Exhibit 10.6
NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: May 19, 2022
$294,444 Principal and Face Value
$265,000 Purchase Price and Subscription
Amount
$29,444 Original Issue Discount
ORIGINAL ISSUE DISCOUNT
CONVERTIBLE PROMISSORY NOTE
THIS ORIGINAL ISSUE DISCOUNT CONVERTIBLE PROMISSORY NOTE
is duly authorized
and validly issued at a 10% original
issue discount by 60 Degrees Pharmaceuticals, LLC, a Washington DC limited liability corporation (the “Company”) (the “Note”).
FOR VALUE RECEIVED,
the Company promises to pay to Xxxxxxxx Xxx, or its permitted assigns (the “Holder”), the principal sum of $294,444 on May
31, 2023 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder,
and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the
provisions hereof. This Note is subject to the following additional provisions:
Section 1. Definitions.
For the purposes hereof, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement
and (b) the following words and phrases shall have the following meanings:
“Alternate Consideration” shall have the meaning
set forth in Section 5(e).
“Bankruptcy Event”
means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company or any Subsidiary thereof any such case
or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Subsidiary thereof is adjudicated insolvent
or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Subsidiary
thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or
stayed within 60 calendar days after such appointment, (e) the Company or any Subsidiary thereof makes a general assignment for the benefit
of creditors, (f) the Company or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment
or restructuring of its debts or (g) the Company or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent
to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the
foregoing.
“Base Conversion Price” shall have the meaning
set forth in Section 5(b).
“Beneficial Ownership Limitation” shall have
the meaning set forth in Section 4(f).
“Black Scholes
Value” means the value of the outstanding principal amount of this Note, plus all accrued and unpaid interest hereon based on the
Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. (“Bloomberg”) determined
as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental
Transaction and the Maturity Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the
HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction,
(C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus
the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to
the time between the date of the public announcement of the applicable Fundamental Transaction and the Maturity Date.
“Buy-In” shall have the meaning set forth in
Section 4(d)(v).
“Change of
Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities
of the Company (other than by means of conversion, exercise or exchange of this Note or the Warrants issued together with this Note),
(b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after
giving effect to such transaction, the shareholders of the Company immediately prior to such transaction own less than 50% of the aggregate
voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of
its assets to another Person, (d) a replacement at one time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of
Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (d) the execution
by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.
“Conversion” shall have the meaning ascribed
to such term in Section 4.
“Conversion Date” shall have the meaning set
forth in Section 4(a).
“Conversion Price” shall have the meaning set
forth in Section 4(c).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.
“Default Interest Rate” shall have the meaning
set forth in Section 2(a).
“Dilutive Issuance” shall have the meaning
set forth in Section 5(b).
“Dilutive Issuance Notice” shall have the meaning
set forth in Section 5(b)(5).
“DWAC”
means the Deposit or Withdrawal at Custodian system at The Depository Trust Company.
“Event of Default” shall have the meaning set
forth in Section 7(a).
“Exchange
Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder.
“Fundamental Transaction” shall have the meaning
set forth in Section 5(e).
“IPO” shall have the meaning set forth in Section
4(b).
“Liens” shall have the meaning set forth in
the Purchase Agreement.
“Note Register” shall have the meaning set
forth in Section 3(c).
“Notice of Conversion” shall have the meaning
set forth in Section 4(a).
“Mandatory Default Amount” shall have the meaning
set forth in Section 7(b).
“Option Value”
means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the “OV” function
on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common Stock Equivalent,
if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the
applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for pricing purposes and
reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable
Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg as of (A) the Trading Day immediately following the public announcement of
the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately
following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced,
(iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock during the period beginning
on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Common Stock Equivalent
and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Common Stock
Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if
the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.
“Original Issue
Date” means the date of the first issuance of this Note, regardless of any transfers of this Note and regardless of the number of
instruments which may be issued to evidence this Note.
“Permitted Indebtedness”
means (a) the indebtedness evidenced by this Note, (b) senior secured non-convertible loans from traditional commercials banks with interest
per annum not to exceed 12%, (c) capital lease obligations and purchase money indebtedness incurred in connection with the acquisition
of machinery and equipment as long as such capital leases and indebtedness are approved in advance by the Holder and (d) the Indebtedness
set forth on Schedule 3.27 to the Purchase Agreement).
