Exhibit 10.20

 

NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS NOTE, NOR
THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE, HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR ASSIGNED
(i) IN THE ABSENCE OF (a) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR, (b) AN OPINION OF COUNSEL
(SELECTED BY HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT; OR, (ii) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

 

Principal Amount: $325,000.00 Issue Date: 30 September 2020

 

30 SEPTEMBER 2020 EXCHANGE CONVERTIBLE PROMISSORY NOTE

 

BINDING RECITALS AND AGREEMENTS

 

A. Borrower previously issued in favor of GRANITE GLOBAL VALUE INVESTMENTS LTD.,
a British Virgin Islands company (“Granite”) that certain Lender Note Dated 18
March 2020 in the original principal amount of One Hundred Twenty Five Thousand
Dollars ($125,000) with a maturity date of 18 December 2020 (the “Original
Note”).     B. Concurrent with the issuance of the Original Note to Granite,
Borrower also issued in favor of Granite that certain Common Stock Purchase
Warrant dated 18 March 2020 for the issuance of two hundred fifty thousand
(250,0000) shares of Borrower common stock (the “Warrant”).     C. Pursuant to
an Assignment Agreement dated 30 September 2020 by and between Granite and
Holder, Holder acquired any and all rights arising under and related to the
Original Note and the Warrant, with Granite no rights whatsoever in, under, or
related to the Original Note and the Warrant.     D. This Exchange Note is
issued solely in exchange for the Original Note and the Warrant, and is
expressly intended to satisfy all applicable requirements of Section 3(a)(9) of
the Securities Act of 1933, as amended from time-to-time (the “Act”).     E. No
commission or other remuneration has been, or will be, paid or given directly or
indirectly for soliciting the exchange of the Original Note and the Warrant for
this Exchange Note.     F. This 30 September 2020 Exchange Convertible
Promissory Note is referred to herein as the “Exchange Note”).

 

GENERAL TERMS FOR THE NOTE

 

Solely in exchange for the Original Note and the Warrant, and for no other
consideration, DATA443 RISK MITIGATION, INC., a Nevada corporation (“Borrower”,
or “Company”), hereby promises to pay to the order of BLUE CITI LLC, a New York
limited liability company, or its registered assigns (the “Holder”), on the
twelve (12) month anniversary of the Issue Date (the “Maturity Date”), the sum
of Three Hundred Twenty Five Thousand Dollars ($325,000), as set forth herein.
No interest shall accrue on the outstanding principal balance hereunder except
in the event of an Event of Default, as provided under Section 3.22, below.

 

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All payments due hereunder shall be made in lawful money of the United States of
America, at such address as Holder shall hereafter give to Borrower by written
notice made in accordance with the provisions of this Exchange Note. Whenever
any amount expressed to be due by the terms of this Exchange Note is due on any
day which is not a business day, the same shall instead be due on the next
succeeding day which is a business day and, in the case of any interest payment
date which is not the date on which this Exchange Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such date. As used in this Exchange
Note, the term “business day” shall mean any day other than a Saturday, Sunday
or a day on which commercial banks in the City of New York, New York are
authorized or required by law or executive order to remain closed.

 

This Exchange Note is free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of shareholders of Borrower and will not impose personal
liability upon the holder thereof.

 

The following additional terms and conditions shall apply to this Exchange Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1. Conversion Right. Holder shall have the right, in its sole and absolute
discretion, and at any time after the Issue Date to convert all or any part of
the outstanding amount due under this Exchange Note into fully paid and
non-assessable shares of common stock of Borrower, as such common stock exists
on the Issue Date (“Common Stock”), or any shares of capital stock or other
securities of Borrower into which such Common Stock shall hereafter be changed
or reclassified at the conversion price determined as provided herein (a
“Conversion”). However, in no event shall Holder be entitled to convert any
portion of this Exchange Note in excess of that portion of this Exchange Note
upon conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Exchange Note or the unexercised or unconverted
portion of any other security of Borrower subject to a limitation on conversion
or exercise analogous to the limitations contained herein), and (2) the number
of shares of Common Stock issuable upon the conversion of the portion of this
Exchange Note with respect to which the determination of this proviso is being
made, would result in beneficial ownership by Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock. For purposes of this
Exchange Note, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and Regulation 13D-G thereunder, except as otherwise provided in clause
(1), above. However, the limitations on conversion may be waived by Holder upon,
at the election of Holder, not less than 61 days’ prior notice to Borrower, and
the provisions of the conversion limitation shall continue to apply until such
61st day (or such later date, as determined by Holder, as may be specified in
such notice of waiver). The number of shares of Common Stock to be issued upon
each Conversion of this Exchange Note (“Conversion Shares”) shall be determined
by dividing the Conversion Amount (as defined below) by the applicable
Conversion Price then in effect on the date specified in the notice of
conversion, in the form attached hereto as Exhibit A (the “Notice of
Conversion”), delivered to Borrower by Holder in accordance with Section 1.4
below; provided that the Notice of Conversion is submitted by facsimile or
E-Mail (or by other means resulting in, or reasonably expected to result in,
notice) to Borrower before 11:59 p.m., New York, New York time on such
conversion date (the “Conversion Date”). The term “Conversion Amount” means,
with respect to any Conversion of this Exchange Note, the sum of (1) the
principal amount of this Exchange Note to be converted in such Conversion; plus
(2) accrued and unpaid Default Interest, if any, on such principal amount being
converted at the interest rates provided in this Exchange Note to the Conversion
Date; plus (3) at Holder’s option, any amounts owed to Holder pursuant to
Section 1.4(g) hereof.

