Exhibit 10.1

 

CONVERTIBLE PROMISSORY NOTE

Effective Date: May 2, 2018

U.S. $900,000.00

 

FOR VALUE RECEIVED, Sharing Economy International Inc., a Nevada corporation
(“Borrower”), promises to pay to Iliad Research and Trading, L.P., a Utah
limited partnership, or its successors or assigns (“Lender”), $900,000.00 and
any interest, fees, charges, and late fees on the date that is fifteen (15)
months after the Purchase Price Date (the “Maturity Date”) in accordance with
the terms set forth herein and to pay interest on the Outstanding Balance at the
rate of ten percent (10%) per annum from the Purchase Price Date until the same
is paid in full. This Convertible Promissory Note (this “Note”) is issued and
made effective as of May 2, 2018 (the “Effective Date”). This Note is issued
pursuant to that certain Securities Purchase Agreement dated April 20, 2018, as
the same may be amended from time to time, by and between Borrower and Lender
(the “Purchase Agreement”). Certain capitalized terms used herein are defined in
Attachment 1 attached hereto and incorporated herein by this reference.

 

This Note carries an OID of $150,000.00. In addition, Borrower agrees to pay
$15,000.00 to Lender to cover Lender’s legal fees, accounting costs, due
diligence, monitoring and other transaction costs incurred in connection with
the purchase and sale of this Note, which amount will be deducted from the
amount funded to Borrower at Closing (as defined in the Purchase Agreement),
such that the net amount funded to Borrower at the Closing is equal to
$735,000.00. The purchase price for this Note and the Warrant (as defined in the
Purchase Agreement) shall be $750,000.00 (the “Purchase Price”), computed as
follows: $900,000.00 original principal balance, less the OID. The Purchase
Price shall be payable by Lender by wire transfer of immediately available
funds.

 

1. Payment; Prepayment.

 

1.1. Payment. Provided there is an Outstanding Balance, on each Redemption Date
(as defined below), Borrower shall pay to Lender an amount equal to the
Redemption Amount (as defined below) due on such Redemption Date in accordance
with Section 8. All payments owing hereunder shall be in lawful money of the
United States of America or Conversion Shares (as defined below), as provided
for herein, and delivered to Lender at the address or bank account furnished to
Borrower for that purpose. All payments shall be applied first to (a) costs of
collection, if any, then to (b) fees and charges, if any, then to (c) accrued
and unpaid interest, and thereafter, to (d) principal.

 

1.2. Prepayment. Notwithstanding the foregoing, so long as Borrower has not
received a Lender Conversion Notice (as defined below) or a Redemption Notice
(as defined below) from Lender where the applicable Conversion Shares have not
yet been delivered and so long as no Event of Default has occurred since the
Effective Date (whether declared by Lender or undeclared and regardless of
whether or not cured), then Borrower shall have the right, exercisable on not
less than five (5) Trading Days prior written notice to Lender to prepay the
Outstanding Balance of this Note, in full, in accordance with this Section 1.
Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be
delivered to Lender in accordance with the notice requirements in Section 20 and
shall state: (i) that Borrower is exercising its right to prepay this Note, and
(ii) the date of prepayment, which shall be not less than five (5) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for
prepayment (the “Optional Prepayment Date”), Borrower shall make payment of the
Optional Prepayment Amount (as defined below) to or upon the order of Lender as
may be specified by Lender in writing to Borrower. If Borrower exercises its
right to prepay this Note, Borrower shall make payment to Lender of an amount in
cash equal to 125% multiplied by the then Outstanding Balance of this Note (the
“Optional Prepayment Amount”). In the event Borrower delivers the Optional
Prepayment Amount to Lender prior to the Optional Prepayment Date or without
delivering an Optional Prepayment Notice to Lender as set forth herein without
Lender’s prior written consent, the Optional Prepayment Amount shall not be
deemed to have been paid to Lender until the Optional Prepayment Date. Moreover,
in such event the Optional Prepayment Liquidated Damages Amount will
automatically be added to the Outstanding Balance of this Note on the day
Borrower delivers the Optional Prepayment Amount to Lender. In the event
Borrower delivers the Optional Prepayment Amount without an Optional Prepayment
Notice, then the Optional Prepayment Date will be deemed to be the date that is
five (5) Trading Days from the date that the Optional Prepayment Amount was
delivered to Lender and Lender shall be entitled to exercise its conversion
rights set forth herein during such five (5) day period. In addition, if
Borrower delivers an Optional Prepayment Notice and fails to pay the Optional
Prepayment Amount due to Lender within five (5) Trading Days following the
Optional Prepayment Date, Borrower shall forever forfeit its right to prepay
this Note.

