Exhibit 10.2 

 

SIGNING DEBENTURE

 

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE
BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED
OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION
REQUIREMENTS THEREOF OR EXEMPTION THEREFROM.

 

DIGERATI TECHNOLOGIES, INC.

 

CONVERTIBLE DEBENTURE DUE JANUARY 17, 2021

 

Issuance Date: January 17, 2018 Principal Amount: $200,000.00

  

FOR VALUE RECEIVED, DIGERATI TECHNOLOGIES, INC., a corporation organized and
existing under the laws of the State of Nevada (the “Company”), hereby promises
to pay to PEAK ONE OPPORTUNITY FUND, L.P., having its address at 333 South
Hibiscus Drive, Miami Beach, FL 33139, or its assigns (the “Holder” and together
with the other holders of Debentures issued pursuant to the Securities Purchase
Agreement (as defined below), the “Holders”), the initial principal sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00) (subject to adjustment as
provided herein, the “Principal Amount”) on January 17, 2021 (the “Maturity
Date”). The Company has the option to redeem this Debenture prior to the
Maturity Date pursuant to Section 2(b). All unpaid principal due and payable on
the Maturity Date shall be paid in the form of Common Stock of the Company, par
value $0.001 per share (“Common Stock”) pursuant to Section 3. The Holder has
the option to cause any outstanding principal and accrued interest, if any, on
this Debenture to be converted into Common Stock at any time prior to the
Redemption Date (as defined below) or the Maturity Date pursuant to Section
2(a).

 

This Debenture is one of the Debentures referred to in the Securities Purchase
Agreement (the “Securities Purchase Agreement”) dated as of January 12, 2018,
between the Company and the Holder. Capitalized terms used but not defined
herein shall have the meanings set forth in the Securities Purchase Agreement.
This Debenture is subject to the provisions of the Securities Purchase Agreement
and further is subject to the following additional provisions:

 

1. This Debenture has been issued subject to investment representations of the
original purchaser hereof and may be transferred or exchanged only in compliance
with the Securities Act and other applicable state and foreign securities laws.
The Holder may transfer or assign this Debenture (or any part thereof) without
the prior consent of the Company, and the Company shall cooperate with any such
transfer. In the event of any proposed transfer of this Debenture, the Company
may require, prior to issuance of a new Debenture in the name of such other
Person, that it receive reasonable transfer documentation including legal
opinions that the issuance of the Debenture in such other name does not and will
not cause a violation of the Securities Act or any applicable state or foreign
securities laws or is exempt from the registration requirements of the
Securities Act. Prior to due presentment for transfer of this Debenture to which
the Company has consented, the Company and any agent of the Company may treat
the Person in whose name this Debenture is duly registered on the Company's
books and records of outstanding debt securities and obligations (“Debenture
Register”) as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Debenture be overdue,
and neither the Company nor any such agent shall be affected by notice to the
contrary.

 

 

 

 

2. Conversion at Holder’s Option; Redemption at Company’s Option.

 

a. The Holder is entitled to, at any time or from time to time, convert the
Conversion Amount (as defined below) into Conversion Shares, at a conversion
price for each share of Common Stock (the “Conversion Price”) equal to either:
(i) if the date of conversion is prior to the date that is one hundred eighty
(180) days after the Issuance Date, $0.50, or (ii) if the date of conversion is
on or after the date that is one hundred eighty (180) days after the Issuance
Date, the lesser of (a) $0.50 or (b) seventy percent (70%) of the lowest closing
bid price (as reported by Bloomberg LP) of the Common Stock for the twenty (20)
Trading Days immediately preceding the date of the date of conversion of the
Debentures (provided, further, that if either the Company is not DWAC
Operational at the time of conversion or the Common Stock is traded on the OTC
Pink (“OTCP”) at the time of conversion, then seventy percent (70%) shall
automatically adjust to sixty-five percent (65%) of the lowest closing bid price
(as reported by Bloomberg LP) of the Common Stock for the twenty (20) Trading
Days immediately preceding the date of conversion of the Debentures), subject in
each case to equitable adjustments resulting from any stock splits, stock
dividends, recapitalizations or similar events. The Company shall issue
irrevocable instructions to its Transfer Agent regarding conversions such that
the transfer agent shall be authorized and instructed to issue Conversion Shares
upon its receipt of a Notice of Conversion without further approval or
authorization from the Company. For purposes of this Debenture, the “Conversion
Amount” shall mean the sum of (A) all or any portion of the outstanding
Principal Amount of this Debenture, as designated by the Holder upon exercise of
its right of conversion plus (B) any interest, pursuant to Section 10 or
otherwise, that has accrued on the portion of the Principal Amount that has been
designated for payment pursuant to (A).

