NEITHER THIS CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) NOR ANY SECURITIES THAT
MAY BE ISSUED UPON THE CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR THE SECURITIES LAWS OF ANY
STATE OR ANY FOREIGN JURISDICTION. THIS NOTE AND SUCH SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE.  NEITHER
THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD, ASSIGNED, OFFERED, PLEDGED, OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR (II) THE COMPANY RECEIVING
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE,
ASSIGNMENT, OFFER, PLEDGE, OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND STATE SECURITIES LAWS.

JAYHAWK ENERGY, INC.

CONVERTIBLE PROMISSORY NOTE

US $177,173.49
                                                                                                                Date:
December 20, 2016

FOR VALUE RECEIVED, JayHawk Energy, Inc., a Nevada corporation (the “Company” or
“JayHawk Energy”), hereby promises to pay to the order of Kelly Stopher, or
assigns (the “Holder”), at the place designated by the Holder, in lawful money
of the United States of America, the principal sum of One Hundred Seventy-Seven
Thousand One Hundred Seventy-Three and 49/100 Dollars ($177,173.49) (the
“Principal Amount”), together with interest thereon on the terms set forth in
Section 1. The Company shall pay the unpaid Principal Amount and interest
accrued hereunder in lawful money of the United States pursuant to the terms
hereof, except to the extent that it has been previously converted into shares
of the Company’s Common Stock pursuant to Section 2 hereof.  

2.

Payments of Interest and Principal.  Payments of principal plus interest on the
unpaid principal balance of this Note outstanding from time to time shall be
payable in accordance with the following and Schedule 1 attached hereto:

2.1.

Interest.  Interest shall equal Zero Percent (0%) of the Principal Amount per
annum based on an Actual/360 day basis (the “Interest”) from the date hereof.  

2.2.

Principal.  The Principal Amount and the Interest shall be due and payable to
the Holder on or before December 20, 2020 (the “Maturity Date”).
Contemporaneously with the repayment on or conversion of this Note in full, the
Holder shall surrender this Note, duly endorsed as paid, at the office of the
Company.

2.3.

Payments.  All payments of principal, interest, fees and other amounts due
hereunder shall be made by the Company in lawful money of the United States of
America by first class mail, or by any other method approved in advance by the
Holder to the account of the Holder at the address of the

1

--------------------------------------------------------------------------------

Holder set forth herein or at such other place designated by the Holder from
time to time in writing to the Company.  

3.

Conversion.  This Note is convertible into shares of the Company’s Common Stock
upon the terms and conditions set forth below.

3.1.

Optional Conversion.  Any portion of the Principal Amount and/or accrued
Interest on this Note may be converted at the Holder’s option as follows: at any
time prior to the Maturity Date into shares of the Company’s Common Stock at a
rate equal to the lesser of: (a) the conversion rate provided to a plurality of
investors in the Company’s first round of financing wherein the Company raises
at least $300,000 following the completion of its 100:1 reverse split of its
securities (“Qualified Financing”) or (b) the closing price on the first day of
trading immediately following the Company’s 100:1 reverse split.

3.2.

Conversion Procedure. Any conversion of this Note shall be on the following
terms and conditions:  The Holder wishing (or deemed) to convert any portion of
this Note shall: (A) provide written notice to the Company (the “Conversion
Notice”), specifying the aggregate dollar amount of this Note, consisting of all
(or that portion) of the Principal Amount of, together with all accrued and
unpaid Interest on, this Note being converted, and identifying the name(s) in
which the Holder desires the shares of Common Stock to be titled; (B) if
converting the entire Principal Amount of and accrued Interest on this Note,
surrender to the Company this Note (original execution copy); and, (C) deliver
any other forms, including but not limited to, transfer forms, tax forms or
relevant documentation, duly executed, as may be specified by the Company, if
necessary, to effect the conversion.  If specified by the Holder in the
Conversion Notice that the shares of Common Stock shall be issued to person(s)
other than the Holder, the Holder shall pay or cause to be paid any transfer or
similar taxes payable in connection with the Common Stock so issued.

4.

Delivery.  Upon delivery of the Conversion Notice and surrender of this Note (if
converted in its entirety) to the Company for conversion, the Holder shall be
entitled to receive the applicable shares of Common Stock constituting the
Converted Equity Securities.  At its expense, the Company shall, within Ten (10)
business days following receipt of the Conversion Notice, issue and deliver to
the Holder (or the person(s) so designated by the Holder) the shares of Common
Stock to which the Holder shall be entitled upon such conversion (bearing such
legends as are required by applicable state and federal securities laws in the
opinion of the Company’s counsel).  No fractional share shall be issued upon
such conversion.  In lieu of any such fractional share, which would otherwise be
issuable upon such conversion, the Company shall round up the fractional share
to the nearest whole share.