 

 

 

 

2. Security. This Note is not secured.

 

3. Lender Optional Conversion.

 

3.1. Lender Conversions. Lender has the right at any time after the Purchase
Price Date until the Outstanding Balance has been paid in full, including
without limitation until any Optional Prepayment Date (even if Lender has
received an Optional Prepayment Notice) or at any time thereafter with respect
to any amount that is not prepaid, to convert (each instance of conversion is
referred to herein as a “Lender Conversion”) all or any part of the Outstanding
Balance into shares (“Lender Conversion Shares”) of fully paid and
non-assessable common stock, $0.001 par value per share (“Common Stock”), of
Borrower as per the following conversion formula: the number of Lender
Conversion Shares equals the amount being converted (the “Conversion Amount”)
divided by the Lender Conversion Price (as defined below). Conversion notices in
the form attached hereto as Exhibit A (each, a “Lender Conversion Notice”) may
be effectively delivered to Borrower by any method of Lender’s choice (including
but not limited to facsimile, email, mail, overnight courier, or personal
delivery), and all Lender Conversions shall be cashless and not require further
payment from Lender. Borrower shall deliver the Lender Conversion Shares from
any Lender Conversion to Lender in accordance with Section 9 below.

 

3.2. Lender Conversion Price. Subject to adjustment as set forth in this Note,
the price at which Lender has the right to convert all or any portion of the
Outstanding Balance into Common Stock is $6.70 per share of Common Stock (the
“Lender Conversion Price”).

 

4. Defaults and Remedies.

 

4.1. Defaults. The following are events of default under this Note (each, an
“Event of Default”): (a) Borrower fails to pay any principal, interest, fees,
charges, or any other amount when due and payable hereunder; (b) Borrower fails
to deliver any Lender Conversion Shares in accordance with the terms hereof; (c)
Borrower fails to deliver any Redemption Conversion Shares (as defined below) in
accordance with the terms hereof; (d) a receiver, trustee or other similar
official shall be appointed over Borrower or a material part of its assets and
such appointment shall remain uncontested for twenty (20) days or shall not be
dismissed or discharged within sixty (60) days; (e) Borrower becomes insolvent
or generally fails to pay, or admits in writing its inability to pay, its debts
as they become due, subject to applicable grace periods, if any; (f) Borrower
makes a general assignment for the benefit of creditors; (g) Borrower files a
petition for relief under any bankruptcy, insolvency or similar law (domestic or
foreign); (h) an involuntary bankruptcy proceeding is commenced or filed against
Borrower; (i) Borrower or any pledgor, trustor, or guarantor of this Note
defaults or otherwise fails to observe or perform any covenant, obligation,
condition or agreement of Borrower or such pledgor, trustor, or guarantor
contained herein or in any other Transaction Document (as defined in the
Purchase Agreement), other than those specifically set forth in this Section 4.1
and Section 4 of the Purchase Agreement; (j) any representation, warranty or
other statement made or furnished by or on behalf of Borrower or any pledgor,
trustor, or guarantor of this Note to Lender herein, in any Transaction
Document, or otherwise in connection with the issuance of this Note is false,
incorrect, incomplete or misleading in any material respect when made or
furnished; (k) Borrower fails to maintain the Share Reserve as required under
the Purchase Agreement; (l) any money judgment, writ of execution or similar
process is entered or filed against Borrower or any subsidiary of Borrower or
any of its property or other assets for more than $1,000,000.00, and shall
remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days
unless otherwise consented to by Lender; (m) Borrower fails to be DWAC Eligible;
or (n) Borrower fails to observe or perform any covenant set forth in Section 4
of the Purchase Agreement. Notwithstanding the foregoing, the occurrence of any
event specified in Section 4.1(i) – (n) shall not be considered an Event of
Default hereunder if such event is cured within thirty (30) days of the
occurrence of such event.

