Exhibit 10.3


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (AND THE ORDINARY SHARES ISSUABLE PURSUANT TO SUCH SECURITIES) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND NEITHER THESE SECURITIES NOR THE ORDINARY
SHARES ISSUABLE PURSUANT THERETO MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED TO ANY PERSON OTHER THAN THE ISSUER OF
THESE SECURITIES IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN APPLICABLE EXEMPTION THEREUNDER, AS EVIDENCED BY AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS; PROVIDED THAT SUCH OPINION
OF COUNSEL SHALL NOT BE REQUIRED IN THE CASE OF A RESALE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT (“RULE 144”)
IF SUCH RESALE IS NOT MADE BY AN “AFFILIATE” (WITHIN THE MEANING OF RULE 144) OF THE ISSUER OF THESE SECURITIES.


 


DRAGON
VICTORY INTERNATIONAL LIMITED


 


CONVERTIBLE
DEBENTURE


 


Principal
Amount: $500,000


Debenture
Issuance Date: November 20 , 2020


Debenture Number: LYL-1


 


FOR
VALUE RECEIVED, DRAGON VICTORY INTERNATIONAL LIMITED, a Cayman Islands corporation (the “Company”),
hereby promises to pay to the order of YA II PN, Ltd., or its registered assigns (the “Holder”) the amount
set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration,
redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”)
on any outstanding Principal at the applicable Interest Rate from the date set out above as the Debenture Issuance Date (the
“Issuance Date”) until the same becomes due and payable, whether upon an Interest Date (as defined below),
the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).
This Convertible Debenture (including all debentures issued in exchange, transfer or replacement hereof, this
“Debenture”) was originally issued pursuant to the Securities Purchase Agreement dated November 17, 2020, as
amended (the “Securities Purchase Agreement”) between the Company and YA II PN, Ltd. Certain capitalized
terms used herein are defined in Section (14).


 




     


     


    

 


(1)
GENERAL TERMS


 


(a)
Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Debenture. The “Maturity
Date” shall be November 20 , 2021, as may be at the option of the Holder. Other than as specifically permitted
by this Debenture, the Company may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest


 


(b)
Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate
equal to 5% (“Interest Rate”), which Interest Rate shall increase to an annual rate of 15% for so long as any
Event of Default remains uncured. Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed,
to the extent permitted by applicable law.


 


(c)
Triggering Event. If, any time after the Issuance Date, and from time to time thereafter, the daily VWAP is less than the
Floor Price for a period of 5 consecutive Trading Days (each such occurrence, a “Triggering Event”), then the
Interest Rate shall increase to an annual rate of 15%. The Interest Rate shall return to the rate set forth in Clause 1(b) if
any time after a Triggering Event the daily VWAP is greater than the Floor Price for a period of 5 consecutive Trading Days, unless
a subsequent Triggering Event occurs.


 


(2)
Early Redemption. The Company shall have the right, but not the obligation, to redeem (“Optional Redemption”)
early a portion or all amounts outstanding under this Debenture as described in this Section; provided that (i) the trading
price of the Ordinary Shares is less than the Fixed Conversion Price and (ii) the Company provides the Holder with at least 10
Business Days’ prior written notice (each, a “Redemption Notice”) of its desire to exercise an Optional
Redemption on the date fixed for early redemption in such notice (“Redemption Date”). Each Redemption Notice
shall be irrevocable and shall specify the outstanding balance of the Convertible Debenture to be redeemed and the applicable
Redemption Premium. The “Redemption Amount” shall be equal to the outstanding Principal balance being redeemed
by the Company, plus the applicable Redemption Premium, plus all accrued and unpaid interest. After receipt of the Redemption
Notice, the Holder shall have until the Trading Day prior to the Redemption Date to elect to convert all or any portion of Convertible
Debentures. On the Redemption Date, the Company shall deliver to the Holder the Redemption Amount with respect to the Principal
amount redeemed after giving effect to conversions effected during such period.


 


(3)
EVENTS OF DEFAULT.


 


(a)
An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and
whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body):


 


(i)
the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Debenture
within five (5) Business Days after such payment is due;


 







    2


     


    

 


(ii)
The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any
subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the
Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a
period of sixty-one 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the
Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial
part of its property which continues undischarged or unstayed for a period of sixty-one (61) days; or the Company or any
subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the
Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they
become due; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent
to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any
subsidiary of the Company for the purpose of effecting any of the foregoing;


 


(iii)
The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage,
credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued,
or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness
now exists or shall hereafter be created and such default is not cured within five (5) Business Days;


 


(iv)
The Ordinary Shares shall cease to be quoted or listed for trading, as applicable, on any Primary Market for a period of 10 consecutive
Trading Days;


 


(v)
The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section (14))
unless in connection with such Change of Control Transaction this Debenture is retired;