“Permitted Lien”
means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies
not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance
with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course
of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property
or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y)
are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future
the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred in connection with Permitted Indebtedness under
clauses (a) through (d) thereunder, and Liens set forth on Schedule 3.1(aa) to the Purchase Agreement.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of May [*], 2022, among the Company and the original Holders, as amended,
modified or supplemented from time to time in accordance with its terms.
“Share Delivery Date” shall have the meaning
set forth in Section 4(d)(ii).
“Successor Entity” shall have the meaning set
forth in Section 5(e)(2).
“Transaction Documents” means the Note, the
Purchase Agreement and the Warrant.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)) (or a similar organization or agency succeeding to its functions of reporting
prices), (b) if no volume weighted average price of the Common Stock is reported for the Trading Market, the most recent bid price per
share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall
be paid by the Company.
Section 2. Interest.
Interest shall accrue to the Holder on
the aggregate unconverted and then outstanding principal amount of this Note at the rate of 6% per annum, calculated on the basis of a
360-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal (or conversion
to the extent applicable), together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder,
has been made. During the existence of an Event of Default, interest shall accrue at the lesser of (i) the rate of 15% per annum, or (ii)
the maximum amount permitted by law (the lesser of clause (i) or (ii), the “Default Interest Rate”). Once an Event
of Default is cured, the interest rate shall return to 6%.
Section 3. Registration of
Transfers and Exchanges.
(a) Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge or other fees will be payable for such registration of transfer or exchange.
(b) Investor
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities
laws and regulations.
(c) Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may
treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
Section 4. Conversion.
(a) Voluntary
Conversion. After the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in
part, at any time, and from time to time, into Conversion Shares at the option of the Holder. The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date,
the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date
that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder,
the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus
all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing
the principal amount(s) converted in each conversion, the date of each conversion, and the Conversion Price in effect at the time of each
conversion. The Company may deliver an objection to any Notice of Conversion within two Trading Days of delivery of such Notice of Conversion.
In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest
error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated
on the face hereof.
(b) Mandatory
Conversion. This Note shall convert into Conversion Shares upon the completion of an initial public offering by the Company that results
in a listing of the Company’s Common Stock on a national securities exchange (the “IPO”).
(c) Conversion
Price. The “Conversion Price” shall be at the lesser of a 20% discount to the IPO price or a $27 million pre-money valuation.
All such Conversion Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction that proportionately decreases or increases the Common Stock.
(d) Mechanics of Conversion
or Prepayment.
(i) Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion
Price in effect at the time of such conversion.
(ii) Delivery
of Certificate Upon Conversion. Not later than two Trading Days after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder any certificate or certificates required to be delivered by the Company
under this Section 4(d) which shall be free of restrictive legends and trading restrictions except as provided by the Securities Act (other
than those which may then be required by the Purchase Agreement) and such shares shall be delivered electronically through the Depository
Trust Company or another established clearing corporation performing similar functions.
(iii) Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed
by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time
on or before its receipt of such Conversion Shares, to rescind such conversion, in which event the Company shall promptly return to the
Holder any original Note delivered to the Company.
(iv) Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of
this Note in accordance with the terms hereof, are absolute and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder
or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal
amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder
has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the
benefit of the Holder in accordance with Section 5.1(d) of the Purchase Agreement. The exercise of any such rights shall not prohibit
the Holder from seeking to collect damages under this Note, the Purchase Agreement or under applicable law.
(v) Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the Holder,
if the Company fails for any reason to deliver to the Holder such Conversion Shares by the Share Delivery Date pursuant to Section 4(d)(ii),
and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise),
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of
the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”),
then the Company shall have the remedies provided for in accordance with Section 5.1(d) of the Purchase Agreement. Nothing herein or therein
shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Conversion Shares
upon conversion of this Note as required pursuant to the terms hereof.
(vi) Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction
of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay
a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up
to the next whole share.
(vii) Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates. The Company shall
pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion
Shares.
(viii) Attorneys’
Fees etc. The Company shall (A) pay the reasonable fees of the law firm of the Holder’s choice (in an amount not to exceed $500
per opinion) in connection with the conversion of the Note, (B) cause its attorneys to promptly provide any reliance opinion to the Transfer
Agent, and (C) pay the Holder the sums required under Section 4(d)(iv).
