Exhibit 10.20


 


DEBT PURCHASE AGREEMENT


 


This Debt Purchase
Agreement (the “Agreement”) made as of this 10th day of June, 2014, by and between LG Capital Funding, LLC
(the “Buyer”) and Spagus Capital Partners, LLC (the “Seller”).


 


1.  PURCHASE AND SALE OF THE
CONVERTIBLE NOTE


 


Upon the terms and
conditions herein contained, at the Closing (as hereinafter defined), the Seller hereby sells, assigns and transfers to the Buyer
and the Buyer agrees to purchase from the Seller the “Transferred Rights” of the Seller and all rights thereto. Transferred
Rights shall mean all rights with respect to $50,000 in principal and proportional accrued interest (the “Assigned Portion”)
under that promissory note in the amount of $150,000 issued by M Line Holdings, Inc. (“Borrower” or “Company”)
on September 29, 2011, a true and correct copy which has been provided to New Venture Attorneys, P.C. (the “Note”).
By its signatures hereto the Borrower accepts the assignment of the Transferred Rights to Buyer and agrees that Buyer may convert
the Transferred Rights into shares of the Company’s common stock.


 


2. CONSIDERATION


 


The purchase price
for the Assigned Portion of the Note shall be the Buyer’s payment of Fifty Thousand Dollars ($50,000.00) to the Seller, for
the Assigned Portion (the “Purchase Price”).


 


3. CLOSING


 


The closing of the
transactions contemplated by this Agreement (the “Closing”) shall take place simultaneously with the delivery of the
Purchase Price via wire transfer of immediately available funds against the assignment of the Note. The funds will be wired as
set forth in Exhibit A.


 


4. REPRESENTATIONS
AND WARRANTIES OF SELLER The Seller hereby represents and warrants to the Buyer as follows:


 


	 	4.1	Status of the Seller and the Note. The Seller is the beneficial owner of the Note. The Note is currently outstanding and Seller is informed by Company that the Note represents a bona fide debt obligation of the Company.


 


4.2           Authorization;
Enforcement. (i) Seller has all requisite corporate power and authority to enter into and perform the Agreement and to consummate
the transactions contemplated hereby and to sell each Note, in accordance with the terms hereof, (ii) the execution and delivery
of this Agreement by the Seller and the consummation by it of the transactions contemplated hereby (including, without limitation,
the sale of the Note to the Buyer) have been duly authorized by the Seller and no further consent or authorization of the Seller
or its members is required, (iii) this Agreement has been duly executed and delivered by the Seller, and (iv) this Agreement constitutes
a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors’ rights and remedies or by other equitable principles of general
application.


 



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4.3           No
Conflicts. The execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the
transactions contemplated hereby (including, without limitation, the sale of the Note to the Buyer) will not (i) conflict with
or result in a violation of any provision of its certificate of formation or other organizational documents, or (ii) violate or
conflict with or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time
or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, note, bond, indenture or other instrument to which Seller are a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which Seller are subject) applicable to Seller or the Note is bound or affected. The Seller is
not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental
agency, regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver
or perform any of its obligations under this Agreement in accordance with the terms hereof.


 


4.4           Title;
Rule 144 Matters. Seller has good and marketable title to the Note. Seller is not an “Affiliate” of the Company,
as that term is defined in Rule 144 of the Securities Act of 1933, as amended (the “1933 Act”), as such Buyer will
be able to track the holding period of the Seller.


 


4.5           Consent
of the Company.


 


(i)          The
Company, as evidence by its signature at the foot of this Agreement, hereby represents and warrants that, upon delivery to the
Company of the Note, the Company shall promptly cause to be issued to and in the name of Buyer one of more new executed Notes in
the aggregate amount of $50,000.00 plus accrued interest but otherwise having the sale terms (including, but not necessarily limited
to, referring to the original issue date) as in the Note. The Note may contain the same restrictive legend as provided in the original
Note, but no stop transfer order. The Note is currently outstanding and represents a bona fide debt obligation of the Company.


 


(ii)         The
signature by the Company also represents the Company’s agreement to treat Buyer as a party to, and having all the rights
of the Seller with respect to the Transferred Rights.


 


5. REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGEMENTS OF THE BUYER. The Buyer hereby represents warrants and acknowledges to the Seller as follows:


 


5.1 Sophisticated
Investor. The Buyer has sufficient knowledge and experience of financial and business matters, is able to evaluate the merits
and risks of the partial purchase of the Note and has had substantial experience in previous private and public purchases of securities.


 



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5.2 Authorization;
Enforcement. (i) Buyer has all requisite corporate power and authority to enter into and perform the Agreement and to consummate
the transactions contemplated hereby and to purchase each Note, in accordance with the terms hereof, (ii) the execution and delivery
of this Agreement by the Buyer and the consummation by it of the transactions contemplated hereby (including, without limitation,
the purchase of the Note by the Buyer) have been duly authorized by the Buyer and no further consent or authorization of the Buyer
or its members is required, (iii) this Agreement has been duly executed and delivered by the Buyer, and (iv) this Agreement constitutes
a legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors’ rights and remedies or by other equitable principles of general application.


 


5.3           No
Conflicts. The execution, delivery and performance of this Agreement by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby will not (i) conflict with or result in a violation of any provision of its certificate of formation
or other organizational documents, or (ii) violate or conflict with or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, note, bond, indenture or other instrument to which Buyer
is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory organizations to which Buyer is subject) applicable to Seller
or the Note is bound or affected. The Buyer is not required to obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations under this Agreement in accordance with the terms hereof.


 


6.          MISCELLANEOUS



 


6.1           Binding
Effect; Benefits. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective
successors and permitted assigns. Except as otherwise set forth herein, this Agreement may not be assigned by any party hereto
without the prior written consent of the other party hereto. Except as otherwise set forth herein, nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto or their respective successors and permitted assigns
any rights, remedies, obligations or liabilities under or by any reason of this Agreement.


 


6.2           Notices.
All notices, requests, demands and other communications which are required to be or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered in person, or transmitted by telecopy or telex, or upon receipt
after dispatch by certified or registered first class mail, postage prepaid, return receipt requested, to the party to whom the
same is so given or made, at the following addresses (or such others as shall be provided in writing hereafter):


 



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(a)   If to the Buyer to:


LG Capital Funding, LLC


1218 Union Street, Suite #2


Brooklyn, NY 11225


Attn: Joseph Lerman


 


(b)   If to the Seller to:


Spagus Capital Partners, LLC


250 F. Centerville Road


Warwick, RI 02886


 


6.3           Entire
Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.


 


6.4           Further
Assurances. After the Closing, at the request of either party, the other party shall execute, acknowledge and deliver, without
further consideration, all such further assignments, conveyances, endorsements, deeds, powers of attorney, consents and other documents
and take such other action as may be reasonably requested to consummate the transactions contemplated by this Agreement.


 


6.5           Headings.
The section and other headings contained in this Agreement are for reference purposes only and shall not be deemed to be part of
this Agreement or to affect the meaning or interpretation of this Agreement.


 


6.6           Counterparts.
This Agreement may be executed in any number of counterparts and by facsimile, each of which, when executed, shall be deemed to
be an original and all of which together shall be deemed to be one and the same instrument.


 


6.7           Governing
Law. This Agreement shall be construed as to both validity and performance and enforced in accordance with and governed by
the laws of the State of New York, without giving effect to the conflicts of law principles thereof.


 


6.8           Severability.
If any term or provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of the Agreement shall be valid and enforced to the fullest extent permitted
by law.


 


6.9           Amendments.
This Agreement may not be modified or changed except by an instrument or instruments in writing executed by the parties hereto.


 



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IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed as of the date first above written.


 


	 	BUYER:
	 	LG CAPITAL FUNDING, LLC
	 	 
	 	By:	 
	 	Joseph Lerman, Managing Member
	 	 
	 	SELLER:
	 	 
	 	SPAGUS CAPITAL PARTNERS, LLC
	 	 
	 	By:	 
	 	 	 
	 	Title: 	 


 


	ACCEPTED AND AGREED:	 
	 	 
	M LINE HOLDINGS, INC	 
	 	 
	By:	/s/ Anthony L. Anish	 
	 	 	 
	Title: 	COO	 


 



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EXHIBIT A


WIRE INSTRUCTIONS FOR SELLER


 


PLEASE WIRE YOUR FUNDS TO THE FOLLOWING


 


PLEASE INSERT COMPLETE BANK WIRING INFO INCLUDING BANK ADDRESS
AS WELL AS ADDRESS


 



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NON-AFFILIATION
LETTER


 


June 10, 2014


 


Counsel to M LINE HOLDINGS, INC.


 


Counsel to LG Capital Funding, LLC


 


Gentlemen:


 


Please let this letter serve as confirmation
that Spagus Capital Partners, LLC is not now, and has not been during the preceding 90 days, an officer, director, 10% or more
shareholder of M LINE HOLDINGS, INC. or in any other way an “affiliate” (as that term is defined in Rule 144(a)(1)
adopted pursuant to the Securities Act of 1933, as amended) of such issuer.


 


	Very Truly yours,	 
	 	 
	SPAGUS CAPITAL PARTNERS, LLC	 
	 	 
	By:	 	 
	 	 	 
	Title:	 	 


 



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	 	THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT”)	 


 


US $60,673.97


 


REPLACEMENT NOTE- ORIGINALLY ISSUED 9/29/2011 IN THE AMOUNT
OF $150,000.00


 


M LINE HOLDINGS, INC.


