”
of a share of Common Stock or another security as of a particular date shall mean the fair market value as determined by the Administrator
in its sole discretion; provided, that, (i) if the Common Stock or other security is admitted to trading on a national securities
exchange, the fair market value on any date shall be the closing sale price reported on such date, or if no shares were traded
on such date, on the last preceding date for which there was a sale of a share of Common Stock on such exchange, or (ii) if
the Common Stock or other security is then traded in an over-the-counter market, the fair market value on any date shall be the
average of the closing bid and asked prices for such share in such over-the-counter market for the last preceding date on which
there was a sale of such share in such market.
(w) “Free Standing
Rights” has the meaning set forth in Section 8.
(x) “Good Reason”
has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the
Participant or, if no such agreement exists or if such agreement does not define “Good Reason,” “Good Reason”
and any provision of this Plan that refers to “Good Reason” shall not be applicable to such Participant.
(y) “Grandfathered
Arrangement” means an Award which is provided pursuant to a written binding contract in effect on November 2, 2017,
and which was not modified in any material respect on or after November 2, 2017, within the meaning of Section 13601(e)(2) of
P.L. 115.97, as may be amended from time to time (including any rules and regulations promulgated thereunder).
(z) “Incentive Compensation”
means annual cash bonus and any Award.
(aa) “ISO”
means an Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of
the Code.
(bb) “Nonqualified
Stock Option” shall mean an Option that is not designated as an ISO.
(cc) “Option”
means an option to purchase shares of Common Stock granted pursuant to Section 7 hereof. The term “Option” as used
in the Plan includes the terms “Nonqualified Stock Option” and “ISO.”
(dd) “Other Stock-Based
Award” means a right or other interest granted pursuant to Section 10 hereof that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to, Common Stock, including, but not limited to,
unrestricted Shares, dividend equivalents or performance units, each of which may be subject to the attainment of performance
goals or a period of continued provision of service or employment or other terms or conditions as permitted under the Plan.
(ee) “Participant”
means any Eligible Recipient selected by the Administrator, pursuant to the Administrator’s authority provided for in Section
3 below, to receive grants of Awards, and, upon his or her death, his or her successors, heirs, executors and administrators,
as the case may be.
(ff) “Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.
(gg) “Plan”
means this 2021 Omnibus Equity Incentive Plan.
(hh) “Prior Plan”
means the Company’s 2017 Equity Incentive Plan, as in effect immediately prior to the Effective Date.
(ii) “Related Rights”
has the meaning set forth in Section 8.
(jj) “Restricted Period”
has the meaning set forth in Section 9.
(kk) “Restricted Stock”
means a Share granted pursuant to Section 9 below subject to certain restrictions that lapse at the end of a specified period
(or periods) of time and/or upon attainment of specified performance objectives.
(ll) “Restricted Stock
Unit” means the right granted pursuant to Section 9 hereof to receive a Share at the end of a specified restricted period
(or periods) of time and/or upon attainment of specified performance objectives.
(mm) “Rule 16b-3”
has the meaning set forth in Section 3.
(nn) “Section 16 Officer”
means any officer of the Company whom the Board has determined is subject to the reporting requirements of Section 16 of the Exchange
Act, whether or not such individual is a Section 16 Officer at the time the determination to recoup compensation is made.
(oo) “Shares”
means Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger,
consolidation or other reorganization) security.
(pp) “Stock Appreciation
Right” means a right granted pursuant to Section 8 hereof to receive an amount equal to the excess, if any, of (i) the
aggregate Fair Market Value, as of the date such Award or portion thereof is surrendered, of the Shares covered by such Award
or such portion thereof, over (ii) the aggregate Exercise Price of such Award or such portion thereof.
(qq) “Subsidiary”
means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise
controls, directly or indirectly, more than 50% of the voting shares or other similar interests or a sole general partner interest
or managing member or similar interest of such other Person.
(rr) “Transfer”
has the meaning set forth in Section 15.
Section 3.
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Administration.
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(a) The Plan shall be administered
by the Administrator and shall be administered, to the extent applicable, in accordance with Rule 16b-3 under the Exchange Act
(“Rule 16b-3”).
(b) Pursuant to the terms of
the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the
Board, shall have the power and authority, without limitation:
(1) to select those Eligible
Recipients who shall be Participants;
(2) to determine whether and
to what extent Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards or a combination
of any of the foregoing, are to be granted hereunder to Participants;
(3) to determine the number
of Shares to be covered by each Award granted hereunder;
(4) to determine the terms
and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder (including, but not limited to, (i) the
restrictions applicable to Restricted Stock or Restricted Stock Units and the conditions under which restrictions applicable to
such Restricted Stock or Restricted Stock Units shall lapse, (ii) the performance goals and periods applicable to Awards,
(iii) the Exercise Price of each Option and each Stock Appreciation Right or the purchase price of any other Award, (iv) the
vesting schedule and terms applicable to each Award, (v) the number of Shares or amount of cash or other property subject
to each Award and (vi) subject to the requirements of Section 409A of the Code (to the extent applicable) any amendments
to the terms and conditions of outstanding Awards, including, but not limited to, extending the exercise period of such Awards
and accelerating the payment schedules of such Awards and/or, to the extent specifically permitted under the Plan, accelerating
the vesting schedules of such Awards);
(5) to determine the terms
and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Awards;
(6) to determine the Fair
Market Value in accordance with the terms of the Plan;
(7) to determine the duration
and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant’s
service or employment for purposes of Awards granted under the Plan;
(8) to adopt, alter and repeal
such administrative rules, regulations, guidelines and practices governing the Plan as it shall from time to time deem advisable;
(9) to construe and interpret
the terms and provisions of, and supply or correct omissions in, the Plan and any Award issued under the Plan (and any Award Agreement
relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either
specifically granted under the Plan or necessary and advisable in the administration of the Plan; and
(10) to prescribe, amend and
rescind rules and regulations relating to sub-plans established for the purpose of satisfying applicable non-United States laws
or for qualifying for favorable tax treatment under applicable non-United States laws, which rules and regulations may be set
forth in an appendix or appendixes to the Plan.
(c) Subject to Section 5, neither
the Board nor the Committee shall have the authority to (i) reprice or cancel and regrant any Award at a lower exercise, base
or purchase price or cancel any Award with an exercise, base or purchase price in exchange for cash, property or other Awards
without first obtaining the approval of the Company’s stockholders; or (ii) accelerate the vesting of any Awards (except
pursuant to Section 11).
(d) All decisions made by the
Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all Persons, including the Company
and the Participants.
(e) The expenses of administering
the Plan shall be borne by the Company and its Affiliates.
(f) If at any time or to any
extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised
by the Committee. Except as otherwise provided in the Articles of Incorporation or Bylaws of the Company, any action of the Committee
with respect to the administration of the Plan shall be taken by a majority vote at a meeting at which a quorum is duly constituted
or unanimous written consent of the Committee’s members.
Section 4.
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Shares Reserved for Issuance Under the Plan.
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(a) Subject to Section 5 hereof,
the number of shares of Common Stock that are reserved and available for issuance pursuant to Awards granted under the Plan shall
be equal to the sum of (i) 3,000,000 shares, plus (ii) the number of shares of Common Stock reserved, but unissued under
the Prior Plan; (iii) the number of shares of Common Stock underlying forfeited awards under the Prior Plan; and (iv) an
annual increase on the first day of each calendar year beginning with the first January 1 following the Effective Date and ending
with the last January 1 during the initial ten-year term of the Plan, equal to the lesser of (A) five percent (5%) of
the Shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (B) such lesser
number of Shares as determined by the Board; provided, that, shares of Common Stock issued under the Plan
with respect to an Exempt Award shall not count against such share limit. Following the Effective Date, no further awards shall
be issued under the Prior Plan, but all awards under the Prior Plan which are outstanding as of the Effective Date (including
any Grandfathered Arrangement) shall continue to be governed by the terms, conditions and procedures set forth in the Prior Plan
and any applicable Award Agreement.
(b) Shares issued under the
Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company
in the open market, in private transactions or otherwise. If an Award entitles the Participant to receive or purchase Shares,
the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award
against the aggregate number of Shares available for granting Awards under the Plan. If any Shares subject to an Award are forfeited,
cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of Shares to the Participant,
the Shares with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination
or expiration, again be available for granting Awards under the Plan. Notwithstanding the foregoing, Shares surrendered or withheld
as payment of either the Exercise Price of an Award (including Shares otherwise underlying a Stock Appreciation Right that are
retained by the Company to account for the Exercise Price of such Stock Appreciation Right) and/or withholding taxes in respect
of an Award shall no longer be available for grant under the Plan. In addition, (i) to the extent an Award is denominated
in shares of Common Stock, but paid or settled in cash, the number of shares of Common Stock with respect to which such payment
or settlement is made shall again be available for grants of Awards pursuant to the Plan and (ii) shares of Common Stock
underlying Awards that can only be settled in cash shall not be counted against the aggregate number of shares of Common Stock
available for Awards under the Plan. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards
shall be cancelled to the extent of the number of Shares as to which the Award is exercised and, notwithstanding the foregoing,
such number of Shares shall no longer be available for grant under the Plan.
(c) No more than 500,000 Shares
(as increased on an annual basis, on the first day of each calendar year beginning with the first January 1 following the Effective
Date and ending with the last January 1 during the initial ten-year term of the Plan, by the lesser of (A) five percent (5%)
of the Shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year; (B) 500,000
Shares, and (C) such lesser number of Shares as determined by the Board) shall be issued pursuant to the exercise of ISOs.
Section 5.
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Equitable Adjustments.
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In the event of any Change in
Capitalization, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind
of securities reserved for issuance under the Plan pursuant to Section 4, (ii) the kind, number of securities subject to,
and the Exercise Price subject to outstanding Options and Stock Appreciation Rights granted under the Plan, (iii) the kind,
number and purchase price of Shares or other securities or the amount of cash or amount or type of other property subject to outstanding
Restricted Stock, Restricted Stock Units or Other Stock-Based Awards granted under the Plan; and/or (iv) the terms and conditions
of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); provided, however,
that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments
shall be made as may be determined by the Administrator, in its sole discretion. Without limiting the generality of the foregoing,
in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, but subject in all events
to the requirements of Section 409A of the Code, for the cancellation of any outstanding Award granted hereunder in exchange for
payment in cash or other property having an aggregate Fair Market Value equal to the Fair Market Value of the Shares, cash or
other property covered by such Award, reduced by the aggregate Exercise Price or purchase price thereof, if any; provided, however,
that if the Exercise Price or purchase price of any outstanding Award is equal to or greater than the Fair Market Value of the
shares of Common Stock, cash or other property covered by such Award, the Administrator may cancel such Award without the payment
of any consideration to the Participant. Further, without limiting the generality of the foregoing, with respect to Awards subject
to foreign laws, adjustments made hereunder shall be made in compliance with applicable requirements. Except to the extent determined
by the Administrator, any adjustments to ISOs under this Section 5 shall be made only to the extent not constituting a “modification”
within the meaning of Section 424(h)(3) of the Code. The Administrator’s determinations pursuant to this Section 5
shall be final, binding and conclusive.
The Participants in the Plan
shall be selected from time to time by the Administrator, in its sole discretion, from those individuals that qualify as Eligible
Recipients.
(a) General. Options
granted under the Plan shall be designated as Nonqualified Stock Options or ISOs. Each Participant who is granted an Option shall
enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in
its sole discretion, including, among other things, the Exercise Price of the Option, the term of the Option and provisions regarding
exercisability of the Option, and whether the Option is intended to be an ISO or a Nonqualified Stock Option (and in the event
the Award Agreement has no such designation, the Option shall be a Nonqualified Stock Option). The provisions of each Option need
not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be outstanding
concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section
7 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall
deem desirable and set forth in the applicable Award Agreement.
(b) Exercise Price.
The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the
time of grant, but in no event shall the exercise price of an Option be less than one hundred percent (100%) of the Fair Market
Value of a share of Common Stock on the date of grant.
(c) Option Term.
The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten (10) years
after the date such Option is granted. Each Option’s term is subject to earlier expiration pursuant to the applicable provisions
in the Plan and the Award Agreement. Notwithstanding the foregoing, subject to Section 4(d) of the Plan, the Administrator shall
have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as the
Administrator, in its sole discretion, deems appropriate.
(d) Exercisability.
Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of performance
goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that
any Option shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at
any time, in whole or in part, based on such factors as the Administrator may determine in its sole discretion.
(e) Method of Exercise.
Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of whole
Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its
equivalent, as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any
Option or category of Options, payment in whole or in part may also be made (i) by means of consideration received under
any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise),
(ii) in the form of unrestricted Shares already owned by the Participant which have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (iii) any other form of consideration
approved by the Administrator and permitted by Applicable Laws or (iv) any combination of the foregoing.
(f) ISOs. The terms
and conditions of ISOs granted hereunder shall be subject to the provisions of Section 422 of the Code and the terms, conditions,
limitations and administrative procedures established by the Administrator from time to time in accordance with the Plan. At the
discretion of the Administrator, ISOs may be granted only to an employee of the Company, its “parent corporation”
(as such term is defined in Section 424(e) of the Code) or a Subsidiary of the Company.
(1) ISO Grants to
10% Stockholders. Notwithstanding anything to the contrary in the Plan, if an ISO is granted to a Participant who owns shares
representing more than ten percent (10%) of the voting power of all classes of shares of the Company, its “parent corporation”
(as such term is defined in Section 424(e) of the Code) or a Subsidiary of the Company, the term of the ISO shall not exceed five
(5) years from the time of grant of such ISO and the Exercise Price shall be at least one hundred and ten percent (110%) of the
Fair Market Value of the Shares on the date of grant.
(2) $100,000 Per Year
Limitation For ISOs. To the extent the aggregate Fair Market Value (determined on the date of grant) of the Shares for which
ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds $100,000,
such excess ISOs shall be treated as Nonqualified Stock Options.
(3) Disqualifying
Dispositions. Each Participant awarded an ISO under the Plan shall notify the Company in writing immediately after the date
the Participant makes a “disqualifying disposition” of any Share acquired pursuant to the exercise of such ISO. A
“disqualifying disposition” is any disposition (including any sale) of such Shares before the later of (i) two
years after the date of grant of the ISO and (ii) one year after the date the Participant acquired the Shares by exercising
the ISO. The Company may, if determined by the Administrator and in accordance with procedures established by it, retain possession
of any Shares acquired pursuant to the exercise of an ISO as agent for the applicable Participant until the end of the period
described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Shares.
(g) Rights as Stockholder.
A Participant shall have no rights to dividends, dividend equivalents or distributions or any other rights of a stockholder with
respect to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, and has paid
in full for such Shares and has satisfied the requirements of Section 15 hereof.