 


(vi)
the Company’s (A) failure to cure a Conversion Failure by delivery of (I) the required number of Ordinary Shares (II) or the Buy-In
Price within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including
by way of public announcement, at any time, of its intention not to comply with a request for conversion of this Debentures into
Ordinary Shares, other than pursuant to Section (5)(d);


 


(vii)
The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within five (5)
Business Days after such payment is due;


 







    3


     


    

 


(viii)
The Company shall fail to observe or perform any other material covenant, agreement or warranty contained in, or otherwise commit
any material breach or default of any provision of this Debenture (except as may be covered by Section (3)(a)(i) through (3)(a)(viii)
hereof) or any Transaction Document (as defined in Section (14)) which is not cured within the time prescribed.


 


(ix)
any Event of Default (as defined in the Other Debentures) occurs with respect to any Other Debentures.


 


(b)
During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred and is continuing, the
full unpaid Principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date
of acceleration shall become at the Holder’s election, immediately due and payable in cash. Furthermore, in addition to any other
remedies, the Holder shall have the right (but not the obligation) to convert this Debenture (subject to the beneficial ownership
limitations set out in Section (4)(c)) at any time after (x) an Event of Default (provided that such Event of Default is continuing)
or (y) the Maturity Date at the Conversion Price. The Holder need not provide and the Company hereby waives any presentment, demand,
protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately enforce any and
all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.


 


(4)
CONVERSION OF DEBENTURE. This Debenture shall be convertible into the Company’s Ordinary Shares on the terms and conditions
set forth in this Section (4).


 


(a) Conversion
Right. Subject to the provisions of Section (4)(c), at any time or times on or after the Issuance Date, the Holder shall
be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and
nonassessable Ordinary Shares in accordance with Section (4)(b), at the Conversion Rate (as defined below). Upon each
conversion and upon receipt of the appropriate notice from the Holder as set forth in Section (4)(b)(i) herein, the Company
shall issue the applicable Ordinary Shares to the Holder. The number of Ordinary Shares issuable upon conversion of any
Conversion Amount pursuant to this Section (4)(a) shall be determined by dividing (x) such Conversion Amount by (y) the
Conversion Price (the “Conversion Rate”). No fraction of an Ordinary share will be delivered upon any
conversion. All calculations under this Section (4) shall be rounded to the nearest $0.0001. If the issuance would result in
the issuance of a fraction of an Ordinary Share, the Company shall round such fraction of a share up to the nearest whole
share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance
and delivery of shares upon conversion of any Conversion Amount.


 


(i)
“Conversion Amount” means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise
with respect to which this determination is being made.


 







    4


     


    

 


(ii)
“Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination the lower
of (i) $2.69 (the “Fixed Conversion Price”), or (ii) 88% of the lowest daily VWAP during the 10 consecutive
Trading Days immediately preceding the Conversion Date or other date of determination (the “Variable Conversion Price”),
but not lower than the Floor Price. The Conversion Price shall be adjusted from time to time pursuant to the other terms and conditions
of this Debenture.


 


(b)
Mechanics of Conversion.


 


(i)
Optional Conversion. To convert any Conversion Amount into Ordinary Shares on any date (a “Conversion Date”),
the Holder shall (A) transmit by email, for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed
notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company
and (B) if required by Section (4)(b)(iii), surrender this Debenture to a nationally recognized overnight delivery service for
delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture
in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion
Notice, Instrument of Transfer, and Letter of Transmittal (the “Share Delivery Date”), the Company shall cause
the issuance of the underlying Ordinary Shares and (X) if legends are not required to be placed on the shares certificates and
provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities
Transfer Program, instruct the Depositary Bank to credit such aggregate number of Ordinary Shares to which the Holder shall be
entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal and Custodian system or (Y)
if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, instruct the Transfer Agent
to deliver to the address as specified in the Conversion Notice, a share certificate, registered in the name of the Holder or
its designee, for the number of Ordinary Shares to which the Holder shall be entitled which certificates shall not bear any restrictive
legends unless required pursuant to rules and regulations of the Commission. If this Debenture is physically surrendered for conversion
and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted,
then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture
and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted.
The Person or Persons entitled to receive Ordinary Shares issuable upon a conversion of this Debenture shall be treated for all
purposes as the record holder or holders of such Ordinary Shares upon the transmission of a Conversion Notice.


 


(ii)
Company’s Failure to Timely Convert. If within three (3) Trading Days after the Company’s receipt of an email copy of a
Conversion Notice the Company shall fail to issue the underlying Ordinary Shares and cause the issuance and deliver a share certificate
to the Holder or credit the Holder’s balance account with DTC for the number of Ordinary Shares to which the Holder is entitled
upon such holder’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading
Day the Holder purchases (in an open market transaction or otherwise) Ordinary Shares to deliver in satisfaction of a sale by
the Holder Ordinary Shares issuable upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”),
then the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay
cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions) for the Ordinary
Shares so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Ordinary Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder
a certificate or certificates representing such Ordinary Shares and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of Ordinary Shares, times (B) the Closing Bid Price on the Conversion
Date.