8% CONVERTIBLE REDEEMABLE NOTE


DUE JUNE 10, 2015


 


FOR VALUE RECEIVED,
M Line Holdings, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors
and permitted assigns (“Holder”), the aggregate principal face amount of Sixty Thousand Six Hundred Seventy
Three Dollars and 97/100 cents exactly (U.S. $60,673.97) on June 10, 2015 (“Maturity Date”) and to pay interest
on the principal amount outstanding hereunder at the rate of 8% per annum commencing on June 10, 2014. The interest will be paid
to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this
Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and
if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company
will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts
required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the
last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment
of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the
sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph
4(b) herein.


 


This Note is subject to the following additional
provisions:


 


1.          This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	 



    	 



     


2.          The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.          This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”),
and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name
this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note
be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this
Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this
Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of
receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.


 


4.          (a)          The
Holder of this Note is entitled, at its option, at any time after 180 days, to convert all or any amount of the principal face
amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) without
restrictive legend of any nature, at a price (“Conversion Price”) for each share of Common Stock equal to 50%
of the lowest closing bid price of the Common Stock as reported on the OTCQB marketplace which the Company’s
shares are traded or any market upon which the Common Stock may be traded in the future (“Exchange”), for the
fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company (provided
such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard
or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within
3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder
has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing
such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in
blank. Accrued, but unpaid interest shall be subject to conversion. No fractional shares 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. In the event the
Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 40% instead of 50%
while that “Chill” is in effect.


 


(b)          Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock (“Interest Shares”). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	2



    	 



     


(c)          This
Note may not be prepaid.


 


(d)          Upon
(i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock,
other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into
another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change
the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares
of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a “Sale Event”),
then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus
accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid
principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately
prior to such Sale Event at the Conversion Price.


 


(e)          In
case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which
this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note
shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of
stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the
Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash,
the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.


 


5.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.          The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


7.          The
Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by
the Holder in collecting any amount due under this Note.


 


8.          If
one or more of the following described “Events of Default” shall occur:


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	3



    	 



     


(a)          The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)          Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or


 


(c)          The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or


 


(d)          The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) 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; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)          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; or


 


(f)          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; or


 


(g)          One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)          The
Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered
and failed to cure such default within the appropriate grace period; or


 


(i)          The
Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;


 


(j)          If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	4



    	 



     


(k)          The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or


 


(1)         The
Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder; or


 


(m)          The
Company shall not be “current” in its filings with the Securities and Exchange Commission; or


 


(n)          The
Company shall lose the “bid” price for its stock and a market (including the OTCBB marketplace or other exchange)


 


Then, or at any time thereafter, unless
cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder’s
sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further)
notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note
or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period
of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded
by law. Upon an Event of Default, interest shall accrue at a default interest rate of 16% per annum or, if such rate is usurious
or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k)
the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was
delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty for a breach
of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i), the outstanding
principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under
this Note shall increase by 10%.


 


If the Holder shall commence an action
or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails
in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.


 


9.          In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


10.         Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.


 


	/s/ Anthony L. Anish	 
	Initials	 


 


 



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11.         The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information
indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a(9)
opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.         The
Company shall issue irrevocable transfer agent instructions reserving 150,000,000 shares of its Common Stock for conversions under
this Note (the “Share Reserve”). The reserve shall be replenished as needed to allow for conversions of this Note and
another $50,000 note issued by the Company to the Holder on even date herewith . Upon full conversion of this Note, the any shares
remaining in the Share Reserve shall be cancelled.


 


13.         The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.


 


14.         This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



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IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by an officer thereunto duly authorized.


 


Dated: June 10, 2014


 


	 	M LINE HOLDINGS, INC
	 	 
	 	By:	/s/ Tony Anish
	 	 	 
	 	 	Tony Anish, Chief Operating Officer


 


	/s/ Anthony L. Anish	 
	Initials	 


 



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EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby
irrevocably elects to convert $___________ of the above Note into ___________ Shares of Common Stock of M Line Holdings, Inc. (“Shares”)
according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with
respect thereto.


 


	Date of Conversion: 	 


 


	Applicable Conversion Price:	 


 


	Signature: 	 
	 	[Print Name of Holder and Title of Signer]


 


	Address:	 
	 	 


 


	SSN or EIN: 	 


 


	Shares are to be registered in the following name: 	 


 


	Name:	 


 


	Address:	 


 


	Tel: 	 


 


	Fax:	 


 


	SSN or EIN: 	 


 


Shares are to be sent or delivered to the following account:


 


	Account Name: 	 


 


	Address:	 


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	8



    	 



     


	 	THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT”)	 


 


US $50,000.00


 


M LINE HOLDINGS, INC.


8% CONVERTIBLE REDEEMABLE NOTE


DUE JUNE 10, 2015


 


FOR VALUE RECEIVED,
M Line Holdings, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors
and permitted assigns (“Holder”), the aggregate principal face amount of Fifty Thousand Dollars exactly (U.S.
$50,000.00) on June 10, 2015 (“Maturity Date”) and to pay interest on the principal amount outstanding hereunder
at the rate of 8% per annum commencing on June 10, 2014. The interest will be paid to the Holder in whose name this Note is registered
on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are
payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company
as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding
principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the
Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company.
The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest
shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.


 


This Note is subject to the following additional
provisions:


 


1.          This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	 



    	 



     


2.          The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.          This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”),
and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name
this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note
be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this
Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this
Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of
receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.


 


4.          (a)          The
Holder of this Note is entitled, at its option, at any time after 180 days, to convert all or any amount of the principal face
amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) without
restrictive legend of any nature, at a price (“Conversion Price”) for each share of Common Stock equal to 50%
of the lowest closing bid price of the Common Stock as reported on the OTCQB marketplace which the Company’s
shares are traded or any market upon which the Common Stock may be traded in the future (“Exchange”), for the
fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company (provided
such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard
or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within
3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder
has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing
such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in
blank. Accrued, but unpaid interest shall be subject to conversion. No fractional shares 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. In the event the
Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 40% instead of 50%
while that “Chill” is in effect.


 


(b)          Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock (“Interest Shares”). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	2



    	 



     


(c)          The
Notes may be prepaid with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then at 125%
of the face amount plus any accrued interest; (ii) if the note is prepaid within 91 days after the issuance date but less than
151 days after the issuance date, then at 140% of the face amount plus any accrued interest and (iii) if the note is prepaid within
151 days after the issuance date but less than 180 days after the issuance date, then at 150% of the face amount plus any accrued
interest. This Note may not be prepaid after the 180th day. Such redemption must be closed and funded within 3 days
of giving notice of redemption of the right to redeem shall be null and void.


 


(d)          Upon
(i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock,
other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into
another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change
the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares
of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a “Sale Event”),
then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus
accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid
principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately
prior to such Sale Event at the Conversion Price.


 


(e)          In
case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which
this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note
shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of
stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the
Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash,
the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.


 


5.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.          The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	3



    	 



     


7.          The
Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by
the Holder in collecting any amount due under this Note.


 


8.          If
one or more of the following described “Events of Default” shall occur:


 


(a)          The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)          Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or


 


(c)          The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or


 


(d)          The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) 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; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)          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; or


 


(f)          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; or


 


(g)          One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)          The
Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered
and failed to cure such default within the appropriate grace period; or


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	4



    	 



     


(i)          The
Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;


 


(j)          If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;


 


(k)          The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or


 


(1)         The
Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder; or


 


(m)          The
Company shall not be “current” in its filings with the Securities and Exchange Commission; or


 


(n)          The
Company shall lose the “bid” price for its stock and a market (including the OTCBB marketplace or other exchange)


 


Then, or at any time thereafter, unless
cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder’s
sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further)
notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note
or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period
of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded
by law. Upon an Event of Default, interest shall accrue at a default interest rate of 16% per annum or, if such rate is usurious
or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k)
the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered
to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty for a breach of Section 8(n)
shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i), the outstanding principal
due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under this Note
shall increase by 10%.


 


If the Holder shall commence an action
or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails
in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.


 


9.          In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	5



    	 



     


10.         Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.


 


11.         The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information
indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a(9)
opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.         The
Company shall issue irrevocable transfer agent instructions reserving 150,000,000 shares of its Common Stock for conversions under
this Note and another note issued by the Company to the Holder on even date herewith (the “Share Reserve”). The reserve
shall be replenished as needed to allow for conversions of this Note. Upon full conversion of this Note, the any shares remaining
in the Share Reserve shall be cancelled.


 


13.         The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.


 


14.         This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	6



    	 



     


IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by an officer thereunto duly authorized.


 


Dated: June 10, 2014


 


	 	M LINE HOLDINGS, INC
	 	 	 
	 	By:	 /s/ Tony Anish
	 	 	 
	 	 	Tony Anish, Chief Operating Officer


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	7



    	 



     


EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby
irrevocably elects to convert $____________ of the above Note into ____________ Shares of Common Stock of M Line Holdings, Inc.
(“Shares”) according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.