 

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1.2. Conversion Price.

 

a) Calculation of Conversion Price. For purposes hereof, the conversion price
hereunder (the “Conversion Price”) shall equal the lowest trade price of the
Common Stock on the Principal Market during the five (5) consecutive Trading
Days immediately preceding the Conversion Date, though in no event less than
$0.007. If an Event of Default under Article III of this Exchange Note has
occurred, Holder, in its sole discretion, may elect to use a Conversion Price
with a discount factor of twenty percent (20%), though still with the minimum
price of $0.007. If Borrower’s Common Stock is not traded on the Pink Sheets or
OTCQB or an equivalent marketplace, NASDAQ, NYSE, or AMEX, then such sale price
shall be the sale price of such security on the principal securities exchange or
trading market where such security is listed or traded or, if no sale price of
such security is available in any of the foregoing manners, the average of the
closing bid prices of any market makers for such security that are listed in the
“Pink Sheets” by OTC Markets. If such sale price cannot be calculated for such
security on such date in the manner provided above, such price shall be the fair
market value as mutually determined by Borrower and Holder. If Borrower’s Common
Stock is chilled for deposit at DTC, becomes chilled at any point while this
Exchange Note remains outstanding or deposit or other additional fees are
payable due to a Yield Sign, Stop Sign or other trading restrictions, then such
discount factor shall be forty percent (40%). In the event that the shares of
Borrower’s Common Stock are not deliverable via DWAC following the conversion of
any amount hereunder, an additional five percent (5%) discount will be
attributed to the Conversion Price.

 

b) Cooperation. Borrower agrees to cooperate with all conversions hereunder, and
that it will take all reasonable steps necessary or appropriate, including
providing a board of directors resolution authorizing the issuance of common
stock to Holder. So long as the requested sale may be made pursuant to Rule 144
as promulgated by the SEC, as such Rule 144 may be in effect from time to time
(“Rule 144”), Borrower agrees to accept an opinion of counsel to Holder
confirming the rights of Holder to sell shares of Common Stock issuable or
issued to Holder on conversion of this Exchange Note pursuant to Rule 144, which
opinion will be issued at Borrower’s expense and the conversion dollar amount
will be reduced by $500.00 to cover the cost of such legal opinion. “Trading
Day” shall mean any day on which the Common Stock is tradable for any period on
the principal securities exchange or other securities market on which the Common
Stock is then traded.

 

c) Additional Principal. 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 the Conversion Price hereunder shall equal such par value for such
Conversion and the Conversion Amount for such Conversion shall 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 subject to the minimum price set forth in this Section 1.2(c).

 

d) Failure to Timely Deliver. Without in any way limiting Holder’s right to
pursue other remedies, including actual damages and/or equitable relief, the
parties agree that if delivery of the Common Stock issuable upon conversion of
this Exchange Note is not delivered by the Deadline (as defined below) Borrower
shall pay to Holder $1,000.00 per day in cash, for each day beyond the Deadline
that Borrower fails to deliver such Common Stock. Such cash amount shall be paid
to Holder by the fifth day of the month following the month in which it has
accrued or, at the option of Holder, shall be added to the principal amount of
this Exchange Note, in which event such additional principal amount shall be
convertible into Common Stock in accordance with the terms of this Exchange
Note. Borrower agrees that the right to convert this Exchange Note is a valuable
right to Holder. The damages resulting from a failure, attempt to frustrate, or
interference with such conversion right are difficult if not impossible to
quantify. Accordingly, the parties acknowledge the liquidated damages provision
contained herein is justified.

 

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1.3. Authorized Shares; Reserved Amount. Borrower covenants that at all times
while this Exchange Note is outstanding it will have a sufficient number of
shares of authorized and unissued Common Stock, free from preemptive rights, to
provide for the issuance of Common Stock upon the full conversion or adjustment
of this Exchange Note. Borrower shall maintain a separate reserve of shares of
Common Stock with Borrower’s transfer agent exclusively under this Exchange
Note, with said amount of reserve to be the lesser of (i) fifty million
(50,000,000) shares of Common Stock; or, (ii) that number of shares of Common
Stock needed to fully convert all amounts due hereunder. Borrower shall provide
to it transfer agent irrevocable written instructions to enforce this Section
1.3 and all other conversion provisions hererunder.

 

1.4. Method of Conversion.

 

a) Mechanics of Conversion. Subject to Section 1.1, this Exchange Note may be
converted by Holder in whole or in part at any time following the Issue Date by
submitting to Borrower a Notice of Conversion by facsimile, E-Mail or other
reasonable means of communication dispatched on the Conversion Date prior to
11:59 p.m., New York, New York time.

 

b) Book Entry upon Conversion. Notwithstanding anything to the contrary set
forth herein, upon conversion of this Exchange Note in accordance with the terms
hereof, Holder shall not be required to physically surrender this Exchange Note
to Borrower unless the entire unpaid principal amount of this Exchange Note is
so converted. Holder and Borrower shall maintain records showing the principal
amount so converted and the dates of such conversions or shall use such other
method, reasonably satisfactory to Holder and Borrower, so as not to require
physical surrender of this Exchange Note upon each such conversion. In the event
of any dispute or discrepancy, such records of Borrower shall, prima facie, be
controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Exchange Note is converted as aforesaid,
Holder may not transfer this Exchange Note unless Holder first physically
surrenders this Exchange Note to Borrower, whereupon Borrower will forthwith
issue and deliver upon the order of Holder a new Exchange Note of like tenor,
registered as Holder (upon payment by Holder of any applicable transfer taxes)
may request, representing in the aggregate the remaining unpaid principal amount
of this Exchange Note. Holder and any assignee, by acceptance of this Exchange
Note, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Exchange Note, the unpaid and
unconverted principal amount of this Exchange Note represented by this Exchange
Note may be less than the amount stated on the face hereof.