 







    5


     


    

  


(iii)
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless
(A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with
prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical
surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal and Interest converted and
the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Debenture upon partial conversion.


 


(c)
Limitations on Conversions.


 


(i)
Beneficial Ownership. The Holder shall not have the right to convert any portion of this Debenture or otherwise receive
Ordinary Shares hereunder to the extent that after giving effect to such conversion or receipt of such Ordinary Shares, the Holder,
together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act
and the rules promulgated thereunder) in excess of 4.99% of the number of Ordinary Shares outstanding immediately after giving
effect to such conversion. Since the Holder will not be obligated to report to the Company the number of Ordinary Shares it may
hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of Ordinary Shares representing
beneficial ownership in excess of 4.99% of the then outstanding Ordinary Shares without regard to any other Ordinary Shares which
may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine
whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the determination of which portion of the Principal amount of
this Debenture is convertible shall be the responsibility and obligation of the Holder, provided however, upon the request of
the Company, the Holder shall report its holdings in Ordinary Shares to the Company. If the Holder has delivered a Conversion
Notice for a Principal amount of this Debenture that would result in the issuance in excess of the permitted amount hereunder,
the Company shall notify the Holder of this fact and shall honor the conversion for the maximum Principal amount permitted to
be converted on such Conversion Date in accordance with Section 3(a) and any Principal amount tendered for conversion in excess
of the permitted amount hereunder shall remain outstanding under this Debenture. The Holder (but only as to itself and not to
any other Holder) may elect to increase the beneficial ownership limitation set forth herein from 4.99% to 9.99% upon not less
than 65 days prior written notice to the Company.


 


(ii)
Principal Market Limitation. Notwithstanding anything in this Agreement to the contrary, the Company shall not issue any
Ordinary Shares pursuant to the transactions contemplated hereby or any other Transaction Documents if the issuance of such Ordinary
Shares would exceed the aggregate number of Ordinary Shares that the Company may issue in this transaction in compliance with
the Company’s obligations under the rules or regulations of Nasdaq Stock Market LLC (the “Nasdaq”) (the
number of shares which may be issued without violating such rules and regulations is 2,283,136 (which is 19.99% of 1,421,393 outstanding
Ordinary Shares) and shall be referred to as the “Exchange Cap”), except that such limitation shall not apply
in the event that the Company (A) obtains the approval of its shareholders as required by the applicable rules of the Nasdaq for
issuances of shares in excess of such amount or (B) obtains a written opinion from counsel to the Company that such approval is
not required, which opinion shall be reasonably satisfactory to the Buyers. The Exchange Cap shall be appropriately adjusted for
any stock dividend, stock split, reverse stock split or similar transaction.


 












    6


     


    

 


(iii) Sales
Limitations. The Holder shall not sell such number of Ordinary Shares in any calendar month (being the 1st of
the month through the last day of the same month) that would result in gross proceeds received by the Holder in excess of the
greater of (a) 30% of the dollar trading volume of the Ordinary Shares during such calendar month, of (b) $500,000. This
limitation shall not apply (i) at any time after the occurrence of an Event of Default, and (ii) with respect to any sales of
Ordinary Shares at prices greater than or equal to the Fixed Conversion Price. This limitation may be waived with the written
consent of the Company.


 


(d)
Other Provisions.


 


(i)
The Company shall at all times reserve and keep available out of its authorized Ordinary Shares the full number of Ordinary Shares
issuable upon conversion of all outstanding amounts under this Debenture; and within three (3) Business Days following the receipt
by the Company of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall promptly
reserve a sufficient number of shares to comply with such requirement.


 


(ii)
All calculations under this Section (4) shall be rounded to the nearest $0.0001 or whole share.


 


(iii)
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (3) herein
for the Company’s failure to deliver certificates representing shares upon conversion within the period specified herein
and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security.
The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof
or under applicable law.


 


(5)
Adjustments to Conversion Price


 


(a)
Adjustment of Conversion Price upon Issuance of Ordinary Shares. If the Company, at any time while this Debenture is outstanding,
issues or sells any Ordinary Shares or Convertible Securities, for a consideration per share (the “New Issuance Price”)
less than a price equal to the Fixed Conversion Price in effect immediately prior to such issue or sale (such price the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance the Fixed
Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For the purposes hereof, if the
Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one Ordinary Share is
issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such Ordinary Share shall
be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible
Securities for such price per share. No further adjustment of the Conversion Price shall be made upon the actual issuance of such
Ordinary Shares upon conversion or exchange or exercise of such Convertible Securities.