 

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4.2. Remedies. At any time and from time to time after Lender becomes aware of
the occurrence of any Event of Default, Lender may accelerate this Note by
written notice to Borrower, with the Outstanding Balance becoming immediately
due and payable in cash at the Mandatory Default Amount. Notwithstanding the
foregoing, at any time following the occurrence of any Event of Default, Lender
may, at its option, elect to increase the Outstanding Balance by applying the
Default Effect (subject to the limitation set forth below) via written notice to
Borrower without accelerating the Outstanding Balance, in which event the
Outstanding Balance shall be increased as of the date of the occurrence of the
applicable Event of Default pursuant to the Default Effect, but the Outstanding
Balance shall not be immediately due and payable unless so declared by Lender
(for the avoidance of doubt, if Lender elects to apply the Default Effect
pursuant to this sentence, it shall reserve the right to declare the Outstanding
Balance immediately due and payable at any time and no such election by Lender
shall be deemed to be a waiver of its right to declare the Outstanding Balance
immediately due and payable as set forth herein unless otherwise agreed to by
Lender in writing). Notwithstanding the foregoing, upon the occurrence of any
Event of Default described in clauses (d), (e), (f), (g) or (h) of Section 4.1,
the Outstanding Balance as of the date of acceleration shall become immediately
and automatically due and payable in cash at the Mandatory Default Amount,
without any written notice required by Lender. At any time following the
occurrence of any Event of Default, upon written notice given by Lender to
Borrower, interest shall accrue on the Outstanding Balance beginning on the date
the applicable Event of Default occurred at an interest rate equal to the lesser
of 22% per annum or the maximum rate permitted under applicable law (“Default
Interest”). For the avoidance of doubt, Lender may continue making Lender
Conversions and Redemption Conversions (as defined below) at any time following
an Event of Default until such time as the Outstanding Balance is paid in full.
Borrower further acknowledges and agrees that Lender may continue making
Conversions following the entry of any judgment or arbitration award in favor of
Lender until such time that the entire judgment amount or arbitration award is
paid in full. Borrower agrees that any judgment or arbitration award will, by
its terms, be made convertible into Common Stock. Any Conversions made following
a judgment or arbitration award shall be made pursuant to the following formula:
the amount of the judgment or arbitration award being converted divided by 80%
of the lowest Closing Bid Price in the ten (10) Trading Days immediately
preceding the date of Conversion. In such event, Borrower and Lender agree that
it is their expectation that any such judgment amount or arbitration award that
is converted will tack back to the Purchase Price Date for purposes of
determining the holding period under Rule 144. Borrower and Lender agree and
stipulate that any judgment or arbitration award entered against Borrower shall
be reduced by $1,000.00 and such $1,000.00 shall become the new Outstanding
Balance of this Note and this Note shall expressly survive such judgment or
arbitration award. Additionally, following the occurrence of any Event of
Default, Borrower may, at its option, pay any Lender Conversion in cash instead
of Lender Conversion Shares by paying to Lender on or before the applicable
Delivery Date (as defined below) a cash amount equal to the number of Lender
Conversion Shares set forth in the applicable Lender Conversion Notice
multiplied by the highest intra-day trading price of the Common Stock that
occurs during the period beginning on the date the applicable Event of Default
occurred and ending on the date of the applicable Lender Conversion Notice. In
connection with acceleration described herein, Lender need not provide, and
Borrower hereby waives, any presentment, demand, protest or other notice of any
kind, and Lender may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by Lender at any time prior to payment hereunder and Lender shall have
all rights as a holder of the Note until such time, if any, as Lender receives
full payment pursuant to this Section 4.2. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereon.
Nothing herein shall limit Lender’s right to pursue any other remedies available
to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to Borrower’s failure to
timely deliver Conversion Shares upon Conversion of the Note as required
pursuant to the terms hereof.

 

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4.3. Certain Additional Rights. Notwithstanding anything to the contrary herein,
in the event Borrower fails to make any payment when due or fails to deliver any
Conversion Shares as and when required under this Note, then the Lender
Conversion Price for all Lender Conversions occurring after the date of such
failure to pay shall equal the lower of the Lender Conversion Price and the
Market Price as of any applicable date of Conversion provided, however, in no
event shall the Lender Conversion Price be less than the Conversion Price Floor
(as defined below). For the avoidance of doubt, Lender’s exercise of the rights
granted to it pursuant to this Section 4.3 shall not relieve Borrower of its
obligation to continue paying the Redemption Amount on all future Redemption
Dates.