 

c) Payment of Taxes. Borrower shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock or other securities or property on conversion of this Exchange
Note, and Borrower shall not be required to issue or deliver any such shares or
other securities or property unless and until the person or persons (other than
Holder or the custodian in whose street name such shares are to be held for
Holder’s account) requesting the issuance thereof shall have paid to Borrower
the amount of any such tax or shall have established to the satisfaction of
Borrower that such tax has been paid.

 

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d) Delivery of Common Stock upon Conversion. Upon receipt by Borrower from
Holder of a facsimile transmission or E-Mail (or other reasonable means of
communication) of a Notice of Conversion meeting the requirements for conversion
as provided in this Section 1.4, Borrower shall issue and deliver or cause to be
issued and delivered to or upon the order of Holder certificates for the Common
Stock issuable upon such conversion within three (3) business days after such
receipt or such an event (the “Deadline”) (and, solely in the case of conversion
of the entire unpaid principal amount hereof, surrender of this Exchange Note)
in accordance with the terms hereof.

 

e) Obligation of Borrower to Deliver Common Stock. Upon receipt by Borrower of a
duly and properly executed Notice of Conversion, Holder shall be deemed to be
the holder of record of the Common Stock issuable upon such conversion, and the
outstanding principal amount and the amount of accrued and unpaid interest on
this Exchange Note shall be reduced to reflect such conversion or adjustment,
and, unless Borrower defaults on its obligations under this Article I, all
rights with respect to the portion of this Exchange Note being so converted
shall forthwith terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such conversion. If
Holder shall have given a Notice of Conversion as provided herein, Borrower’s
obligation to issue and deliver the certificates for Common Stock shall be
absolute and unconditional, irrespective of the absence of any action by Holder
to enforce the same, any waiver or consent with respect to any provision
thereof, the recovery of any judgment against any person or any action to
enforce the same, any failure or delay in the enforcement of any other
obligation of Borrower to the holder of record, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by Holder
of any obligation to Borrower, and irrespective of any other circumstance which
might otherwise limit such obligation of Borrower to Holder in connection with
such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by
Borrower before 11:59 p.m., New York, New York time, on such date.

 

f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering
physical certificates representing the Common Stock issuable upon conversion,
provided Borrower is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer (“FAST”) program, upon request of Holder and its
compliance with the provisions contained in Section 1.1 and in this Section 1.4,
Borrower shall use its best efforts to cause its transfer agent to
electronically transmit the Common Stock issuable upon conversion to Holder by
crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal Agent Commission (“DWAC”) system.

 

g) Failure to Deliver Common Stock Prior to Deadline. Without limiting Holder’s
right to pursue other remedies, including actual damages and/or equitable
relief, the parties agree that if delivery of the Common Stock issuable upon
conversion or adjustment of this Exchange Note is not delivered by the Deadline,
Borrower shall pay to Holder $1,000.00 per day in cash, for each day beyond the
Deadline that Borrower fails to deliver such Common Stock to Holder. Such cash
amount shall be paid to Holder by the fifth day of the month following the month
in which it has accrued or, at the option of Holder, shall be added to the
principal amount of this Exchange Note, in which event interest shall accrue
thereon in accordance with the terms of this Exchange Note and such additional
principal amount shall be convertible into Common Stock in accordance with the
terms of this Exchange Note. Borrower agrees that the right to convert and/or
receive shares in the event of an adjustment is a valuable right to Holder. The
damages resulting from a failure, attempt to frustrate, or interference with
such conversion or adjustment right are difficult, if not impossible, to
qualify. Accordingly, the parties acknowledge that the liquidated damages
provision contained in this Section 1.4(g) are justified.

 

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h) Rule 144. Borrower acknowledges that it will take all reasonable steps
necessary or appropriate, including accepting an opinion of counsel to Holder
confirming the rights of Holder to sell shares of Common Stock issued to Holder
on conversion or adjustment of the Exchange Note pursuant to Rule 144. So long
as the requested sale may be made pursuant to Rule 144 Borrower agrees to accept
an opinion of counsel to Holder which opinion will be issued at Borrower’s
expense.

 

i) Charges and Expenses. Issuance of Common Stock to Holder, or any of its
assignees, upon the conversion of this Exchange Note shall be made without
charge to Holder for any issuance fee, transfer tax, legal opinion and related
charges, postage/mailing charge or any other expense with respect to the
issuance of such Common Stock. Company shall pay all Transfer Agent fees
incurred from the issuance of the Common Stock to Holder, as well as any and all
other fees and charges required by the Transfer Agent as a condition to
effectuate such issuance. Any such fees or charges as noted in this Section that
are paid by Holder (whether from Borrower’s delays, outright refusal to pay, or
otherwise), will be automatically added to the Principal Amount of the Exchange
Note and tack back to the Issue Date herein for purposes of Rule 144.