(h) Termination of Employment
or Service. Treatment of an Option upon termination of employment of a Participant shall be provided for by the Administrator
in the Award Agreement.
(i) Other Change in
Employment or Service Status. An Option shall be affected, both with regard to vesting schedule and termination, by leaves
of absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment, partial Disability
or other changes in the employment status or service status of a Participant, in the discretion of the Administrator.
Section 8.
|
Stock Appreciation Rights.
|
(a) General. Stock
Appreciation Rights may be granted either alone (“Free Standing Rights”) or in conjunction with all or part
of any Option granted under the Plan (“Related Rights”). Related Rights may be granted either at or after the
time of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at
which, grants of Stock Appreciation Rights shall be made. Each Participant who is granted a Stock Appreciation Right shall enter
into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole
discretion, including, among other things, the number of Shares to be awarded, the Exercise Price per Share, and all other conditions
of Stock Appreciation Rights. Notwithstanding the foregoing, no Related Right may be granted for more Shares than are subject
to the Option to which it relates. The provisions of Stock Appreciation Rights need not be the same with respect to each Participant.
Stock Appreciation Rights granted under the Plan shall be subject to the following terms and conditions set forth in this Section
8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall
deem desirable, as set forth in the applicable Award Agreement.
(b) Awards; Rights as
Stockholder. A Participant shall have no rights to dividends or any other rights of a stockholder with respect to the shares
of Common Stock, if any, subject to a Stock Appreciation Right until the Participant has given written notice of the exercise
thereof and has satisfied the requirements of Section 15 hereof.
(c) Exercise Price.
The Exercise Price of Shares purchasable under a Stock Appreciation Right shall be determined by the Administrator in its sole
discretion at the time of grant, but in no event shall the exercise price of a Stock Appreciation Right be less than one hundred
percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.
(d) Exercisability.
(1) Stock Appreciation Rights
that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be
determined by the Administrator in the applicable Award Agreement.
(2) Stock Appreciation Rights
that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate
shall be exercisable in accordance with the provisions of Section 7 hereof and this Section 8 of the Plan.
(e) Payment Upon Exercise.
(1) Upon the exercise of a
Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value
to the excess of the Fair Market Value as of the date of exercise over the Exercise Price per share specified in the Free Standing
Right multiplied by the number of Shares in respect of which the Free Standing Right is being exercised.
(2) A Related Right may be
exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the
Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair
Market Value as of the date of exercise over the Exercise Price specified in the related Option multiplied by the number of Shares
in respect of which the Related Right is being exercised. Options which have been so surrendered, in whole or in part, shall no
longer be exercisable to the extent the Related Rights have been so exercised.
(3) Notwithstanding the foregoing,
the Administrator may determine to settle the exercise of a Stock Appreciation Right in cash (or in any combination of Shares
and cash).
(f) Termination of Employment
or Service. Treatment of a Stock Appreciation Right upon termination of employment of a Participant shall be provided for
by the Administrator in the Award Agreement.
(g) Term.
(1) The term of each Free
Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after
the date such right is granted.
(2) The term of each Related
Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years
after the date such right is granted.
(h) Other Change in
Employment or Service Status. Stock Appreciation Rights shall be affected, both with regard to vesting schedule and termination,
by leaves of absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment, partial
Disability or other changes in the employment or service status of a Participant, in the discretion of the Administrator.
Section 9.
|
Restricted Stock and Restricted Stock Units.
|
(a) General. Restricted
Stock or Restricted Stock Units may be issued under the Plan. The Administrator shall determine the Eligible Recipients to whom,
and the time or times at which, Restricted Stock or Restricted Stock Units shall be made. Each Participant who is granted Restricted
Stock or Restricted Stock Units shall enter into an Award Agreement with the Company, containing such terms and conditions as
the Administrator shall determine, in its sole discretion, including, among other things, the number of Shares to be awarded;
the price, if any, to be paid by the Participant for the acquisition of Restricted Stock or Restricted Stock Units; the period
of time restrictions, performance goals or other conditions that apply to Transferability, delivery or vesting of such Awards
(the “Restricted Period”); and all other conditions applicable to the Restricted Stock and Restricted Stock
Units. If the restrictions, performance goals or conditions established by the Administrator are not attained, a Participant shall
forfeit his or her Restricted Stock or Restricted Stock Units, in accordance with the terms of the grant. The provisions of the
Restricted Stock or Restricted Stock Units need not be the same with respect to each Participant.
(b) Awards and Certificates.
Except as otherwise provided below in Section 9(c), (i) each Participant who is granted an Award of Restricted Stock may,
in the Company’s sole discretion, be issued a share certificate in respect of such Restricted Stock; and (ii) any such
certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to any such Award. The Company may require that the share certificates, if any,
evidencing Restricted Stock granted hereunder be held in the custody of the Company until the restrictions thereon shall have
lapsed, and that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a share transfer form,
endorsed in blank, relating to the Shares covered by such Award. Certificates for shares of unrestricted Common Stock may, in
the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture
in such Restricted Stock Award. With respect to Restricted Stock Units to be settled in Shares, at the expiration of the Restricted
Period, share certificates in respect of the shares of Common Stock underlying such Restricted Stock Units may, in the Company’s
sole discretion, be delivered to the Participant, or his legal representative, in a number equal to the number of shares of Common
Stock underlying the Restricted Stock Units Award. Notwithstanding anything in the Plan to the contrary, any Restricted Stock
or Restricted Stock Units to be settled in Shares (at the expiration of the Restricted Period, and whether before or after any
vesting conditions have been satisfied) may, in the Company’s sole discretion, be issued in uncertificated form. Further,
notwithstanding anything in the Plan to the contrary, with respect to Restricted Stock Units, at the expiration of the Restricted
Period, Shares, or cash, as applicable, shall promptly be issued (either in certificated or uncertificated form) to the Participant,
unless otherwise deferred in accordance with procedures established by the Company in accordance with Section 409A of the Code,
and such issuance or payment shall in any event be made within such period as is required to avoid the imposition of a tax under
Section 409A of the Code.
(c) Restrictions and
Conditions. The Restricted Stock or Restricted Stock Units granted pursuant to this Section 9 shall be subject to the following
restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant
or, subject to Section 409A of the Code where applicable, thereafter:
(1) The Administrator may,
in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in
whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including,
but not limited to, the attainment of certain performance goals, the Participant’s termination of employment or service
with the Company or any Affiliate thereof, or the Participant’s death or Disability. Notwithstanding the foregoing, upon
a Change in Control, the outstanding Awards shall be subject to Section 11 hereof.
(2) Except as provided in
the applicable Award Agreement, the Participant shall generally have the rights of a stockholder of the Company with respect to
Restricted Stock during the Restricted Period; provided, however, that dividends declared during the Restricted
Period with respect to an Award, shall only become payable if (and to the extent) the underlying Restricted Stock vests. Except
as provided in the applicable Award Agreement, the Participant shall generally not have the rights of a stockholder with respect
to Shares subject to Restricted Stock Units during the Restricted Period; provided, however, that, subject
to Section 409A of the Code, an amount equal to dividends declared during the Restricted Period with respect to the number of
Shares covered by Restricted Stock Units shall, unless otherwise set forth in an Award Agreement, be paid to the Participant at
the time (and to the extent) Shares in respect of the related Restricted Stock Units are delivered to the Participant. Certificates
for Shares of unrestricted Common Stock may, in the Company’s sole discretion, be delivered to the Participant only after
the Restricted Period has expired without forfeiture in respect of such Restricted Stock or Restricted Stock Units, except as
the Administrator, in its sole discretion, shall otherwise determine.
(3) The rights of Participants
granted Restricted Stock or Restricted Stock Units upon termination of employment or service as a director or independent contractor
to the Company or to any Affiliate thereof terminates for any reason during the Restricted Period shall be set forth in the Award
Agreement.
(d) Form of Settlement.
The Administrator reserves the right in its sole discretion to provide (either at or after the grant thereof) that any Restricted
Stock Unit represents the right to receive the amount of cash per unit that is determined by the Administrator in connection with
the Award.
Section 10.
|
Other Stock-Based Awards.
|
Other Stock-Based Awards may
be issued under the Plan. Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine
the individuals to whom and the time or times at which such Other Stock-Based Awards shall be granted. Each Participant who is
granted an Other Stock-Based Award shall enter into an Award Agreement with the Company, containing such terms and conditions
as the Administrator shall determine, in its sole discretion, including, among other things, the number of shares of Common Stock
to be granted pursuant to such Other Stock-Based Awards, or the manner in which such Other Stock-Based Awards shall be settled
(e.g., in shares of Common Stock, cash or other property), or the conditions to the vesting and/or payment or settlement of such
Other Stock-Based Awards (which may include, but not be limited to, achievement of performance criteria) and all other terms and
conditions of such Other Stock-Based Awards. In the event that the Administrator grants a bonus in the form of Shares, the Shares
constituting such bonus shall, as determined by the Administrator, be evidenced in uncertificated form or by a book entry record
or a certificate issued in the name of the Participant to whom such grant was made and delivered to such Participant as soon as
practicable after the date on which such bonus is payable. Notwithstanding anything set forth in the Plan to the contrary, any
dividend or dividend equivalent Award issued hereunder shall be subject to the same restrictions, conditions and risks of forfeiture
as apply to the underlying Award.
Section 11.
|
Change in Control.
|
Unless otherwise determined
by the Administrator and evidenced in an Award Agreement, in the event that (a) a Change in Control occurs, and (b) the Participant
is employed by the Company or any of its Affiliates immediately prior to the consummation of such Change in Control then upon
the consummation of such Change in Control, the Administrator, in its sole and absolute discretion, may:
(a) provide that any unvested
or unexercisable portion of any Award carrying a right to exercise become fully vested and exercisable; and
(b) cause the restrictions,
deferral limitations, payment conditions and forfeiture conditions applicable to an Award granted under the Plan to lapse and
such Awards shall be deemed fully vested and any performance conditions imposed with respect to such Awards shall be deemed to
be fully achieved at target performance levels.
If the Administrator determines
in its discretion pursuant to Section 3(b)(4) hereof to accelerate the vesting of Options and/or Share Appreciation Rights in
connection with a Change in Control, the Administrator shall also have discretion in connection with such action to provide that
all Options and/or Stock Appreciation Rights outstanding immediately prior to such Change in Control shall expire on the effective
date of such Change in Control.
Section 12.
|
Amendment and Termination.
|
The Board may amend, alter or
terminate the Plan at any time, but no amendment, alteration or termination shall be made that would impair the rights of a Participant
under any Award theretofore granted without such Participant’s consent. The Board shall obtain approval of the Company’s
stockholders for any amendment that would require such approval in order to satisfy the requirements of any rules of the stock
exchange on which the Common Stock is traded or other Applicable Law. Subject to Section 3(c), the Administrator may amend the
terms of any Award theretofore granted, prospectively or retroactively, but, subject to Section 5 of the Plan and the immediately
preceding sentence, no such amendment shall materially impair the rights of any Participant without his or her consent.
Section 13.
|
Unfunded Status of Plan.
|
The Plan is intended to constitute
an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.
Section 14.
|
Withholding Taxes.
|
Each Participant shall, no later
than the date as of which the value of an Award first becomes includible in the gross income of such Participant for purposes
of applicable taxes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of an amount
up to the maximum statutory tax rates in the Participant’s applicable jurisdiction with respect to the Award, as determined
by the Company. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements,
and the Company shall, to the extent permitted by Applicable Laws, have the right to deduct any such taxes from any payment of
any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an Award, the Company shall have the right
to deduct therefrom an amount sufficient to satisfy any applicable withholding tax requirements related thereto. Whenever Shares
or property other than cash are to be delivered pursuant to an Award, the Company shall have the right to require the Participant
to remit to the Company in cash an amount sufficient to satisfy any related taxes to be withheld and applied to the tax obligations; provided, that,
with the approval of the Administrator, a Participant may satisfy the foregoing requirement by either (i) electing to have
the Company withhold from delivery of Shares or other property, as applicable, or (ii) delivering already owned unrestricted
shares of Common Stock, in each case, having a value not exceeding the applicable taxes to be withheld and applied to the tax
obligations. Such already owned and unrestricted shares of Common Stock shall be valued at their Fair Market Value on the date
on which the amount of tax to be withheld is determined and any fractional share amounts resulting therefrom shall be settled
in cash. Such an election may be made with respect to all or any portion of the Shares to be delivered pursuant to an award. The
Company may also use any other method of obtaining the necessary payment or proceeds, as permitted by Applicable Laws, to satisfy
its withholding obligation with respect to any Award.
Section 15.
|
Transfer of Awards.
|
Until such time as the Awards
are fully vested and/or exercisable in accordance with the Plan or an Award Agreement, no purported sale, assignment, mortgage,
hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation
of a security interest in or lien on, any Award or any agreement or commitment to do any of the foregoing (each, a “Transfer”)
by any holder thereof in violation of the provisions of the Plan or an Award Agreement will be valid, except with the prior written
consent of the Administrator, which consent may be granted or withheld in the sole discretion of the Administrator. Any purported
Transfer of an Award or any economic benefit or interest therein in violation of the Plan or an Award Agreement shall be null
and void ab initio and shall not create any obligation or liability of the Company, and any Person purportedly
acquiring any Award or any economic benefit or interest therein transferred in violation of the Plan or an Award Agreement shall
not be entitled to be recognized as a holder of such Shares or other property underlying such Award. Unless otherwise determined
by the Administrator in accordance with the provisions of the immediately preceding sentence, an Option or a Stock Appreciation
Right may be exercised, during the lifetime of the Participant, only by the Participant or, during any period during which the
Participant is under a legal Disability, by the Participant’s guardian or legal representative.
Section 16.
|
Continued Employment or Service.
|
Neither the adoption of the
Plan nor the grant of an Award shall confer upon any Eligible Recipient any right to continued employment or service with the
Company or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company or any Affiliate
thereof to terminate the employment or service of any of its Eligible Recipients at any time.
Section 17.
|
Effective Date.
|
The Plan was approved by the
Board on February 24, 2021 and shall be adopted and become effective on the date that it is approved by the Company’s stockholders
(the “Effective Date”).
Section 18.
|
Electronic Signature.
|
Participant’s electronic
signature of an Award Agreement shall have the same validity and effect as a signature affixed by hand.
Section 19.
|
Term of Plan.
|
No Award shall be granted pursuant
to the Plan on or after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date.