5.

Prepayment.  The Company may prepay this Note at any time. Upon the occurrence
of the Company having raised at least Three Million Dollars ($3,000,000) in the
aggregate through the sale of debt or equity securities of the Company, the
Holder will have the option to have the remaining balance of the Note paid in
full.

6.

Default; Remedies.  

6.1.

Event of Default.  The occurrence of an Event of Default (as hereafter defined)
shall constitute a default under this Note.  Failing to make a payment of
Principal Amount or

2

--------------------------------------------------------------------------------

Interest when due shall constitute an “Event of Default” under this Note.  

6.2.

Consequences of Default; Remedies. If payments of the Principal Amount and
accrued Interest, if any, are not made within fifteen (15) business days of
written notice, the Interest rate shall be retroactively set at Six Percent (6%)
and accrued to the Principal Amount of this Note until such time as payment is
made.  If any Note payment is not made within Forty-Five (45) days of its due
this Note will incur default interest at the rate of Eighteen Percent (18%)
(“Default Interest Rate”) until payment is made. If any Note payment is not made
within Ninety (90) days the Holder will have the option to foreclose on the
stock pledge described in Section 6 below. If the Holder forecloses on the stock
pledge, this Note shall be remain in Default until cured or the Note is paid in
full. These are the Holder’s exclusive remedies in the Event of Default. The
Holder confirms the reasonableness of this restriction.

7.

Security. This Note will be secured by a pledge of Three Hundred Fifty Thousand
(350,000) shares of JayHawk Energy, Inc.’s Common Stock. In the event the
Company makes a disposition of substantially all of its assets (including those
held in subsidiaries) the Holder of this Note shall have the option to foreclose
on the stock pledge described above.

   

8.

No Waiver of Rights or Remedies.  No extension of the time for the payment of
this Note or any installment hereof shall operate to release, discharge, modify,
change or affect the original liability under this Note, either in whole or in
part, and the Company agrees that this Note and any or all payments coming due
hereunder may be extended from time to time in the sole discretion of the Holder
without in any way affecting or diminishing the Company’s liability hereunder.
 No delay in the exercise of any right or remedy hereunder shall be deemed a
waiver of such right or remedy, nor shall the exercise of any right or remedy be
deemed an election of remedies or a waiver of any other right or remedy.

9.

Transfer; Assignment.  This Note, and the rights and obligations of the Holder
hereunder, may be assigned by such Holder to any Affiliate of the Holder;
provided that the transferor provides written notice of such transfer to the
Company and that the transferee is an “Accredited Investor” as such term is
defined in Rule 501(a) of Regulation D as promulgated under the Securities Act
of 1933, as amended. The transfer of this Note is registerable by the Holder in
person or by an attorney duly authorized in writing on the books of the Company.
 The Company and any transfer agent may deem and treat the person in whose name
this Note is registered upon the books of the Company as the absolute owner of
this Note.  For the purposes of this Note, (“Affiliate(s)”) means any other
person directly or indirectly controlling, controlled by, or under direct or
indirect common control with the referenced person or entity and includes
without limitation, (a) any person who is an officer, director, or direct or
indirect beneficial holder of at least five percent (5%) of the then outstanding
capital stock of the referenced person or entity and (b) any person of which the
referenced person or entity and/or its Affiliates (as defined in clause (a)
above), directly or indirectly, either beneficially own(s) at least five percent
(5%) of the then outstanding equity securities or constitute(s) at least a five
percent (5%) equity participant, (c) any family member of any of the foregoing,
and (d) any trust or other similar entity established for the benefit of any
family member of any of the foregoing.

10.

Governing Law.  This Note shall be governed by and construed in accordance with
the domestic substantive laws of the State of Nevada, without giving effect to
any choice or conflict of law provision

3

--------------------------------------------------------------------------------

or rule that would cause the application of the laws of any other jurisdiction.

11.

Notices.  All notices and other communications given to any party hereto
pursuant to this Agreement shall be in writing and shall be hand delivered, or
sent either by (a) certified mail, postage prepaid, return receipt requested;
(b) an overnight express courier service that provides written confirmation of
delivery; (c) facsimile or other electronic transmission with written
confirmation by the sending machine or with telephone or e-mail confirmation of
receipt.