 

1.5. Restricted Securities. The shares of Common Stock issuable upon conversion
or adjustment of this Exchange Note may not be sold or transferred unless (i)
such shares are sold pursuant to an effective registration statement under the
Act; or, (ii) Borrower or its transfer agent shall have been furnished with an
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; or, (iii) such shares are sold or transferred
pursuant to Rule 144; or, (iv) such shares are transferred to an “affiliate” (as
defined in Rule 144) of Borrower who agrees to sell or otherwise transfer the
shares only in accordance with this Section 1.5 and who is an Accredited
Investor (as defined under the Act). Any legend set forth on any stock
certificate evidencing any Conversion Shares shall be removed and Borrower shall
issue to Holder a new certificate therefore free of any transfer legend if (i)
Borrower or its transfer agent shall have received an opinion of counsel form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Common Stock
may be made without registration under the Act, which opinion shall be
reasonably acceptable to Borrower; or, (ii) in the case of the Common Stock
issued or issuable upon conversion of this Exchange Note, such security is
registered for sale by Holder under an effective registration statement filed
under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then
be immediately sold.

 

1.6. Effect of Certain Events.

 

a) Effect of Merger, Consolidation, Etc. At the option of Holder, the sale,
conveyance or disposition of all or substantially all of the assets of Borrower,
the effectuation by Borrower of a transaction or series of related transactions
in which more than 50% of the voting power of Borrower is disposed of, or the
consolidation, merger or other business combination of Borrower with or into any
other Person (as defined below) or Persons when Borrower is not the survivor
shall either: (i) be deemed to be an Event of Default (as defined in Article
III) pursuant to which Borrower shall be required to pay to Holder upon the
consummation of and as a condition to such transaction an amount equal to the
Default Amount (as defined in Article III) or (ii) be treated pursuant to
Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or
organization.

 

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b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this
Exchange Note is issued and outstanding and prior to conversion of all of the
Notes, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock of Borrower shall be changed into the same or a different
number of shares of another class or classes of stock or securities of Borrower
or another entity, or in case of any sale or conveyance of all or substantially
all of the assets of Borrower other than in connection with a plan of complete
liquidation of Borrower, then Holder of this Exchange Note shall thereafter have
the right to receive upon conversion of this Exchange Note, upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such stock,
securities or assets which Holder would have been entitled to receive in such
transaction had this Exchange Note been converted in full immediately prior to
such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect
to the rights and interests of Holder of this Exchange Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Price and of the number of shares issuable upon conversion of the
Exchange Note) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities or assets thereafter deliverable upon the
conversion hereof. Borrower shall not affect any transaction described in this
Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30)
days prior written notice (but in any event at least fifteen (15) days prior
written notice) of the record date of the special meeting of shareholders to
approve, or if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time, for clarification, Holder
shall be entitled to convert this Exchange Note) and (b) the resulting successor
or acquiring entity assumes by written instrument the obligations of this
Section 1.6(b). The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share exchanges.

 

c) Adjustment Due to Distribution. If Borrower shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to Borrower’s shareholders in
cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then Holder of this Exchange Note shall
be entitled, upon any conversion of this Exchange Note after the date of record
for determining shareholders entitled to such Distribution, to receive the
amount of such assets which would have been payable to Holder with respect to
the shares of Common Stock issuable upon such conversion had such Holder been
the holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution. Such assets shall
be held in escrow by the Company pending any such conversion

 

d) Purchase Rights. If, at any time when any part of the Exchange Note remains
outstanding, Borrower issues any convertible securities or rights to purchase
stock, warrants, securities or other property (the “Purchase Rights”) pro rata
to the record holders of any class of Common Stock, then Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held
the number of shares of Common Stock acquirable upon complete conversion of this
Exchange Note (without regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights or, if no such record is taken, the date as of
which the record holders of Common Stock are determined for the grant, issue or
sale of such Purchase Rights.

 

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e) Stock Dividends and Stock Splits. If the Company, at any time while this
Exchange Note is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of
Common Stock or any securities convertible into or exercisable for Common Stock;
(B) subdivides outstanding shares of Common Stock into a larger number of
shares; (C) combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares; or (D) issues, in the
event of a reclassification of shares of the Common Stock, any shares of capital
stock of the Company, then the Conversion Price (and each sale or bid price used
in determining the Conversion Price) shall be multiplied by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

 

f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment
of the Conversion Price as a result of events described in this Section 1.6,
Borrower, at its expense, shall promptly compute such adjustment or readjustment
and prepare and furnish to Holder a certificate setting forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. Borrower shall, upon written request of Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or
readjustment, (ii) the Conversion Price at the time in effect and (iii) the
number of shares of Common Stock and the amount, if any, of other securities or
property which at the time would be received upon conversion of the Exchange
Note.

 

1.7. Revocation. If any Conversion Shares are not received by the Deadline,
Holder may revoke the applicable Conversion pursuant to which such Conversion
Shares were issuable. This Exchange Note shall remain convertible after the
Maturity Date hereof until this Exchange Note is repaid or converted in full.

 

1.8. Repayment. Notwithstanding anything to the contrary contained in this
Exchange Note, subject to the terms of this Section, at any time after the Issue
Date Borrower shall have the right, exercisable on not less than five (5)
Trading Days prior written notice to Holder of this Exchange Note, to prepay the
outstanding balance on this Exchange Note in full, in accordance with this
Section, without penalty or premium. Any notice of prepayment hereunder (an
“Optional Prepayment Notice”) shall be delivered to Holder of the Exchange Note
at its registered addresses and shall state: (1) that Borrower is exercising its
right to prepay the Exchange Note; and, (2) the date of prepayment, which shall
be not more than ten (10) Trading Days from the date of the Optional Repayment
Notice. On the date fixed for prepayment (the “Optional Prepayment Date”),
Borrower shall make payment to or upon the order of Holder as specified by
Holder in writing to Borrower at least one (1) business day prior to the
Optional Prepayment Date. If Borrower delivers an Optional Prepayment Notice and
fails to pay the amount due to Holder of the Exchange Note within two (2)
business days following the Optional Prepayment Date, Borrower shall forever
forfeit its right to prepay the Exchange Note pursuant to this Section.
Thereafter, Borrower shall have no right to prepay this Exchange Note. However,
Borrower shall continue to have the right to repay all obligations hereunder on,
as of, and after the Maturity Date.