 

Conversion shall be effectuated by delivering by facsimile, email or other
delivery method to the Transfer Agent of the completed form of conversion notice
attached hereto as Annex A (the “Notice of Conversion”), executed by the Holder
of the Debenture evidencing such Holder's intention to convert this Debenture or
a specified portion hereof. No fractional shares of Common Stock or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share. The Holder may, at
its election, deliver a Notice of Conversion to either the Company or the
Transfer Agent. The date on which notice of conversion is given (the “Conversion
Date”) shall be deemed to be the date on which the Company or the Transfer
Agent, as the case may be, receives by fax, email or other means of delivery
used by the Holder the Notice of Conversion (such receipt being evidenced by
electronic confirmation of delivery by facsimile or email or confirmation of
delivery by such other delivery method used by the Holder). Delivery of a Notice
of Conversion to the Transfer Agent may be given by the Holder by facsimile, or
by delivery to the Transfer Agent at the address set forth in the Transfer Agent
Instruction Letter (or such other contact facsimile number, email or street
address as may be designated by the Transfer Agent to the Holder). Delivery of a
Notice of Conversion to the Company shall be given by the Holder pursuant to the
notice provisions set forth in Section 10 of the Agreement. The Conversion
Shares must be delivered to the Holder within three (3) business days from the
date of delivery of the Notice of Conversion to the Transfer Agent or Company,
as the case may be. Conversion shares shall be delivered by DWAC so long as the
Company is then DWAC Operational, unless the Holder expressly requests delivery
in certificated form or the Conversion Shares are in the form of Restricted
Stock and are required to bear a restrictive legend. Conversion Shares shall be
deemed delivered (i) if delivered by DWAC, upon deposit into the Holder’s
brokerage account, or (ii) if delivered in certificated form, upon the Holder’s
actual receipt of the Conversion Shares in certificated form at the address
specified by the Holder in the Notice of Conversion, as confirmed by written
receipt.

 

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If at any time the Conversion Price as determined hereunder for any conversion
would be less than the par value of the Common Stock, then at the sole
discretion of the Holder, the Conversion Price hereunder may equal such par
value for such conversion and the Conversion Amount for such conversion may be
increased to include Additional Principal, where “Additional Principal” means
such additional amount to be added to the Conversion Amount to the extent
necessary to cause the number of conversion shares issuable upon such conversion
to equal the same number of conversion shares as would have been issued had the
Conversion Price not been adjusted by the Holder to the par value price.

 

Notwithstanding the foregoing, unless the Holder delivers to the Company written
notice at least sixty-one (61) days prior to the effective date of such notice
that the provisions of this paragraph (the “Limitation on Ownership”) shall not
apply to such Holder, in no event shall a holder of Debentures have the right to
convert Debentures into, nor shall the Company issue to such Holder, shares of
Common Stock to the extent that such conversion would result in the Holder and
its affiliates together beneficially owning more than 4.99% of the then issued
and outstanding shares of Common Stock. For purposes hereof, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13D-G under the Exchange Act.