12.

Usury Savings Clause.  It is the intention of the Company and the Holder to
comply with applicable state and federal usury laws from time to time in effect.
 Accordingly, notwithstanding any provision to the contrary in this Note or any
other document related hereto, in no event (including, but not limited to,
prepayment or acceleration of the maturity of any obligation) shall this Note or
any such other document require the payment or permit the collection or receipt
of interest in excess of the highest lawful rate.  If under any circumstance
whatsoever, any provision of this Note or of any other document pertaining
hereto shall provide for the payment, collection or receipt of interest in
excess of the highest lawful rate, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if from any such
circumstances the Holder shall ever receive anything of value as interest or
deemed interest by applicable law under this Note or any other document
pertaining hereto or otherwise an amount that would exceed the highest lawful
rate, such amount that would exceed the highest lawful rate shall be applied to
the reduction of the Principal Amount and accrued Interest outstanding hereunder
or on account of any other indebtedness of the Holder to the Company, and not to
the payment of Interest, or if such excessive Interest exceeds the unpaid
Principal Amount outstanding hereunder and such other indebtedness, such excess
shall be refunded to the Company.  In determining whether or not the Interest
paid or payable with respect to any indebtedness of the Company to the Holder,
under any specified contingency, exceeds the highest lawful rate, the Company
shall, to the maximum extent permitted by applicable law, (i) characterize any
non-Principal Amount payment as an expense, fee or premium rather than as
Interest, (ii) exclude prepayments and the effects thereof, (iii) amortize,
prorate, allocate and spread the total amount of Interest throughout the full
term of such indebtedness (including any extension or renewal) so that Interest
thereon does not exceed the maximum amount permitted by applicable law, and/or
(iv) allocate Interest between portions of such indebtedness, to the end that no
such portion shall bear Interest at a rate greater than that permitted by
applicable law.  The Holder expressly disavows any intention to charge or
collect excessive unearned Interest or finance charges in the event that the
maturity of this Note is accelerated.  If at any time the Interest rate set
forth in Section 1 hereof exceeds the highest lawful rate, then the rate at
which Interest shall accrue hereunder shall automatically be limited to the
highest lawful rate, and shall remain at the highest lawful rate until the total
amount of Interest accrued hereunder equals the total amount of Interest that
would have accrued but for the operation of this sentence.  Thereafter, Interest
shall accrue at the Interest rate set forth in Section 1 hereof unless and until
such Interest rate again exceeds the highest lawful rate, in which case the
immediately preceding sentence shall apply.

13.

No Shareholder Rights. Except as otherwise stated herein, nothing contained in
this Note shall be construed as conferring upon the Holder or any other person
the right to vote or to consent or to receive notice as a shareholder of the
Company.

14.

No Violation of Law. This Note may not be converted if its conversion would
cause the Company to violate an exemption from registration or would violate any
applicable state or federal securities law,

4

--------------------------------------------------------------------------------

any registration under or any requirements of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules of an
exchange on which the Company’s securities may be traded, any other federal law,
or any state securities laws.

15.

Piggyback Registration Rights. The Company grants the Holder piggyback
registration rights for the shares underlying the Note and stock pledge in any
registration statement which the Company may file during 2017.

16.

Headings.  The headings of the sections of this Note are inserted for
convenience only and do not constitute a part of this Note.

17.

Dispute of Terms.  In the event the terms of this Note are disputed by the
parties, both parties agree that the terms shall not be interpreted against the
Company merely because the Note was drafted by counsel of the Company.

18.

Amendments.  This Note shall only be amended, modified or supplemented, and
provisions hereof may only be waived, by an instrument in writing duly executed
by the Holder and the Company.

19.