 

ARTICLE II. CERTAIN COVENANTS

 

2.1. Distributions on Capital Stock. So long as any part of this Exchange Note
remains unpaid, Borrower shall not without Holder’s written consent (a) pay,
declare or set apart for such payment, any dividend or other distribution
(whether in cash, property or other securities) on shares of capital stock other
than dividends on shares of Common Stock solely in the form of additional shares
of Common Stock or (b) directly or indirectly or through any subsidiary make any
other payment or distribution in respect of its capital stock except for
distributions pursuant to any shareholders’ rights plan which is approved by a
majority of Borrower’s disinterested directors.

 

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2.2. Restriction on Stock Repurchases. So long as any part of the Exchange Note
remains unpaid, Borrower shall not without Holder’s written consent redeem,
repurchase or otherwise acquire (whether for cash or in exchange for property or
other securities or otherwise) in any one transaction or series of related
transactions any issued and outstanding shares of capital stock of Borrower.

 

2.3. Borrowings; Liens. So long as any part of the Exchange Note remains unpaid,
Borrower shall not create, incur, assume guarantee, endorse, contingently agree
to purchase or otherwise become liable upon the obligation of any person, firm,
partnership, joint venture or corporation, except by the endorsement of
negotiable instruments for deposit or collection, or suffer to exist any
liability for borrowed money, except (a) borrowings in existence or committed on
the date hereof and of which Borrower has informed Holder in writing prior to
the date hereof; or, (b) indebtedness to trade creditors or financial
institutions incurred in the ordinary course of business; or, (c) borrowings
assumed as a result of an acquisition or similar transaction; or, (d)
indebtedness of a subsidiary.

 

2.4. Sale of Assets. So long as any part of the Exchange Note remains unpaid,
Borrower shall not, without Holder’s written consent, sell, lease or otherwise
dispose of substantially all of its assets outside the ordinary course of
business. Any consent to such a disposition of assets may be conditioned on a
specified use of the proceeds of disposition.

 

2.5. Advances and Loans. So long as any part of this Exchange Note remains
unpaid, Borrower shall not, without Holder’s written consent, lend money, give
credit or make advances to any person, firm, joint venture or corporation,
including, without limitation, officers, directors, employees, officers,
subsidiaries and affiliates of Borrower, except loans, credits, or advances in
existence or committed on the date hereof and which Borrower has informed Holder
in writing prior to the date hereof.

 

2.6. Charter. So long as any part of this Exchange Note remains unpaid, Borrower
shall not amend its charter documents, including without limitation its articles
of incorporation and bylaws, in any manner that materially and adversely affects
any rights of Holder.

 

2.7. Transfer Agent. Borrower shall not change its transfer agent absent 5-days
prior written notice to Holder. Any resignation by the transfer agent without a
replacement transfer agent prior to such replacement taking effect shall
constitute an Event of Default.

 

2.8. Unconditional Obligation; No Offset. Borrower acknowledges that this
Exchange 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
Holder, its successors and assigns, and agrees to make the payments and
conversions called for herein in accordance with the terms of this Exchange
Note.

 

2.9. Exchange. This Exchange Note is issued solely in exchange for the Original
Note and the Warrant, and is expressly intended to satisfy all applicable
requirements of Section 3(a)(9) of the Act. Securities Act of 1933, as amended
from time-to-time (the “Act”). Borrower and Holder each represent and agree that
(i) no additional consideration has been requested of or received from Holder;
(ii) no additional consideration has been provided to Holder; and, (iii)
Borrower has not paid any commission or remuneration for the solicitation of the
exchange of the Original Note and the Warrant for this Exchange Note.

 

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ARTICLE III. EVENTS OF DEFAULT

 

Any one or more of the following events which shall occur and/or be continuing
shall constitute an event of default (each, an “Event of Default”):

 

3.1. Failure to Pay Principal or Interest. Borrower fails to pay the principal
hereof or interest thereon when due on this Exchange Note, whether at maturity,
upon acceleration or otherwise.

 

3.2. Conversion and the Shares. Borrower fails to issue shares of Common Stock
to Holder (or announces or threatens in writing that it will not honor its
obligation to do so at any time following the execution hereof or) upon exercise
by Holder of the conversion rights of Holder in accordance with the terms of
this Exchange Note, fails to transfer or cause its transfer agent to transfer
(issue) (electronically or in certificated form) any certificate for shares of
Common Stock issued to Holder upon conversion of or otherwise pursuant to this
Exchange Note as and when required by this Exchange Note, Borrower directs its
transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing) (electronically or in certificated form) any
certificate for shares of Common Stock to be issued to Holder upon conversion of
or otherwise pursuant to this Exchange Note as and when required by this
Exchange Note, or fails to remove (or directs its transfer agent not to remove
or impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any shares of Common Stock issued to Holder upon
conversion of or otherwise pursuant to this Exchange Note as and when required
by this Exchange Note (or makes any written announcement, statement or threat
that it does not intend to honor the obligations described in this paragraph)
and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in
writing) for five (5) business days after Holder shall have delivered a Notice
of Conversion. It is an obligation of Borrower to remain current in its
obligations to its transfer agent. It shall be an event of default of this
Exchange Note, if a conversion of this Exchange Note is delayed, hindered or
frustrated due to a balance owed by Borrower to its transfer agent. If at the
option of Holder, Holder advances any funds to Borrower’s transfer agent in
order to process a conversion, such advanced funds shall be paid by Borrower to
Holder within forty eight (48) hours of a demand from Holder.