(e) Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert
any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the
Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s
Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares
of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number
of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation,
any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence,
for purposes of this Section 4(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(e) applies, the determination
of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal
amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be
deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder
together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a
Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this Section 4(e) and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For
purposes of this Section 4(e), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed
with the SEC, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the
Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number
of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial
Ownership Limitation provisions of this Section 4(e) to 9.99% of the number of shares of Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder. In all events, the provisions of this
Section 4(e) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered
to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 4(e) solely with respect to
the Holder’s Note at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. The Beneficial
Ownership Limitation provisions of this Section 4(e) shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 4(e) to correct any portion which may be defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this Section 4(d) shall apply to a successor holder of this Note.
Section 5. Certain Adjustments.
(a) Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock,
any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of
which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant
to this Section 5(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination
or re-classification.
(b) Subsequent
Equity Sales. (1) At any time, for so long as the Note or any amounts accrued and payable thereunder remain outstanding, the Company
or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes
of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the Conversion Price then in
effect (such lower price, the “Base Conversion Price” and each such issuance or announcement a “Dilutive Issuance”),
then the Conversion Price shall be immediately reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued.
(2) If
any Common Stock Equivalent is amended or adjusted, and such price as so amended shall be less than the Conversion Price in effect at
the time of such amendment or adjustment, then the Conversion Price shall be adjusted upon each such issuance or amendment as provided
in this Section 5(b). In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to have been issued for the Option Value
of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been
issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by
the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock or
Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received
by the Company will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock or Common Stock Equivalents
are issued or sold for a consideration other than cash, the amount of such consideration received by the Company 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 will be the average VWAP of such public traded securities for the ten days prior to the date of receipt. If any
shares of Common Stock or Common Stock Equivalents 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 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 or Common Stock Equivalents,
as the case may be.
(3) If
the holder of Common Stock or Common Stock Equivalents outstanding on the Original Issue Date or issued after the Original Issuance Date
shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share that is lower than the Conversion Price then in effect, such issuance shall be
deemed to have occurred for less than the Conversion Price on such date and such issuance shall be deemed to be a Dilutive Issuance.
(4) If
the Company enters into a Variable Rate Transaction despite the prohibition set forth in the Purchase Agreement, the Company shall be
deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities may be
converted or exercised under the terms of such Variable Rate Transaction.
(5) The
Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder
is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance,
regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
(6) The
provisions of this Section 5(b) shall apply each time a Dilutive Issuance occurs after the Original Issue Date for so long as the Note
or any amounts accrued and payable thereunder remain outstanding, but any adjustment of the Conversion Price pursuant to this Section
5(b) shall be downward only.
(7) The provisions of
this Section 5(b) shall not apply to Exempt Issuances.
(c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells
any Common Stock, Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held
the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
(d) Pro
Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets or rights or warrants to acquire its assets, or subscribe for or purchase any security other than Common Stock, to holders
of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement
or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is
taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to
be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate
in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other
publicly-traded corporation subject to Section 13(d) of the Exchange Act, then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)
and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded
corporation subject to Section 13(d) of the Exchange Act).
(e) Fundamental
Transaction. (1) If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any
sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series
of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities,
cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person
whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held
by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the conversion of
this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction
(without regard to any limitation on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion
Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such
Fundamental Transaction. The Company shall not effect a Fundamental Transaction unless it gives the Holder at least 10 Trading Days prior
notice together with sufficient details so the Holder can make an informed decision as to whether it elects to accept the Alternative
Consideration. If a public announcement of the Fundamental Transaction has not been made, the notice to the Holder may not be given until
the Company files a Form 8-K or other report disclosing the Fundamental Transaction.
(2) Notwithstanding
anything to the contrary, provided that the Warrant Shares are not registered under an effective registration statement, in the event
of a Fundamental Transaction that is (x) an all cash transaction, (y) a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act, or (z) a Fundamental Transaction involving a person or entity not traded on a national securities exchange or
trading market (with such exchange or market including, without limitation, the Nasdaq Global Select Trading Market, the Nasdaq Global
Market, or the Nasdaq Capital Market, the New York Stock Exchange, Inc., the NYSE American or any market operated by the OTC Markets,
Inc.), the Company or any Successor Entity (as defined below) shall, at the Holder’s option, concurrently with the consummation
of the Fundamental Transaction, purchase this Note from the Holder by paying to the Holder the higher of (i) an amount of cash equal to
the Black Scholes Value of the outstanding principal of this Note on the date of the consummation of such Fundamental Transaction, or
(ii) the product of (a) the number of Conversion Shares issuable upon full conversion of this Note (without regard to any limitation on
conversion of this Note) and (b) the positive difference between the cash per share paid in such Fundamental Transaction minus the then
in effect Conversion Price. (3)
(3) If
Section 5(e)(1) and (2) are not applicable, the Company shall cause any successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to assume 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(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon
conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and
with a conversion price which applies the Conversion Price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number
of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior
to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the
occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of 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. Notwithstanding anything in this Section 5(e), an Exempt Issuance (as defined in the Purchase Agreement) shall not
be deemed a Fundamental Transaction.