Section 20.
|
Securities Matters and Regulations.
|
(a) Notwithstanding anything
herein to the contrary, the obligation of the Company to sell or deliver Shares with respect to any Award granted under the Plan
shall be subject to all Applicable Laws, rules and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Administrator. The
Administrator may require, as a condition of the issuance and delivery of certificates evidencing shares of Common Stock pursuant
to the terms hereof, that the recipient of such shares make such agreements and representations, and that such certificates bear
such legends, as the Administrator, in its sole discretion, deems necessary or advisable.
(b) Each Award is subject to
the requirement that, if at any time the Administrator determines that the listing, registration or qualification of Shares is
required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Shares, no such
Award shall be granted or payment made or Shares issued, in whole or in part, unless listing, registration, qualification, consent
or approval has been effected or obtained free of any conditions not acceptable to the Administrator.
(c) In the event that the disposition
of Shares acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act and is
not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required by the Securities
Act or regulations thereunder, and the Administrator may require a Participant receiving Common Stock pursuant to the Plan, as
a condition precedent to receipt of such Common Stock, to represent to the Company in writing that the Common Stock acquired by
such Participant is acquired for investment only and not with a view to distribution.
Section 21.
|
Section 409A of the Code.
|
The Plan as well as payments
and benefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A
of the Code, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding
anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A of the Code, the Participant shall not be considered to have terminated employment or service with the
Company for purposes of the Plan and no payment shall be due to the Participant under the Plan or any Award until the Participant
would be considered to have incurred a “separation from service” from the Company and its Affiliates within the meaning
of Section 409A of the Code. Any payments described in the Plan that are due within the “short term deferral period”
as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Law requires otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent that any Awards (or any other amounts payable under any plan,
program or arrangement of the Company or any of its Affiliates) are payable upon a separation from service and such payment would
result in the imposition of any individual tax and penalty interest charges imposed under Section 409A of the Code, the settlement
and payment of such awards (or other amounts) shall instead be made on the first business day after the date that is six (6)
months following such separation from service (or death, if earlier). Each amount to be paid or benefit to be provided under this
Plan shall be construed as a separate identified payment for purposes of Section 409A of the Code. The Company makes no representation
that any or all of the payments or benefits described in this Plan will be exempt from or comply with Section 409A of the
Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. The Participant shall
be solely responsible for the payment of any taxes and penalties incurred under Section 409A.
Section 22.
|
Notification of Election Under Section 83(b) of the
Code.
|
If any Participant shall, in
connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under Section 83(b)
of the Code, such Participant shall notify the Company of such election within ten (10) days after filing notice of the election
with the Internal Revenue Service.
Section 23.
|
No Fractional Shares.
|
No fractional shares of Common
Stock shall be issued or delivered pursuant to the Plan. The Administrator shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
A Participant may file with
the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from
time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator
of the Participant’s estate shall be deemed to be the Participant’s beneficiary.
Section 25.
|
Paperless Administration.
|
In the event that the Company
establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise
of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting
or exercise of Awards by a Participant may be permitted through the use of such an automated system.
Section 26.
|
Severability.
|
If any provision of the Plan
is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the
invalid or unenforceable provision had not been included in the Plan.
(a) If the Company is required
to prepare a financial restatement due to the material non-compliance of the Company with any financial reporting requirement,
then the Committee may require any Section 16 Officer to repay or forfeit to the Company, and each Section 16 Officer
agrees to so repay or forfeit, that part of the Incentive Compensation received by that Section 16 Officer during the three-year
period preceding the publication of the restated financial statement that the Committee determines was in excess of the amount
that such Section 16 Officer would have received had such Incentive Compensation been calculated based on the financial results
reported in the restated financial statement. The Committee may take into account any factors it deems reasonable in determining
whether to seek recoupment of previously paid Incentive Compensation and how much Incentive Compensation to recoup from each Section 16
Officer (which need not be the same amount or proportion for each Section 16 Officer), including any determination by the
Committee that a Section 16 Officer engaged in fraud, willful misconduct or committed grossly negligent acts or omissions
which materially contributed to the events that led to the financial restatement. The amount and form of the Incentive Compensation
to be recouped shall be determined by the Committee in its sole and absolute discretion, and recoupment of Incentive Compensation
may be made, in the Committee’s sole and absolute discretion, through the cancellation of vested or unvested Awards, cash
repayment or both.
(b) Notwithstanding any other
provisions in this Plan, any Award which is subject to recovery under any Applicable Laws, government regulation or stock exchange
listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such Applicable
Law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law,
government regulation or stock exchange listing requirement).
Section 28.
|
Governing Law.
|
The Plan shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law of
such state.
Section 29.
|
Indemnification.
|
To the extent allowable pursuant
to applicable law, each member of the Board and the Administrator and any officer or other employee to whom authority to administer
any component of the Plan is designated shall be indemnified and held harmless by the Company from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may be a party or in which he or she may be involved
by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in
satisfaction of judgment in such action, suit, or proceeding against him or her; provided, however, that he or she gives the Company
an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which
such individuals may be entitled pursuant to the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
Section 30.
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Titles and Headings, References to Sections of the
Code or Exchange Act.
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The titles and headings of the
sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or
successor thereto.
The obligations of the Company
under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets
and business of the Company.
Section 32.
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Relationship to other Benefits.
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No payment pursuant to the Plan
shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance,
welfare, or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in
such other plan or an agreement thereunder.
APPENDIX B
CERTIFICATE OF AMENDMENT
to the
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
ADITX THERAPEUTICS, INC.
ADITX THERAPEUTICS, INC., a
corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”),
does hereby certify as follows:
FIRST: The name of the Corporation
is Aditx Therapeutics, Inc. The Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the
“Secretary of State”) on September 28, 2017 and has been amended and restated by the Amended and Restated Certificate
of Incorporation filed with the Secretary of State on February 7, 2018 ( the “Certificate of Incorporation”).
SECOND: ARTICLE IV, SECTION
4.1 of the Corporation’s Certificate of Incorporation shall be amended and restated in its entirety to read as follows:
4.1 Authorized Capital
Stock. The total number of shares of all classes of capital stock which the Corporation is authorized to issue is 103,000,000
shares, consisting of 100,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 3,000,000
shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).
THIRD: The stockholders
of the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation
has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized
officer as of the day of ,
2021.
ADITX THERAPEUTICS, INC.
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By:
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Name:
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Amro Albanna
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Title:
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Chief Executive Officer
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APPENDIX C
NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), CORINNE PANKOVCIN, A REPRESENTATIVE OF
THE COMPANY HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST
THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). CORINNE PANKOVCIN, CHIEF FINANCIAL OFFICER, MAY BE REACHED
AT TELEPHONE NUMBER [__________].
Aditx
Therapeutics, Inc.
Senior
Convertible Note
Issuance Date: January 25,
2021
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Original Principal Amount: U.S. $6,000,000.00
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FOR VALUE RECEIVED,
Aditx Therapeutics, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of [__].
or its registered assigns (“Holder”) the amount set forth above as the Original Principal Amount (as reduced
pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether
upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date (each as defined
below), or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and upon the occurrence
of an Event of Default (as defined below), to pay interest (“Interest”) on any outstanding Principal at the
Default Rate (as defined below), from the date set forth above as the Issuance Date (the “Issuance Date”) until
the same becomes due and payable, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount
due on such Installment Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms
hereof). This Senior Convertible Note (including all Senior Convertible Notes issued in exchange, transfer or replacement hereof,
this “Note”) is one of an issue of Senior Convertible Notes issued pursuant to the Securities Purchase Agreement,
dated as of January 25, 2021 (the “Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (collectively, the “Notes”, and such other Senior Convertible
Notes, the “Other Notes”). Certain capitalized terms used herein are defined in Section 31.
1. PAYMENTS
OF PRINCIPAL. On each Installment Date, the Company shall pay to the Holder an amount equal to the Installment Amount due on
such Installment Date in accordance with Section 8. On the Maturity Date, the Company shall pay to the Holder an amount in cash
(excluding any amounts paid in shares of Common Stock on the Maturity Date in accordance with Section 8) representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 24(c)) on such Principal and
Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.
2. DEFAULT
INTEREST; DEFAULT RATE.
(a) This
Note was issued with original issue discount as described in the Securities Purchase Agreement. This Note shall not bear Interest
except upon the occurrence (and during the continuance) of an Event of Default (as defined below), in which case this Note shall
bear interest at a rate of eighteen percent (18.0%) per annum (the “Default Rate”) of the then outstanding Principal.
In the event that such Event of Default is subsequently cured or waived in accordance with the terms of this Note (and no other
Event of Default then exists (including, without limitation, for the Company’s failure to pay such Interest at the Default
Rate on the applicable Interest Date (as defined below))), Interest hereunder shall cease to accrue as of the calendar day immediately
following the date of such cure or waiver; provided that the Interest as calculated and unpaid during the continuance of such Event
of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and
including the date of such cure or waiver of such Event of Default.
(b) Interest,
if any, shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in arrears on each Interest
Date and shall compound each calendar month and shall be payable in accordance with the terms of this Note. Interest shall be paid
on each Interest Date in cash.
3. CONVERSION
OF NOTES. At any time after the Issuance Date, this Note shall be convertible into validly issued, fully paid and non-assessable
shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled
to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue
any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share
of Common Stock, the Company shall round such fraction of a share of Common Stock down to the nearest whole share and pay the Holder
the value of such fractional share in cash. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs
and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with
respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.
(b) Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall
be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion
Amount” means the sum of (x) portion of the Principal to be converted, redeemed or otherwise with respect to which this
determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued
and unpaid Late Charges with respect to such portion of such Principal and such Interest, if any.
(ii) “Conversion
Price” means, as of any Conversion Date or other date of determination, $4.00, subject to adjustment as provided herein.
(c) Mechanics
of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company. If required by Section 3(c)(iii), within two (2) Trading Days following a conversion of this
Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the
Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated
by Section 18(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the
Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation and representation as to whether such
shares of Common Stock may then be resold pursuant to Rule 144 or an effective and available registration statement, in the form
attached hereto as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent
(the “Transfer Agent”) which confirmation shall constitute an instruction to the Transfer Agent to process such
Conversion Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date
on which the Company has received a Conversion Notice (or such earlier date as required pursuant to the 1934 Act or other applicable
law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock
issuable pursuant to such Conversion Notice) (the “Share Delivery Deadline”), the Company shall (1) provided
that the Transfer Agent is participating in The Depository Trust Company’s (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled pursuant to such
conversion to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system
or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, upon the request of the
Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled
pursuant to such conversion. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding
Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as
soon as practicable and in no event later than two (2) Business Days after receipt of this Note and at its own expense, issue and
deliver to the Holder (or its designee) a new Note (in accordance with Section 18(d)) representing the outstanding Principal not
converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be
treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. In the event of
a partial conversion of this Note pursuant hereto, the Principal amount converted shall be deducted from the Installment Amount(s)
relating to the Installment Date(s) as set forth in the applicable Conversion Notice. Notwithstanding anything to the contrary
contained in this Note or the Registration Rights Agreement, after the effective date of the Registration Statement (as defined
in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined in the
Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the
Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement)
with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part
of the particular Registration Statement to the extent applicable, and for which the Holder has not yet settled.
(ii) Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share
Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
to issue and deliver to the Holder (or its designee) a certificate for the number of shares of Common Stock to which the Holder
is entitled and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of this Note
(as the case may be) or (II) if the Registration Statement covering the resale of the shares of Common Stock that are the subject
of the Conversion Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable
Conversion Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights
Agreement (x) so notify the Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by
crediting such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such conversion to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event
described in clause (I) above, a “Conversion Failure”), then, in addition to all other remedies available to
the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the issuance of
such shares of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares
of Common Stock not issued to the Holder on or prior to the Share Delivery Deadline and to which the Holder is entitled, multiplied
by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning
on the applicable Conversion Date and ending on the applicable Share Delivery Deadline and (2) the Holder, upon written notice
to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of
this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall
not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to
this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) if the
Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and
deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the Company’s share register
or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail
to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant
to clause (II) below or (B) a Notice Failure occurs, and if on or after such Share Delivery Deadline the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common
Stock issuable upon such conversion that the Holder is entitled to receive from the Company and has not received from the Company
in connection with such Conversion Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition
to all other remedies available to the Holder, the Company shall, within two (2) Business Days after receipt of the Holder’s
request and in the Holder’s discretion, either: (I) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”),
at which point the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock)
or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue
such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate
or certificates representing such shares of Common Stock or credit the balance account of such Holder or such Holder’s designee,
as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion
hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the
product of (x) such number of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date of the applicable Conversion Notice and ending on the date of such issuance
and payment under this clause (II) (the “Buy-In Payment Amount”). Nothing shall limit the Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares
of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of this Note as required pursuant
to the terms hereof.
(iii) Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and
addresses of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered Notes”).
The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders
of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including,
without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary.
A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the
Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder thereof,
the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same
aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee
pursuant to Section 18, provided that if the Company does not so record an assignment, transfer or sale (as the case may be)
of all or part of any Registered Note within two (2) Business Days of such a request, then the Register shall be automatically
deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set
forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder
shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this
Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated
by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion
Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records
showing the Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or
payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Note upon conversion. If the Company does not update the Register to record such Principal,
Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the
case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect
such occurrence.
(iv) Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for
the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion,
the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro
rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted
for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on
such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion
of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute
in accordance with Section 23.
(d) Limitations
on Conversions.
(i) Beneficial
Ownership. The Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right
to convert any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and
void and treated as if never made, to the extent that after giving effect to such conversion, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the
shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock
issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or
warrants, including, without limitation, the Warrants) beneficially owned by the Holder or any other Attribution Party subject
to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d)(i). For purposes of this Section
3(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining
the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of this Note without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the
SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or
the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives a Conversion Notice from the Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the Holder’s
beneficial ownership, as determined pursuant to this Section 3(d)(i), to exceed the Maximum Percentage, the Holder must notify
the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at
any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing
or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported.
In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of
outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time
to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or
decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any
such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties
and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned
by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to
convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with
respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 3(d)(i) to the extent necessary to correct this
paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 3(d)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Note.