 

3.3. Breach of Covenants. Borrower breaches any material covenant or other
material term or condition contained in this Exchange Note and such breach
continues for a period of seven (7) days after written notice thereof to
Borrower from Holder.

 

3.4. Breach of Representations and Warranties. Any representation or warranty of
Borrower made herein or in any agreement, statement or certificate given in
writing pursuant hereto or in connection herewith, shall be false or misleading
in any material respect when made and the breach of which has (or with the
passage of time will have) a material adverse effect on the rights of Holder
with respect to this Exchange Note.

 

3.5. Receiver or Trustee. Borrower shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for a substantial part of its property or business, or such a receiver
or trustee shall otherwise be appointed.

 

10

 

 

3.6. Judgments. Any money judgment, writ or similar process shall be entered or
filed against Borrower or any subsidiary of Borrower or any of its property or
other assets for more than $100,000.00, and shall remain unvacated, unbonded or
unstayed for a period of twenty (20) days unless otherwise consented to by
Holder, which consent will not be unreasonably withheld.

 

3.7. Bankruptcy. Bankruptcy, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against Borrower or
any subsidiary of Borrower.

 

3.8. Delisting of Common Stock. Borrower shall fail to maintain the listing of
the Common Stock on at least one of the Pink Sheets or OTCQB or an equivalent
replacement exchange, NASDAQ, NYSE, or AMEX.

 

3.9. Failure to Comply with the Exchange Act. Borrower shall fail to comply in
any material respect with the reporting requirements of the Exchange Act; and/or
Borrower shall cease to be subject to the reporting requirements of the Exchange
Act.

 

3.10. Liquidation. Any dissolution, liquidation, or winding up of Borrower or
any substantial portion of its business.

 

3.11. Cessation of Operations. Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts as such debts
become due, provided, however, that any disclosure of Borrower’s ability to
continue as a “going concern” shall not be an admission that Borrower cannot pay
its debts as they become due.

 

3.12. Maintenance of Assets. The failure by Borrower, during the term of this
Exchange Note, to maintain any material intellectual property rights, personal,
real property or other assets which are necessary to conduct its business
(whether now or in the future).

 

3.13. Financial Statement Restatement. The restatement of any financial
statements filed by Borrower with the SEC for any date or period from two years
prior to the Issue Date of this Exchange Note and until this Exchange Note is no
longer outstanding, if the result of such restatement would, by comparison to
the unrestated financial statement, have constituted a material adverse effect
on the rights of Holder with respect to this Exchange Note.

 

3.14. Reverse Splits. Borrower effectuates a reverse split of its Common Stock
without twenty (20) days prior written notice to Holder.

 

3.15. Replacement of Transfer Agent. In the event that Borrower proposes to
replace its transfer agent, the Borrower fails to provide, prior to the
effective date of such replacement, to the replacement transfer agent a fully
executed copy of this Exchange Note.

 

3.16. Cross-Default. Notwithstanding anything to the contrary contained in this
Exchange Note or the other related or companion documents, a breach or default
by Borrower of any covenant or other term or condition contained in any of the
Other Agreements (as defined below), after the passage of all applicable notice
and cure or grace periods, shall, at the option of Holder, be considered a
default under this Exchange Note, in which event Holder shall be entitled (but
in no event required) to apply all rights and remedies of Holder under the terms
of this Exchange Note. For purposes of this Exchange Note, “Other Agreements”
means, collectively, all agreements and instruments between, among, or by
Borrower, and, or for the benefit of, Holder and any affiliate of Holder,
including, without limitation, promissory notes. Each of the loan transactions
will be cross-defaulted with each other loan transaction and with all other
existing and future debt of Borrower to Holder.

 

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3.17. SEC Filings. Borrower fails to remain current in its filings with the SEC.
Such a failure shall expressly constitute an Event of Default, and the Exchange
Note shall become immediately due and payable. The possible reduction in the
Conversion Price under Section 1.2(a) is an additional result of, and not an
alternative remedy for, a breach of this Section 3.17.

 

3.18. Inside Information. Borrower or its officers, directors, and/or affiliates
attempt to transmit, convey, disclose, or any actual transmittal, conveyance, or
disclosure by Borrower or its officers, directors, and/or affiliates of,
material non-public information concerning Borrower, to Holder or its successors
and assigns, which is not immediately cured by Borrower’s filing of a Form 8-K
pursuant to Regulation FD on that same date.

 

3.19 Bid Price. Borrower shall lose the “bid” price for its Common Stock
($0.0001 on the “Ask” with zero market makers on the “Bid” per Level 2) and/or a
market (including the OTC Pink, OTCQB or an equivalent replacement exchange).