 

b. The Company may at its option call for redemption all or part of the
Debentures, with the exception of any portion thereof which is the subject of a
previously-delivered Notice of Conversion, prior to the Maturity Date, as
follows:

 

(i) The Debentures called for redemption shall be redeemable by the Company,
upon not more than two (2) days written notice, for an amount (the “Redemption
Price”) equal to: (i) if the Redemption Date (as defined below) is ninety (90)
days or less from the date of issuance of this Debenture, One Hundred Ten
percent (110%) of the sum of the Principal Amount so redeemed plus accrued
interest, if any; (ii) if the Redemption Date is greater than or equal to one
ninety-one (91) days from the date of issuance of this Debenture and less than
or equal to one hundred twenty (120) days from the date of issuance of this
Debenture, One Hundred Fifteen percent (115%) of the sum of the Principal Amount
so redeemed plus accrued interest, if any; (iii) if the Redemption Date is
greater than or equal to one hundred twenty one (121) days from the date of
issuance of this Debenture and less than or equal to one hundred fifty (150)
days from the date of issuance of this Debenture, One Hundred Twenty percent
(120%) of the sum of the Principal Amount so redeemed plus accrued interest, if
any; (iv) if the Redemption Date is greater than or equal to one hundred fifty
one (151) days from the date of issuance of this Debenture and less than or
equal to one hundred eighty (180) days from the date of issuance of this
Debenture, One Hundred Thirty percent (130%) of the sum of the Principal Amount
so redeemed plus accrued interest, if any; and (v) if the Redemption Date is
greater than or equal to one hundred eighty one (181) days from the date of
issuance of this Debenture, One Hundred Forty percent (140%) of the sum of the
Principal Amount so redeemed plus accrued interest, if any. The date upon which
the Debentures are redeemed and paid shall be referred to as the “Redemption
Date” (and, in the case of multiple redemptions of less than the entire
outstanding Principal Amount, each such date shall be a Redemption Date with
respect to the corresponding redemption).

 

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(ii) If fewer than all outstanding Debentures are to be redeemed and are held by
different investors, then all Debentures shall be partially redeemed on a pro
rata basis.

 

(iii) [Reserved]

 

(iv) On the Redemption Date, the Company shall cause the Holders whose
Debentures have been presented for redemption to be issued payment of the
Redemption Price. In the case of a partial redemption, the Company shall also
issue new Debentures to the Holders for the Principal Amount remaining
outstanding after the Redemption Date promptly after the Holders’ presentation
of the Debentures called for redemption.

 

(v) To effect a redemption the Company shall provide a written notice to the
Holder(s) not more than two (2) days prior to the Redemption Date (the
“Redemption Notice”), setting forth the following:

 

  1. the Redemption Date;

 

  2. the Redemption Price;

 

  3. the aggregate Principal Amount of the Debentures being called for
redemption;

 

  4. a statement instructing the Holders to surrender their Debentures for
redemption and payment of the Redemption Price, including the name and address
of the Company or, if applicable, the paying agent of the Company, where
Debentures are to be surrendered for redemption;

 

  5. a statement advising the Holders that the Debentures (or, in the case of a
partial redemption, that portion of the Principal Amount being called for
redemption) as of the Redemption Date will cease to be convertible into Common
Stock as of the Redemption Date; and

 

  6. in the case of a partial redemption, a statement advising the Holders that
after the Redemption Date a substitute Debenture will be issued by the Company
after deduction the portion thereof called for redemption, at no cost to the
Holder, if the Holder so requests.

 

Notwithstanding the foregoing, in the event the Company issues a Redemption
Notice but fails to fund the redemption on the Redemption Date, then such
Redemption Notice shall be null and void, and (i) the Holder(s) shall be
entitled to convert the Debentures previously the subject of the Redemption
Notice, and (ii) the Company may not redeem such Debentures for at least thirty
(30) days following the intended Redemption Date that was voided, and the
Company shall be required to pay to the Holder(s) the Redemption Price
simultaneously with the issuance of a Redemption Notice in connection with any
subsequent redemption pursued by the Company.

 

 4

 

 

3. Unless demand has otherwise been made by the Holder in writing for payment in
cash as provided hereunder, and so long as no Event of Default shall exist
(whether or not notice thereof has been delivered by the Holder to the Company),
any Debentures not previously tendered to the Company for conversion as of the
Maturity Date shall be deemed to have been surrendered for conversion, without
further action of any kind by the Company or any of its agents, employees or
representatives, as of the Maturity Date at the Conversion Price applicable on
the Maturity Date (“Mandatory Conversion”).