(ii) Principal
Market Regulation The Company shall not issue any shares of Common Stock upon conversion of this Note or otherwise pursuant
to the terms of this Note (taken together with the issuance of such shares upon the exercise of the Warrants) if the issuance of
such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion
of the Notes or otherwise pursuant to the terms of this Note or the Warrants (as the case may be) without breaching the Company’s
obligations under the rules or regulations of the Principal Market (the number of shares which may be issued without violating
such rules and regulations, including rules related to the aggregate of offerings under NASDAQ Listing Rule 5635(d), the “Exchange
Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders
as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or
(B) obtains a written opinion from counsel to the Company that such approval is not required, which opinion shall be reasonably
satisfactory to the Holder. Until such approval or such written opinion is obtained, no Buyer shall be issued in the aggregate,
upon conversion or exercise (as the case may be) of any Notes or any of the Warrants or otherwise pursuant to the terms of the
Notes or the Warrants, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Issuance
Date multiplied by (ii) the quotient of (1) the original principal amount of Notes issued to such Buyer pursuant to the Securities
Purchase Agreement on the Closing Date (as defined in the Securities Purchase Agreement) divided by (2) the aggregate original
principal amount of all Notes issued to the Buyers pursuant to the Securities Purchase Agreement on the Closing Date (with respect
to each Buyer, the “Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise transfer
any of such Buyer’s Notes, the transferee shall be allocated a pro rata portion of such Buyer’s Exchange Cap Allocation
with respect to such portion of such Notes so transferred, and the restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon conversion and exercise in full
of a holder’s Notes and Warrants, the difference (if any) between such holder’s Exchange Cap Allocation and the number
of shares of Common Stock actually issued to such holder upon such holder’s conversion in full of such Notes and such holder’s
exercise in full of such Warrants shall be allocated, to the respective Exchange Cap Allocations of the remaining holders of Notes
and related Warrants on a pro rata basis in proportion to the shares of Common Stock underlying the Notes and related Warrants
then held by each such holder of Notes and related Warrants. At any time after tenth (10th) Trading Day after the Stockholder
Meeting Deadline (as defined in the Securities Purchase Agreement), in the event that the Company is prohibited from issuing shares
of Common Stock pursuant to this Section 3(d)(i) (the “Exchange Cap Shares”), the Company shall pay cash in
exchange for the cancellation of such portion of this Note convertible into such Exchange Cap Shares at a price equal to the sum
of (i) the product of (x) such number of Exchange Cap Shares and (y) the greatest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect to such
Exchange Cap Shares to the Company and ending on the date of such issuance and payment under this Section 3(d)(i) and (ii) to the
extent of any Buy-In related thereto, any Buy-In Payment Amount, any brokerage commissions and other out-of-pocket expenses, if
any, of the Holder incurred in connection therewith (collectively, the “Exchange Cap Share Cancellation Amount”).
(e) Right
of Alternate Conversion Upon an Event of Default.
(i) General.
Subject to Section 3(d), at any time at any time after the occurrence of an Event of Default (regardless of whether such Event
of Default has been cured or if the Holder has delivered an Event of Default Redemption Notice to the Company), the Holder may,
at the Holder’s option, convert (each, an “Alternate Conversion”, and the date of such Alternate Conversion,
each, an “Alternate Conversion Date”) all, or any part of, the Conversion Amount (such portion of the Conversion
Amount subject to such Alternate Conversion, the “Alternate Conversion Amount”) into shares of Common Stock
at the Alternate Conversion Price.
(ii) Mechanics
of Alternate Conversion. On any Alternate Conversion Date, the Holder may voluntarily convert any Alternate Conversion Amount
pursuant to Section 3(c) (with “Alternate Conversion Price” replacing “Conversion Price” for all purposes
hereunder with respect to such Alternate Conversion and with “Redemption Premium of the Conversion Amount” replacing
“Conversion Amount” in clause (x) of the definition of Conversion Rate above with respect to such Alternate Conversion)
by designating in the Conversion Notice delivered pursuant to this Section 3(e) of this Note that the Holder is electing to use
the Alternate Conversion Price for such conversion; provided that in the event of the Conversion Floor Price Condition, on the
applicable Alternate Conversion Date the Company shall also deliver to the Holder the applicable Alternate Conversion Floor Amount.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of
Common Stock representing the applicable Alternate Conversion Amount to the Holder, such Alternate Conversion Amount may be converted
by the Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 3(e).
4. RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default. Each of the following events shall constitute an “Event of Default” and each of the events in
clauses (ix), (x) and (xi) shall constitute a “Bankruptcy Event of Default”:
(i) the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on
or prior to the date that is five (5) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement)
or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is five
(5) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);
(ii) while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of
a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable
Securities (as defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance
with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of fifteen (15) consecutive
days or for more than an aggregate of thirty (30) days in any 365-day period (excluding days during an Allowable Grace Period (as
defined in the Registration Rights Agreement));
(iii) the
suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a
period of five (5) consecutive Trading Days;
(iv) the
Company’s (A) failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of the
required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or exercise date (as
the case may be) or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way
of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for
conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than
pursuant to Section 3(d), or a request for exercise of any Warrants for shares of Common Stock in accordance with the provisions
of the Warrants;
(v) except
to the extent the Company is in compliance with Section 11(b) below, at any time following the tenth (10th) consecutive
day that the Holder’s Authorized Share Allocation (as defined in Section 11(a) below) is less than (A) the number of shares
of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without
regard to any limitations on conversion set forth in Section 3(d) or otherwise), and (B) the number of shares of Common Stock that
the Holder would be entitled to receive upon exercise in full of the Holder’s Warrants (without regard to any limitations
on exercise set forth in the Warrants);
(vi) the
Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other
amounts when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure to
pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement)
or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby
and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure
remains uncured for a period of at least two (2) Trading Days;
(vii) the
Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion
or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under
the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement,
unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five
(5) days;
(viii) the
occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $100,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other
Notes;
(ix) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed
within thirty (30) days of their initiation;
(x) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or
any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the
consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence
of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts
generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action
or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under
federal, state or foreign law;
(xi) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or
insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;
(xii) a
final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled
or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any
judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000
amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which
written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within
thirty (30) days of the issuance of such judgment;
(xiii) the
Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $100,000 due to any third party (other than, with respect to
unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or
is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $100,000, which breach
or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer
to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely
to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition
(including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;
(xiv) other
than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation
or warranty, or any covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant
or other term or condition that is curable, only if such breach remains uncured for a period of two (2) consecutive Trading Days;
(xv) a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity
Conditions are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Event of Default has occurred;
(xvi) any
breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 14 of this Note;
(xvii) any
Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xviii) any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b) Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other
Note, the Company shall within two (2) Business Day deliver written notice thereof via facsimile or electronic mail and overnight
courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the
earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder
may require the Company to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note
by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event
of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note
subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater
of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of
(X) the Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default
Redemption Notice multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price
of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Event of Default and
ending on the date the Company makes the entire payment required to be made under this Section 4(b) (the “Event of Default
Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section
12. To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be
prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything
to the contrary in this Section 3(e), but subject to Section 3(d), until the Event of Default Redemption Price (together with any
Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any
Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note.
In the event of a partial redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted from the Installment
Amount(s) relating to the applicable Installment Date(s) as set forth in the Event of Default Redemption Notice. In the event of
the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain
and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability
of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(b)
is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by the Holder,
and all other rights and remedies of the Holder shall be preserved.
(c) Mandatory
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion
that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity
Date, the Company shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal, accrued and
unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption Premium,
in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action by the
Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment
upon a Bankruptcy Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder,
including any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any right to payment of
the Event of Default Redemption Price or any other Redemption Price, as applicable.
5. RIGHTS
UPON FUNDAMENTAL TRANSACTION.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing
all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of
this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior
to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking and security to
the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under
Sections 6 and 15, which shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Notes prior
to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity
(including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction
had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion
of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction
without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations on the conversion of this Note.
(b) Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior
to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement
of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail and overnight courier
to the Holder (a “Change of Control Notice”). At any time during the period beginning after the Holder’s
receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not
delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on twenty (20) Trading
Days after the later of (A) the date of consummation of such Change of Control or (B) the date of receipt of such Change of Control
Notice or (C) the date of the announcement of such Change of Control, the Holder may require the Company to redeem all or any portion
of this Note by delivering written notice thereof (“Change of Control Redemption Notice”) to the Company, which
Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this
Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company in cash at a price equal to the greatest
of (i) the product of (w) the Change of Control Redemption Premium multiplied by (y) the Conversion Amount being redeemed, (ii)
the product of (x) the Change of Control Redemption Premium multiplied by (y) the product of (A) the Conversion Amount being redeemed
multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during
the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change of
Control and (2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control
Redemption Notice by (II) the Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium
multiplied by (z) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash
consideration and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of
the shares of Common Stock upon consummation of such Change of Control (any such non-cash consideration constituting publicly-traded
securities shall be valued at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior
to the consummation of such Change of Control, the Closing Sale Price of such securities on the Trading Day immediately following
the public announcement of such proposed Change of Control and the Closing Sale Price of such securities on the Trading Day immediately
prior to the public announcement of such proposed Change of Control) divided by (II) the Conversion Price then in effect (the “Change
of Control Redemption Price”). Redemptions required by this Section 5 shall be made in accordance with the provisions
of Section 12 and shall have priority to payments to stockholders in connection with such Change of Control. To the extent redemptions
required by this Section 5(a) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
5, but subject to Section 3(d), until the Change of Control Redemption Price (together with any Late Charges thereon) is paid in
full, the Conversion Amount submitted for redemption under this Section 5(a) (together with any Late Charges thereon) may be converted,
in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant
hereto, the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s)
as set forth in the Change of Control Redemption Notice. In the event of the Company’s redemption of any portion of this
Note under this Section 5(a), the Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 5(a) is intended by the parties to be, and shall be
deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.
6. RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially
all of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into
account any limitations or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted
at the Alternate Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however,
that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right
to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a
result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent
shall be held in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term
shall be extended by such number of days held in abeyance, if applicable) for the benefit of the Holder until such time or times,
if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase
Right or on any subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity
date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable)) to the same
extent as if there had been no such limitation).
(b) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option
(i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder
would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon
the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of
this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as
the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions
of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations
on the conversion or redemption of this Note.
7. RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company grants, issues
or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 7(a) is deemed to have granted,
issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the
account of the Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration
per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior
to such issuance or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive Issuance, the
Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Conversion Price and the New Issuance Price under this Section 7(a)),
the following shall be applicable:
(i) Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any
Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the granting, issuance or sale of such Option for such price per
share. For purposes of this Section 7(a)(i), the “lowest price per share for which one share of Common Stock is at any time
issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock
upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise
price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market
conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (2) the sum of all amounts paid or payable to
the holder of such Option (or any other Person) with respect to any one share of Common Stock upon the granting, issuance or sale
of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration consisting of cash,
debt forgiveness, assets or any other property received or receivable by, or benefit conferred on, the holder of such Option (or
any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance
of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the
terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.
(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any
Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion,
exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of
such Convertible Securities for such price per share. For the purposes of this Section 7(a)(ii), the “lowest price per share
for which one share of Common Stock is at any time issuable (or may become issuable assuming all possible market conditions) upon
the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower
of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share
of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible
Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security
for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms
thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) with
respect to any one share of Common Stock upon the issuance or sale of such Convertible Security plus the value of any other consideration
received or receivable consisting of cash, debt forgiveness, assets or other property by, or benefit conferred on, the holder of
such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall
be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities
or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section
7(a), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other
than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b)
below), the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued
or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security (including, without limitation,
any Option or Convertible Security that was outstanding as of the Subscription Date) are increased or decreased in the manner described
in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable
upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease.
No adjustment pursuant to this Section 7(a) shall be made if such adjustment would result in an increase of the Conversion Price
then in effect.
(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales
of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity
to each other and/or (C) are consummated under the same plan of financing), the aggregate consideration per share of Common Stock
with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which
one share of Common Stock was issued (or was deemed to be issued pursuant to Section 7(a)(i) or 7(a)(ii) above, as applicable)
in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities,
the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as determined by
the Holder in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III)
the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined on a per
share basis in accordance with this Section 7(a)(i). If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the
consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares
of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security,
but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the
Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days
immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners
of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration
therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not
for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all
parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the
issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(b) Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 6, Section
15 or Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
Without limiting any provision of Section 6, Section 15 or Section 7(a), if the Company at any time on or after the Subscription
Date combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more
classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior
to such combination will be proportionately increased. Any adjustment pursuant to this Section 7(b) shall become effective immediately
after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7(b) occurs
during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted
appropriately to reflect such event.
(c) Holder’s
Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section 7, if the
Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities
(any such securities, “Variable Price Securities”), after the Subscription Date that are issuable pursuant to
such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary
with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of
such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and
similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”),
the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the date of such agreement
and the issuance of such Convertible Securities or Options. From and after the date the Company enters into such agreement or issues
any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price for the Conversion Price upon conversion of this Note by designating in the Conversion Notice delivered upon
any conversion of this Note that solely for purposes of such conversion the Holder is relying on the Variable Price rather than
the Conversion Price then in effect. The Holder’s election to rely on a Variable Price for a particular conversion of this
Note shall not obligate the Holder to rely on a Variable Price for any future conversion of this Note. In addition, from and after
the date the Company enters into such agreement or issues any such Variable Price Securities, for purposes of calculating the Installment
Conversion Price as of any time of determination, the “Conversion Price” as used therein shall mean the lower of (x)
the Conversion Price as of such time of determination and (y) the Variable Price as of such time of determination.
(d) Stock
Combination Event Adjustments. If at any time and from time to time on or after the Subscription Date there occurs any stock
split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a “Stock
Combination Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market
Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 7(b) above), then on the
sixteenth (16th) Trading Day immediately following such Stock Combination Event Date, the Conversion Price then in effect
on such sixteenth (16th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall be reduced
(but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding
sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made.
(e) Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly
applicable, or, if applicable, would not operate to protect the Holder 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 the Company’s board of directors
shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the
Holder, provided that no such adjustment pursuant to this Section 7(e) will increase the Conversion Price as otherwise determined
pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then the Company’s board of directors and the Holder 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 absent manifest error and whose fees and expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(g) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the
term of this Note, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce
the then current Conversion Price of each of the Notes to any amount and for any period of time deemed appropriate by the board
of directors of the Company.
8. INSTALLMENT
CONVERSION OR REDEMPTION.
(a) General.