 


	Date of Conversion: 	 


 


	Applicable Conversion Price: 	 


 


	Signature: 	 
	 	[Print Name of Holder and Title of Signer]


 


	Address: 	 
	 	 


 


	SSN or EIN: 	 


 


	Shares are to be registered in the following name: 	 


 


	Name: 	 


 


	Address: 	 


 


	Tel: 	 


 


	Fax: 	 


 


	SSN or EIN: 	 


 


Shares are to be sent or delivered to the following account:


 


	Account Name: 	 


 


	Address: 	 


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	8



    	 



     


UNANIMOUS CONSENT IN LIEU OF A SPECIAL


MEETING OF DIRECTORS OF


M LINE HOLDINGS, INC.


 


The undersigned, being all of the directors
of M Line Holdings, Inc, a corporation of the State of Nevada (the “Corporation”), do hereby authorize and approve
the actions set forth in the following resolutions without the formality of convening a meeting, and do hereby consent to the following
actions of this Corporation, which actions are hereby deemed affective as of the date hereof:


 


RESOLVED: That officers of
this Corporation are authorized and directed to amend and restate a $50,000 portion (plus accrued interest) of a $150,000.00
note issued to Spagus Capital Partners, LLC on September 29, 2011 into a new promissory note to LG Capital Funding, LLC, in the
amount of $60,673.97 to provide conversion features equal to 55% of the lowest closing bid price of the last day of 10 trading
days prior to conversion, as well as 8% interest and become due and payable on June 10, 2015; and


 


RESOLVED: That the officers of this
Corporation are authorized and directed to issue a $50,000 promissory note to LG Capital Funding, LLC, which provides conversion
features equal to 50% of the lowest closing bid price of the Corporation’s Common Stock for the last 15 trading days prior
to conversion, as well as 8% per annum interest and become due and payable on June 10, 2015; and


 


RESOLVED FURTHER: That the officers
of this corporation are authorized and directed to execute transfer agent instructions with the Company’s transfer
agent to irrevocably reserve 150,000,000 shares of the Company’s Common Stock with the transfer agent for the benefit of
LG Capital Funding, LLC for conversion of the above aforementioned notes and


 


RESOLVED FURTHER: That officers
of this Corporation are authorized and directed to issue an additional promissory note in the amount of $50,000.00 to LG
Capital Funding, LLC which provides conversion features equal to 50% of the lowest closing bid price of the Corporation’s
Common Stock for the last 15 trading days prior to conversion, as well as 8% per annum interest and become due and payable on June
10, 2015; and


 


RESOLVED FURTHER: That the aforementioned notes shall
be paid for by LG Capital Funding, LLC by the payment to the Corporation of $50,000 and by the issuance of a $50,000 promissory
note of LG Capital Funding, LLC secured by assets with a fair market value of not less than $50,000.00; and


 


RESOLVED FURTHER, that each of the
officers of the Corporation be, and they hereby are, authorized and empowered to execute and deliver such documents, instruments
and papers and to take any and all other action as they or any of them may deem necessary or appropriate of the purpose of carrying
out the intent of the foregoing resolutions and the transactions contemplated thereby; and that the authority of such officers
to execute and deliver any such documents, instruments and papers and to take any such other action shall be conclusively evidenced
by their execution and delivery thereof or their taking thereof.


 



    	 



    	 



     


The undersigned, by affixing their signatures
hereto, do hereby consent to, authorize and approve the foregoing actions in their capacity as a majority of the direction of M
Line Holdings, Inc.


 


Dated: June 10, 2014


 


	/s/ Bruce Barren	 
	Bruce Barren	 
	 	 
	/s/ George Colin	 
	George Colin	 
	 	 
	/s/ Jitu Banker	 
	Jitu Banker	 
	 	 
	/s/ Anthony Anish	 
	Anthony Anish	 


 



    	 



    	 



     


THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. LENDERS SHOULD BE AWARE THAT THEY MAY
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


 


LG CAPITAL FUNDING, LLC


COLLATERALIZED SECURED PROMISSORY NOTE


BACK END NOTE


 


	$50,000.00	Brooklyn, NY
	 	June 10, 2014


 


	 	1.	Principal and Interest


 


FOR VALUE RECEIVED,
LG Capital Funding, LLC, a New York Limited Liability Company (the “Company”) hereby absolutely and unconditionally
promises to pay to M Line Holdings, Inc (the “Lender”), or order, the principal amount of Fifty Thousand Dollars ($50,0000)
no later than February 10, 2015, unless the Lender does not meet the “current information requirements” required under
Rule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender
on the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as
well as the Lenders payment obligations under the offsetting note. This Full Recourse Note shall bear simple interest at the rate
of 8%.


 


	 	2.	Repayments and Prepayments; Security.


 


a.           All
principal under this Note shall be due and payable no later than February 10, 2015, unless the Lender does not meet the “current
information requirements” required under Rule 144 of the Securities Act of 1933, as amended, in which case the Company may
declare the offsetting note issued by the Lender on the same date herewith to be in Default (as defined in that note) and cross
cancel its payment obligations under this Note as well as the Lenders payment obligations under the offsetting note.


 


b.           The
Company may pay this Note at any time. This note may not be assigned by the Lender, except by operation of law.


 


	/s/ Anthony L. Anish	 


 



    	1



    	 



     


c.           This
Note shall initially be secured by the pledge of the $50,000.00 8% convertible promissory note issued to the Company by the Lender
on even date herewith (the “Lender Note”). The Company may exchange this collateral for other collateral with an
appraised value of at least $50,000.00, by providing 3 days prior written notice to the Lender. If the Lender does not object
to the substitution of collateral in that 3 day period, such substitution of collateral shall be deemed to have been accepted by
the Lender. All collateral shall be retained by New Venture Attorneys, P.C., which shall act as the escrow agent for
the collateral for the benefit of the Lender. The Company may not effect any conversions under the Lender Note until it has made
full cash payment for the portion of the Lender Note being converted.


 


______


Lender Initials to Acceptance of bolded section above.


 


	 	3.	Events of Default; Acceleration.


 


a.           The
principal amount of this Note is subject to prepayment in whole or in part upon the occurrence and during the continuance of any
of the following events (each, an “Event of Default”): the initiation of any bankruptcy, insolvency, moratorium, receivership
or reorganization by or against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon
the occurrence of any Event of Default, the entire unpaid principal balance of this Note and all of the unpaid interest accrued
thereon shall be immediately due and payable. The Company may offset amounts due to the Lender under this Note by similar amounts
that may be due to the Company by the Lender resulting from breaches under the Lender Note.


 


b.           No
remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative
and in addition to every other remedy hereunder, now or hereafter existing at law or in equity or otherwise. The Company accepts
and agrees that this Note is a full recourse note and that the Holder may exercise any and all remedies available to it under law.


 


	 	4.	Notices.


 


a.           All
notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by
telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage prepaid, addressed (i) if to a Lender, at such Lender’s address as the Lender shall have furnished
the Company in writing and (ii) if to the Company at such address as the Company shall have furnished the Lender(s) in writing.


 


b.           Each
such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given
when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited
in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent
by electronic communication with confirmation, upon the delivery of electronic communication.


 


	/s/ Anthony L. Anish	 


 



    	2



    	 



     


	 	5.	Miscellaneous.


 


a.           Neither
this Note nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in
writing.


 


b.           No
failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable
and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity
or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the
parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note regardless
of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any
extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or secondarily liable.


 


c.           If
Lender retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all, or any
part of, or for protection of the indebtedness respected by this Note, then the Company agrees to pay all costs and expenses of
the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys’
fees.


 


d.           This
Note shall for all purposes be governed by, and construed in accordance with the laws of the State of New York (without reference
to conflict of laws).


 


e.           This
Note shall be binding upon the Company’s successors and assigns, and shall inure to the benefit of the Lender’s successors
and assigns.


 


	/s/ Anthony L. Anish	 


 



    	3



    	 



     


 


IN WITNESS WHEREOF, the Company has caused
this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.


 


	 	LG CAPITAL FUNDING, LLC
	 	 
	 	By:	 
	 	 	 
	 	Title:	 
	 	 
	 	APPROVED:
	 	 
	 	M LINE HOLDINGS, INC.
	 	 
	 	By:	/s/ Anthony L. Anish
	 	 	 
	 	Title: 	COO


 



    	4



    	 



     


DISBURSEMENT AUTHORIZATION


(MEMORANDUM)


 


TO: LG CAPITAL FUNDING, LLC.


 


FROM: M LINE HOLDINGS, INC


 


DATE: June 10, 2014


 


RE: Disbursement of Funds


 


In connection with
the funding of an aggregate of $50,000 pursuant to that certain Convertible Redeemable Note dated as of June 10, 2014 (the “Agreement”),
you are hereby directed to disburse such funds as follows:


 


	 	1.	$2,500.00 to New Venture Attorneys, P.C. in accordance with the wire transfer instructions attached as Schedule A hereto;


 


	 	2.	$4,750 to Anubis Capital Partners, LLC, in accordance with the wire transfer instructions attached as Schedule B hereto; and


 


	 	3.	$42,750 to M Line Holdings, Inc. in accordance with the wire transfer instructions attached as Schedule C hereto;


 


*with identical payments to be made on ash funding
of $50,000 back end note


 


	 	/s/ Tony Anish 
	 	 
	 	Tony Anish, Chief Operating Officer


 


	 	 
	Company Initials	 


 



    	 



    	 



     


EXHIBIT A


NEW VENTURE ATTORNEYS


WIRING INFORMATION


 


	Please wire funds to:
	 
	Bank of America
	 
	Routing No: 026009593
	Acct No.: 164109387780
	 
	Beneficiary:	New Venture Attorneys, PC, IOLTA account
	 	 
	Attorney info:	
        New Venture Attorneys, P.C.