 

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

 

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

 

7. Rights Upon Issuance of Securities. Without limiting any provision hereof, if
Borrower at any time on or after the Effective Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Lender
Conversion Price and the Issuance Cap (as defined below) in effect immediately
prior to such subdivision will be proportionately reduced. Without limiting any
provision hereof, if Borrower at any time on or after the Effective Date
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Lender Conversion Price and Issuance Cap in effect immediately prior to such
combination will be proportionately increased. Any adjustment pursuant to this
Section 7 shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
Section 7 occurs during the period that a Lender Conversion Price is calculated
hereunder, then the calculation of such Lender Conversion Price shall be
adjusted appropriately to reflect such event.

 

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8. Borrower Redemptions.

 

8.1. Redemption Conversion Price. Subject to the adjustments set forth herein,
the conversion price for each Redemption Conversion (as defined below) (the
“Redemption Conversion Price”) shall be the lesser of (a) the Lender Conversion
Price, and (b) the Market Price; provided, however, in no event shall the
Redemption Conversion Price be less than $2.00 per share (“Conversion Price
Floor”).

 

8.2. Redemption Conversions. Beginning on the date that is six (6) months after
the Purchase Price Date (the “Redemption Start Date”), Lender shall have the
right, exercisable at any time in its sole and absolute discretion, to redeem
all or any portion of the Note (such amount, the “Redemption Amount”) by
providing Borrower with a notice substantially in the form attached hereto as
Exhibit B (each, a “Redemption Notice”, and each date on which Lender delivers a
Redemption Notice, a “Redemption Date”). For the avoidance of doubt, Lender may
submit to Borrower one (1) or more Redemption Notices in any given calendar
month. Payments of each Redemption Amount may be made (a) in cash, or (b) by
converting such Redemption Amount into shares of Common Stock (“Redemption
Conversion Shares”, and together with the Lender Conversion Shares, the
“Conversion Shares”) in accordance with this Section 8 (each, a “Redemption
Conversion”) per the following formula: the number of Redemption Conversion
Shares equals the portion of the applicable Redemption Amount being converted
divided by the Redemption Conversion Price, or (c) by any combination of the
foregoing, so long as the cash is delivered to Lender on the fifth Trading Day
immediately following the applicable Redemption Date and the Redemption
Conversion Shares are delivered to Lender on or before the applicable Delivery
Date. Notwithstanding the foregoing, Borrower will not be entitled to elect a
Redemption Conversion with respect to any portion of any applicable Redemption
Amount and shall be required to pay the entire amount of such Redemption Amount
in cash within thirty (30) days, if (a) on the applicable Redemption Date there
is an Equity Conditions Failure, and such failure is not waived in writing by
Lender; or (b) the Redemption Conversion Price is below the Conversion Price
Floor and Borrower does not agree to waive the Conversion Price Floor.
Notwithstanding that failure to repay this Note in full by the Maturity Date is
an Event of Default, the Redemption Dates shall continue after the Maturity Date
pursuant to this Section 8 until the Outstanding Balance is repaid in full.
Lender agrees to redeem at least the Minimum Redemption Amount in each
thirty-day period following the Redemption Start Date. Lender also agrees not to
redeem more than the Minimum Redemption Amount in any thirty-day period
following the Redemption Start Date in which the Redemption Conversion Price is
less than the Conversion Floor Price. In the event Borrower cannot deliver
Conversion Shares pursuant to a Redemption Notice as a result of Lender’s
ownership of Common Stock being equal to the Maximum Percentage (as defined
below) and such shares of Common Stock are freely tradeable in Lender’s account,
then the Maturity Date will be extended by one (1) Trading Day for each day that
Borrower cannot deliver Conversion Shares as result of Lender’s ownership of the
Maximum Percentage of shares (or a longer duration as shall be agreed between
the Lender and the Borrower to enable the Borrower to deliver the Conversion
Shares).