On each applicable Installment Date, provided there has been no Equity Conditions Failure, the Company shall pay to the Holder
of this Note the applicable Installment Amount due on such date by converting such Installment Amount in accordance with this Section
8 (a “Installment Conversion”); provided, however, that the Company may, at its option following
notice to the Holder as set forth below, pay the Installment Amount by redeeming such Installment Amount in cash (a “Installment
Redemption”) or by any combination of an Installment Conversion and an Installment Redemption so long as all of the outstanding
applicable Installment Amount due on any Installment Date shall be converted and/or redeemed by the Company on the applicable Installment
Date, subject to the provisions of this Section 8. On the date which is the twenty-first (21st) Trading Day prior to each Installment
Date (each, an “Installment Notice Due Date”), the Company shall deliver written notice (each, a “Installment
Notice” and the date all of the holders receive such notice is referred to as to the “Installment Notice Date”),
to each holder of Notes and such Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of such
holder’s Note shall be converted in whole pursuant to an Installment Conversion or (B) (1) state that the Company elects
to redeem for cash, or is required to redeem for cash in accordance with the provisions of the Notes, in whole or in part, the
applicable Installment Amount pursuant to an Installment Redemption and (2) specify the portion of such Installment Amount which
the Company elects or is required to redeem pursuant to an Installment Redemption (such amount to be redeemed in cash, the “Installment
Redemption Amount”) and the portion of the applicable Installment Amount, if any, with respect to which the Company will,
and is permitted to, effect an Installment Conversion (such amount of the applicable Installment Amount so specified to be so converted
pursuant to this Section 8 is referred to herein as the “Installment Conversion Amount”), which amounts when
added together, must at least equal the entire applicable Installment Amount and (ii) if the applicable Installment Amount is to
be paid, in whole or in part, pursuant to an Installment Conversion, certify that there is not then an Equity Conditions Failure
as of the applicable Installment Notice Date. Each Installment Notice shall be irrevocable. If the Company does not timely deliver
an Installment Notice in accordance with this Section 8 with respect to a particular Installment Date, then the Company shall be
deemed to have delivered an irrevocable Installment Notice confirming an Installment Conversion of the entire Installment Amount
payable on such Installment Date and shall be deemed to have certified that there is not then an Equity Conditions Failure in connection
with such Installment Conversion. Except as expressly provided in this Section 8(a), the Company shall convert and/or redeem the
applicable Installment Amount of this Note pursuant to this Section 8 and the corresponding Installment Amounts of the Other Notes
pursuant to the corresponding provisions of the Other Notes in the same ratio of the applicable Installment Amount being converted
and/or redeemed hereunder. The applicable Installment Conversion Amount (whether set forth in the applicable Installment Notice
or by operation of this Section 8) shall be converted in accordance with Section 8(b) and the applicable Installment Redemption
Amount shall be redeemed in accordance with Section 8(c).
(b) Mechanics
of Installment Conversion. Subject to Section 3(d), if the Company delivers an Installment Notice or is deemed to have delivered
an Installment Notice certifying that such Installment Amount is being paid, in whole or in part, in an Installment Conversion
in accordance with Section 8(a), then the remainder of this Section 8(b) shall apply. The applicable Installment Conversion Amount,
if any, shall be converted on the applicable Installment Date at the applicable Installment Conversion Price and the Company shall,
on such Installment Date, (A) deliver to the Holder’s account with DTC such shares of Common Stock issued upon such conversion
(subject to the reduction contemplated by the immediately following sentence and, if applicable, the penultimate sentence of this
Section 8(b)) and (B) in the event of the Conversion Floor Price Condition, the Company shall deliver to the Holder the applicable
Conversion Installment Floor Amount, provided that the Equity Conditions are then satisfied (or waived in writing by the Holder)
on such Installment Date and an Installment Conversion is not otherwise prohibited under any other provision of this Note. If the
Company confirmed (or is deemed to have confirmed by operation of Section 8(a)) the conversion of the applicable Installment Conversion
Amount, in whole or in part, and there was no Equity Conditions Failure as of the applicable Installment Notice Date (or is deemed
to have certified that the Equity Conditions in connection with any such conversion have been satisfied by operation of Section
8(a)) but an Equity Conditions Failure occurred between the applicable Installment Notice Date and any time through the applicable
Installment Date (the “Interim Installment Period”), the Company shall provide the Holder a subsequent notice
to that effect. If there is an Equity Conditions Failure (which is not waived in writing by the Holder) during such Interim Installment
Period or an Installment Conversion is not otherwise permitted under any other provision of this Note, then, at the option of the
Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following: (i) the
Company shall redeem all or any part designated by the Holder of the unconverted Installment Conversion Amount (such designated
amount is referred to as the “Designated Redemption Amount”) and the Company shall pay to the Holder within
two (2) days of such Installment Date, by wire transfer of immediately available funds, an amount in cash equal to 110% of such
Designated Redemption Amount, and/or (ii) the Installment Conversion shall be null and void with respect to all or any part designated
by the Holder of the unconverted Installment Conversion Amount and the Holder shall be entitled to all the rights of a holder of
this Note with respect to such designated part of the Installment Conversion Amount; provided, however, the Conversion Price for
such designated part of such unconverted Installment Conversion Amount shall thereafter be adjusted to equal the lesser of (A)
the Installment Conversion Price as in effect on the date on which the Holder voided the Installment Conversion and (B) the Installment
Conversion Price that would be in effect on the date on which the Holder delivers a Conversion Notice relating thereto as if such
date was an Installment Date. If the Company fails to redeem any Designated Redemption Amount by the second (2nd) day following
the applicable Installment Date by payment of such amount by such date, then the Holder shall have the rights set forth in Section
12(a) as if the Company failed to pay the applicable Installment Redemption Price (as defined below) and all other rights under
this Note (including, without limitation, such failure constituting an Event of Default described in Section 4(a)(vi)). Notwithstanding
anything to the contrary in this Section 8(b), but subject to 3(d), until the Company delivers Common Stock representing the Installment
Conversion Amount to the Holder, the Installment Conversion Amount may be converted by the Holder into Common Stock pursuant to
Section 3. In the event that the Holder elects to convert the Installment Conversion Amount prior to the applicable Installment
Date as set forth in the immediately preceding sentence, the Installment Conversion Amount so converted shall be deducted from
the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice. The
Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of any shares of Common Stock
in any Installment Conversion hereunder.
(c) Mechanics
of Installment Redemption. If the Company elects or is required to effect an Installment Redemption, in whole or in part, in
accordance with Section 8(a), then the Installment Redemption Amount, if any, shall be redeemed by the Company in cash on the applicable
Installment Date by wire transfer to the Holder of immediately available funds in an amount equal to 105% of the applicable Installment
Redemption Amount (the “Installment Redemption Price”). If the Company fails to redeem such Installment Redemption
Amount on such Installment Date by payment of the Installment Redemption Price, then, at the option of the Holder designated in
writing to the Company (any such designation shall be a “Conversion Notice” for purposes of this Note), the
Holder may require the Company to convert all or any part of the Installment Redemption Amount at the Installment Conversion Price
(determined as of the date of such designation as if such date were an Installment Date). Conversions required by this Section
8(c) shall be made in accordance with the provisions of Section 3(c). Notwithstanding anything to the contrary in this Section
8(c), but subject to Section 3(d), until the Installment Redemption Price (together with any Late Charges thereon) is paid in full,
the Installment Redemption Amount (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder
into Common Stock pursuant to Section 3. In the event the Holder elects to convert all or any portion of the Installment Redemption
Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Installment Redemption
Amount so converted shall be deducted from the Installment Amounts relating to the applicable Installment Date(s) as set forth
in the applicable Conversion Notice. Redemptions required by this Section 8(c) shall be made in accordance with the provisions
of Section 12.
(d) Deferred
Installment Amount. Notwithstanding any provision of this Section 8(d) to the contrary, the Holder may, at its option and in
its sole discretion, deliver a written notice to the Company no later than the Trading Day immediately prior to the applicable
Installment Date electing to have the payment of all or any portion of an Installment Amount payable on such Installment Date deferred
(such amount deferred, the “Deferral Amount”, and such deferral, each a “Deferral”) until
any subsequent Installment Date selected by the Holder, in its sole discretion, in which case, the Deferral Amount shall be added
to, and become part of, such subsequent Installment Amount and such Deferral Amount shall continue to accrue Interest hereunder.
Any notice delivered by the Holder pursuant to this Section 8(d) shall set forth (i) the Deferral Amount and (ii) the date that
such Deferral Amount shall now be payable.
(e) Acceleration
of Installment Amounts. Notwithstanding anything herein to the contrary, during the period commencing on an Installment Date
(a “Current Installment Date”) and ending on the Trading Day immediately prior to the next Installment Date
(each, an “Installment Period”), at the option of the Holder, at one or more times, the Holder may convert other
Installment Amounts (each, an “Acceleration”, and each such amount, an “Acceleration Amount”),
in whole or in part, at the Installment Conversion Price of such Current Installment Date in accordance with the conversion procedures
set forth in Section 3 hereunder, mutatis mutandis. Notwithstanding the foregoing, with respect to any given Installment
Period, the Holder may not elect to effect any Acceleration (a “Current Acceleration”) during such Installment
Period if the sum of (x) the Acceleration Amounts with respect to Accelerations previously consummated by the Holder during the
applicable Installment Period and (y) the Acceleration Amount of such Current Acceleration, collectively, exceeds the Installment
Amount with respect to such Current Installment Date.
9. REDEMPTIONS
AT THE COMPANY’S ELECTION.
(a) Company
Optional Redemption. At any time (x) if prior to the Applicable Date (as defined in the Securities Purchase Agreement), as
long as no Event of Default has occurred or is continuing or (y) if after the Applicable Date and (y) as long as no Equity Conditions
Failure then exists, the Company shall have the right to redeem all, but not less than all, of the Conversion Amount then remaining
under this Note (the “Company Optional Redemption Amount”) on the Company Optional Redemption Date (each as
defined below) (a “Company Optional Redemption”). The portion of this Note subject to redemption pursuant to
this Section 9(a) shall be redeemed by the Company in cash at a price (the “Company Optional Redemption Price”)
equal to 105% of the Conversion Amount being redeemed as of the Company Optional Redemption Date. The Company may exercise its
right to require redemption under this Section 9(a) by delivering a written notice thereof by facsimile or electronic mail and
overnight courier to all, but not less than all, of the holders of Notes (the “Company Optional Redemption Notice”
and the date all of the holders of Notes received such notice is referred to as the “Company Optional Redemption Notice
Date”). The Company may deliver only one Company Optional Redemption Notice hereunder and such Company Optional Redemption
Notice shall be irrevocable. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption
shall occur (the “Company Optional Redemption Date”) which date shall not be less than ten (10) Trading Days
nor more than twenty (20) Trading Days following the Company Optional Redemption Notice Date, (y) certify that there has been no
Event of Default or, if after the Applicable Date, no Equity Conditions Failure and (z) state the aggregate Conversion Amount of
the Notes which is being redeemed in such Company Optional Redemption from the Holder and all of the other holders of the Notes
pursuant to this Section 9(a) (and analogous provisions under the Other Notes) on the Company Optional Redemption Date. Notwithstanding
anything herein to the contrary, (i) if no Event of Default or, if after the Applicable Date, no Equity Conditions Failure has
occurred as of the Company Optional Redemption Notice Date but an Event of Default or, if after the Applicable Date, an Equity
Conditions Failure, as applicable, occurs at any time prior to the Company Optional Redemption Date, (A) the Company shall provide
the Holder a subsequent notice to that effect and (B) unless the Holder waives such Event of Default or Equity Conditions Failure,
as applicable, the Company Optional Redemption shall be cancelled and the applicable Company Optional Redemption Notice shall be
null and void and (ii) at any time prior to the date the Company Optional Redemption Price is paid, in full, the Company Optional
Redemption Amount may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3. All Conversion
Amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce the Company Optional Redemption
Amount of this Note required to be redeemed on the Company Optional Redemption Date. Redemptions made pursuant to this Section
9(a) shall be made in accordance with Section 12. In the event of the Company’s redemption of any portion of this Note under
this Section 9, the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability
to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the
Holder. Accordingly, any redemption premium due under this Section 9 is intended by the parties to be, and shall be deemed, a reasonable
estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. For the avoidance of doubt, the
Company shall have no right to effect a Company Optional Redemption if any Event of Default has occurred and continuing, but any
Event of Default shall have no effect upon the Holder’s right to convert this Note in its discretion.
(b) Pro
Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section
9(a), then it must simultaneously take the same action with respect to all of the Other Notes.
10. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined
in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith
carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this
Note. Without limiting the generality of the foregoing or any other provision of this Note or the other Transaction Documents,
the Company (a) shall not increase the par value of any shares of Common Stock receivable upon conversion of this Note above
the Conversion Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this Note.
Notwithstanding anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder
is not permitted to convert this Note in full for any reason (other than pursuant to restrictions set forth in Section 3(d) hereof),
the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents
or approvals as necessary to permit such conversion into shares of Common Stock.
11. RESERVATION
OF AUTHORIZED SHARES.
(a) Reservation.
So long as any Notes remain outstanding, the Company shall at all times reserve at least 200% of the number of shares of Common
Stock as shall from time to time be necessary to effect the conversion, including without limitation, Installment Conversions,
Alternate Conversions and Accelerations, of all of the Notes then outstanding (without regard to any limitations on conversions
and assuming such Notes remain outstanding until the Maturity Date) at the Alternate Conversion Price then in effect (the “Required
Reserve Amount”). The Required Reserve Amount (including, without limitation, each increase in the number of shares so
reserved) shall be allocated pro rata among the holders of the Notes based on the original principal amount of the Notes held by
each holder on the Closing Date or increase in the number of reserved shares, as the case may be (the “Authorized Share
Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee
shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and
allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on
the principal amount of the Notes then held by such holders.
(b) Insufficient
Authorized Shares. If, notwithstanding Section 11(a), and not in limitation thereof, at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve
Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase
the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve
Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement
and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock
and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company
is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number
of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such Authorized Failure Shares
to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount convertible into
such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure Shares and
(y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder
delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date
of such issuance and payment under this Section 11(a); and (ii) to the extent the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in Section
11(a) or this Section 11(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
12. REDEMPTIONS.
(a) Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days
after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change
of Control Redemption Notice in accordance with Section 5(a), the Company shall deliver the applicable Change of Control Redemption
Price to the Holder in cash concurrently with the consummation of such Change of Control if such notice is received prior to the
consummation of such Change of Control and within five (5) Business Days after the Company’s receipt of such notice otherwise.
The Company shall deliver the applicable Installment Redemption Price to the Holder in cash on the applicable Installment Date.
The Company shall deliver the applicable Company Optional Redemption Price to the Holder in cash on the applicable Company Optional
Redemption Date. Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time the Holder
is entitled to receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered in writing
to the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder
under such other Transaction Document and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s
payment obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount
of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section
18(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption
Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder
all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable
Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x)
the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately
return this Note, or issue a new Note (in accordance with Section 18(d)), to the Holder, and in each case the principal amount
of this Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable
Redemption Price (as the case may be, and as adjusted pursuant to this Section 12, if applicable) minus (2) the Principal portion
of the Conversion Amount submitted for redemption and (z) the Conversion Price of this Note or such new Notes (as the case may
be) shall be automatically adjusted with respect to each conversion effected thereafter by the Holder to the lowest of (A) the
Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) the greater of (x) the Floor
Price and (y) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on
which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable
Redemption Notice is voided and (C) the greater of (x) the Floor Price and (y) 75% of the lowest VWAPs of the Common Stock during
the five (5) consecutive Trading Day period ending and including the applicable Conversion Date (it being understood and agreed
that all such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period). The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights
following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued
prior to the date of such notice with respect to the Conversion Amount subject to such notice.