 

4. No provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional to convert this Debenture into
Common Stock, at the time, place, and rate herein prescribed. This Debenture is
a direct obligation of the Company.

 

5. If the Company (a) merges or consolidates with another corporation or
business entity and the Company is not the surviving entity or (b) sells or
transfers all or substantially all of its assets to another Person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee will agree that this Debenture may thereafter
be converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any (i) proposed
merger or consolidation where the Company is not the surviving entity or (ii)
sale or transfer of all or substantially all of the assets of the Company (in
either such case, a “Sale”), the Holder shall have the right to convert by
delivering a Notice of Conversion to the Company within fifteen (15) days of
receipt of notice of such Sale from the Company.

 

6. If, at any time while any portion of this Debenture remains outstanding, the
Company effectuates a stock split or reverse stock split of its Common Stock or
issues a dividend on its Common Stock consisting of shares of Common Stock or
otherwise recapitalizes its Common Stock, the Conversion Price shall be
equitably adjusted to reflect such action. By way of illustration, and not in
limitation, of the foregoing (i) if the Company effectuates a 2:1 split of its
Common Stock, thereafter, with respect to any conversion for which the Company
issues the shares after the record date of such split, the Conversion Price
shall be deemed to be one-half of what it had been calculated to be immediately
prior to such split; (ii) if the Company effectuates a 1:10 reverse split of its
Common Stock, thereafter, with respect to any conversion for which the Company
issues the shares after the record date of such reverse split, the Conversion
Price shall be deemed to be the amount of such Conversion Price calculated
immediately prior to the record date multiplied by 10; and (iii) if the Company
declares a stock dividend of one share of Common Stock for every 10 shares
outstanding, thereafter, with respect to any conversion for which the Company
issues the shares after the record date of such dividend, the Conversion Price
shall be deemed to be the amount of such Conversion Price calculated immediately
prior to such record date multiplied by a fraction, of which the numerator is
the number of shares for which a dividend share will be issued and the
denominator is such number of shares plus the dividend share(s) issuable or
issued thereon.

 

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7. All payments contemplated hereby to be made “in cash” shall be made by wire
transfer of immediately available funds in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. All payments of cash and each delivery of shares of
Common Stock issuable to the Holder as contemplated hereby shall be made to the
Holder to an account designated by the Holder to the Company and if the Holder
has not designated any such accounts at the address last appearing on the
Debenture Register of the Company as designated in writing by the Holder from
time to time; except that the Holder may designate, by notice to the Company, a
different delivery address for any one or more specific payments or deliveries.

 

8. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture
is being acquired for investment and that such Holder will not offer, sell or
otherwise dispose of this Debenture or the Shares of Common Stock issuable upon
conversion thereof except in compliance with the terms of the Securities
Purchase Agreement and under circumstances which will not result in a violation
of the Securities Act or any applicable state Blue Sky or foreign laws or
similar laws relating to the sale of securities.

 

9. This Debenture shall be governed by and construed in accordance with the laws
of the State of Nevada. Each of the parties consents to the exclusive
jurisdiction and venue of the state and/or federal courts located in Miami-Dade
County, Florida in connection with any dispute arising under this Agreement, and
each waives any objection based on forum non conveniens. This provision is
intended to be a “mandatory” forum selection clause and governed by and
interpreted consistent with Florida law (Nevada law governing all other,
substantive matters). Each of the parties hereby consents to the exclusive
jurisdiction and venue of any state or federal court having its situs in
Miami-Dade County, Florida, and each waives any objection based on forum non
conveniens. To the extent determined by such court, the Company shall reimburse
the Holder for any reasonable legal fees and disbursements incurred by the
Holder in enforcement of or protection of any of its rights under this Debenture
or the Securities Purchase Agreement.