 

3.20 Insolvency. 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.

 

3.21 DWAC. Borrower fails to remain DWAC eligible.

 

3.22 Consequences of Event of Default. Upon the occurrence and during the
continuation of any Event of Default specified in Section 3.1 (solely with
respect to failure to pay the principal hereof or interest thereon when due at
the Maturity Date) or Section 3.2, the Exchange Note shall become immediately
due and payable and Borrower shall pay to Holder, in full satisfaction of its
obligations hereunder, an amount equal to the Default Sum (as defined herein).
Upon the occurrence and during the continuation of any Event of Default
specified in Sections 3.1, and/or 3.3 through and including 3.21, exercisable
through the delivery of written notice to Borrower by Holder (the “Default
Notice”), and upon the occurrence of an Event of Default specified in the
remaining sections of Articles III (other than failure to pay the principal
hereof or interest thereon at the Maturity Date specified in Section 3.1,
hereof), the Exchange Note shall become immediately due and payable and Borrower
shall pay to Holder, in full satisfaction of its obligations hereunder, an
amount equal to the greater of (i) 150% times the sum of (w) the then
outstanding principal amount of this Exchange Note plus (x) accrued and unpaid
interest on the unpaid principal amount of this Exchange Note to the date of
payment (the “Mandatory Prepayment Date”) plus (y) “Default Interest”, if any,
in the amount of eighteen percent (18%) per annum from the date of the Event of
Default on the amounts referred to in clauses (w) and/or (x) plus (z) any
amounts owed to Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then
outstanding principal amount of this Exchange Note to the date of payment plus
the amounts referred to in clauses (x), (y) and (z) shall collectively be known
as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be
prepaid, where parity value means (a) the highest number of shares of Common
Stock issuable upon conversion of or otherwise pursuant to such Default Sum in
accordance with Article I, treating the Trading Day immediately preceding the
Mandatory Prepayment Date as the “Conversion Date” for purposes of determining
the lowest applicable Conversion Price, unless the Default Event arises as a
result of a breach in respect of a specific Conversion Date in which case such
Conversion Date shall be the Conversion Date), multiplied by (b) the highest
Closing Price for the Common Stock during the period beginning on the date of
first occurrence of the Event of Default and ending one day prior to the
Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable
hereunder shall immediately become due and payable, all without demand,
presentment or notice, all of which hereby are expressly waived, together with
all costs, including, without limitation, legal fees and expenses, of
collection, and Holder shall be entitled to exercise all other rights and
remedies available at law or in equity.

 

12

 

 

If Borrower fails to pay the Default Amount within five (5) business days of
written notice that such amount is due and payable, then Holder shall have the
right at any time, so long as Borrower remains in default (and so long and to
the extent that there are sufficient authorized shares), to require Borrower,
upon written notice, to immediately issue, in lieu of the Default Amount, the
number of shares of Common Stock of Borrower equal to the Default Amount divided
by the Conversion Price then in effect. Holder may still convert any amounts due
hereunder, including without limitation, the Default Sum, until such time as
this Exchange Note has been repaid in full.

 

ARTICLE IV. MISCELLANEOUS

 

4.1. Failure or Indulgence Not Waiver. No failure or delay on the part of Holder
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privileges. All rights and remedies existing hereunder are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2. Notices. All notices, requests, and demands hereunder shall be in writing
and delivered by hand, by Electronic Transmission, by mail, or by recognized
commercial over-night delivery service (such as Federal Express or UPS), and
shall be deemed given (a) if by hand delivery, upon such delivery; (b) if by
Electronic Transmission, twenty four (24) hours after being sent; (c) if by
mail, forty eight (48) hours after deposit in the United States mail, first
class, registered or certified mail, postage prepaid; or, (d) if by recognized
commercial over-night delivery service, upon such delivery. Each party hereby
expressly consents to the use of Electronic Transmission for communications and
notices under this Exchange Note. For purposes of this Exchange Note,
“Electronic Transmission” means a communication (i) delivered by Fax or E-Mail
when directed to the Fax number or E-Mail address, respectively, for that
recipient on record with the sending party; and, (ii) that creates a record that
is capable of retention, retrieval, and review, and that may thereafter be
rendered into clearly legible tangible form.

 

4.3. Amendments. This Exchange Note and any provision hereof may only be amended
by an instrument in writing signed by Borrower and Holder. The term “Exchange
Note” and all reference thereto, as used throughout this instrument, shall mean
this instrument as originally executed, or if later amended or supplemented,
then as so amended or supplemented.

 

4.4. Assignability. This Exchange Note shall be binding upon Borrower and its
successors and assigns, and shall inure to be the benefit of Holder and its
successors and assigns. Borrower may not assign this Exchange Note without the
prior written consent of Holder. This Exchange Note, and nay portion thereof,
and any share of Common Stock issued upon the conversion of this Exchange Note,
may be offered, sold, assigned, pledged, or transferred by Holder without the
consent of Borrower.

 

4.5. Cost of Collection. If default is made in the payment of this Exchange
Note, Borrower shall pay Holder hereof costs of collection, including reasonable
attorneys’ fees.

 

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4.6. Governing Law. This Exchange Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement must be brought only
in (i) the state courts in Dade or Broward County, Florida; or (ii) the state
courts in New York County, New York, in the sole discretion of the party
bringing the action. Both parties and the individual signing this Agreement on
behalf of Borrower agree to submit to the jurisdiction of such courts. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Exchange Note is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform to such statute
or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or unenforceability of any other
provision of this Exchange Note. Nothing contained herein shall be deemed or
operate to preclude Holder from bringing suit or taking other legal action
against Borrower in any other jurisdiction to collect on Borrower’s obligations
to Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other decision in favor of Holder. This
Exchange Note shall be deemed an unconditional obligation of Borrower for the
payment of money and, without limitation to any other remedies of Holder, may be
enforced against Borrower by summary proceeding pursuant to New York Civil
Procedure Law and Rules Section 3213 or any similar rule or statute in the
jurisdiction where enforcement is sought. For purposes of such rule or statute,
any other document or agreement to which Holder and Borrower are parties or
which Borrower delivered to Holder, which may be convenient or necessary to
determine Holder’s rights hereunder or Borrower’s obligations to Holder are
deemed a part of this Exchange Note, whether or not such other document or
agreement was delivered together herewith or was executed apart from this
Exchange Note.