(b) Redemption
by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment
as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(a)
(each, an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day
of its receipt thereof, forward to the Holder by facsimile or electronic mail a copy of such notice. If the Company receives a
Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including
the date which is two (2) Business Days prior to the Company’s receipt of the Holder’s applicable Redemption Notice
and ending on and including the date which is two (2) Business Days after the Company’s receipt of the Holder’s applicable
Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice
and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata
amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day
period.
13. VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation,
the Delaware General Corporation Law) and as expressly provided in this Note.
14. COVENANTS.
Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank.
All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness
of the Company and its Subsidiaries.
(b) Incurrence
of Indebtedness. Until the Minimum Note Threshold Time (as defined in the Securities Purchase Agreement), the Company shall
not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer
to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) other Permitted
Indebtedness).
(c) Existence
of Liens. Until the Minimum Note Threshold Time, the Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively,
“Liens”) other than Permitted Liens.
(d) Restricted
Payments. Until the Minimum Note Threshold Time, the Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or
cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise),
all or any portion of any Indebtedness (other than Permitted Indebtedness secured by Permitted Liens or the Notes) whether by way
of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due
or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is
continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred
and is continuing.
(e) Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
(f) Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the
Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other
than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company
and its Subsidiaries in the ordinary course of business consistent with its past practice and (ii) sales of inventory and product
in the ordinary course of business.
(g) Maturity
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
permit any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.
(h) Change
in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly
contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially
related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, modify its or their corporate structure or purpose.
(i) Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.
(j) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases
to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.
(k) Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable
to maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any
of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.
(l) Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such
amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in similar businesses similarly situated.
(m) Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with any affiliate, except transactions in the ordinary
course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation
of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a
comparable arm’s length transaction with a Person that is not an affiliate thereof.
(n) Restricted
Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in
aggregate principal amount of the Notes then outstanding, issue any Notes (other than as contemplated by the Securities Purchase
Agreement and the Notes) or any other securities that would cause a breach or default under the Notes or the Warrants.
(o) Independent
Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing,
(y) upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z)
at any time the Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent,
reputable investment bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note
has occurred (the “Independent Investigator”). If the Independent Investigator determines that such breach of
this Note has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written
notice to each holder of a Note of such breach. In connection with such investigation, the Independent Investigator may, during
normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company
and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the
records of its legal advisors and accountants (including the accountants’ work papers) and any books of account, records,
reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client
or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as the Independent
Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and operating data
and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably
request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with,
and to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent
public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent
Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice,
and as often as may be reasonably requested.
15. DISTRIBUTION
OF ASSETS. In addition to any adjustments pursuant to Section 7, if the Company shall declare or make any dividend or other
distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return
of capital or otherwise (including without limitation, any distribution of cash, stock or other securities, property or options
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(the “Distributions”), then the Holder will be entitled to such Distributions as if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations
or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the Alternate Conversion
Price as of the applicable record date) immediately prior to the date on which a record is taken for such Distribution or, if no
such record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and
the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution
to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a
result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall
be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the
Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly
in abeyance) to the same extent as if there had been no such limitation).
16. AMENDING
THE TERMS OF THIS NOTE. Except for Section 3(d), which may not be amended, modified or waived by the parties hereto, the prior
written consent of the Holder shall be required for any change, waiver or amendment to this Note.
17. TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.
18. REISSUANCE
OF THIS NOTE.
(a) Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 18(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred,
a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal not being transferred. The Holder
and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following
conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.
(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal.
(c) Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 18(d) and in principal amounts of at least $1,000) representing
in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.
(d) Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions
as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note,
from the Issuance Date.
19. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. No failure
on the part of the Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Holder of any right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy of the Holder at
law or equity or under this Note or any of the documents shall not be deemed to be an election of Holder’s rights or remedies
under such documents or at law or equity. The Company covenants to the Holder that there shall be no characterization concerning
this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be
entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive
or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages
and without posting a bond or other security. The Company shall provide all information and documentation to the Holder that is
reasonably requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions
of this Note (including, without limitation, compliance with Section 7).
20. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly
acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price
paid for this Note was less than the original Principal amount hereof.
21. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed
against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed
to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Note
instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections
of this Note. Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have
the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing
by the Holder.
22. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 22
shall permit any waiver of any provision of Section 3(d).
23. DISPUTE
RESOLUTION.
(a) Submission
to Dispute Resolution.
(i) In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Installment Conversion Price,
an Alternate Conversion Price, a Black Scholes Consideration Value, a VWAP or a fair market value or the arithmetic calculation
of a Conversion Rate or the applicable Redemption Price (as the case may be) (including, without limitation, a dispute relating
to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other
party via facsimile or electronic mail (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances
giving rise to such dispute or (B) if by the Holder at any time after the Holder learned of the circumstances giving rise to such
dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing
Sale Price, such Conversion Price, such Installment Conversion Price, such Alternate Conversion Price, such Black Scholes Consideration
Value, such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate or such applicable Redemption
Price (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company
or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its
sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 23 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the
Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute
Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other
support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on
the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company
nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation).
(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 23 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil Practice Law and Rules
(“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR §
7503(a) in order to compel compliance with this Section 23, (ii) a dispute relating to a Conversion Price includes, without limitation,
disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 7(a), (B) the
consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed
issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii)
the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s
resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings,
determinations and the like that such investment bank determines are required to be made by such investment bank in connection
with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Note and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in
its sole discretion, shall have the right to submit any dispute described in this Section 23 to any state or federal court sitting
in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 23 and (v) nothing
in this Section 23 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 23).
24. NOTICES;
CURRENCY; PAYMENTS.
(a) Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without
limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment
of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least
fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights
to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall
be made known to the public prior to or in conjunction with such notice being provided to the Holder.
(b) Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing
under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the
U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate”
means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange
rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an
amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period
of time).
(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth
herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of
the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction
Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal
to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is
paid in full (“Late Charge”).
25. CANCELLATION.
After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this
Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
26. WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all
other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the
Securities Purchase Agreement.
27. GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Except as otherwise required by Section
23 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on
the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce
a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision
of Section 23. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
28. JUDGMENT
CURRENCY.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being hereinafter in this Section 28 referred to as the “Judgment
Currency”) an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing
on the Trading Day immediately preceding:
(i) the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 28(a)(ii) being hereinafter referred to as the “Judgment Conversion
Date”).
(b) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 28(a)(ii) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with
the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion
Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.
29. SEVERABILITY.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
30. MAXIMUM
PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event
that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments
in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
31. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than
rights of the type described in Section 6(a) hereof) that could result in a decrease in the net consideration received by the Company
in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment
or other similar rights).
(d) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(e) “Alternate
Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant
to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher
of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Alternate Conversion
Date and (II) the applicable Alternate Conversion Price and (B) the difference obtained by subtracting (I) the number of shares
of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery Deadline with respect to such Alternate
Conversion from (II) the quotient obtained by dividing (x) the applicable Conversion Amount that the Holder has elected to be the
subject of the applicable Alternate Conversion, by (y) the applicable Alternate Conversion Price without giving effect to clause
(x) of such definition.
(f)
“Alternate Conversion Price” means, with respect to any Alternate Conversion that price which shall be the lowest
of (i) the applicable Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion and
(ii) the greater of (x) the Floor Price and (y) 80% of the lowest VWAP of the Common Stock during the five (5) Trading Day period
ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice
(such period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases
or increases the Common Stock during such Alternate Conversion Measuring Period.
(g)
“Approved Stock Plan” means any employee benefit plan or agreement which has been approved by the board of directors
of the Company prior to or subsequent to the Subscription Date pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, consultant, officer or director for services provided to the Company in their
capacity as such.
(h) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(i) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the
case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such
Option, Convertible Security or Adjustment Right (as the case may be), (ii) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may
be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost
of borrow and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT”
function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the
date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(j) “Bloomberg”
means Bloomberg, L.P.
(k) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations
at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers)
of commercial banks in The City of New York generally are open for use by customers on such day.
(l) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect,
wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification
of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization
or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities
and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities
with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation)
of such entity or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv)
any acquisition (or series of acquisitions) by the Company (whether through merger or otherwise) of any business or entity (each,
an “Acquisition Transaction”) after which both (x) holders of the Company’s voting power immediately prior
to such Acquisition Transaction (or the initial Acquisition Transaction in any series of Acquisition Transactions, as applicable)
continue after the consummation of such Acquisition Transaction (or the last Acquisition Transaction in such series of Acquisition
Transactions, as applicable) to hold publicly traded securities and, directly or indirectly, are, in all material respects, the
holders of at least 2/3rds of the voting power of the surviving entity (or entities with the authority or voting power to elect
2/3rds of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after
such Acquisition Transaction (or the last Acquisition Transaction in such series of Acquisition Transactions, as applicable).
(m) “Change
of Control Redemption Premium” means 110%.
(n) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time,
as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing
Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 23. All such determinations shall be appropriately
adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such
period.
(o) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially
issued Notes pursuant to the terms of the Securities Purchase Agreement.
(p) “Common
Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into
which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(q) “Conversion
Floor Price Condition” means that the relevant Alternate Conversion Price or Installment Conversion Price, as applicable,
is being determined based on clause (x) of such definitions.
(r) “Conversion
Installment Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant
to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher
of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Installment Date
and (II) the applicable Installment Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of
Common Stock delivered (or to be delivered) to the Holder on the applicable Installment Date with respect to such Installment Conversion
from (II) the quotient obtain by dividing (x) the applicable Installment Amount subject to such Installment Conversion, by (y)
the applicable Installment Conversion Price without giving effect to clause (x) of such definition.
(s)
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under
any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder
thereof to acquire, any shares of Common Stock.
(t)
“Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the
Nasdaq Global Market or the Principal Market.
(u) “Equity
Conditions” means, with respect to an given date of determination: (i) on each day during the period beginning thirty
calendar days prior to such applicable date of determination and ending on and including such applicable date of determination
either (x) one or more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective and the
prospectus contained therein shall be available on such applicable date of determination (with, for the avoidance of doubt, any
shares of Common Stock previously sold pursuant to such prospectus deemed unavailable) for the resale of all shares of Common
Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion Amount
being redeemed, as applicable, in the event requiring this determination at the Alternate Conversion Price then in effect (without
regard to any limitations on conversion set forth herein)) (each, a “Required Minimum Securities Amount”),
in each case, in accordance with the terms of the Registration Rights Agreement and there shall not have been during such period
any Grace Periods (as defined in the Registration Rights Agreement) or (y) all Registrable Securities shall be eligible for sale
pursuant to Rule 144 (as defined in the Securities Purchase Agreement) without the need for registration under any applicable
federal or state securities laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities
with respect to the Notes and exercise of the Warrants) and no Current Public Information Failure (as defined in the Registration
Rights Agreement) exists or is continuing; (ii) on each day during the period beginning thirty calendar days 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 (including all Registrable Securities) is listed or designated for quotation (as applicable)
on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more
than two (2) days and occurring prior to the applicable date of determination due to business announcements by the Company) nor
shall delisting or suspension by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring after
giving effect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced
by (A) a writing by such Eligible Market or (B) the Company falling below the minimum listing maintenance requirements of the
Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (iii) during the Equity
Conditions Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note
on a timely basis as set forth in Section 3 hereof and all other shares of capital stock required to be delivered by the Company
on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection
with the event requiring determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring
this determination) may be issued in full without violating Section 3(d) hereof; (v) any shares of Common Stock to be issued in
connection with the event requiring determination (or issuable upon conversion of the Conversion Amount being redeemed in the
event requiring this determination (without regards to any limitations on conversion set forth herein)) 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); (vi) 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; (vii) the Company
shall have no knowledge of any fact that would reasonably be expected to cause (1) any Registration Statement required to be filed
pursuant to the Registration Rights Agreement to not be effective or the prospectus contained therein to not be available for
the resale of the applicable Required Minimum Securities Amount of Registrable Securities in accordance with the terms of the
Registration Rights Agreement or (2) any Registrable Securities to not be eligible for sale pursuant to Rule 144 without the need
for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion
of the Notes, other issuance of securities with respect to the Notes and exercise of the Warrants) and no Current Public Information
Failure exists or is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall be in) possession of any
material, non-public information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates,
employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring Period, the
Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty in any material
respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached
in any respect) or any covenant or other term or condition of any Transaction Document, including, without limitation, the Company
shall not have failed to timely make any payment pursuant to any Transaction Document; (x) there shall not have occurred any Volume
Failure or Price Failure as of such applicable date of determination; (xi) on the applicable date of determination (A) no Authorized
Share Failure shall exist or be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are
available under the certificate of incorporation of the Company and reserved by the Company to be issued pursuant to the Notes
and (B) all shares of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion
of the Conversion Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion
set forth herein)) may be issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Equity
Conditions Measuring Period, there shall not have occurred and there shall not exist an Event of Default or an event that with
the passage of time or giving of notice would constitute an Event of Default; (xiii) no bone fide dispute shall exist, by and
between any of holder of Notes or Warrants, the Company, the Principal Market (or such applicable Eligible Market in which the
Common Stock of the Company is then principally trading) and/or FINRA with respect to any term or provision of any Note or any
other Transaction Document and (xiv) the shares of Common Stock issuable pursuant the event requiring the satisfaction of the
Equity Conditions are duly authorized and listed and eligible for trading without restriction on an Eligible Market.
(v) “Equity
Conditions Failure” means that (i) on any day during the period commencing twenty (20) Trading Days prior to the applicable
Company Optional Redemption Notice Date through the applicable Company Optional Redemption Date or (ii) on any day during the period
commencing twenty (20) Trading Days prior to the applicable Installment Notice Date through the later of the applicable Installment
Date and the date on which the applicable shares of Common Stock are actually delivered to the Holder, the Equity Conditions have
not been satisfied (or waived in writing by the Holder).
(w) “Event
Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum
of the VWAP of the Common Stock for each of the five (5) Trading Days with the lowest VWAP of the Common Stock during the fifteen
(15) consecutive Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day
after such Stock Combination Event Date, divided by (y) five (5).