 

10. The following shall constitute an “Event of Default”:

 

a. The Company fails in the payment of principal or interest (to the extent that
interest is imposed under this Section 10) on this Debenture as required to be
paid in cash hereunder, and payment shall not have been made for a period of
five (5) business days following the payment due date (as to which no further
cure period shall apply); or

 

b. Any of the representations or warranties made by the Company herein, in the
Securities Purchase Agreement or in any certificate or financial or other
written statements heretofore or hereafter furnished by the Company to the
Holder in connection with the issuance of this Debenture, shall be false or
misleading (including without limitation by way of the misstatement of a
material fact or the omission of a material fact) in any material respect at the
time made (as to which no cure period shall apply); or

 

c. The Company fails to remain listed on OTCP, OTCQB, or OTCQX, or a more senior
stock exchange any time from the date hereof to the Maturity Date for a period
in excess of five (5) Trading Days (as to which no further cure period shall
apply); or

 

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d. The Company (i) fails to timely file required SEC reports when due (including
extensions), becomes, is deemed to or asserts that it is a “shell company” at
any time for purposes of the 1933 Act, and Rule 144 promulgated thereunder or
otherwise takes any action, or refrains from taking any action, the result of
which makes Rule 144 under the 1933 unavailable to the Holder for the sale of
their Securities, (ii) fails to issue shares of Common Stock to the Holder or to
cause its Transfer Agent to issue shares of Common Stock upon exercise by the
Holder of the conversion rights of the Holder in accordance with the terms of
this Debenture or Transaction Documents, (iii) fails to transfer or to cause its
Transfer Agent to transfer any certificate for shares of Common Stock issued to
the Holder upon conversion of this Debenture as and when required by this
Debenture and such transfer is otherwise lawful, (iv) fails to remove any
restrictive legend or to cause its Transfer Agent to transfer any certificate or
any shares of Common Stock issued to the Holder upon conversion of this
Debenture as and when required by the relevant Transaction Document(s) and such
legend removal is otherwise lawful, or (v) the Company fails to perform or
observe any of its obligations under the Section 5 of the Agreement or under the
Transfer Agent Instruction Letter (no cure period shall apply in the case of
clauses (i) through (v) above, inclusive); or

 

e. The Company fails to perform or observe, in any material respect any other
covenant, term, provision, condition, agreement or obligation set forth in the
Debenture, (subject to a cure period of three (3) days other than in the case of
a failure under Section 5 hereof, as to which no cure period shall apply), or
(ii) any other covenant, term, provision, condition, agreement or obligation of
the Company set forth in the Securities Purchase Agreement and such failure
shall continue uncured for a period of either (1) three (3) days after the
occurrence of the Company’s failure under Section 4(d), (e) (except as described
in Section 10(c) hereof, as to which Section 10(c) hereof shall control), (f),
(g) or (h) of the Securities Purchase Agreement, or (2) ten (10) days after the
occurrence of the Company’s failure under any other provision of the Securities
Purchase Agreement not otherwise specifically addressed in the Events of Default
set forth in this Section 10; or

 

f. The Company shall (1) admit in writing its inability to pay its debts
generally as they mature; (2) make an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (3) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a substantial
part of its property or business (as to which no cure period shall apply); or

 

g. A trustee, liquidator or receiver shall be appointed for the Company or for a
substantial part of its property or business without its consent and shall not
be discharged within sixty (60) days after such appointment (as to which no cure
period shall apply); or

 

h. Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the whole
or any substantial portion of the properties or assets of the Company and shall
not be dismissed within sixty (60) days thereafter (as to which no cure period
shall apply); or

 

i. Any money judgment, writ or warrant of attachment, or similar process
(including an arbitral determination), in excess of One Hundred Fifty Thousand
Dollars ($150,000) in the aggregate shall be entered or filed against the
Company or any of its properties or other assets (as to which no cure period
shall apply); or

 

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j. The occurrence of a breach or an event of default under the terms of any
indebtedness or financial instrument of the Company or any subsidiary (including
but not limited to any Subsidiary) of the Company in an aggregate amount in
excess of Two Hundred Thousand Dollars ($200,000) or more which is not waived by
the creditors under such indebtedness (as to which no cure period shall apply);
or

