Common use of Automatic Conversion Clause in Contracts

Automatic Conversion. In the event that a Lender has elected to demand the repayment of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of the Company’s equity securities which have been issued and sold at the closing of such New Equity Financing, unless the Lender has decided to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposes

Automatic Conversion. In the event that a Lender has elected to demand the repayment (i) Each share of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, Preferred Stock shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of the Company’s equity securities which have been issued and sold Common Stock at the closing then effective Conversion Price upon (i) the written election of such New Equity Financing, unless the Lender has decided to defer the Maturity Date holders of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion sixty-seven percent (67%) of the Loan Amount either under this subsection Preferred Stock then outstanding, voting as a single class (an “Automatic Conversion Election”) or (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series public offering, underwritten by an investment banking firm approved by the holders of equity securities are issued as part sixty-seven percent (67%) of the New Equity Financingshares of Preferred Stock then outstanding, then voting as a single class, pursuant to an effective registration statement under the Lenders shall be entitled Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the most favorable class or series public for a total offering of equity securities issued in such financing, and in at least $20,000,000 (a “Qualifying Initial Public Offering”). In the event that of a Qualifying Initial Public Offering, the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be person(s) entitled to receive the lowest Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted their Preferred Stock until the closing of the Qualifying Initial Public Offering. Upon the effective date of an Automatic Conversion Election or the closing of the Qualifying Initial Public Offering, all shares of Preferred Stock shall be converted automatically without any further action by the holders of such pricesshares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder of such shares notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. The Upon the automatic conversion of the Preferred Stock, the holders of such Preferred Stock shall surrender the certificates representing such shares at the office of the Corporation or of its transfer agent. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in his name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares to of Common Stock into which the shares of the Preferred Stock surrendered were convertible on the date on which such automatic conversion occurred. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to each Lender upon such conversion which the holder would otherwise be entitled, the Corporation shall be pay cash equal to such fraction multiplied by the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposesthen effective Conversion Price.

Automatic Conversion. In Immediately upon (a) the event that a Lender has elected to demand the repayment of its applicable amount effectiveness of the Loan Amount in accordance with subsection (c)(i) above, and corporation's registration statement on Form S-1 pursuant to which Common Stock is sold to the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined public by the Company’s Board corporation (or selling stockholders, if any) in a public offering registered under the Securities Act of Directors)1933, such Loan Amount as amended, at a per share public offering price of not less than $3.50 (equitably adjusted for any stock split, combination or any part thereof which similar event) and an aggregate public offering price not less than $15,000,000, or (b) the Company is unable to repayconversion of at least fifty percent (50%) of [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. the then outstanding shares of Preferred Stock, each share of Preferred Stock shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of Common Stock at the Company’s equity securities which Conversion Price for such Preferred Stock then in effect. On and after said conversion date, notwithstanding that any certificates for the shares of Preferred Stock shall not have been issued and sold at surrendered for conversion, the closing of such New Equity Financing, unless the Lender has decided to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders Preferred Stock evidenced thereby shall be deemed to be investors no longer outstanding, and all rights with respect thereto shall forthwith cease and terminate, except only the rights of the holder (i) to receive the shares of Common Stock to which such holder shall be entitled upon conversion thereof, (ii) to receive the amount of cash payable in respect of any fractional share of Common Stock to which such holder shall be entitled, and (iii) with respect to dividends declared but unpaid on Preferred Stock prior to such conversion date, in the New Equity Financing event that any holder of Preferred Stock presents such holder's certificate therefor for all purposessurrender to the Company or its transfer agent upon such conversion, a certificate for the number of shares of Common Stock into which the shares of Preferred Stock surrendered were convertible on such conversion date promptly will be issued and delivered to such holder.