 

8.3. Allocation of Redemption Amounts. Following its receipt of a Redemption
Notice, Borrower may either ratify Lender’s proposed allocation in the
applicable Redemption Notice or elect to change the allocation by written notice
to Lender by email or fax within forty-eight (48) hours of its receipt of such
Redemption Notice (excluding Saturdays, Sundays and any day on which banks in
Hong Kong do not generally open for business), so long as the sum of the cash
payments and the amount of Redemption Conversions equal the applicable
Redemption Amount. If Borrower fails to notify Lender of its election to change
the allocation prior to the deadline set forth in the previous sentence, it
shall be deemed to have ratified and accepted the allocation set forth in the
applicable Redemption Notice prepared by Lender. Borrower acknowledges and
agrees that the amounts and calculations set forth thereon are subject to
correction or adjustment because of error, mistake, or any adjustment resulting
from an Event of Default or other adjustment permitted under the Transaction
Documents (an “Adjustment”). Furthermore, no error or mistake in the preparation
of such notices, or failure to apply any Adjustment that could have been applied
prior to the preparation of a Redemption Notice may be deemed a waiver of
Lender’s right to enforce the terms of any Note, even if such error, mistake, or
failure to include an Adjustment arises from Lender’s own calculation. Borrower
shall deliver the Redemption Conversion Shares from any Redemption Conversion to
Lender in accordance with Section 9 below on or before each applicable Delivery
Date. If Borrower elects to pay a Redemption Amount in cash, such payment must
be delivered no later than the fifth (5th) Trading Day immediately following the
Redemption Date. If Borrower elects to make a payment in cash and fails to make
such payment by the required due date on two (2) separate occasions, Borrower
shall lose the right to make payments of Redemption Amounts in cash in the
future without Lender’s written consent.

 

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9. Method of Conversion Share Delivery. On or before the close of business on
the fifth (5th) Trading Day following each Redemption Date or the fifth (5th)
Trading Day following the date of delivery of a Lender Conversion Notice, as
applicable (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible
at such time, deliver or cause its transfer agent to deliver the applicable
Conversion Shares electronically via DWAC to the account designated by Lender in
the applicable Lender Conversion Notice or Redemption Notice. If Borrower is not
DWAC Eligible, it shall deliver to Lender or its broker (as designated in the
Lender Conversion Notice or Redemption Notice, as applicable), via reputable
overnight courier, a certificate representing the number of shares of Common
Stock equal to the number of Conversion Shares to which Lender shall be
entitled, registered in the name of Lender or its designee. For the avoidance of
doubt, Borrower has not met its obligation to deliver Conversion Shares by the
Delivery Date unless Lender or its broker, as applicable, has actually received
the certificate representing the applicable Conversion Shares no later than the
close of business on the relevant Delivery Date pursuant to the terms set forth
above. Moreover, and notwithstanding anything to the contrary herein or in any
other Transaction Document, in the event Borrower or its transfer agent refuses
to deliver any Conversion Shares to Lender on grounds that such issuance is in
violation of Rule 144 under the Securities Act of 1933, as amended (“Rule 144”),
Borrower shall deliver or cause its transfer agent to deliver the applicable
Conversion Shares to Lender with a restricted securities legend, but otherwise
in accordance with the provisions of this Section 9. In conjunction therewith,
Borrower will also deliver to Lender a written opinion from its counsel or its
transfer agent’s counsel opining as to why the issuance of the applicable
Conversion Shares violates Rule 144.

 

10. Conversion Delays. If Borrower fails to deliver Conversion Shares in
accordance with the timeframes stated in Section 9, Lender, at any time prior to
selling all of those Conversion Shares may rescind in whole or in part that
particular Conversion attributable to the unsold Conversion Shares, with a
corresponding increase to the Outstanding Balance (any returned amount will tack
back to the Purchase Price Date for purposes of determining the holding period
under Rule 144). In addition, for each Lender Conversion, in the event that
Lender Conversion Shares are not delivered by the sixth (6th) Trading Day
(inclusive of the day of the Lender Conversion), a late fee equal to 2% of the
applicable Lender Conversion Share Value rounded to the nearest multiple of
$100.00 (but in any event the cumulative amount of such late fees for each
Lender Conversion shall not exceed 200% of the applicable Lender Conversion
Share Value) will be assessed for each day after the fifth (5th) Trading Day
(inclusive of the day of the Lender Conversion) until Lender Conversion Share
delivery is made; and such late fee will be added to the Outstanding Balance
(such fees, the “Conversion Delay Late Fees”). Notwithstanding anything herein
to the contrary, in the event of the accrual of Conversion Delay Late Fees,
Lender shall have the right to choose between adding such Conversion Delay Late
Fees to the Outstanding Balance or adding Default Interest to the Outstanding
Balance but not both. For the avoidance of doubt, if Lender elects to add the
Conversion Delay Late Fees to the Outstanding Balance, Lender shall still be
entitled to interest at the original rate.