(x) “Excluded
Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued to directors, consultants,
officers or employees of the Company for services rendered to the Company in their capacity as such pursuant to an Approved Stock
Plan (as defined above), provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise
of such options) after the Subscription Date pursuant to this clause (i) do not, in the aggregate, exceed more than 25% of the
Common Stock issued and outstanding immediately prior to the Subscription Date and (B) the exercise price of any such options is
not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions
of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common
Stock issued upon the conversion or exercise of Convertible Securities or Options (other than standard options to purchase Common
Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided
that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities or Options
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible
Securities or Options (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) any
shares of Common Stock issued or issuable in connection with any bona fide strategic or commercial alliances, acquisitions, mergers,
licensing arrangements, and strategic partnerships, provided, that (w) the primary purpose of such issuance is not to raise capital
as reasonably determined, (x) such strategic or commercial alliances, acquisitions, mergers, licensing arrangements, and strategic
partnerships, as applicable, has been approved by a majority of the independent members of the board of directors of the Company,
(y) the purchaser or acquirer or recipient of the securities in such issuance solely consists of either (A) the actual participants
in such strategic or commercial alliance, strategic or commercial licensing arrangement or strategic or commercial partnership,
(B) the actual owners of such assets or securities acquired in such acquisition or merger or (C) the stockholders, partners, employees,
consultants, officers, directors or members of the foregoing Persons, in each case, which is, itself or through its subsidiaries,
an operating company or an owner of an asset, in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, and (z) the number or amount of securities issued to such Persons
by the Company shall not be disproportionate to each such Person’s actual participation in (or fair market value of the contribution
to) such strategic or commercial alliance or strategic or commercial partnership or ownership of such assets or securities to be
acquired by the Company, as applicable, (iv) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant
to the terms of the Notes; provided, that the terms of the Notes are not amended, modified or changed on or after the Subscription
Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date), and (v) the shares
of Common Stock issuable upon exercise of the Warrants; provided, that the terms of the Warrants are not amended, modified or changed
on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription
Date).
(y) “Floor
Price” means $0.63.
(z) “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of
the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be
subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of
the stockholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(aa)
“GAAP” means United States generally accepted accounting principles, consistently applied.
(bb) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(cc) “Holder
Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing
Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers
pursuant to the Securities Purchase Agreement on the Closing Date.
(dd)
“Indebtedness” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(ee) “Installment
Amount” means the sum of (A) (i) with respect to any Installment Date other than the Maturity Date, the lesser of (x)
the quotient of (I) the Principal amount outstanding under this Note as of the initial Installment Date, divided by (II) the number
of Installment Dates occurring hereunder (as determined as of the initial Installment Date assuming no Deferrals, Accelerations,
redemptions or conversions hereunder prior to the Maturity Date) and (y) the Principal amount then outstanding under this Note
as of such Installment Date, and (ii) with respect to the Installment Date that is the Maturity Date, the Principal amount then
outstanding under this Note as of such Installment Date (in each case, as any such Installment Amount may be reduced pursuant to
the terms of this Note, whether upon conversion, redemption or Deferral), (B) any Deferral Amount deferred pursuant to Section
8(d) and included in such Installment Amount in accordance therewith, (C) any Acceleration Amount accelerated pursuant to Section
8(e) and included in such Installment Amount in accordance therewith and (D) in each case of clauses (A) through (C) above, the
sum of any accrued and unpaid Interest as of such Installment Date under this Note, if any, and accrued and unpaid Late Charges,
if any, under this Note as of such Installment Date. In the event the Holder shall sell or otherwise transfer any portion of this
Note, the transferee shall be allocated a pro rata portion of the each unpaid Installment Amount hereunder.
(ff) “Installment
Conversion Price” means, with respect to a particular date of determination, the lowest of (i) the Conversion Price then
in effect, and (ii) the greater of (x) the Floor Price and (y) the lower of 90% of the lowest VWAP of the Common Stock for each
of the five (5) Trading Days ending and including the Trading Day immediately prior to the applicable Installment Date. All such
determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction
during any such measuring period.
(gg) “Installment
Date” means (i) July 25, 2021, (ii) then, (x) if the first Trading Day of the calendar month immediately following the
initial Installment Date occurs less than twenty (20) Trading Days after the initial Installment Date, the first Trading Day of
the second calendar month immediately following the initial Installment Date or (y) otherwise, the first Trading Day of the calendar
month immediately following the initial Installment Date, (iii) thereafter, the first Trading Day of the calendar month immediately
following the previous Installment Date until the Maturity Date, and (iv) the Maturity Date.
(hh) “Interest
Date” means, with respect to any given calendar month, (x) if prior to the initial Installment Date or after the Maturity
Date, the first Trading Day of such calendar month or (y) if on or after the initial Installment Date, but on or prior to the Maturity
Date, such Installment Date, if any, in such calendar month.
(ii) “Maturity
Date” shall mean January 25, 2023; provided, however, the Maturity Date may be extended at the option of the Holder (i)
in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred
and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the
date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction
is publicly announced or a Change of Control Notice is delivered prior to the Maturity Date, provided further that if a Holder
elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to
Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not limit the
conversion of this Note.
(jj)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(kk) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(ll) “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set forth on Schedule
3(s) to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) the Permitted Line of Credit, (iv) unsecured
Indebtedness incurred by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this
Note, as reflected in a written agreement acceptable to the Holder and approved by the Holder in writing, and which Indebtedness
does not provide at any time for (A) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any
principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (B) total interest and fees
at a rate in excess of 9% per annum and (v) Indebtedness secured by Permitted Liens or unsecured but as described in clauses (iv)
and (v) of the definition of Permitted Liens.
(mm) “Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course
of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings,
(iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price
of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B)
existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such equipment, in either case, with respect to Indebtedness in an aggregate amount
not to exceed $250,000, (v) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured
by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited
to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced
does not increase, (vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom
duties in connection with the importation of goods, and (vii) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 4(a)(xii).
(nn) “Permitted
Line of Credit” means a line of credit established with a federal or state chartered banking institution, provided,
however, that the aggregate outstanding principal amount of such line of credit does not at any time exceed $2 million.
(oo)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(pp)
“Price Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock on any
Trading Day during any Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately preceding such
date of determination fails to exceed $0.60 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately adjusted for
any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during any such measuring
period.
(qq) “Principal
Market” means the Nasdaq Capital Market.
(rr) “Redemption
Notices” means, collectively, the Event of Default Redemption Notices, the Installment Notices with respect to any Installment
Redemption, the Company Optional Redemption Notices and the Change of Control Redemption Notices, and each of the foregoing, individually,
a “Redemption Notice.”
(ss) “Redemption
Premium” means 110%.
(tt) “Redemption
Prices” means, collectively, Event of Default Redemption Prices, the Change of Control Redemption Prices, the Company
Optional Redemption Prices and the Installment Redemption Prices, and each of the foregoing, individually, a “Redemption
Price.”
(uu) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date, by and among the Company
and the initial holders of the Notes relating to, among other things, the registration of the resale of the Common Stock issuable
upon conversion of the Notes or otherwise pursuant to the terms of the Notes and exercise of the Warrants, as may be amended from
time to time.
(vv) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(ww) “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among
the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to
time.
(xx) “Security
Agreement” shall have the meaning as set forth in the Securities Purchase Agreement.
(yy) “Subscription
Date” means January 25, 2021.
(zz) “Subsidiaries”
shall have the meaning as set forth in the Securities Purchase Agreement.
(aaa) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(bbb)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(ccc) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market
for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on
such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange
or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day
in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock,
any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(ddd) “Volume
Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading volume (as reported
on Bloomberg) of the Common Stock on the Principal Market on any Trading Day during the twenty (20) Trading Day period ending on
the Trading Day immediately preceding such date of determination (such period, the “Volume Failure Measuring Period”),
is less than $100,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar
transactions occurring after the Subscription Date). All such determinations to be appropriately adjusted for any stock splits,
stock dividends, stock combinations, recapitalizations or other similar transactions during such Volume Failure Measuring Period.
(eee)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New
York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30
start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in
the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York
time, and ending at 4:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported
for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of
any of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink
Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures
in Section 23. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination,
recapitalization or other similar transaction during such period.
(fff) “Warrants”
has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.
32. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms
of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material,
non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city
time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information
on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public
information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing
in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication
in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled
to presume that information contained in the notice does not constitute material, non-public information relating to the Company
or any of its Subsidiaries. Nothing contained in this Section 32 shall limit any obligations of the Company, or any rights of the
Holder, under Section 4(i) of the Securities Purchase Agreement.
33. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of
the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the
Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure
agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the
absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any
securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity,
and may disclose any such information to any third party.
[signature page follows]
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date set out above.
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ADITX THERAPEUTICS, INC.
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By:
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Name:
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Amro Albanna
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Title:
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Chief Executive Officer
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Senior Convertible Note - Signature
Page
EXHIBIT
I
ADITX THERAPEUTICS, INC.
CONVERSION NOTICE
Reference is made to
the Senior Convertible Note (the “Note”) issued to the undersigned by Aditx Therapeutics, Inc., a Delaware corporation
(the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.001 par value per share (the “Common
Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning
as set forth in the Note.
Date of Conversion:
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Aggregate Principal
to be converted:
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Aggregate accrued
and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate
Interest to be converted:
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AGGREGATE CONVERSION AMOUNT
TO BE CONVERTED:
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Please
confirm the following information:
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Conversion Price:
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Number of shares
of Common Stock to be issued:
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Installment
Amount(s) to be reduced (and corresponding Installment Date(s)) and amount of reduction:
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☐
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If
this Conversion Notice is being delivered with respect to an Alternate Conversion, check here if Holder is electing to use the
following Alternate Conversion Price:____________
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☐
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If
this Conversion Notice is being delivered with respect to an Acceleration, check here if Holder is electing to use _________ as
the Installment Conversion Price (as applicable) related to the following Installment Date:____________
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Please
issue the Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
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☐
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Check
here if requesting delivery as a certificate to the following name and to the following address:
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☐
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Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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DTC Participant:
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DTC Number:
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Account Number:
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Date: _____________ __,_____
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Name of Registered Holder
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By:
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Name:
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Title:
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Tax ID:_____________________
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Facsimile:___________________
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E-mail Address:
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Exhibit II
ACKNOWLEDGMENT
The Company hereby
(a) acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not]
eligible to be resold by the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the
Company of a customary 144 representation letter) or (ii) an effective and available registration statement and (c) hereby directs
_________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions
dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.
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ADITX THERAPEUTICS, INC.
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By:
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Name:
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Title:
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APPENDIX
D
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(a)
OF THIS WARRANT.
Aditx Therapeutics, Inc.
Warrant To Purchase Common
Stock
Warrant No.: [__]
Date of Issuance: January 25, 2021 (“Issuance
Date”)
Aditx Therapeutics,
Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [__], the registered holder hereof or its permitted assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then
in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange,
transfer or replacement hereof, the “Warrant”), at any time or times on or after the Issuance Date, but not
after 11:59 p.m., New York time, on the Expiration Date (as defined below), Eight Hundred Thousand (800,000) (subject to adjustment
as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”,
and such number of Warrant Shares, the “Warrant Number”). Except as otherwise defined herein, capitalized terms
in this Warrant shall have the meanings set forth in Section 19. This Warrant is one of the Warrants to Purchase Common Stock
(the “SPA Warrants”) issued pursuant to Section 1 of that certain Securities Purchase Agreement, dated
as of January 25, 2021 (the “Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (the “Securities Purchase Agreement”).
1. EXERCISE
OF WARRANT.
(a) Mechanics
of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)),
this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “Exercise Date”), in
whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. Within one (1) Trading
Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the
Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so
exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the
Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined
in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise
hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same
effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining
number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have
the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares in accordance with the terms
hereof. On or before the first (1st) Trading Day following the date on which the Company has received an Exercise Notice,
the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt of such Exercise Notice,
in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Exercise Notice in
accordance with the terms herein. On or before the second (2nd) Trading Day following the date on which the Company
has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation
for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, upon
the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Exercise Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder
shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective
of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing
such Warrant Shares (as the case may be). If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a)
and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares
being acquired upon an exercise and upon surrender of this Warrant to the Company by the Holder, then, at the request of the Holder,
the Company shall as soon as practicable and in no event later than two (2) Business Days after any exercise and at its own expense,
issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to
purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant
Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise
of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.
The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation,
fees and expenses of the Transfer Agent) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise
of this Warrant. Notwithstanding the foregoing, except in the case where an exercise of this Warrant is validly made pursuant to
a Cashless Exercise, the Company’s failure to deliver Warrant Shares to the Holder on or prior to the later of (i) two (2)
Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other
applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date)
and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise)
(such later date, the “Share Delivery Date”) shall not be deemed to be a breach of this Warrant. Notwithstanding
anything to the contrary contained in this Warrant or the Registration Rights Agreement, after the effective date of the Registration
Statement (as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period
(as defined in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common
Stock to the Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights
Agreement) with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included
as part of the particular Registration Statement to the extent applicable, and for which the Holder has not yet settled. From the
Issuance Date through and including the Expiration Date, the Company shall maintain a transfer agent that participates in the DTC’s
Fast Automated Securities Transfer Program.
(b) Exercise
Price. For purposes of this Warrant, “Exercise Price” means $4.00, subject to adjustment as provided herein.
(c) Company’s
Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior to the Share
Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, to
issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which the Holder is entitled
and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee with DTC for
such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the case may
be) or (II) if a Registration Statement covering the resale of the Warrant Shares that are the subject of the Exercise Notice (the
“Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares and the Company
fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify the Holder
and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such aggregate number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account
with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter
referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery
Failure”), then, in addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the
Holder on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the
sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder
is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time
during the period beginning on the applicable Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder,
upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may
be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise
Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice
pursuant to this Section 1(c) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Date either (I)
the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue
and deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the Company’s share
register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, the Transfer Agent shall
fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant
to clause (ii) below or (II) a Notice Failure occurs, and if on or after such Share Delivery Date the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock
issuable upon such exercise that the Holder is entitled to receive from the Company and has not received from the Company in connection
with such Delivery Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to the Holder, the Company shall, within two (2) Business Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of
such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled
upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly
honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such Warrant Shares or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B) the lowest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice
and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In Payment Amount”). Nothing
shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of
this Warrant as required pursuant to the terms hereof. While this Warrant is outstanding, the Company shall cause its transfer
agent to participate in the DTC Fast Automated Securities Transfer Program. In addition to the foregoing rights, (i) if the Company
fails to deliver the applicable number of Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery
Date, then the Holder shall have the right to rescind such exercise in whole or in part and retain and/or have the Company return,
as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the
rescission of an exercise shall not affect the Company’s obligation to make any payments that have accrued prior to the date
of such notice pursuant to this Section 1(c) or otherwise, and (ii) if a registration statement covering the issuance or resale
of the Warrant Shares that are subject to an Exercise Notice is not available for the issuance or resale, as applicable, of such
Warrant Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such registration
statement and the Company has not already delivered the Warrant Shares underlying such Exercise Notice electronically without any
restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, the
Holder shall have the option, by delivery of notice to the Company, to (x) rescind such Exercise Notice in whole or in part and
retain or have returned, as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise
Notice; provided that the rescission of an Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this Section 1(c), or otherwise, and/or (y) switch some or all of
such Exercise Notice from a cash exercise to a Cashless Exercise.