Automatic Conversion. All shares of Series A Non-Voting Convertible Preferred Stock shall automatically convert into shares of Common Stock as set forth in Paragraph 2 of the Rights Offering Letter Agreement to which this Exhibit A is attached promptly following stockholder approval (by the affirmative vote of the holders of outstanding BFE Common Stock) of the authorization and issuance of the Common Stock issuable upon conversion of all Series A Non-Voting Convertible Preferred Stock and issuable upon the exchange on a one-for-one basis of all Common Membership Interests that would be received by the Eligible LLC Members following the conversion of all Preferred Membership Interests they receive in the Concurrent Private Placement for Common Membership Interests. EXHIBIT B PREFERRED MEMBERSHIP INTERESTS In connection with the Concurrent Private Placement (as defined in the Rights Offering Letter Agreement to which this Exhibit B is attached), the Second Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) of BioFuel Energy, LLC (“LLC”) will be amended to provide for preferred membership interests (“Preferred Membership Interests”) with the characteristics set forth below. Capitalized terms not otherwise defined shall have the meanings assigned to such terms in the Rights Offering Letter Agreement to which this Exhibit B is attached. Liquidation Preference: In the event that a Lender has elected to demand the repayment of its applicable amount of the Loan Amount in accordance with subsection (c)(i) abovevoluntary or involuntary liquidation, and the Company does not have available cash for the repayment dissolution or winding up of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by LLC, the Company’s Board holder of Directors), such Loan Amount or any part thereof which the Company is unable to repay, shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of the Company’s equity securities which have been issued and sold at the closing of such New Equity Financing, unless the Lender has decided to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall each Preferred Membership Interest will be entitled to receive the lowest of such prices. The number of shares and to be issued paid out of the assets available for distribution to each Lender upon such conversion shall be the members of the LLC, before any payment or distribution is made to holders of the Common Membership Interests, a liquidation preference per Preferred Membership Interest in an amount equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share Rights Price. After payment of the equity securities paid by investors full amount of the liquidation preference to which they are entitled, the holders of the Preferred Membership Interests will have no right or claim to any of the LLC’s remaining assets in the New Equity Financing, rounded to the nearest whole share, and such shares shall be event of the same class and have such rights (including with respect to original issuance priceLLC’s liquidation, liquidation preference, conversion price and with respect to any other securities, warrants dissolution or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposeswinding up.

Automatic Conversion. In Each outstanding share of Class B Common Stock shall convert into one outstanding share of Class A Common Stock automatically and without any further action by the event that a Lender has elected to demand Corporation or any other Person: (i) at the repayment first time the holders of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment all of the outstanding Loan Amount due shares of Class B Common Stock (assuming that all the outstanding shares of Class A Common Stock which are then exchangeable for Class B Common Stock have been so exchanged) are collectively entitled to such Lender or any part thereof (as shall be determined by cast less than 10% of the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing Total Voting Power (as defined above), into shares of the Company’s equity securities which have been issued below) and sold at the closing of such New Equity Financing, unless the Lender has decided to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection (ii) if such Class B Common Stock is transferred by a holder to any Person who is not an Affiliate of such holder or subsection a Nominee (ias defined below) above into of such holder or one of its Affiliates; provided, however, that notwithstanding the Company’s equity securities which have been issued and sold at the closing foregoing no such conversion shall occur pursuant to this clause (ii) if such transfer is part of a New Equity Financing transfer by such holder and if more than one class or series its Affiliates of equity securities are issued as part all of the New Equity Financingshares of Class B Common Stock then owned by them (either directly or through a Nominee) to any other Person or to any other Person and its Affiliates. From and after any such conversion, then each certificate, if any, formerly representing shares of Class B Common Stock shall represent the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances same number of shares of Class A Common Stock and upon surrender of such certificate to the same class at different prices per share, then Corporation the Lenders holder of such certificate shall be entitled to receive the lowest of a new certificate or book-entry interest representing such prices. The number of shares of Class A Common Stock. Immediately upon any such conversion of any shares of Class B Common Stock into shares of Class A Common Stock, the rights of the holders of such shares of Class B Common Stock as such shall cease and such holders shall be treated for all purposes as having become the record owners of the shares of Class A Common Stock into which such shares of Class B Common Stock were converted; provided, however, that notwithstanding the foregoing such holders shall be entitled to be issued receive when paid any dividends or other distributions declared on such shares of Class B Common Stock with a record date preceding the time of such conversion and which have not yet been paid as of the time of such conversion subject to each Lender upon the following sentence. Upon any such conversion of any shares of Class B Common Stock into shares of Class A Common Stock, any dividend or other distribution declared on such shares of Class B Common Stock with a record date or payment date after the time of such conversion shall be equal deemed to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole sharehave been declared, and such shares shall be of the same class and have such rights (including payable, with respect to original issuance price, liquidation preference, conversion price the shares of Class A Common Stock into which such shares of Class B Common Stock shall have been so converted and with respect to any other securities, warrants or other rights issued or provided as part such dividend payable in shares of the New Equity Financing) as those of the New Equity Financing, and the Lenders Class B Common Stock shall be deemed to have been declared, and shall be investors payable, in the New Equity Financing for all purposesshares of Class A Common Stock.