 

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

 

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

 

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

 

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

 

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

 

16. Cancellation. After repayment or conversion of the entire Outstanding
Balance, this Note shall be deemed paid in full, shall automatically be deemed
canceled, and shall not be reissued.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 8 

 

 

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

 

  BORROWER:       Sharing Economy International Inc.         By:
                    Name:     Title:  

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

LENDER:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner     By: Fife Trading, Inc., its
Manager

 

  By:              John M. Fife, President  

 

[Signature Page to Convertible Promissory Note]

 

 

 

 

ATTACHMENT 1

DEFINITIONS

 

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

 

A1. “Bloomberg” means Bloomberg L.P. (or if that service is not then reporting
the relevant information regarding the Common Stock, a comparable reporting
service of national reputation selected by Lender and reasonably satisfactory to
Borrower).

 

A2. “Closing Bid Price” and “Closing Trade Price” means the last closing bid
price and last closing trade price, respectively, for the Common Stock on its
principal market, as reported by Bloomberg, or, if its principal market begins
to operate on an extended hours basis and does not designate the closing bid
price or the closing trade price (as the case may be) then the last bid price or
last trade price, respectively, of the Common Stock prior to 4:00:00 p.m., New
York time, as reported by Bloomberg, or, if its principal market is not the
principal securities exchange or trading market for the Common Stock, the last
closing bid price or last trade price, respectively, of the Common Stock on the
principal securities exchange or trading market where the Common Stock is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of the Common Stock in the
over-the-counter market on the electronic bulletin board for the Common Stock as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for the Common Stock by Bloomberg, the average of the
bid prices, or the ask prices, respectively, of any market makers for the Common
Stock as reported by OTC Markets Group, Inc., and any successor thereto. If the
Closing Bid Price or the Closing Trade Price cannot be calculated for the Common
Stock on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Trade Price (as the case may be) of the Common Stock on such date
shall be the fair market value as mutually determined by Lender and Borrower.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.

 

A3. “Conversion” means a Lender Conversion under Section 3 or a Redemption
Conversion under Section 8.

 

A4. “Conversion Factor” means 80%, subject to the following adjustment. If at
any time after the Effective Date the 10-day VWAP is $1.00 or less, then the
Conversion Factor shall be reduced by 5%.

 

A5. “Default Effect” means multiplying the Outstanding Balance as of the date
the applicable Event of Default occurred by (a) 15% for each occurrence of any
Major Default, or (b) 5% for each occurrence of any Minor Default, and then
adding the resulting product to the Outstanding Balance as of the date the
applicable Event of Default occurred, with the sum of the foregoing then
becoming the Outstanding Balance under this Note as of the date the applicable
Event of Default occurred; provided that the Default Effect may only be applied
three (3) times hereunder with respect to Major Defaults and three (3) times
hereunder with respect to Minor Defaults; and provided further that the Default
Effect shall not apply to any Event of Default pursuant to Section 4.1(b)
hereof. Notwithstanding the foregoing, the Default Effect shall not exceed 25%
in the aggregate.

 

A6. “DTC” means the Depository Trust Company or any successor thereto.

 

A7. “DTC Eligible” means, with respect to the Common Stock, that such Common
Stock is eligible to be deposited in certificate form at the DTC, cleared and
converted into electronic shares by the DTC and held in the name of the clearing
firm servicing Lender’s brokerage firm for the benefit of Lender.

 

A8. “DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer
program.

 

A9. “DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.