(d) Cashless
Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if after a period
of one hundred and eighty (180) days after the Date of Issuance of this Warrant, at the time of exercise hereof a Registration
Statement (as defined in the Registration Rights Agreement) is not effective (or the prospectus contained therein is not available
for use) for the resale by the Holder of all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of
Warrant Shares determined according to the following formula (a “Cashless Exercise”):
Net Number = (A x B) - (A x C)
D
For purposes of the
foregoing formula:
A= the total number of shares with
respect to which this Warrant is then being exercised.
B = the VWAP of the shares of Common
Stock at the close of business on the Principal Market as of the Trading Day immediately prior to the date of the delivery of the
applicable Exercise Notice.
C = the
Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
D = the VWAP of the shares of Common
Stock at the close of business on the Principal Market on the date of the delivery of the applicable Exercise Notice.
If the Warrant Shares
are issued in a Cashless Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the
Warrant Shares take on the registered characteristics of the Warrants being exercised. For purposes of Rule 144(d) promulgated
under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant Shares issued in a Cashless Exercise
shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced,
on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.
(e) Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares
to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section 15.
(f) Limitations
on Exercises.
(i) Beneficial
Ownership. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right
to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null
and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the
shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the
number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or
warrants, including other SPA Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes of this Section 1(f)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number
of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case
may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent,
if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”).
If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock
is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares
of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s beneficial
ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum Percentage, the Holder must notify the Company
of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number of shares by which such purchase
is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the Company shall return to
the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral
request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the
Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that
the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder and the other Attribution
Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares
of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s
and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”)
shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer
the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a written notice
to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st)
day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified
in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the
other Attribution Parties and not to any other holder of SPA Warrants that is not an Attribution Party of the Holder. For purposes
of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall
not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1)
of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f)(i) to the
extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended
beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder
of this Warrant.
(ii) Principal
Market Regulation. The Company shall not issue any shares of Common Stock upon the exercise of this Warrant if the issuance
of such shares of Common Stock (taken together with the issuance of such shares upon the exercise of the SPA Warrants and the conversion
of the Notes or otherwise pursuant to the terms of the Notes or the SPA Warrants) would exceed the aggregate number of shares of
Common Stock which the Company may issue upon exercise or conversion or otherwise pursuant to the terms of the Notes or the SPA
Warrants (as the case may be) of the Warrants and the Notes without breaching the Company’s obligations under the rules or
regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations, the
“Exchange Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval
of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess
of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Holder. Until such approval or such written opinion is obtained, no Buyer shall be issued
in the aggregate, upon conversion or exercise (as the case may be) of any Notes or any of the SPA Warrants or otherwise pursuant
to the terms of the Notes or the SPA Warrants, shares of Common Stock in an amount greater than the product of (i) the Exchange
Cap as of the Issuance Date multiplied by (ii) the quotient of (1) the original principal amount of Notes issued to such Buyer
pursuant to the Securities Purchase Agreement on the Closing Date (as defined in the Securities Purchase Agreement) divided by
(2) the aggregate original principal amount of all Notes issued to the Buyers pursuant to the Securities Purchase Agreement on
the Closing Date (with respect to each Buyer, the “Exchange Cap Allocation”). In the event that any Buyer shall
sell or otherwise transfer any of such Buyer’s SPA Warrants, the transferee shall be allocated a pro rata portion of such
Buyer’s Exchange Cap Allocation with respect to such portion of such SPA Warrants so transferred, and the restrictions of
the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so allocated to such
transferee. Upon conversion and exercise in full of a holder’s Notes and SPA Warrants, the difference (if any) between such
holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder’s
conversion in full of such Notes and such holder’s exercise in full of such SPA Warrants shall be allocated, to the respective
Exchange Cap Allocations of the remaining holders of Notes and related SPA Warrants on a pro rata basis in proportion to the shares
of Common Stock underlying the Notes and related SPA Warrants then held by each such holder of Notes and related SPA Warrants.
At any time after tenth (10th) Trading Day after the Stockholder Meeting Deadline (as defined in the Securities Purchase Agreement),
in the event that the Company is then prohibited from issuing any shares of Common Stock pursuant to this Section 1(f)(ii) (the
“Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company
shall pay cash to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap
Shares (the “Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number
of Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date the Holder delivers the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending
on the date of such payment under this Section 1(f)(ii) and (y) to the extent the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage commissions
and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
(g) Reservation
of Shares.
(i) Required
Reserve Amount. So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under
this Warrant a number of shares of Common Stock at least equal to 200% of the maximum number of shares of Common Stock as shall
be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the SPA Warrants then outstanding
(without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally in connection
with any exercise or redemption of SPA Warrants or such other event covered by Section 2(a) below. The Required Reserve Amount
(including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders
of the SPA Warrants based on number of shares of Common Stock issuable upon exercise of SPA Warrants held by each holder on the
Closing Date (without regard to any limitations on exercise) or increase in the number of reserved shares, as the case may be (the
“Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s
SPA Warrants, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares
of Common Stock reserved and allocated to any Person which ceases to hold any SPA Warrants shall be allocated to the remaining
holders of SPA Warrants, pro rata based on the number of shares of Common Stock issuable upon exercise of the SPA Warrants then
held by such holders (without regard to any limitations on exercise).
(ii) Insufficient
Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while any of the SPA
Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock
to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that
they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of
this Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”),
in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation
of such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product
of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day
during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization
Failure Shares to the Company and ending on the date of such issuance and payment under this Section 1(f); and (ii) to the extent
the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses,
if any, of the Holder incurred in connection therewith. Nothing contained in this Section 1(f) shall limit any obligations of the
Company under any provision of the Securities Purchase Agreement.
2. ADJUSTMENT OF
EXERCISE PRICE AND NUMBER OF WARRANT SHARES .The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a) Stock
Dividends and Splits. Without limiting any provision of Section 3 or Section 4, if the Company, at any time on or after
the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise
makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger
number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding
shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant
to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment
under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise
Price shall be adjusted appropriately to reflect such event.
(b) Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 2(a) above, the number
of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained
herein).
(c) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common
Stock.
(d) Voluntary
Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the
term of this Warrant, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement),
reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of
the Company.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire
its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any
such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to
beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent
of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time
or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no
such limitation).
4. PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would
result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess)
and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever,
as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which
time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right
or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity
assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in
the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in
form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements
to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of
shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which
applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the
number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity (including its Parent
Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the
consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after
the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets
or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly
traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been
entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior
to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance
with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction
without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of
the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase
or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction
had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations
on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably
satisfactory to the Holder.
(c) Black
Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered
at any time commencing on the earliest to occur of (x) the public disclosure of any Change of Control, (y) the consummation of
any Change of Control and (z) the Holder first becoming aware of any Change of Control through the date that is thirty (30) days
after the public disclosure of the consummation of such Change of Control by the Company pursuant to a Current Report on Form 8-K
filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the
date of such request by paying to the Holder cash in an amount equal to the Black Scholes Value. Payment of such amounts shall
be made by the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second (2nd)
Trading Day after the date of such request and (y) the date of consummation of such Change of Control.
(d) Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events
and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations
on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage,
applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).
5. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as
defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any
reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be
required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not
increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant. Notwithstanding
anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not
permitted to exercise this Warrant in full for any reason (other than pursuant to restrictions set forth in Section 1(f)
hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining
such consents or approvals as necessary to permit such exercise into shares of Common Stock.
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and
other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
7. REISSUANCE
OF WARRANTS.
(a) Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered
as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and,
if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b) Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to
the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to
purchase the Warrant Shares then underlying this Warrant.
(c) Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase
the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such
portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for
fractional shares of Common Stock shall be given.
(d) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying
the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date,
and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement.
The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the
issuance of shares of Common Stock upon exercise in accordance with the terms hereof), including in reasonable detail a description
of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record with respect to any dividend or distribution upon the shares of Common Stock or (C)
for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder,
and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction. To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries,
the Company shall simultaneously file such notice with the SEC (as defined in the Securities Purchase Agreement) pursuant to a
Current Report on Form 8-K. If the Company or any of its Subsidiaries provides material non-public information to the Holder that
is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public
information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company,
any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a
duty to any of the foregoing not to trade on the basis of, such material non-public information. It is expressly understood and
agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed
or challenged by the Company.
9.
DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from
the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the
matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries,
the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date,
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as
applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon
receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not
constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section
9 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
10. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of
the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the
Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure
agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the
absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any
securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity,
and may disclose any such information to any third party.
11. AMENDMENT
AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be
amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party.
12. SEVERABILITY.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
13.
GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall
be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. The Company hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 9(f)
of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and
notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING
OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
14.
CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by
the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are
for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant
but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined
in the Securities Purchase Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
15.
DISPUTE RESOLUTION .
(a) Submission
to Dispute Resolution.
(i) In
the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Value or fair market
value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute
relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute
to the other party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances
giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such
dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing
Sale Price, such Bid Price, Black Scholes Value or such fair market value or such arithmetic calculation of the number of Warrant
Shares (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company
or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its
sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 15 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the
Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute
Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other
support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on
the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company
nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation).
(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New
York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for an order to compel
arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 15, (ii) the terms of this Warrant
and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of
the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations
and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution
of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the
terms of this Warrant and any other applicable Transaction Documents, (iii) the Holder (and only the Holder), in its sole discretion,
shall have the right to submit any dispute described in this Section 15 to any state or federal court sitting in The City of New
York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 15 and (iv) nothing in this Section 15
shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect
to any matters described in this Section 15).
16.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and
the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief),
and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company
to comply with the terms of this Warrant. The Company covenants to the Holder that there shall be no characterization concerning
this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary
and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation
to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares and
certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or
such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.
17. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in the hands of
an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes
action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy,
reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving a claim
under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in
connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’
fees and disbursements.
17.
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company, except as may otherwise be required by Section 2(g) of the Securities Purchase Agreement.
18. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following
meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(e) “Bid
Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal
Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the bid price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply,
the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be calculated for a security as
of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.
(f) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing
Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable
Change of Control (or the consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s
request pursuant to Section 4(c) and (2) the sum of the price per share being offered in cash in the applicable Change of Control
(if any) plus the value of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike
price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant
as of the date of the Holder’s request pursuant to Section 4(c) and (2) the remaining term of this Warrant as of the
date of consummation of the applicable Change of Control or as of the date of the Holder’s request pursuant to Section 4(c)
if such request is prior to the date of the consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v)
an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A)
the public disclosure of the applicable Change of Control, (B) the consummation of the applicable Change of Control and (C) the
date on which the Holder first became aware of the applicable Change of Control.
(g) “Bloomberg”
means Bloomberg, L.P.
(h) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New
York generally are open for use by customers on such day.
(i) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect,
wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification
of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization
or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities
and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities
with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation)
of such entity or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv)
any acquisition (or series of acquisitions) by the Company (whether through merger or otherwise) of any business or entity (each,
an “Acquisition Transaction”) after which both (x) holders of the Company’s voting power immediately prior
to such Acquisition Transaction (or the initial Acquisition Transaction in any series of Acquisition Transactions, as applicable)
continue after the consummation of such Acquisition Transaction (or the last Acquisition Transaction in such series of Acquisition
Transactions, as applicable) to hold publicly traded securities and, directly or indirectly, are, in all material respects, the
holders of at least 2/3rds of the voting power of the surviving entity (or entities with the authority or voting power to elect
2/3rds of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after
such Acquisition Transaction (or the last Acquisition Transaction in such series of Acquisition Transactions, as applicable).
(j)
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security
on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and
does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded
as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security
by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink sheets”
by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(k) “Common
Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(l) “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any
shares of Common Stock.
(m) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market
or the Principal Market.
(n) “Expiration
Date” means the date that is the third (3rd) anniversary of the Issuance Date or, if such date falls on a day other than
a Trading Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that
is not a Holiday.
(o)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or
(z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of
the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(p) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(q) “Notes”
has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all notes issued in exchange therefor
or replacement thereof.
(r) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(s) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(t) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(u) “Principal
Market” means the Nasdaq Capital Market.
(v) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date, by and among the Company
and the initial holders of the Notes relating to, among other things, the registration of the resale of the Common Stock issuable
upon conversion of the Notes or otherwise pursuant to the terms of the Notes and exercise of the SPA Warrants, as may be amended
from time to time.
(w) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(x) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(y) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.
(z) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market
for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on
such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange
or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day
in writing by the Holder or (y) with respect to all determinations other than price or trading volume determinations relating to
the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(aa) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m.,
New York time, as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or,
if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the
electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New
York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such
security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
[signature page follows]
IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.
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Aditx Therapeutics, Inc.
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By:
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Name:
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Amro Albanna
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Title:
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Chief Executive Officer
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EXHIBIT A
EXERCISE
NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
ADITX
THERAPEUTICS, INC.
The undersigned holder
hereby elects to exercise the Warrant to Purchase Common Stock No. _______ (the “Warrant”) of Aditx Therapeutics,
Inc., a Delaware corporation (the “Company”) as specified below. Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.
1. Form
of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
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☐
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a “Cash Exercise” with respect to _________________
Warrant Shares; and/or
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☐
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a “Cashless Exercise” with respect to _______________
Warrant Shares.
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In the event that the
Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date
set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2. Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum
of $___________________ to the Company in accordance with the terms of the Warrant.
3. Delivery
of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________ shares
of Common Stock in accordance with the terms of the Warrant. Delivery shall be made to Holder, or
for its benefit, as follows:
☐ Check
here if requesting delivery as a certificate to the following name and to the following address:
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☐
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Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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DTC Participant:
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DTC Number:
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Account Number:
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Date: _____________ __,
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Name of Registered Holder
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By:
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Name:
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Title:
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Tax ID:
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Facsimile:
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E-mail Address:
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EXHIBIT B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number
of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________, 2021, from the Company and acknowledged
and agreed to by _______________.
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Aditx Therapeutics, Inc.
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By:
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Name:
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Title:
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