Automatic Conversion. In the event that a Lender has elected to demand the repayment of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, A Super Voting Share shall automatically be converted without further action by the holder thereof into A-1 one Multiple Voting Share upon the transfer by the holder thereof to anyone other than (i) another Initial Holder, an immediate family member of an Initial Holder or a transfer for purposes of estate or tax planning to a company or person that is wholly beneficially owned by an Initial Holder or immediate family members of an Initial Holder or which an Initial Holder or immediate family members of an Initial Holder are the sole beneficiaries thereof; or (ii) a party approved by the Corporation. Each Super Voting Share held by a particular Initial Holder shall automatically be converted without further action by the holder thereof into Multiple Voting Shares based at the Conversion Ratio for each Super Voting Share held if at any time the aggregate number of issued and outstanding Super Voting Shares beneficially owned, directly or indirectly, by that Initial Holder and that Initial Holder’s predecessor or transferor, permitted transferees and permitted successors, divided by the number of Super Voting Shares beneficially owned, directly or indirectly, by that Initial Holder (and the Initial Holder’s predecessor or transferor, permitted transferees and permitted successors) as at the date of completion of the Business Combination is less than 50% (the “Threshold Conversion”). The holders of Super Voting Shares will, from time to time upon the request of the Corporation, provide to the Corporation evidence as to such holders’ direct and indirect beneficial ownership (and that of its permitted transferees and permitted successors) of Super Voting Shares to enable the Corporation to determine if its right to convert has occurred. For purposes of these calculations, a holder of Super Voting Shares will be deemed to beneficially own Super Voting Shares held by an intermediate company or fund in proportion to their equity ownership of such company or fund, unless such company or fund holds such shares for the benefit of such holder, in which case they will be deemed to own 100% of such shares held for their benefit. For the purposes hereof, “Initial Holders” means Xxx Xxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxxx, Telogia Pharm, LLC, KOPUS, LLC and Shade Leaf Holding LLC. In addition, each Super Voting Share shall automatically be converted (the “Sunset Conversion” and together with the Threshold Conversion, the “SVS Mandatory Conversion”), without further action by the holder thereof, into one Multiple Voting Shares at the Conversion Ratio for each Super Voting Share held on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of the Company’s equity securities which have been issued and sold at date that is 30 months following the closing of such New Equity Financingthe Business Combination. The Corporation will issue or cause its transfer agent to issue each holder of Super Voting Shares of record a notice at least 20 days prior to the record date of the SVS Mandatory Conversion, unless which shall specify therein, (i) the Lender has decided to defer the Maturity Date number of such Loan Amount or any part thereof Multiple Voting Shares into which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection Super Voting Shares are convertible and (ii) the address of record for such holder. On the record date of an SVS Mandatory Conversion, the Corporation will issue or subsection (i) above cause its transfer agent to issue each holder of record on the SVS Automatic Conversion date certificates representing the number of Multiple Voting Shares into which the Company’s equity securities which have been issued Super Voting Shares are so converted and sold at each certificate representing the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders Super Voting Shares shall be entitled to the most favorable class or series of equity securities issued in such financing, null and in the event that the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposesvoid

Automatic Conversion. In the event that a Lender has elected to demand the repayment of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, The Debenture shall automatically be converted into A-1 Shares based on shares of Common Stock at the A-1 Conversion Price or, in case upon the Company has consummated a New Equity financing earlier of (as defined above), into shares 1) immediately upon the closing of the sale of the Company’s equity securities which have been issued 's Common Stock in a firm commitment, underwritten public offering registered under the Securities Act, at a public offering price (prior to underwiter's discounts and sold at expenses) equal to or exceeding $2.00 per share of Common Stock (as adjusted for any stock dividends, combinations or splits with respect to the closing of such New Equity Financing, unless shares) and the Lender has decided aggregate proceeds to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable (after deduction for underwriter discounts and expenses relating to repay. In case the issuance) exceed $1,000,000, or (2) if the average common stock trading price ("Average Market Price") for the fifteen (15) trading days last preceding the date of conversion of the Loan Amount either under this subsection (ii) is equal to or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices exceeds $1.88 per share. For purposes of calculating the Average Market Price, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the market price per share of the equity common stock at any date shall be (i) if the principal trading market for such securities paid is an exchange, the closing bid price on the exchange on that day, provided if trading of the common stock is listed on any consolidated tape, the price shall be the closing bid price set forth on the consolidated tape, or (ii) if the principal market for the securities is the over-the-counter market, the closing bid price on that date as set forth by investors in NASDAQ NMS, NASDAQ SmallCap, the New Equity FinancingNASD Electronic Bulletin Board or over-the-counter, rounded as the case may be, or (iii) if the security is not quoted over-the-counter, the closing bid price as reported by the National Quotation Bureau (or similar organization or agency succeeding to its functions of reporting prices). Notwithstanding the foregoing, if there is no reported closing price or closing bid price, as the case may be, on a date prior to the nearest whole shareevent requiring a computation or adjustment hereunder, and such shares then the market price shall be determined as of the same class and have such rights (including with respect latest date prior to original issuance price, liquidation preference, conversion the day for which the closing price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposesclosing bid price is available.

Automatic Conversion. In the event that a Lender has elected to demand the repayment (i) Each share of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, Preferred Stock shall automatically be converted into A-1 Shares based on shares of Common Stock at the A-1 then effective Conversion Price or, in case upon (i)the written election of the Company has consummated a New Equity financing Preferred Majority (as defined abovean “Automatic Conversion Election”), into shares of the Company’s equity securities which have been issued and sold at the closing of such New Equity Financing, unless the Lender has decided to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing public offering, underwritten by an investment banking firm approved by the Preferred Majority pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and if more than one class or series sale of equity securities are issued as part Common Stock for the account of the New Equity Financing, then the Lenders shall be entitled Corporation to the most favorable class or series public for a total offering of equity securities issued in such financing, and in at least $20,000,000 (a “Qualifying Initial Public Offering”). In the event that of a Qualifying Initial Public Offering, the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be person(s) entitled to receive the lowest Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted their Preferred Stock until the closing of the Qualifying Initial Public Offering. Upon the effective date of an Automatic Conversion Election or the closing of the Qualifying Initial Public Offering, all shares of Preferred Stock shall be converted automatically without any further action by the holders of such pricesshares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder of such shares notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. The Upon the automatic conversion of the Preferred Stock, the holders of such Preferred Stock shall surrender the certificates representing such shares at the office of the Corporation or of its transfer agent. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in his name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares to of Common Stock into which the shares of the Preferred Stock surrendered were convertible on the date on which such automatic conversion occurred. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to each Lender upon such conversion which the holder would otherwise be entitled, the Corporation shall be pay cash equal to such fraction multiplied by the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposesthen effective Conversion Price.

Automatic Conversion. In the event that a Lender has elected to demand the repayment (i) Each share of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, Preferred Stock shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of the Company’s equity securities which have been issued and sold Common Stock at the closing then effective Conversion Price upon (i) the written election of such New Equity Financing, unless the Lender has decided to defer the Maturity Date holders of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion at least seventy-five percent (75%) of the Loan Amount either under this subsection Preferred Stock then outstanding, voting as a single class (an “Automatic Conversion Election”) or (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series public offering, underwritten by an investment banking firm approved by the holders of equity securities are issued as part seventy-five percent (75%) of the New Equity Financingshares of Preferred Stock then outstanding, then voting as a single class, pursuant to an effective registration statement under the Lenders shall be entitled Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the most favorable class or series public for a total offering of equity securities issued in such financing, and in at least $20,000,000 (a “Qualifying Initial Public Offering”). In the event that of a Qualifying Initial Public Offering, the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be person(s) entitled to receive the lowest Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted their Preferred Stock until the closing of the Qualifying Initial Public Offering. Upon the effective date of an Automatic Conversion Election or the closing of the Qualifying Initial Public Offering, all shares of Preferred Stock shall be converted automatically without any further action by the holders of such pricesshares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder of such shares notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. The Upon the automatic conversion of the Preferred Stock, the holders of such Preferred Stock shall surrender the certificates representing such shares at the office of the Corporation or of its transfer agent. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in his name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares to of Common Stock into which the shares of the Preferred Stock surrendered were convertible on the date on which such automatic conversion occurred. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to each Lender upon such conversion which the holder would otherwise be entitled, the Corporation shall be pay cash equal to such fraction multiplied by the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposesthen effective Conversion Price.