 

A10. “DWAC Eligible” means that (a) Borrower’s Common Stock is eligible at DTC
for full services pursuant to DTC’s operational arrangements, including without
limitation transfer through DTC’s DWAC system; (b) Borrower has been approved
(without revocation) by DTC’s underwriting department; (c) Borrower’s transfer
agent is approved as an agent in the DTC/FAST Program; (d) the Conversion Shares
are otherwise eligible for delivery via DWAC; (e) Borrower has previously
delivered all Conversion Shares to Lender via DWAC; and (f) Borrower’s transfer
agent does not have a policy prohibiting or limiting delivery of the Conversion
Shares via DWAC.

 

Attachment 1 to Convertible Promissory Note, Page 1 

 

 

A11. “Equity Conditions Failure” means that any of the following conditions has
not been satisfied during any applicable Redemption Date: (a) with respect to
the applicable date of determination, issued at any time following six (6)
months after the Purchase Price Date, all of the Conversion Shares would be
freely tradable under Rule 144 or without the need for registration under any
applicable federal or state securities laws (in each case, disregarding any
limitation on conversion of this Note); (b) any shares of Common Stock to be
issued in connection with the event requiring determination may be issued in
full without violating Section 11 hereof (Lender acknowledges that Borrower
shall be entitled to assume that this condition has been met for all purposes
hereunder absent written notice from Lender); (c) no Event of Default shall have
occurred under this Note; and (d) the Common Stock shall be DWAC Eligible as of
each applicable Redemption Date or other date of determination.

 

A12. “Free Trading” means that (a) the shares or certificate(s) representing the
applicable shares of Common Stock have been cleared and approved for public
resale by the compliance departments of Lender’s brokerage firm and the clearing
firm servicing such brokerage, and (b) such shares are held in the name of the
clearing firm servicing Lender’s brokerage firm and have been deposited into
such clearing firm’s account for the benefit of Lender.

 

A13. “Lender Conversion Share Value” means the product of the number of Lender
Conversion Shares deliverable pursuant to any Lender Conversion multiplied by
the Closing Trade Price of the Common Stock on the Delivery Date for such Lender
Conversion.

 

A14. “Major Default” means any Event of Default occurring under Sections 4.1(a),
4.1(a), 4.1(c), or 4.1(n) of this Note.

 

A15. “Mandatory Default Amount” means the greater of (a) the Outstanding Balance
divided by the Redemption Conversion Price on the date the Mandatory Default
Amount is demanded, multiplied by the VWAP on the date the Mandatory Default
Amount is demanded, or (b) the Outstanding Balance following the application of
the Default Effect.

 

A16. “Market Price” means the Conversion Factor multiplied by the lowest Closing
Trade Price during the twenty (20) Trading Days immediately preceding the
applicable Conversion.

 

A17. “Minor Default” means any Event of Default that is not a Major Default.

 

A18. “Minimum Redemption Amount” means $200,000.00 for first thirty-day period
following the Redemption Start Date and $150,000.00 for each thirty-day period
thereafter.

 

A19. “OID” means an original issue discount.

 

A20. “Optional Prepayment Liquidated Damages Amount” means an amount equal to
the difference between (a) the product of (i) the number of shares of Common
Stock obtained by dividing (1) the applicable Optional Prepayment Amount by (2)
the Lender Conversion Price as of the date Borrower delivered the applicable
Optional Prepayment Amount to Lender, multiplied by (ii) the Closing Trade Price
of the Common Stock on the date Borrower delivered the applicable Optional
Prepayment Amount to Lender, and (b) the applicable Optional Prepayment Amount
paid by Borrower to Lender. For illustration purposes only, if the applicable
Optional Prepayment Amount were $50,000.00, the Lender Conversion Price as of
the date the Optional Prepayment Amount was paid to Lender was equal to $0.75
per share of Common Stock, and the Closing Trade Price of a share of Common
Stock as of such date was equal to $1.00, then the Optional Prepayment
Liquidated Damages Amount would equal $16,666.67 computed as follows: (a)
$66,666.67 (calculated as (i) (1) $50,000.00 divided by (2) $0.75 multiplied by
(ii) $1.00) minus (b) $50,000.00.

 

A21. “Other Agreements” means, collectively, (a) all existing and future
agreements and instruments between, among or by Borrower (or an affiliate), on
the one hand, and Lender (or an affiliate), on the other hand, and (b) any
financing agreement or a material agreement that affects Borrower’s ongoing
business operations.