        900 E. Hamilton Ave, Suite 100

        Campbell, CA 95008



 


	/s/ Anthony L. Anish	 
	Company Initials	 


 



    	 



    	 



     


EXHIBIT B


ANUBIS CAPITAL PARTNERS WIRING INFO


 


Capital One, N.A.


8989 Preston Road


Frisco, TX 75034


 


Routing No:  111901014


Acct No.:      3622044799


 


Beneficiary:  Anubis Capital Partners


 


2550 Midway Road Suite 198


Carrolton, TX 75006


 


	/s/ Anthony L. Anish	 
	Company Initials	 


 



    	 



    	 



     


EXHIBIT C


[WIRING INFO FOR ISSUER]


 


	Beneficiary:	M Line Holdings, Inc.
	 	2672 Dow Avenue
	 	Tustin, CA 92780


 


	Bank Account Number:    	23414-69572


 


	Bank Routing: 	121000358


 


	Bank:	Bank of America
	 	14222 Culver Drive
	 	Irvine, CA 92620


 


	/s/ Anthony L. Anish	 
	Company Initials	 


 



    	 



    	 



     


	 	THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT”)	 


 


US $50,000.00


 


M LINE HOLDINGS, INC.


8% CONVERTIBLE REDEEMABLE NOTE


DUE JUNE 10, 2015


BACK END NOTE


 


FOR VALUE RECEIVED,
M Line Holdings, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors
and permitted assigns (“Holder”), the aggregate principal face amount of Fifty Thousand Dollars exactly (U.S. $50,000.00)
on May 30, 2015 (“Maturity Date”) and to pay interest on the principal amount outstanding hereunder at the rate
of 8% per annum commencing on May 30, 2014. The interest will be paid to the Holder in whose name this Note is registered on the
records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable
at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as
designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal
due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of
this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding
of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the
liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable
in Common Stock (as defined below) pursuant to paragraph 4(b) herein.


 


This Note is subject to the following additional
provisions:


 


1.          This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	 



    	 



     


2.          The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.          This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”),
and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name
this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note
be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this
Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this
Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of
receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.


 


4.          (a)
The Holder of this Note is entitled, at its option, at any time after 180 days, to convert all or any amount of the principal face
amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) without
restrictive legend of any nature, at a price (“Conversion Price”) for each share of Common Stock equal to 50%
of the lowest closing bid price of the Common Stock as reported on the OTCQB marketplace which the Company’s
shares are traded or any market upon which the Common Stock may be traded in the future (“Exchange”), for the
fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company (provided
such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard
or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within
3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder
has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing
such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in
blank. Accrued, but unpaid interest shall be subject to conversion. No fractional shares 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. In the event the
Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 40% instead of 50%
while that “Chill” is in effect.


 


(b)          Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock (“Interest Shares”). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	2



    	 



     


 


(c)          This
Note may not be prepaid, except that if the $50,000 Rule 144 convertible redeemable note issued by the Company of even date herewith
is redeemed by the Company within 6 months of the issuance date of such Note, all obligations of the Company under this Note and
all obligations of the Holder under the Holder issued Back End Note will be automatically be deemed satisfied and this Note and
the Holder issued Back End Note will be automatically be deemed cancelled and of no further force or effect.


 


(d)          Upon
(i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock,
other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into
another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change
the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares
of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a “Sale Event”),
then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus
accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid
principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately
prior to such Sale Event at the Conversion Price.


 


(e)          In
case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which
this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note
shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of
stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the
Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash,
the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.


 


5.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.          The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	3



    	 



     


7.          The
Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by
the Holder in collecting any amount due under this Note.


 


8.          If
one or more of the following described “Events of Default” shall occur:


 


(a)          The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)          Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall
be false or misleading in any respect; or


 


(c)          The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder and not cure such breach within 10 days; or


 


(d)          The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) 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; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)          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; or


 


(f)          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; or


 


(g)          One
or more money judgments, writs or warrants of attachment, or similar process, in excess of one hundred thousand dollars ($100,000)
in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)          The
Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered
and failed to cure such default within the appropriate grace period; or


 


(i)          The
Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	4



    	 



     


(j)          Intentionally
Deleted;


 


(k)          The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or


 


(l)         The
Company shall not replenish the reserve set forth in Section 12, within 5 business days of the request of the Holder ; or


 


(m)          The
Company’s Common Stock has a closing bid price of less than $0.003 per share for at least 5 consecutive trading days; or


 


(n)          The
aggregate dollar trading volume of the Company’s Common Stock is less than forty thousand dollars ($40,000.00) in any 5 consecutive
trading days; or


 


(o)          The
Company shall cease to be “current” in its filings with the Securities and Exchange Commission; or.


 


(p) The Company shall
lose the “bid” price for its stock and a market (including the OTCBB marketplace or other exchange)


 


Then, or at any time thereafter, unless
cured (except for 8(m) and 8(n) which are incurable defaults, the sole remedy of which is to allow the Holder to cancel
both this Note and the Holder Issued Note, and in each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder
and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or
any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of
16% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
Further, if the Note becomes due and payable, the Holder may use the outstanding principal and interest due under the Note to offset
any payment obligations it may have to the Company. In the event of a breach of 8(k) the penalty shall be $250 per day the shares
are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall
increase to $500 per day beginning on the 10th day. Once cash funded, the penalty for a breach of Section 8(p) shall
be an increase of the outstanding principal amounts by 20%. Once cash funded, in the event of a breach of Section 8(i), the outstanding
principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under
this Note shall increase by 10%.


 


If the Holder shall commence an action
or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then, if the Holder
prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses
incurred in the investigation, preparation and prosecution of such action or proceeding.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	5



    	 



     


9.          In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


10.         Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.


 


11.         The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information
indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a “144-
3(a)(9)” opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.         Prior
to cash funding of this Note, The Company will issue irrevocable transfer agent instructions reserving 3x the number of shares
of Common Stock necessary to allow the holder to convert this note based on the discounted conversion price set forth in Section
4(a). The reserve shall be replenished as needed to allow for conversions of this Note. Upon full conversion of this Note, the
reserve representing this Note shall be cancelled. The Company will pay all transfer agent costs associated with issuing and delivering
the shares.


 


13.         The
Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.


 


14.         This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	6



    	 



     


IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by an officer thereunto duly authorized.


 


 


	Dated: 	 6/10/14	 


 


 


	 	M LINE HOLDINGS ING.
	 	 
	 	By:	/s/ Anthony L. Anish
	 	 	 
	 	Title:	COO


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	7



    	 



     


EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby
irrevocably elects to convert $_________ of the above Note into _________Shares of Common Stock of M Line Holdings, Inc. (“Shares”)
according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with
respect thereto.


 


	Date of Conversion: 	 


 


	Applicable Conversion Price: 	 


 


	Signature: 	 
	 	[Print Name of Holder and Title of Signer]


 


	Address: 	 
	 	 


 


	SSN or EIN: 	 


 


	Shares are to be registered in the following name: 	 


 


	Name: 	 


 


	Address: 	 


 


	Tel: 	 


 


	Fax: 	 


 


	SSN or EIN: 	 


 


Shares are to be sent or delivered to the following account:


 


	Account Name: 	 


 


	Address: 	 


 


	/s/ Anthony L. Anish	 
	Initials	 


 



    	8



    	 



     


		
         

         

         

        2672 Dow Avenue, Tustin, CA 92780

        tel: 714.630.6253 • fax: 714.619.2339

        email: tony@mlineholdings.com

        web site: www.mlineholdings.com



 


June 10, 2014


 


VStock Transfer, LLC


71 Spruce Street


Suite 201


Cedarhurst, NY 11516


 


Re: Irrevocable Transfer Agent Instructions


 


Ladies and Gentlemen:


 


On June 10, 2014, M
Line Holdings, Inc., a Nevada corporation (the “Company”) executed two 8% Convertible Promissory Notes in the amount
of $50,000.00 and $60,697.23 (collectively, the “Note”) with LG Capital Funding, LLC (the “Investor”).


 


Effective upon an
increase in the authorized capital sufficient to allow such a conversion of which you are properly notified together with confirmation
of the reserve, you are hereby irrevocably authorized and instructed to reserve One Hundred Fifty Million (150,000,000) shares
of common stock (“Common Stock”) of the Company for issuance upon for conversion of the Note in accordance with the
terms thereof. The amount of Common Stock so reserved may be increased, from time to time, by written instructions of the Company
and the Investor. Once the reserve shares have been issued Vstock Transfer, LLC shall have no further duty or obligation to issue
shares until the reserve has been increased by the Company and the Investor. You are hereby further irrevocably authorized and
directed to issue the shares of Common Stock so reserved upon your receipt from the Investor of a notice of conversion (“Notice
of Conversion”) executed by the Investor in accordance with the terms of the Notice of Conversion. You shall have no duty
or obligation to confirm the accuracy or the information set forth on the Notice of Conversion. Once the Company repays the principal,
plus interest, plus default interest (if any) of any of the Note at the maturity date, upon written (e-mail being acceptable) confirmation
by the Investor or Investor Counsel as well as the Company, Transfer Agent shall have no further obligation to maintain a reserve
on behalf of the Investor or to issue any share of Common Stock to the Investor under the terms of that Note.