Automatic Conversion. In the event that a Lender has elected to demand the repayment of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, The Debenture shall automatically be converted into A-1 Shares based on shares of Common Stock at the A-1 Conversion Price or, in case upon the Company has consummated a New Equity financing earlier of (as defined above), into shares 1) immediately upon the closing of the sale of the Company’s equity securities which have been issued 's Common Stock in a firm commitment, underwritten public offering registered under the Securities Act, at a public offering price (prior to underwiter's discounts and sold at expenses) equal to or exceeding $2.00 per share of Common Stock (as adjusted for any stock dividends, combinations or splits with respect to the closing of such New Equity Financing, unless shares) and the Lender has decided aggregate proceeds to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable (after deduction for underwriter discounts and expenses relating to repay. In case the issuance) exceed $1,000,000, or (2) if the average common stock trading price ("Average Market Price") for the fifteen (15) trading days last preceding the date of conversion of the Loan Amount either under this subsection (ii) is equal to or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices exceeds $1.88 per share. For purposes of calculating the Average Market Price, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the market price per share of the equity common stock at any date shall be (i) if the principal trading market for such securities paid is an exchange, the closing bid price on the exchange on that day, provided if trading of the common stock is listed on any consolidated tape, the price shall be the closing bid price set forth on the consolidated tape, or (ii) if the principal market for the securities is the over-the-counter market, the closing bid price on that date as set forth by investors in NASDAQ NMS, NASDAQ SmallCap, the New Equity FinancingNASD Electronic Bulletin EXHIBIT A Board or over-the-counter, rounded as the case may be, or (iii) if the security is not quoted over-the-counter, the closing bid price as reported by the National Quotation Bureau (or similar organization or agency succeeding to its functions of reporting prices). Notwithstanding the foregoing, if there is no reported closing price or closing bid price, as the case may be, on a date prior to the nearest whole shareevent requiring a computation or adjustment hereunder, and such shares then the market price shall be determined as of the same class and have such rights (including with respect latest date prior to original issuance price, liquidation preference, conversion the day for which the closing price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposesclosing bid price is available.

Automatic Conversion. In the event that a Lender has elected to demand the repayment of its applicable amount of the Loan Amount in accordance with subsection (c)(i) above, and the Company does not have available cash for the repayment of the outstanding Loan Amount due to such Lender or any part thereof (as shall be determined by the Company’s Board of Directors), such Loan Amount or any part thereof which the Company is unable to repay, shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing (as defined above), into shares of the Company’s equity securities which have been issued and sold at Immediately upon the closing of the earlier of (i)(A) a transaction in which the Corporation, directly or indirectly, merges or consolidates (including by becoming a 90% or more owned subsidiary) with another company that has its common stock approved for quotation on the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority, Inc., any over the counter market maintained by OTC Markets Group Inc. (or any successor), NASDAQ, the NYSE AMEX, the NYSE or any other domestic national stock exchange (“Pubco”) (such New Equity Financingtransaction, unless howsoever denominated, the Lender has decided to defer “Reverse Merger”) and (B) Pubco immediately thereafter issues and sells shares of its capital stock and/or securities convertible, exercisable and/or exchangeable into or for shares of Pubco’s capital stock, or a combination thereof (collectively, “Pubco Securities”), and Pubco receives no less than $5.0 million of aggregate gross proceeds from the Maturity Date sale of such Loan Amount Pubco Securities (the “Pubco Financing”), or any part thereof (ii) a Qualified IPO, the outstanding shares of Series A Preferred Stock and all accrued but unpaid dividends thereon through and including the date of conversion shall be automatically converted into either Pubco Securities on the same terms as are offered to investors in the Pubco Financing or the securities of the Corporation on the same terms as are offered to investors in the Qualified IPO (the “IPO Securities”), as the case may be; provided, however, that notwithstanding anything to the contrary herein or elsewhere, the price at which the Company is unable Series A Preferred Stock shall convert into Pubco Securities or IPO Securities, as applicable, shall be at a valuation calculated to repaybe the lesser of (a) $15 Million, post conversion or (b) the price of the IPO Stock or Pubco Securities, as applicable, in the Pubco Financing or the Qualified IPO, as applicable. In case The securities issuable to the holders of Series A Preferred Stock upon the conversion of the Loan Amount either under this subsection (ii) or subsection (i) above into Series A Preferred Stock are referred to herein as the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) the price per share of the equity securities paid by investors in the New Equity Financing, rounded to the nearest whole share, and such shares shall be of the same class and have such rights (including with respect to original issuance price, liquidation preference, conversion price and with respect to any other securities, warrants or other rights issued or provided as part of the New Equity Financing) as those of the New Equity Financing, and the Lenders shall be deemed to be investors in the New Equity Financing for all purposes“Conversion Securities.”