 

k. Bankruptcy, reorganization, insolvency or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Company and, if instituted against
the Company, shall not be dismissed within sixty (60) days after such
institution or the Company shall by any action or answer approve of, consent to,
or acquiesce in any such proceedings or admit the material allegations of, or
default in answering a petition filed in any such proceeding (as to which no
further cure period shall apply); or

 

l. The issuance of an order, ruling, finding or similar adverse determination
the SEC, the Secretary of State of the State of Nevada or other applicable state
of incorporation of the Company, the National Association of Securities Dealers,
Inc. or any other securities regulatory body (whether in the United States,
Canada or elsewhere) having proper jurisdiction that the Company and/or any of
its past or present directors or officers have committed a material violation of
applicable securities laws or regulations (as to which no cure period shall
apply); or

 

m. The Company shall have its Common Stock suspended or delisted from a national
securities exchange or an electronic quotation service such as the OTCP, OTCQB,
or OTCQX for a period in excess of five (5) Trading Days (as to which no further
cure period shall apply); or

 

n. Any of the following shall occur and be continuing: a breach or default by
any party under (a) any agreement identified by the Company in its SEC filings
as a material agreement or (b) any note or other form of indebtedness in favor
of the Company representing indebtedness of at least Two Hundred Thousand
Dollars ($200,000.00), irrespective of whether such breach or default was waived
(as to which no cure period shall apply); or

 

o. Notice of a Material Adverse Effect is provided by the Company or the
determination in good faith by the Holder that a Material Adverse Effect has
occurred (as to which no cure period shall apply); or

 

p. Reserved.

 

q. Reserved.

 

r. The Company attempts to modify, amend, withdraw, rescind, disavow or
repudiate any part of the Irrevocable Instructions (as to which no cure period
shall apply).

 

s. Any attempt by the Company or its officers, directors, and/or affiliates to
transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure
by the Company or its officers, directors, and/or affiliates of, material
non-public information concerning the Company, to the Holder or its successors
and assigns, which after being so notified by the Holder  is not immediately
cured by Company’s filing of a Form 8-K pursuant to Regulation FD within four
(4) business days of such event.

 

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t. At any time while this Debenture is outstanding, the lowest traded price on
the OTCP, OTCQB, or OTCQX, or other applicable principal trading market for the
Common Stock, is equal to or less than $0.0001.

 