 


The Company must be
participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program
in order for the shares to be delivered electronically. The shares to be issued are to be registered in the names of the registered
holder of the securities submitted for conversion or exercise.


 


The shares will be
issued within three (3) business day upon receipt of the Notice of Conversion. If the Company’s account is at least 30 days
past due, the Investor is responsible for the prepaid Transfer Agent transfer and shipping fees. In no event shall the Transfer
Agent be required to issue and deliver share certificates without the prior payment of its fees for the certificates to be issued.


 



    	 



    	 



     


The Company and the
Investor intend that these instructions require the placement of a restrictive legend on all applicable share certificates unless
the requirements listed below are met and the Investor provides the Transfer agent with an acceptable legal opinion stating that
share certificates can be issued without a legend. So long as you have previously received a legal opinion from the Company (or
Investor counsel) that the shares have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144 without
any restriction and the number of shares to be issued are less than 4.99% of the total issued and outstanding common stock of the
Company, such shares should be transferred, at the option of the holder of the Notes as specified in the Notice of Conversion,
either (i) electronically by crediting the account of a Prime Broker with the Depository Trust Company through its Deposit Withdrawal
Agent Commission system if the Company is a participant or (ii) in certificated form without any legend which would restrict the
transfer of the shares, and you should remove all stop-transfer instructions relating to such shares. Until such time as you are
advised by Investor counsel that the shares have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144
without any restriction and the number of shares to be issued are less than 4.99% of the total issued and outstanding common stock
of the Company, you are hereby instructed to place the following legends on the certificates:


 


THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF INVESTOR
COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.


 


The legend set forth
above shall be removed and you are instructed to issue a certificate without such legend to the holder of any shares upon which
it is stamped, if: (a) such shares are registered for sale under an effective registration statement filed under the 1933 Act or
otherwise may be sold pursuant to Rule 144 without any restriction and the number of shares to be issued is less than 4.99% of
the total issued common stock of the Company, (b) such holder provides the Company and the transfer agent with an opinion of counsel,
in fat in, substance and scope customary for opinions of counsel in comparable transactions (and satisfactory to the transfer agent),
to the effect that a public sale or transfer of such security may be made without registration under the 1933 Act and such sale
or transfer is effected and (c) such holder provides the Company and the transfer agent with reasonable assurances that such shares
can be sold pursuant to Rule 144. Nothing herein shall be construed to require the Transfer Agent to take any action which would
violate state or federal rules, regulations or law. If an instruction herein would require such a violation, such instructions,
but not any other term herein, shall be void and unenforceable.


 


The Company shall indemnify
and defend you and your officers, directors, principals, partners, agents and representatives, and hold each of them harmless from
and against any and all loss, liability, damage, claim or expense (including the reasonable fees and disbursements of its and Transfer
Agent’s attorney) incurred by or asserted against you or any of them arising out of or in connection with the instructions
set forth herein, the performance of your duties hereunder and otherwise in respect hereof, including the costs and expenses of
defending yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder
as to matters in respect of which it is determined that you have acted with gross negligence or in bad faith (which gross negligence,
bad faith or willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). You shall have no liability to the Company or the Investor in respect to any action taken or any failure to act
in respect of this if such action was taken or omitted to be taken in good faith, and you shall be entitled to rely in this regard
on the advice of counsel.


 



    	 



    	 



     


The Company agrees
that in the event that the Transfer Agent resigns as the Company’s transfer agent, the Company shall engage a suitable replacement
transfer agent that will agree to serve as transfer agent for the Company and be bound by the terms and conditions of these Irrevocable
Instructions within five (5) business days. The Company and the Investor agree that any action which names the Transfer Agent as
a party shall be brought in a court of general jurisdiction in New York, New York and no other court.


 


The Investor is intended
to be a party to these instructions and are third party beneficiaries hereof, and no amendment or modification to the instructions
set forth herein may be made without the consent of the Investor.


 


	Very truly yours,	 
	 	 
	M LINE HOLDINGS, INC.	 
	 	 
	By:	/s/ Anthony L. Anish	 
	 	 	 
	Title:	COO	 


 


	Acknowledged and Agreed:	 
	 	 
	VSTOCK TRANSFER, LLC	 
	 	 
	By:	 	 
	 	 	 
	Title:	 	 


 


 



    	 



     




 





 


THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT)


 


US $50,000.00


 


M LINE HOLDINGS, INC.


8% CONVERTIBLE REDEEMABLE NOTE


DUE FEBRUARY 6, 2015


BACK END NOTE


 


FOR VALUE
RECEIVED, M Line Holdings, Inc., (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its
authorized successors and permitted assigns (“Holder”), the aggregate principal face amount of Fifty Thousand
dollars exactly (U.S. $50,000.00) on February 6, 2015 (“Maturity Date”) and to pay interest on the
principal amount outstanding hereunder at the rate of 8% per annum commencing on February 6, 2014. The interest will be paid
to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of
this Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225,
initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from
time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the
Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire
transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check
or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability
for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in
Common Stock (as defined below) pursuant to paragraph 4(b) herein.


 


This Note is subject to the following additional provisions:


 


1.          This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by
the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that
Holder shall
pay any tax or other governmental charges payable in connection therewith.


 


	/s/ Anthony L. Anish	 
	Initials	 


 




    	 



    	 



    

 


2.          The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.          This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”)
and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name
this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note
be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this
Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth
in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this
Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of
receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.


 


4.          (a)
The Holder of this Note is entitled, at its option, after the requisite Rule 144 holding period and after full cash payment for
the shares convertible hereunder, to convert all or any amount of the principal face amount of this Note then outstanding into
shares of the Company’s common stock (the “Common Stock”) without restrictive legend of any nature, at
a price (“Conversion Price”) for each share of Common Stock equal to 55% of the lowest closing bid price
of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are
traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for the seven
prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice
of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or
Daylight Savings Time if the Holder wishes to included the same day closing price). If the shares have not been delivered within
3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder
has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing
such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof
in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares 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. In the
event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead
of 55% while that “Chill” is in effect.


 


(b)          Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock (“Interest Shares”). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.


 


	/s/ Anthony L. Anish	 
	Initials	 


 




    	2



    	 



    

 


(c)          This
Note may not be prepaid, except that if the $50,000 Rule 144 convertible redeemable note issued by the Company of even date herewith
is redeemed by the Company within 6 months of the issuance date of such Note, this Note will automatically terminate, as will
he offsetting Holder issued $50,000 note.


 


(d)          Upon
(i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock,
or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of
items (i), (ii) and (iii) being referred to as a “Sale Event”), then, in each case, the Company shall, upon request
of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the
amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.


 


(e)          In
case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such
Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders
of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person
or entity acting in good faith.


 


5.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.          The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


7.          The
Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by
the Holder in collecting any amount due under this Note.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	3



    	 



    

 


8.          If
one or more of the following described “Events of Default” shall occur:


 


(a)          The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)          Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall
be false or misleading in any respect; or


 


(c)          The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder and not cure such breach within 10 days; or


 


(d)          The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) 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; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)          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 thirty (30) days after such appointment; or


 


(f)          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; or


 


(g)          One
or more money judgments, writs or warrants of attachment, or similar process, in excess of one hundred thousand dollars ($100,000)
in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)          defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or


 


(i)          The
Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;


 


(j)          Intentionally
Deleted;


 


	/s/ Anthony L. Anish	 
	Initials	 


 








    	4



    	 



    

 


(k)          The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or


 


(1)         The
Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder ; or


 


(m)          The
Company’s Common Stock has a closing bid price of less than $0.015 per share for at least 5 consecutive trading days;
or


 


(n)          The
aggregate dollar trading volume of the Company’s Common Stock is less than forty thousand dollars ($40,000.00) in any 5 consecutive
trading days; or


 


(o)          The
Company shall cease to be “current” in its filings with the Securities and Exchange Commission.


 


Then, or at any time thereafter, unless
cured (except for 8(m) and 8(n) which are incurable defaults the sole remedy of which is to allow the Holder to cancel
offsetting back end notes issued to the Company), and in each and every such case, unless such Event of Default shall have been
waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the
Holder and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or
any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of
18% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
Further, if the Note becomes due and payable, the Holder may use the outstanding principal and interest due under the Note to offset
any payment obligations it may have to the Company. In the event of a breach of 8(k) the penalty shall be $250 per day the shares
are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall
increase to $500 per day beginning on the 10th day.


 


If the Holder shall commence an action
or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall
be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation
and prosecution of such action or proceeding.


 


9.          In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


10.         Neither
this Note nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the Company and the Holder.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	5



    	 



    

 


11.         The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information
indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9)
opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.         Prior
to cash funding of this Note, The Company will issue irrevocable transfer agent instructions reserving 4x the number of shares
of Common Stock necessary to allow the holder to convert this note based on the discounted conversion price set forth in Section
4(a) of the $65,000 Rule 144 note issued by the Company on even date herewith. The reserve shall be replenished as needed to allow
for conversions of this Note. Upon full conversion of this Note, the reserve representing this Note shall be cancelled. The Company
will pay all transfer agent costs associated with issuing and delivering the shares.


 


13.         The
Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.


 


14.         This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	6



    	 



    

 


IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed by an officer thereunto duly authorized.