Automatic Conversion. In Immediately upon the event that a Lender has elected to demand the repayment of its applicable amount closing of the Loan Amount next round of equity financing in accordance with subsection the Borrower, whether by way of a private placement, a public offering (c)(iincluding rights offering) aboveor otherwise, and in which the Company does not have available cash Borrower issues equity securities of the Borrower for the repayment aggregate gross proceeds in excess of US$1,000,000 (including conversion of the outstanding Loan Amount due to such Lender or any part thereof Amounts) (as shall be determined by the Company’s Board of Directors“Next Qualified Equity Financing”), such Loan Amount or any part thereof which prior to the Company is unable to repay, shall automatically be converted into A-1 Shares based on the A-1 Price or, in case the Company has consummated a New Equity financing Maturity Date (as defined abovebelow), into shares of the Company’s equity securities which have been issued and sold at the closing of such New Equity Financing, unless the Lender has decided to defer the Maturity Date of such Loan Amount or any part thereof which the Company is unable to repay. In case of conversion of the Loan Amount either under this subsection (ii) or subsection (i) above into the Company’s equity securities which have been issued and sold at the closing of a New Equity Financing and if more than one class or series of equity securities are issued as part of the New Equity Financing, then the Lenders shall be entitled to the most favorable class or series of equity securities issued in such financing, and in the event that the New Equity Financing includes issuances of shares of the same class at different prices per share, then the Lenders shall be entitled to receive the lowest of such prices. The number of shares to be issued to each Lender upon such conversion shall be equal to the quotient obtained by dividing (x) the outstanding Loan Amount (and any Interest accrued thereon) provided by such Lender by (y) shall be automatically converted, upon the price per share closing of the equity securities paid by investors in the New Next Qualified Equity Financing, rounded into such number of fully paid and non-assessable ordinary shares, par value NIS 0.1, of the Borrower (the “Ordinary Shares”) or other securities of the Borrower issued at such financing (collectively, the “Conversion Shares”), at the applicable Conversion Price (as defined below) and on the same terms and conditions at which such shares or securities are issued in the Next Qualified Equity Financing. Notwithstanding the foregoing (solely as it relates to the nearest whole shareconversion of Interest), at least ten (10) calendar days prior to such automatic conversion, the Borrower shall provide a written notice to each Lender informing the Lender of the contemplated conversion and each Lender shall have five (5) calendar days following receipt of such shares notice to inform the Borrower, by providing written notice to Borrower within such 5-days period, that such Lender elected to be paid the Interest (rather than have such Interest converted into equity securities), in which case (i) the Principal Amount of such Lender shall be converted upon the closing of the same class Next Qualified Equity Financing and have (ii) Borrower shall pay the Interest accrued to such rights (including with respect to original issuance priceLender upon, liquidation preferenceor promptly after, conversion price and with respect to any other securities, warrants or other rights issued or provided as part the closing of the New Equity Financing) as those of the New Next Qualified Equity Financing, and the Lenders shall be deemed to be investors but in the New Equity Financing for all purposesany event not later than three (3) business days after such closing.