(f) Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
(g) Notice
to the Holder.
(i) Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly
deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
(ii) Notice
to Allow Conversion by Xxxxxx. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on its Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock, (C) the Company shall
authorize the granting to all holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification
of its Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of
the assets of the Company, or any compulsory share exchange whereby its Common Stock is converted into other securities, cash or property
or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company,
then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note,
and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least 5 calendar days
prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which
the holders of its Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective
or close, and the date as of which it is expected that holders of its Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer
or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect
the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes,
or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company),
the Company or its successor shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. If the Company
does not simultaneously file the required Form 8-K, the Holder shall be entitled penalties in accordance with Section 5.6 of the Purchase
Agreement The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through
the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 6. Negative Covenants.
As long as any portion of this Note remains outstanding, unless the holders of at least 50% in principal amount of the then outstanding
Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly
or indirectly:
(a) other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any
kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom;
(b) other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
(c) amend
its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially and adversely
affects any rights of the Holder, increases in authorized shares and stock splits shall not be deemed to materially and adversely affects
any rights of the Holder;
(d) purchase
or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents;
(e) repay,
or offer to repay, any Indebtedness, other than Permitted Indebtedness, as such terms Indebtedness and Permitted Indebtedness are in effect
as of the Original Issue Date;
(f) pay
cash dividends or distributions on any equity securities of the Company;
(g) enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the SEC assuming
that the Company is subject to the Securities Act or the Exchange Act, unless such transaction is made on an arm’s-length basis
and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for
board approval);
(h) issue
any equity securities of the Company other than pursuant to the provisions of the Purchase Agreement or an Exempt Issuance; or
(i) enter
into any agreement with respect to any of the foregoing.
Section 7. Events of Default.
(a) “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order,
rule or regulation of any administrative or governmental body):
(i) any
default in the payment of (A) principal and interest payment under this Note or any other Indebtedness, or (B) late fees, liquidated damages
and other amounts owing to the Holder of this Note, as and when the same shall become due and payable (whether on a Conversion Date, or
the Maturity Date, or by acceleration or otherwise), which default, solely in the case of a default under clause (B) above, is not cured
within five Trading Days;
(ii) the
Company shall fail to observe or perform any other covenant or agreement contained in this Note (other than a breach by the Company of
its obligations to deliver Conversion Shares, which breach is addressed in clause (x) below) or any Transaction Document which failure
is not cured, if possible to cure, within the earlier to occur of 15 Trading Days after notice of such failure is sent by the Holder or
by any other Holder to the Company and (B) 10 Trading Days after the Company has become aware of such failure;
(iii) except
for payment defaults covered under Section 7(a)(i), the Company shall breach, or a default or event of default (subject to any grace or
cure period provided in the applicable agreement, document or instrument) shall occur under, (A) any of the Transaction Documents or (B)
any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by any
other clause of this Section 7) which default or event of default if not cured, if possible to cure, within the earlier to occur of (i)
10 Trading Days after notice of such default sent by Holder or by any other holder to the Company and (ii) five Trading Days after the
Company has become aware of such default;
(iv) any
representation or warranty made in this Note, any other Transaction Document, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any
material respect as of the date when made or deemed made, which failure is not cured, if possible to cure, within the earlier to occur
of 10 Trading Days after notice of such failure is sent by the Holder or by any other Holder to the Company;
(v) the Company or any
Subsidiary shall be subject to a Bankruptcy Event;
(vi) the
Company or any Subsidiary shall: (A) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or
any of its properties; (B) admit in writing its inability to pay its debts as they mature; (C) make a general assignment for the benefit
of creditors; (D) be adjudicated as bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States
Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute of any other jurisdiction
or foreign country; or (E) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (F)
take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;
(vii) if
any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Subsidiary, by any
court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary, or appointing
a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part of its assets, and such
order, judgment or decree shall continue unstayed and in effect for any period of 60 days;
(viii) the occurrence
of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or any Subsidiary having
an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the aggregate, and any such levy,
seizure or attachment shall not be set aside, bonded or discharged within 45 days after the date thereof;
(ix) any monetary
judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective property