Then, or at any time thereafter, the Company shall immediately give written
notice of the occurrence of such Event of Default to the Holders of all
Debentures then outstanding, and in each and every such case, unless such Event
of Default shall have been waived in writing by a majority in interest of the
Holders of the Debentures (which waiver shall not be deemed to be a waiver of
any subsequent default), then at the option of a majority in interest of the
Holders and in the discretion of a majority in interest of the Holders, take any
or all of the following actions: (i) pursue remedies against the Company in
accordance with any of the Holder’s rights, (ii) increase the interest rate
applicable to the Debentures to the lesser of eighteen percent (18%) per annum
and the maximum interest rate allowable under applicable law, (iii) in the case
of an Event of Default under Section 10(e)(ii)(1) based on the Company’s failure
to be DWAC Operational, increase the Principal Amount to an amount equal to one
hundred ten percent (110%) of the then-outstanding Principal Amount, (iv) in the
case of an Event of Default under Section 10(d)(i), increase the Principal
Amount to an amount equal to one hundred twenty percent (120%) of the
then-outstanding Principal Amount and an additional ten percent (10%) discount
shall be factored into the Conversion Price until this Debenture is no longer
outstanding, (v) in the case of an Event of Default under Section 10(d)(i)
through (v), increase the Principal Amount of the relevant Holder’s Debenture by
One Thousand Dollars and 00/100 ($500.00) for each day the related failure
continues, (vi) in the case of an Event of Default under Section 10(d)(ii)
through (v) arising from an untimely delivery to the Holder of Conversion Shares
or shares of Common Stock in delegended form, if the closing bid price of the
Common Stock on the Trading Day immediately prior to the actual date of delivery
of Conversion Shares or de-legended shares, as the case may be, is less than the
closing bid price on the Trading Day immediately prior to the date when
Conversion Shares or de-legended shares were required to be delivered, increase
the Principal Amount of the relevant Holder’s Debenture by an amount per share
equal to such difference, and (vii) following the expiration of the applicable
grace period (if any), at the option and discretion of the Holder, accelerate
the full indebtedness under this Debenture, in an amount equal to one hundred
forty percent (140%) of the outstanding Principal Amount and accrued and unpaid
interest (the “Acceleration Amount”), whereupon the Acceleration Amount shall be
immediately due and payable, without presentment, demand, protest or notice of
any kinds, all of which are hereby expressly waived, anything contained herein,
in the Securities Purchase Agreement or in any other note or instruments to the
contrary notwithstanding. In the case of an Event of Default under Section
10(d)(ii), the Holder may either (i) declare the Acceleration Amount to exclude
the Conversion Amount that is the subject of the Event of Default, in which case
the Acceleration Amount shall be based on the remaining Principal Amount and
accrued interest (if any), in which case the Company shall continue to be
obligated to issue the Conversion Shares, or (ii) declare the Acceleration
Amount to include the Conversion Amount that is the subject of the Event of
Default, in which case the Acceleration Amount shall be based on the full
Principal Amount, including the Conversion Amount, and accrued interest (if
any), whereupon the Notice of Conversion shall be deemed withdrawn. At its
option, the Holder may elect to convert the Debenture pursuant to Section 2
notwithstanding the prior declaration of a default and acceleration, in the sole
discretion of such Holder. A majority in interest of the Holders may immediately
enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by applicable law. Notwithstanding the
foregoing, in the case of a default under Section 10(d)(ii) through (iv), the
Holder of the Debenture sought to be converted, transferred or de-legended, as
the case may be, acting singly, shall have the sole and absolute discretion to
increase the applicable interest rate on the Debentures held by such Holder
and/or to accelerate the Debenture(s) held by such Holder. The Company expressly
acknowledges and agrees that the Holder’s exercise of any or all of the remedies
provided herein or under applicable law, including without limitation the
increase(s) in the Principal Amount and the Acceleration Amount as may be
declared in the case of a default, is reasonable and appropriate due to the
inability to define the financial hardship that the Company’s default would
impose on the Holders. To the extent that the Holder’s exercise of any of its
remedies in the case of an Event of Default shall be construed to exceed the
maximum interest rate allowable under applicable law, then such remedies shall
be reduced to equal the maximum interest rate allowable under applicable law.

 

 9

 

 

11. Nothing contained in this Debenture shall be construed as conferring upon
the Holder the right to vote or to receive dividends or to consent or receive
notice as a shareholder in respect of any meeting of shareholders or any rights
whatsoever as a shareholder of the Company, unless and to the extent converted
in accordance with the terms hereof.

 

12. So long as this Debenture is outstanding, upon any issuance by the Company
or any of its subsidiaries of any security with any term more favorable to the
holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Debenture, then the
Company shall notify the Holder of such additional or more favorable term and
such term, at Holder’s option, shall become a part of the transaction documents
with the Holder. The types of terms contained in another security that may be
more favorable to the holder of such security include, but are not limited to,
terms addressing conversion discounts, conversion lookback periods, stock sale
price, private placement price per share, and warrant coverage (except with
respect to the private placement being consummated by the Company on or around
the Issuance Date at a price per share of $0.50).

 

13. This Debenture may be amended only by the written consent of the parties
hereto. Notwithstanding the foregoing, the Principal Amount of this Debenture
shall automatically be reduced by any and all Conversion Amounts (to the extent
that the same relate to principal hereof). In the absence of manifest error, the
outstanding Principal Amount of the Debenture on the Holder’s book and records
shall be the correct amount.

 

14. In the event of any inconsistency between the provisions of this Debenture
and the provisions of any other Transaction Document, the provisions of this
Debenture shall prevail. Without limiting the generality of the foregoing, in
the event the Transfer Agent is not required to transfer any Common Stock, issue
Conversion Shares or de-legended shares of Restricted Stock pursuant to the
Transfer Agent Instruction Letter, this shall not operate as an excuse,
extension or waiver of the Company’s obligation to issue and deliver Conversion
Shares or de-legended Restricted Stock.