 





	Date:	2/6/14	 







  


	 	M LINE HOLDINGS, INC.
	 	 
	 	By:	/s/ Anthony L. Anish
	 	 	 
	 	Title:	COO


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	7



    	 



    

 


EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby irrevocably elects
to convert $ _____________ of the above Note into _________ Shares of Common Stock of M Line Holdings, Inc. (“Shares”)
according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.


 


	Date of Conversion:  ____________________________________________________________	 
	Applicable Conversion Price: ______________________________________________________	 
	Signature: ____________________________________________________________________	 
	[Print Name of Holder and Title of Signer]	 


 


	Address:	 	 
	 	 	 


 


SSN or EIN: ________________________


Shares are to be registered in the following name: __________________________________


 


	Name: _______________________________________________________________________	 
	Address: _____________________________________________________________________	 
	Tel: _________________________________________________________________________	 
	Fax: _______________________________	 
	SSN or EIN: _________________________	 


 


Shares are to be sent or delivered to the following account:


 


	Account Name: ________________________________________________________________	 
	Address: _____________________________________________________________________	 



 


	/s/ Anthony L. Anish	 
	Initials	 


 







    	8



    	 



    

 


DISBURSEMENT AUTHORIZATION


(MEMORANDUM)


 


TO: LG CAPITAL FUNDING, LLC.


 


FROM: M LINE HOLDINGS, INC.


 


DATE: February 6, 2014


 


RE: Disbursement of Funds


 


In connection with
the funding of an aggregate of $50,000 pursuant to that certain Convertible Redeemable Note dated as of February 6, 2014 (the “Agreement”),
you are hereby directed to disburse such funds as follows:


 


		1.	$2,500.00 to New Venture Attorneys, P.C. in accordance
with the wires transfer instructions attached as Schedule A, hereto;



 


		2.	$4,750.00 to Anubis Capital Partners in accordance with
the wire transfer instructions attached as Schedule B, hereto; and



 


		3.	$42,750 to M Line Holdings Inc., in accordance with the
wire transfer instructions attached as Schedule C, hereto;



 


		•	Additional payments are to be made when each $50,000 back end note is cash funded in the amounts of $2,500 to New Venture Attoryys
PC an $4,750_to Anubis Capital Partners



 





	 	/s/ Anthony L. Anish
	 	Title:	COO


 


	/s/ Anthony L. Anish	 
	Company Initials	 


 




    	 



    	 



    

 


EXHIBIT A


NEW VENTURE ATTORNEYS


WIRING INFORMATION


 


Please wire funds to:


 


Bank of America


 


Routing No: 026009593


Acct No.: 164109387780


 


	Beneficiary:	New Venture Attorneys, PC, IOLTA account
	 	 
	Attorney info:	
        New Venture Attorneys, P.C.

        900 E. Hamilton Ave, Suite 100

        Campbell, CA 95008



 


	/s/ Anthony L. Anish	 
	Company Initials	 


 





    	 



    	 



    

 


EXHIBIT B


ANUBIS CAPITAL PARTNERS WIRING INFO


 


Capital One, N.A.


8989 Preston Road


Frisco, TX 75034


 


	Routing No:	 111901014
	Acct No.:	 3622044799


 


Beneficiary: Anubis Capital Partners


2550 Midway Road Suite 198


Carrolton, TX 75006





 


	/s/ Anthony L. Anish	 
	Company Initials	 


 





    	 



    	 



    

 


EXHIBIT C


[WIRING INFO FOR ISSUER]


 


Bank of America


14222 Culver Drive


Irvine, CA 92620


 


Routing 121000358


Account Number: 23414 69572


 


Beneficiary:


M Line Holdings, Inc.


2672 Dow Avenue


Tustin, CA 92780


 


	/s/ Anthony L. Anish	 
	Company Initials	 


 





    	 



    	 



    

 


THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. LENDERS SHOULD
BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


 


LG CAPITAL FUNDING, LLC


COLLATERALIZED SECURED PROMISSORY NOTE


BACK END NOTE


 


	$50,000.00	Brooklyn, NY
	.	February 5, 2014


 


		1.	Principal and Interest



 


FOR VALUE RECEIVED,
LG Capital Funding, LLC, a Delaware Limited Liability Company (the “Company”) hereby absolutely and unconditionally
promises to pay to M Line Holdings, Inc. (the “Lender”), or order, the principal amount of Fifty Thousand Dollars ($50,000)
no later than November 5, 2014, unless the Lender does not meet the “current information requirements” required under
Rule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender
on the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as
well as the Lenders payment obligations under the offsetting note. This Full Recourse Note shall bear simple interest at the rate
of 8%.


 


		2.	Repayments and Prepayments; Security.



 


a.           All
principal under this Note shall be due and payable no later than November 5, 2014, unless the Lender does not meet the “current
information requirements” required under Rule 144 of the Securities Act of 1933, as amended, in which case the Company may
declare the offsetting note issued by the Lender on the same date herewith to be in Default (as defined in that note) and cross
cancel its payment obligations under this Note as well as the Lenders payment obligations under the offsetting note.


 


b.           The
Company may pay this Note at any time. This note may not be assigned by the Lender, except by operation of law.







    	1



    	 



    

 


c.           This
Note shall initially be secured by the pledge of the $50,000 8% convertible promissory note issued to the Company by the Lender
on even date herewith (the “Lender Note”). The Company may exchange this collateral for other collateral with an appraised
value of at least $50,000.00, without prior notice to the Lender. All collateral shall be retained by New Venture Attorneys, P.C.,
which shall act as the escrow agent for the collateral for the benefit of the Lender. The Company may not effect any conversions
under the Lender Note until it has made full cash payment for the portion of the Lender Note being converted.


 


		3.	Events of Default; Acceleration.



 


a.           The
principal amount of this Note is subject to prepayment in whole or in part upon the occurrence and during the continuance of any
of the following events (each, an “Event of Default”): the initiation of any bankruptcy, insolvency, moratorium, receivership
or reorganization by or against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon
the occurrence of any Event of Default, the entire unpaid principal balance of this Note and all of the unpaid interest accrued
thereon shall be immediately due and payable. The Company may offset amounts due to the Lender under this Note by similar amounts
that may be due to the Company by the Lender resulting from breaches under the Lender Note.


 


b.           No
remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative
and in addition to every other remedy hereunder, now or hereafter existing at law or in equity or otherwise. The Company accepts
and agrees that this Note is a full recourse note and that the Holder may exercise any and all remedies available to it under law.


 


		4.	Notices.



 


a.           All
notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by
telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage prepaid, addressed (i) if to a Lender, at such Lender’s address as the Lender shall have furnished
the Company in writing and (ii) if to the Company at such address as the Company shall have furnished the Lender(s) in writing.


 


b.           Each
such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given
when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited
in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent
by electronic communication with confirmation, upon the delivery of electronic communication.


 




    	2



    	 



    

 


		5.	Miscellaneous.



 


a.           Neither
this Note nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in
writing.


 


b.           No
failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable
and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity
or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the
parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note regardless
of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any
extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or secondarily liable.


 


c.           If
Lender retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all, or any
part of, or for protection of the indebtedness respected by this Note, then the Company agrees to pay all costs and expenses of
the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys’
fees.


 


d.           This
Note shall for all purposes be governed by, and construed in accordance with the laws of the State of New York (without reference
to conflict of laws).


 


e.           This
Note shall be binding upon the Company’s successors and assigns, and shall inure to the benefit of the Lender’s successors
and assigns.


 


IN WITNESS WHEREOF, the Company has caused
this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.


 


	 	LG CAPITAL FUNDING, LLC
	 	 	 
	 	By:	 
	 	 	 
	 	Title:	 


 




    	3



    	 



    

 


THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT)


 


US $50,000.00


 


M LINE HOLDINGS, INC


8% CONVERTIBLE REDEEMABLE NOTE


DUE FEBRUARY 6, 2015


 


FOR VALUE
RECEIVED, M Line Holdings, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized
successors and permitted assigns (“Holder”), the aggregate principal face amount of Fifty Thousand dollars exactly
(U.S. $50,000.00) on February 6, 2015 (“Maturity Date”) and to pay interest on the principal amount outstanding
hereunder at the rate of 8% per annum commencing on February 6, 2014. The interest will be paid to the Holder in whose name this
Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest
on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the
records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment
and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the
records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder
and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or
wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.


 


This Note is subject to the following additional
provisions:


 


1.          This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	 



    	 



    

 


2.          The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.          This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”)
and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name
this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note
be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this
Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth
in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this
Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of
receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.


 


4.          (a)
       The Holder of this Note is entitled, at its option, at any time after 180 days, and
after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face amount of this
Note then outstanding into shares of the Company’s common stock (the “Common Stock”) without restrictive
legend of any nature, at a price (“Conversion Price”) for each share of Common Stock equal to 55% of the lowest
closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s
shares are traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for
the seven prior trading days including the day upon which a Notice of Conversion is received by the Company
(provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M.
Eastern Standard or Daylight Savings Time if the Holder wishes to included the same day closing price). If the shares have not
been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the
Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of
Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed
by the Holder evidencing such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by
proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares 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.
In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased
to 45% instead of 55% while that “Chill” is in effect.