Arbitration.  Any issue, controversy, or claim arising out of or related to this
Note or any related documents hereto that cannot be resolved by mutual agreement
shall be settled or resolved by binding arbitration pursuant to the Federal
Arbitration Act and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association now or hereafter in effect.  The parties to the
dispute shall unanimously select the arbitrator.  In the event the parties to
the dispute are unable to unanimously select an arbitrator within twenty (20)
business days of a meeting called to appoint an arbitrator, the arbitrator shall
be selected in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.  The parties to the dispute shall confer with the
arbitrator and together shall decide upon a time and place for the arbitration
hearing.  If the parties to the dispute and the arbitrator are unable to agree
upon a time and place for the arbitration hearing, the arbitrator shall
determine the time and place for the arbitration hearing.  The parties shall
split the arbitrator’s fees and costs equally, unless the arbitrator determines
that any party to the dispute has defaulted or asserted an unreasonable business
position during the arbitration, in which event the party to the dispute who
defaulted or asserted the unreasonable business position shall pay all or a part
of the arbitrator’s fees and costs, as the arbitrator, in his or her or its
discretion, determines.  IN AGREEING TO THE METHOD OF DISPUTE RESOLUTION SET
FORTH IN THIS ARBITRATION CLAUSE, THE PARTIES SPECIFICALLY ACKNOWLEDGE THAT EACH
PREFERS TO RESOLVE DISPUTES BY ARBITRATION RATHER THAN THROUGH THE FORMAL COURT
PROCESS.  FURTHER, EACH OF THEM UNDERSTANDS THAT BY AGREEING TO ARBITRATION EACH
OF THEM IS WAIVING THE RIGHT TO RESOLVE DISPUTES ARISING OR RELATING TO THIS
AGREEMENT IN COURT BY A JUDGE OR JURY, THE RIGHT TO A JURY TRIAL, THE RIGHT TO
DISCOVERY AVAILABLE UNDER THE APPLICABLE RULES OF CIVIL PROCEDURE, THE RIGHT TO
FINDINGS OF FACT BASED ON THE EVIDENCE, AND THE RIGHT TO ENFORCE THE LAW
APPLICABLE TO ANY CASE ARISING OR RELATING TO THIS AGREEMENT BY WAY OF APPEAL,
EXCEPT AS ALLOWED UNDER THE FEDERAL ARBITRATION ACT.  EACH OF THEM ALSO
ACKNOWLEDGES THAT EACH HAS HAD AN OPPORTUNITY TO CONSIDER AND STUDY THIS
ARBITRATION PROVISION, TO CONSULT WITH COUNSEL, TO SUGGEST MODIFICATION OR
CHANGES, AND, IF

5

--------------------------------------------------------------------------------

REQUESTED, HAS RECEIVED AND REVIEWED A COPY OF THE FEDERAL ARBITRATION ACT AND
THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION.

20.

ENTIRE AGREEMENT.  THIS NOTE AND THE OTHER INSTRUMENTS ENTERED INTO IN
CONNECTION HEREWITH EVIDENCE THE FINAL AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE COMPANY AND THE HOLDER.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE COMPANY AND THE HOLDER.

IN WITNESS WHEREOF, the parties hereto have executed this Note as of the day and
year first above written.

JayHawk Energy, Inc.

       /s/ Scott Mahoney

By:
                                                                                             

Name: Scott Mahoney

Its: Interim President & Chief Executive Officer

Dated:  December 20, 2016

 

HOLDER

/s/ Kelly Stopher

By:__________________________________________

Name: Kelly Stopher

Title: Individually

Dated:  December 20, 2016

6

--------------------------------------------------------------------------------

SCHEDULE 1

Payment Schedule

20-Dec-16

$2,000

20-Jan-17

$2,000

20-Feb-17

$2,000

20-Mar-17

$2,200

20-Apr-17

$2,200

20-May-17

$2,200

20-Jun-17

$2,400

20-Jul-17

$2,400

20-Aug-17

$2,400

20-Sep-17

$2,600

20-Oct-17

$2,600

20-Nov-17

$2,600

20-Dec-17

$2,800

20-Jan-18

$2,800

20-Feb-18

$2,800

20-Mar-18

$3,000

20-Apr-18

$3,000

20-May-18

$3,000

20-Jun-18

$3,500

20-Jul-18

$3,500

20-Aug-18

$3,500

20-Sep-18

$4,000

20-Oct-18

$4,000

20-Nov-18

$4,000

20-Dec-18

$4,000

20-Jan-19

$4,000

20-Feb-19

$4,000

20-Mar-19

$4,000

20-Apr-19

$4,000

20-May-19

$4,000

20-Jun-19

$4,000

20-Jul-19

$4,000

20-Aug-19

$4,000

20-Sep-19

$4,000

20-Oct-19

$4,000

20-Nov-19

$4,500

20-Dec-19

$4,500

20-Jan-20

$4,500

20-Feb-20

$4,500

20-Mar-20

$4,500

20-Apr-20

$4,500

20-May-20

$4,500

20-Jun-20

$4,500

20-Jul-20

$4,500

20-Aug-20

$4,500

20-Sep-20

$4,500

20-Oct-20

$4,500

20-Nov-20

$4,500

20-Dec-20

$7,173

Total:

$177,173

8