 

A22. “Outstanding Balance” means as of any date of determination, the Purchase
Price, as reduced or increased, as the case may be, pursuant to the terms hereof
for payment, Conversion, offset, or otherwise, plus the OID, accrued but unpaid
interest, collection and enforcements costs (including attorneys’ fees) incurred
by Lender, transfer, stamp, issuance and similar taxes and fees related to
Conversions, and any other fees or charges (including without limitation
Conversion Delay Late Fees) incurred under this Note.

 

A23. “Purchase Price Date” means the date the Purchase Price is delivered by
Lender to Borrower.

 

A24. “Trading Day” means any day on which the New York Stock Exchange is open
for trading, provided that for any cash payment to be made pursuant to this
Note, Trading Day shall exclude any day on which banks in Hong Kong do not
generally open for business.

 

A25. “VWAP” means the volume weighted average price of the Common stock on the
principal market for a particular Trading Day or set of Trading Days, as the
case may be, as reported by Bloomberg.

 

Attachment 1 to Convertible Promissory Note, Page 2 

 

 

EXHIBIT A

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

Sharing Economy International Inc. Date: __________________

Attn: Ping Kee Lau, CEO

18170 Hillcrest, Suite 100

Dallas, Texas 75252

 

LENDER CONVERSION NOTICE

 

The above-captioned Lender hereby gives notice to Sharing Economy International
Inc., a Nevada corporation (the “Borrower”), pursuant to that certain
Convertible Promissory Note made by Borrower in favor of Lender on May 2, 2018
(the “Note”), that Lender elects to convert the portion of the Note balance set
forth below into fully paid and non-assessable shares of Common Stock of
Borrower as of the date of conversion specified below. Said conversion shall be
based on the Lender Conversion Price set forth below. In the event of a conflict
between this Lender Conversion Notice and the Note, the Note shall govern, or,
in the alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Lender Conversion Notice to conform to the Note.
Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.

A.Date of Conversion: ____________

B.Lender Conversion #: ____________

C.Conversion Amount: ____________

D.Lender Conversion Price: _______________

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

F.Remaining Outstanding Balance of Note: ____________*

 

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

 

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

 

Broker:     Address:   DTC#:        

Account #:        

Account Name:        

 

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

_____________________________________

_____________________________________

_____________________________________

 

[Signature page follows]

 

Exhibit A to Convertible Promissory Note, Page 1 

 

  

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner     By: Fife Trading, Inc., its
Manager

 

  By:            John M. Fife, President  

  

Exhibit A to Convertible Promissory Note, Page 2 

 

 

EXHIBIT B

 

Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

Sharing Economy International Inc. Date: __________________

Attn: Ping Kee Lau, CEO

18170 Hillcrest, Suite 100

Dallas, Texas 75252

 

REDEMPTION NOTICE

 

The above-captioned Lender hereby gives notice to Sharing Economy International
Inc., a Delaware corporation (the “Borrower”), pursuant to that certain
Convertible Promissory Note made by Borrower in favor of Lender on May 2, 2018
(the “Note”), that Lender elects to redeem a portion of the Note in Redemption
Conversion Shares or in cash as set forth below. In the event of a conflict
between this Redemption Notice and the Note, the Note shall govern, or, in the
alternative, at the election of Lender in its sole discretion, Lender may
provide a new form of Redemption Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to
them in the Note.

 

REDEMPTION INFORMATION

 

A.Redemption Date: ____________, 201_

B.Redemption Amount: ____________

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

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

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

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

G.Remaining Outstanding Balance of Note: ____________ *

 

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

 

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

 

(Check One)

 

A._________ Borrower herby certifies that no Equity Conditions Failure exists as
of the applicable Redemption Date.

 

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

 

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

 

Exhibit B to Convertible Promissory Note, Page 1 

 

 

Please transfer the Redemption Conversion Shares, if applicable, electronically
(via DWAC) to the following account:

 

Broker:     Address:   DTC#:        

Account #:        

Account Name:        

 

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

_____________________________________

_____________________________________

_____________________________________

 

Sincerely,

 

Lender:

 

Iliad Research and Trading, L.P.

 

By: Iliad Management, LLC, its General Partner     By: Fife Trading, Inc., its
Manager

 

  By:              John M. Fife, President  

 

 

Exhibit A to Convertible Promissory Note, Page 2