 


(b)          Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock (“Interest Shares”). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	2



    	 



    

 


(c)          During
the first six months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount as follows: (i)
if the redemption is within the first 90 days this Note is in effect, then for an amount equal to 125% of the unpaid principal
amount of this Note along with any interest that would have accrued during them term, (ii) if the redemption is after the 91st
day this Note is in effect but less than the 150th day this Note is in effect, then for an amount equal to 140% of the
unpaid principal amount of this Note along with any prepaid and earned interest, (iii) if the redemption is after the 151st day
this Note is in effect but less than the 180th day this Note is in effect, then for an amount equal to 150% of the unpaid
principal amount of this Note along with any prepaid and earned interest. This Note may not be redeemed after 180 days. The redemption
must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid
and the Company may not redeem this Note


 


(d)          Upon
(i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock,
or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of
items (i), (ii) and (iii) being referred to as a “Sale Event”), then, in each case, the Company shall, upon request
of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the
amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.


 


(e)          In
case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such
Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders
of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person
or entity acting in good faith.


 


5.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





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6.          The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


7.          The
Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by
the Holder in collecting any amount due under this Note.


 


8.          If
one or more of the following described “Events of Default” shall occur:


 


(a)        The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)        Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or


 


(c)        The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or


 


(d)        The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) 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; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)        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 thirty (30) days after such appointment; or


 


(f)         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; or


 


(g)        One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)        defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or


 


	/s/ Anthony L. Anish	 
	Initials	 


 





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(i)          The
Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;


 


(j)          If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;


 


(k)         The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or


 


(1)        The
Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.


 


Then, or at
any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing
by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the
Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest
or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration
of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies
afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate
is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of
8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice
was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day.


 


If the Holder shall
commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then
the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.


 


9.          In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


10.        Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





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11.        The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has
been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating
it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion
to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.        The
Company shall issue irrevocable transfer agent instructions reserving 16,000,000 shares of its Common Stock for conversions under
this Note (the “Share Reserve”). The reserve shall be replenished as needed to allow for conversions of this Note.
Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all costs
associated with issuing and delivering the shares.


 


13.        The
Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.


 


14.        This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





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IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by an officer thereunto duly authorized.


 





	Dated: 	2/6/14	 







  


	 	M LINE HOLDINGS, INC.
	 	 	 
	 	By:	/s/ Anthony L. Anish
	 	 	 
	 	Title:	 COO


 


	/s/ Anthony L. Anish	 
	Initials	 


 





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EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby
irrevocably elects to convert $ _____________ of the above Note into _____________ Shares of Common Stock of M Line Holdings,
Inc (“Shares”) according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.


 


	Date of Conversion: ____________________________________________________________	 
	Applicable Conversion Price: _____________________________________________________	 
	Signature: ____________________________________________________________________	 
	[Print Name of Holder and Title of Signer]	 





	Address:	 	 
	 	 	 



 


	SSN or EIN:	__________________________
	Shares are to be registered in the following name: __________________________________________________


 


	Name: _______________________________________________________________________	 
	Address: _____________________________________________________________________	 
	Tel: _________________________________________________________________________	 
	Fax: _______________________________	 
	SSN or EIN: _________________________	 


 


Shares are to be sent or delivered to the following account:


 


	Account Name: ________________________________________________________________	 
	Address: _____________________________________________________________________	 


 


	/s/ Anthony L. Anish	 
	Initials	 


 





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SECURITIES PURCHASE AGREEMENT


 


This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of February 6, 2014, by and between M Line Holdings, Inc.,
a Nevada corporation, with headquarters located at 2672 Dow Avenue, Tustin, CA 92780 (the “Company”), and LG
CAPITAL FUNDING, LLC, a New York limited liability company, with its address at 1218 Union Street, Suite #2, Brooklyn,
NY 11225 (the “Buyer”).


 


WHEREAS:


 


A.            The Company and
the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act”);


 


B.            Buyer desires to
purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement two 8% convertible
notes of the Company, in the forms attached hereto as Exhibit A and B in the aggregate principal amount of $100,000.00 (with the
first note being in the amount of $50,000.00 and the second note being in the amount of $50,000.00 (together with any note(s) issued
in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”),
convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the
terms and subject to the limitations and conditions set forth in such Note. The first of the two notes (the “First Note”)
shall be paid for by the Buyer as set forth herein. The second note (the “Second Note”) shall initially be paid for
by the issuance of an offsetting $50,000.00 secured note issued to the Company by the Buyer (“Buyer Note”), provided
that prior to conversion of the Second Note, the Buyer must have paid off the Buyer Note in cash such that the Second Note may
not be converted until it has been paid for in cash.


 


 


C.           The
Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth
immediately below its name on the signature pages hereto; and


 


NOW THEREFORE, the
Company and the Buyer severally (and not jointly) hereby agree as follows:


 


1.          Purchase
and Sale of Note.


 


a.           Purchase
of Note. On each Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase
from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages
hereto.


 


	/s/ Anthony L. Anish	 
	Company Initials	 


 








    	 



    	 



    

 


b.            Form
of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and
sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds
to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal
amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and
(ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase
Price.


 


c.            Closing Date.
The date and time of the first issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall
be on or about February 6, 2014, or such other mutually agreed upon time. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties. Subsequent
Closings shall occur when the Buyer Note is repaid. The Closing of the Second Note shall be on or before the dates specified in
the Buyer Note.


 


2.          Buyer’s
Representations and Warranties. The Buyer represents and warrants to the Company that:


 


a.           Investment
Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note, such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.


 


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


 


c.           Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.


 


d.           Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for
so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding
the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information
unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries
nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or
affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that
may constitute a breach of any of the Company’s representations and warranties made herein.


 


	/s/ Anthony L. Anish	 


 





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e.           Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.


 


f.            Transfer
or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities
are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company,
at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in
comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to
an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of
the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only
in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined
in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.


 


g.           Legends.
The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may
be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that
can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following faun (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):


 


	/s/ Anthony L. Anish	 


 





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“NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE 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 (WHICH COUNSEL SHALL BE SELECTED BY THE 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.”


 


The legend set forth
above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it
is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an
effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without
any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions,
to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements,
if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer
of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, within 2 business days, it will be
considered an Event of Default under the Note.


 


h.            Authorization;
Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf
of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.


 


i.           Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.


 


3.          Representations
and Warranties of the Company. The Company represents and warrants to the Buyer that:


 


	/s/ Anthony L. Anish	 


 





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a.         Organization
and Qualification. The Company and each of its subsidiaries, if any, is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.


 


b.
       Authorization; Enforcement. (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby
and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion
Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors and
no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this
Agreement has been duly executed and delivered by the Company by its authorized representative, and such
authorized representative is the true and official representative with authority to sign this Agreement and the other
documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its terms.


 


c.           Issuance
of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in
accordance with its respective terms, will be validly issued, fully paid and non-assessable, and 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 the Company and will not impose personal liability upon the holder thereof.


 


d.           Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the
Company.


 


	/s/ Anthony L. Anish	 


 





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e.           No
Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of
the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation
or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which
with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its subsidiaries
is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries
is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a material adverse effect). All consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company is not in violation of the listing requirements of the Over-the-Counter Quotations Bureau
(the “OTCQB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable
future, nor are the Company’s securities “chilled” by FINRA. The Company and its subsidiaries are unaware of
any facts or circumstances which might give rise to any of the foregoing.


 


f.            Absence
of Litigation. Except as disclosed in the Company’s public filings, there is no action, suit, claim, proceeding, inquiry
or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company or any of its subsidiaries, or
their officers or directors in their capacity as such, that could have a material adverse effect. Schedule 3(f) contains a complete
list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the
Company or any of its subsidiaries, without regard to whether it would have a material adverse effect. The Company and its subsidiaries
are unaware of any facts or circumstances which might give rise to any of the foregoing.


 


g.           Acknowledgment
Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the
capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer’ purchase of the Securities. The Company further represents to the Buyer that the
Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its
representatives.


 


h.           No
Integrated Offering. Neither the Company, nor any of its affiliates, nor ay person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would
require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer
will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its securities.


 


	/s/ Anthony L. Anish	 


 





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i.            Title
to Property. The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(i) or such as would
not have a material adverse effect. Any real property and facilities held under lease by the Company and its subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as would not have a material adverse effect.


 


j.            Breach
of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth
in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of default under the Note.


 


4.            COVENANTS.


 


a.           Expenses.
At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”),
including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees
for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions
in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated
by the Documents. When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for
reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice
by the Buyer. The Company’s obligation with respect to this transaction is to reimburse Buyer’ expenses shall be $2500
in legal fees (and proportional amounts for the Second Note) which shall be deduced from each Note when funded.


 


b.           Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the
Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCQB or any equivalent replacement exchange,
the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock
Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”)
and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCQB
and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the
Common Stock for listing on such exchanges and quotation systems.


 


	/s/ Anthony L. Anish	 


 





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c.           Corporate
Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the OTCQB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.


 


d.           No
Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the
Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision
applicable to the Company or its securities.


 


e.           Breach
of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyer pursuant to this Agreement, it will be considered an event of default under the Note.


 


5.          Governing
Law; Miscellaneous.


 


a.           Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard
to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county
of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The
Company and Buyer waive trial by jury. 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 Agreement or any other agreement delivered in connection herewith 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 with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.


 


b.           Counterparts;
Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.


 


	/s/ Anthony L. Anish	 


 





    	8



    	 



    

 


c.           Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of,
this Agreement.