 

15. The Company specifically acknowledges and agrees that in the event of a
breach or threatened breach by the Company of any provision hereof or of any
other Transaction Document, the Holder will be irreparably damaged, and that
damages at law would be an inadequate remedy if this Debenture or such other
Transaction Document were not specifically enforced. Therefore, in the event of
a breach or threatened breach by the Company, the Holder shall be entitled, in
addition to all other rights and remedies, to an injunction restraining such
breach, without being required to show any actual damage or to post any bond or
other security, and/or to a decree for a specific performance of the provisions
of this Debenture and the other Transaction Documents.

 

 10

 

 

16. No waivers or consents in regard to any provision of this Debenture may be
given other than by an instrument in writing signed by the Holder.

 

17. Each time, while this Debenture is outstanding, the Company enters into any
transaction or arrangement structured in accordance with, based upon, or related
or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities
Act (a “3(a)(9) Transaction”) (including but not limited to the issuance of new
promissory notes or debentures, or of a replacement promissory note or
debenture), or Section 3(a)(10) of the Securities Act (a “3(a)(10)
Transaction”), in which any 3rd party has the right to convert monies owed to
that 3rd party (or receive shares pursuant to a settlement or otherwise) at a
discount to market greater than the Conversion Price in effect at that time
(prior to all other applicable adjustments in this Debenture), then the
Conversion Price shall be automatically adjusted to such greater discount
percentage (prior to all applicable adjustments in this Debenture) until this
Debenture is no longer outstanding. Each time, while this Debenture is
outstanding, the Company enters into a Section 3(a)(9) Transaction (including
but not limited to the issuance of new promissory notes or debentures, or of a
replacement promissory note or debenture), or Section 3(a)(10) Transaction, in
which any 3rd party has a look back period greater than the look back period in
effect under this Debenture at that time, then the Holder’s look back period
shall automatically be adjusted to such greater number of days until this
Debenture is no longer outstanding. The Company shall give written notice to the
Holder, with the adjusted Conversion Price and/or adjusted look back period
(each adjustment that is applicable due to the triggering event), within one (1)
business day of an event that requires any adjustment described in this section.
So long as this Note is outstanding, the Company shall not enter into any
3(a)(9) Transaction or Section 3(a)(l0) Transaction. In the event that the
Company does enter into, or makes any issuance of Common Stock related to a
3(a)(9) Transaction or a 3(a)(l0) Transaction while this note is outstanding, a
liquidated damages charge of 20% of the outstanding principal balance of this
Note, but not less than Fifteen Thousand Dollars $15,000, will be assessed and
will become immediately due and payable to the Holder at its election in the
form of cash payment or addition to the balance of this Note.

 

[Signature Page Follows]

 

 11

 

 

IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by
an officer thereunto duly authorized as of the date of issuance set forth above.

 

  DIGERATI TECHNOLOGIES, INC.         By: /s/ Arthur Smith   Name: Arthur Smith
  Title: Chief Executive Officer

 

[Signature Page to Convertible Debenture]

 

 12

 

 

ANNEX A

 

DIGERATI TECHNOLOGIES, INC.

 
NOTICE OF CONVERSION

 

 

(To Be Executed by the Registered Holder in Order to Convert the Debenture)

 

The undersigned hereby irrevocably elects to convert $
__________________________________ of the Principal Amount of the above
Debenture into Shares of Common Stock of Digerati Technologies, Inc., a Nevada
corporation (the “Company”), according to the conditions hereof, as of the date
written below. After giving effect to the conversion requested hereby, the
outstanding Principal Amount of such debenture is $_________________________,
absent manifest error.

 

Pursuant to the Debenture, certificates representing Common Stock upon
conversion must be delivered (including delivery by DWAC or DRS) to the
undersigned within three (3) business days from the date of delivery of the
Notice of Conversion to the Transfer Agent.

 

Conversion Date

 

 

Applicable Conversion Price

 

 

Signature

 

 

Print Name

 

 

Address 

 

 

 

 

 

 

 

 

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