or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed
for a period of 30 days;
(x) any
Material Adverse Effect occurs;
(xi) any provision
of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested by any party thereto,
or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them,
seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any
liability or obligation purported to be created under any Transaction Document;
(xii) the Company fails to use the
proceeds in the manner as described in Section 5.7 of the Purchase Agreement;
(xiii) the Company
shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of 50% of its assets in one
transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
(xiv) from
and after 90 days after the Original Issue Date, the Company fails to have authorized and reserved the amount of shares designated in
Section 3.5 of the Purchase Agreement (without regard to any limitations on conversion hereof, including without limitation, the Beneficial
Ownership Limitation);
(xv) the Company
shall fail for any reason, except if caused by the action or inaction of the Holder to deliver Conversion Shares to the Holder prior to
the third Trading Day after a Conversion Date pursuant to Section 4 or the Company shall provide at any time notice to the Holder, including
by way of public announcement, of the Company’s intention to not honor requests for conversions of this Note in accordance with
the terms hereof; or
(xvi) the
Company fails to file with the SEC any required reports under Section 13 or 15(d) of the Exchange Act within the time required (including
any applicable extension period) by the rules and regulations thereunder.
(b) Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus liquidated damages and
other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due
and payable in cash (the “Mandatory Default Amount”). Upon the payment in full of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder
need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately
and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to
it under applicable law. Such acceleration may be rescinded and annulled by Xxxxxx at any time prior to payment hereunder and the Holder
shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b).
No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
(c) Interest
Rate Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured, this Note
shall accrue interest at an interest rate equal to the Default Interest Rate.
(d) Conversion
Price Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured, this Note
shall be convertible at the Default Conversion Price.
Section 8. Miscellaneous.
(a) No Rights
as Stockholder Until Conversion. This Note does not entitle the Holder to any voting rights, dividends or other rights as a stockholder
of the Company prior to the conversion hereof other than as explicitly set forth in Section 5.
(b) Notices.
All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently
given if delivered to the addressees in person, by FedEx or similar receipted next day delivery, or at the Company’s registered
address or such other address as any of them, by notice to the other may designate from time to time. Time shall be counted to, or from,
as the case may be, the date of delivery.
(c) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest and late fees, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
(d) Lost or
Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new
Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft
or destruction of this Note, and of the ownership hereof, reasonably satisfactory to the Company.
(e) Exclusive
Jurisdiction; Governing Law; Prevailing Party Attorneys’ Fees. All questions concerning the construction, validity, enforcement
and interpretation of this Note and venue shall be governed by and construed and enforced in accordance with Section 6.9 of the Purchase
Agreement. If any party shall commence an Action or Proceeding to enforce or otherwise relating to this Note, then, in addition to the
other obligations of the Company elsewhere in this Note, the prevailing party in such action or proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Action or Proceeding.
(f) Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to
insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver
by the Company or the Holder must be in writing.
(g) Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision
is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall
be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate
of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such
law has been enacted.
(h) 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. 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 would 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 an injunction restraining any such breach or any such threatened breach,
without the necessity of showing economic loss and without any bond or other security being required. 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 Note.
(i) Next
Trading Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Trading Day, such payment shall
be made on the next succeeding Trading Day.
(j) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect
any of the provisions hereof.
(Signature Pages Follow)
IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by a duly authorized officer as of the date first above indicated.
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60 Degrees Pharmaceuticals, LLC |
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By: |
/s/ Xxxxxxxx Xxx |
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Name: |
Xxxxxxxx Xxx |
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Title: |
Chief Executive Officer |
ANNEX A NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal under the Original Issue Discount Convertible Note due May 31, 2023 of 60 Degrees Pharmaceuticals, LLC, a
limited liability company (the “Company”), into shares of common stock (the “Common Stock”), of the Company according
to the conditions hereof, as of the date written below.
By the delivery of
this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed
the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.
Conversion calculations:
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Date to Effect Conversion: |
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Principal Amount of Note to be Converted: |
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Number of shares of Common Stock to be issued: |
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Signature: |
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Name: |
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DWAC Instructions: |