 


d.           Severability.
In the event that any provision of this Agreement 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
with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.


 


e.           Entire
Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.


 


f.            Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:


 


If to the Company, to:


M Line Holdings, Inc.


2672 Dow Avenue


Tustin, CA 92780


Attn: Anthony Anish


 


If to the Buyer:


LG CAPITAL FUNDING, LLC


1218 Union Street, Suite #2


Brooklyn, NY 11225


Attn: Joseph Lerman


 


	/s/ Anthony L. Anish	 


 





    	9



    	 



    

 


Each party shall provide notice to the other party
of any change in address.


 


g.           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any person that purchases Securities
in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act,
without the consent of the Company.


 


h.           Third
Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.


 


i.            Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to
indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth
in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.


 


j.            Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.


 


k.          No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.





1.          Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Agreement, that the Buyer 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 Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.


 


	/s/ Anthony L. Anish	 


 





    	10



    	 



    

 


IN WITNESS WHEREOF, the undersigned
Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.


 


	M Line Holdings, Inc.	 
	 	 	 
	By:	/s/ Anthony L. Anish	 
	 	Anthony L. Anish	 
	 	Chief Operations Officer	 


 


 


	LG CAPITAL FUNDING, LLC.	 
	 	 	 
	By:	 	 
	Name: Joseph Lerman	 
	Title: Manager	 


 


	AGGREGATE SUBSCRIPTION AMOUNT:	 
	 	 
	Aggregate Principal Amount of Note:	$50,000.00
	 	 
	Aggregate Purchase Price:	 


 


$50,000.00 less $2,500.00 in legal fees
and $4,750.00 in third party due diligence fees. With similar payments to be repeated on the cash funding of Note 2.


 


	/s/ Anthony L. Anish	 


 








    	11



    	 



    

 


EXHIBIT A


144 NOTE - $50K


 


	/s/ Anthony L. Anish	 


 





    	12



    	 



    

 


EXHIBIT
B


BACK END NOTES 1


$50K


 


	/s/ Anthony L. Anish	 


 





    	13



    	 



    

 





	

                                            
	
         

         

         

        2672 Dow Avenue, Tustin, CA 92780

         

        tel: 714.630.6253 • fax: 714.619.2339

         

        email: tony@mlineholdings.com

         

        web site: www.mlineholdings.com








 


February 6, 2014


 


V Stock Transfer


77 Spruce Street, Suite 201


Cedarhurst, NY 11516


 


Ladies and Gentlemen:


 


M Line Holdings, Inc.,
a Nevada corporation (the “Company”) and LG Capital Funding, LLC have entered into two Convertible Promissory
Notes in the principal amount of $50,000.00, each (collectively, the “Note”).


 


A copy of the Note
is attached hereto. You should familiarize yourself with your issuance and delivery obligations, as Transfer Agent, contained therein.
The shares to be issued are to be registered in the names of the registered holder of the securities submitted for conversion or
exercise.


 


You are hereby irrevocably
authorized and instructed to reserve a sufficient number of shares of common stock (“Common Stock”) of the Company
(initially, 32,000,000 shares of Common Stock for the subject Note which should be held in reserve for the Investor pursuant
to the subject Note as of this date) for issuance upon full conversion of the Note and the convertible promissory note referenced
herein in accordance with the terms thereof. The amount of Common Stock so reserved may be increased, from time to time, by written
instructions of the Company and the Investor.


 


The ability to convert
the Note in a timely manner is a material obligation of the Company pursuant to the Note. Your firm is hereby irrevocably authorized
and instructed to issue shares of Common Stock of the Company (without any restrictive legend) to the Investor without any further
action or confirmation by the Company by either (i) electronically by crediting the account of a Prime Broker with the Depository
Trust Company through its Deposit Withdrawal Agent Commission system, provided that the Company has been made FAST/DRS eligible
by DTCC (DWAC), or (ii) in certificated form without any legend which would restrict the transfer of the shares, and you should
remove all stop-transfer instructions relating to such shares: (A) upon your receipt from the Investor dated within 90 days from
the date of the issuance or transfer request, of: (i) a notice of conversion (“Conversion Notice”) executed by the
Investor; and (ii) an opinion of counsel of the Investor, in form, substance and scope customary for opinions of counsel in comparable
transactions (and satisfactory to the transfer agent), to the effect that the shares of Common Stock of the Company issued to the
Investor pursuant to the Conversion Notice are not “restricted securities” as defined in Rule 144 and should be issued
to the Investor without any restrictive legend; and (B) the number of shares to be issued is less than 4.99% of the total issued
common stock of the Company.


 




    	 



    	 



    

 


THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT)


 


US $60,750.68


 


M LINE HOLDINGS, INC


8% CONVERTIBLE REDEEMABLE NOTE


DUE FEBRUARY 6, 2015


 


REPLACEMENT NOTE- ORIGINALLY ISSUED MAY
31, 2011


IN THE AMOUNT OF $150,000.00


 


FOR VALUE RECEIVED,
M Line Holdings, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors
and permitted assigns (“Holder”), the aggregate principal face amount of Sixty Thousand Seven Hundred Fifty
dollars and 68/100 cents (U.S. $60,750.68) on February 6, 2015 (“Maturity Date”) and to pay interest on the
principal amount outstanding hereunder at the rate of 8% per annum commencing on February 6, 2015. The interest will be paid
to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this
Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially,
and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time.
The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less
any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such
Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute
a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent
of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant
to paragraph 4(b) herein.


 


This Note is subject to the following additional provisions:


 


1.
         This Note is exchangeable for an equal aggregate principal amount
of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be
made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges
payable in connection therewith.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	 



    	 



    

 


2.          The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.          This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”)
and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void.
Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name
this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note
be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this
Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth
in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this
Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of
receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.


 


4.          (a)
        The Holder of this Note is entitled, at its option, at any time after 180 days,
and after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face amount of
this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) without restrictive
legend of any nature, at a price (“Conversion Price”) for each share of Common Stock equal to 55% of the lowest
closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s
shares are traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for
the seven prior trading days including the day upon which a Notice of Conversion is received by the Company
(provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M.
Eastern Standard or Daylight Savings Time if the Holder wishes to included the same day closing price). If the shares have not
been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the
Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of
Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed
by the Holder evidencing such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by
proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares 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.
In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased
to 45% instead of 55% while that “Chill” is in effect.


 


(b)          Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock (“Interest Shares”). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or
a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	2



    	 



    

 


(c)          This
Note may not be prepaid.


 


(d)          Upon
(i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock,
or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of
items (i), (ii) and (iii) being referred to as a “Sale Event”), then, in each case, the Company shall, upon request
of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the
amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.


 


(e)          In
case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such
Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders
of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person
or entity acting in good faith.


 


5.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.          The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


7.          The
Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by
the Holder in collecting any amount due under this Note.


 


8.          If
one or more of the following described “Events of Default” shall occur:


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	3



    	 



    

 


(a)          The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)          Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or


 


(c)          The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or


 


(d)          The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) 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; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or


 


(e)          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 thirty (30) days after such appointment; or


 


(f)          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; or


 


(g)         One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)         defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or


 


(i)          The
Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;


 


(j)          If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;


 


	/s/ Anthony L. Anish	 
	Initials	 


 








    	4



    	 



    

 


(k)          The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or


 


(l)          The
Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.


 


Then, or at
any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing
by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the
Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest
or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration
of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies
afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate
is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of
8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice
was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day.


 


If the Holder
shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney,
then the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.


 


9.          In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.


 


10.         Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.


 


11.         The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information
indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9)
opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.


 


12.         The
Company shall issue irrevocable transfer agent instructions reserving 16,000,000 shares of its Common Stock for conversions under
this Note (the “Share Reserve”). The reserve shall be replenished as needed to allow for conversions of this Note.
Upon full conversion of this Note, the any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all
costs associated with issuing and delivering the shares.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	5



    	 



    

 


13.         The
Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.


 


14.         This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This
Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	6



    	 



    

 


IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed by an officer thereunto duly authorized,


 





	Date:	2/6/14	 







  


	 	M LINE HOLDINGS, INC.
	 	 
	 	By:	/s/ Anthony L. Anish
	 	Title:	 COO


 


	/s/ Anthony L. Anish	 
	Initials	 


 





    	7



    	 



    

 


EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be Executed by the Registered Holder
in order to Convert the Note)


 


The undersigned hereby irrevocably elects
to convert $ ______________ of the above Note into ____________ Shares of Common Stock of M Line Holdings, Inc (“Shares”)
according to the conditions set forth in such Note, as of the date written below.


 


If Shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect
thereto.


 


	Date of Conversion: ____________________________________________________________	 
	Applicable Conversion Price: _____________________________________________________	 
	Signature: ___________________________________________________________________	 
	[Print Name of Holder and Title of Signer]	 





	Address:	 	 
	 	 	 



 


	SSN or EIN: __________________________	 
	Shares are to be registered in the following name: ________________________________________________	 


 


	Name: _______________________________________________________________________	 
	Address: _____________________________________________________________________	 
	Tel: __________________________________	 
	Fax: __________________________________	 
	SSN or EIN: ____________________________	 


 


Shares are to be sent or delivered to the following
account:


 





	Account Name: ________________________________________________________________	 
	Address: _____________________________________________________________________	 







 


	/s/ Anthony L. Anish	 
	Initials	 


 







    	8