 

4.7. Certain Amounts. Whenever pursuant to this Exchange Note Borrower is
required to pay an amount in excess of the outstanding principal amount (or the
portion thereof required to be paid at that time) plus accrued and unpaid
interest plus Default Interest on such interest, Borrower and Holder agree that
the actual damages to Holder from the receipt of cash payment on this Exchange
Note may be difficult to determine and the amount to be so paid by Borrower
represents stipulated damages and not a penalty and is intended to compensate
Holder in part for loss of the opportunity to convert this Exchange Note and to
earn a return from the sale of shares of Common Stock acquired upon conversion
of this Exchange Note at a price in excess of the price paid for such shares
pursuant to this Exchange Note. Borrower and Holder hereby agree that such
amount of stipulated damages is not plainly disproportionate to the possible
loss to Holder from the receipt of a cash payment without the opportunity to
convert this Exchange Note into shares of Common Stock.

 

4.8. Disclosure. Upon receipt or delivery by Borrower of any notice in
accordance with the terms of this Exchange Note, unless Borrower has in good
faith determined that the matters relating to such notice do not constitute
material, non-public information relating to Borrower, Borrower shall within
four (4) days after any such receipt or delivery, publicly disclose such
material, non-public information on a Current Report on Form 8-K, or such
similar disclosure in accordance with the rules of the OTC Markets. In the event
that Borrower believes that a notice contains material, non-public information
relating to Borrower, Borrower so shall indicate to Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, Holder
shall be allowed to presume that all matters relating to such notice do not
constitute material, non-public information relating to Borrower.

 

14

 

 

4.9. Notice of Corporate Events. Except as otherwise provided below, Holder of
this Exchange Note shall have no rights as a Holder of Common Stock unless and
only to the extent that it converts this Exchange Note into Common Stock.
Borrower shall provide Holder with prior notification of any meeting of
Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders). In the event of any taking by Borrower of a record of its
shareholders for the purpose of determining shareholders who are entitled to
receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation,
reclassification or recapitalization) any share of any class or any other
securities or property, or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
Borrower or any proposed liquidation, dissolution or winding up of Borrower,
Borrower shall mail a notice to Holder, at least twenty (20) days prior to the
record date specified therein (or thirty (30) days prior to the consummation of
the transaction or event, whichever is earlier), of the date on which any such
record is to be taken for the purpose of such dividend, distribution, right or
other event, and a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known at such time.
Borrower shall make a public announcement of any event requiring notification to
Holder hereunder substantially simultaneously with the notification to Holder in
accordance with this Section 4.9.

 

4.10. Remedies. Borrower acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to Holder, by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, Borrower
acknowledges that the remedy at law for a breach of its obligations under this
Exchange Note will be inadequate and agrees, in the event of a breach or
threatened breach by Borrower of the provisions of this Exchange Note, that
Holder shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Exchange
Note and to enforce specifically the terms and provisions thereof, without the
necessity of showing economic loss and without any bond or other security being
required.

 

4.11. Voluntary Agreement. Borrower has carefully read this Exchange Note and
has asked any questions needed for Borrower to understand the terms,
consequences and binding effect of this Exchange 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 Exchange Note
voluntarily and without any duress or undue influence by Holder or anyone else.

 

4.12. Accredited Investor Status. Holder is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D.

 

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

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

(SIGNATURE PAGE FOLLOWS)

 

15

 

 

 

IN WITNESS WHEREOF, Borrower has caused this Exchange Note to be signed in its
name by its duly authorized officer as of the Issue Date first set forth above.

 

DATA443 RISK MITIGATION, INC.,   a Nevada corporation         BY:            
NAME:     TITLE:     DATED:    

 

ACKNOWLEDGED, ACCEPTED, AND AGREED:

 

BLUE CITI LLC,   a New York limited liability company         BY:     NAME:    
TITLE:     DATED:    

 

16

 

 

EXHIBIT A

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert principal under the 30 September 2020
Exchange Convertible Promissory Note issued in the original principal amount of
$325,000 (the “Exchange Note”) by DATA443 RISK MITIGATION, INC., a Nevada
corporation (the Company”), into shares of common stock of the Company (the
“Common Stock”), in accordance with the terms and conditions of the Exchange
Note and as provided for herein, as of the date written below. If shares of
Common Stock are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

 

By the delivery of this Notice of Conversion the undersigned represents and
warrants to the Company that its ownership of the Common Stock does not exceed
the amounts specified under Section 1.1 of this Exchange Note, as determined in
accordance with Section 13(d) of the Exchange Act.

 

CONVERSION CALCULATIONS:

 

Date of Conversion: ______________________   Conversion Price:
_____________________ Principal Amount Converted: ___________________   Interest
Converted: _____________________ Number of Shares of Common Stock to be Issued:
____________________________ Remaining Principal Balance of the Exchange Note:
____________________________

 

HOLDER: ____________________________

 

Authorized Signature: ____________________________

 

Name: ____________________________

 

Title: ____________________________

 

Address for Delivery of Certificates:   _____________________________________  
        _____________________________________          
_____________________________________

 

OR

 

DWAC Instructions:   Broker #:   _____________________________________          
    Account #:   _____________________________________

 

OR

 

Other Instructions:

 

17