 









    7


     


    

  


(b)
Adjustment of Conversion Price upon Subdivision or Combination of Ordinary Shares. If the Company, at any time while this
Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on its Ordinary Shares
or any other equity or equity equivalent securities payable in shares which results in an increase in the number of outstanding
Ordinary Shares, (b) subdivide its outstanding shares of Ordinary Shares into a larger number of Ordinary Shares, (c) combine
(including by way of reverse share split) outstanding Ordinary Shares into a smaller number of Ordinary Shares, or (d) issue additional
Ordinary Shares by reclassification of Ordinary Shares or any shares of capital stock of the Company, then each of the Fixed Conversion
Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares (excluding
treasury shares, if any) outstanding before such event and of which the denominator shall be the number of Ordinary Shares outstanding
after such event (c) of this Section. Any adjustment made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or re-classification.


 


(c)
Other Events. If any event occurs of the type contemplated by the provisions of this Section (5) but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price
so as to protect the rights of the Holder under this Debenture; If the Company issues any Convertible Securities with a variable
conversion formula that is more favorable than this Debenture, then at the option of the Holder, the Variable Conversion Price
formula shall be changed to match that of the new Convertible Securities.


 


(d)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of Ordinary Shares are entitled to receive securities or other assets
with respect to or in exchange for Ordinary Shares (a “Corporate Event”), the Company shall make appropriate
provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder’s
option, (i) in addition to the Ordinary Shares receivable upon such conversion, such securities or other assets to which the Holder
would have been entitled with respect to such Ordinary Shares had such shares been held by the Holder upon the consummation of
such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or
(ii) in lieu of the Ordinary Shares otherwise receivable upon such conversion, such securities or other assets received by the
holders of Ordinary Shares in connection with the consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as
opposed to the Ordinary Shares) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made
pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this
Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations
on the conversion or redemption of this Debenture.


 









    8


     


    

 


(e)
Whenever the Conversion Price is adjusted pursuant to Section (5) hereof, the Company shall promptly mail to the Holder a notice
setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.


 


(6)
REISSUANCE OF THIS DEBENTURE.


 


(a)
Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section (6)(d)), registered
in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along
with any accrued and unpaid interest thereof) and, if less than the entire outstanding Principal is being transferred, a new Debenture
(in accordance with Section (6)(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and
any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section (4)(b)(iii)
following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may
be less than the Principal stated on the face of this Debenture.


 


(b)
Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company reasonably satisfactory to the Company and, in the case of mutilation, upon surrender
and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section
(6)(d)) representing the outstanding Principal.


 


(c)
Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section (6)(d)) representing in
the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding
Principal as is designated by the Holder at the time of such surrender.


 


(d)
Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture,
such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new
Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section (6)(a) or Section
(6)(c), the Principal designated by the Holder which, when added to the Principal represented by the other new Debentures issued
in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to
such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is
the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall
represent accrued and unpaid Interest from the Issuance Date.


 









    9


     


    

  


(7)
NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof
must be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when
delivered personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified,
in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses
and e-mail addresses for such communications shall be:


 


	If
    to the Company, to:	DRAGON
    VICTORY INTERNATIONAL LIMITED
	 	Hanshi
    Tower 22nd Floor, No. 1786 Binsheng Road, Binjiang
	 	District,
    Hangzhou, Zhejiang Province
	 	Peoples
    Republic of China
	 	Telephone:
    +86 137-3814-6896
	 	 
	 	Telephone:
    +86 137-3814-6896
	 	Attention:
    Amanda Yang
	 	Email:
    yangy@dvintinc.com
	 	 
	 	Hunter
    Taubman Fischer & Li LLC
	With
    Copy to:	800
    Third Avenue, Suite 2800
	 	New
    York, NY 10022
	 	Attention:
    Ying Li, Esq. Telephone: (202) 530-2206
	 	Email:
    yli@htflawyers.com
	 	 
	If
    to the Holder:	YA
    II PN, Ltd
	 	c/o
    Yorkville Advisors Global, LLC
	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ 07092
	 	Attention:
    Mark Angelo
	 	Telephone:
    201-985-8300
	 	Email:
    Legal@yorkvilleadvisors.com


 


or
at such other address and/or email and/or to the attention of such other person as the recipient party has specified by written
notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt
(i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s
email service provider containing the time, date, recipient email address or (iii) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.




 




    10


     


    

 


(8)
Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company,
which are absolute and unconditional, to pay the Principal of, interest and other charges (if any) on, this Debenture at the
time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.
As long as this Debenture is outstanding, the Company shall not and shall cause their subsidiaries not to, without the
consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely
affect any rights of the Holder; or (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire its Ordinary
Shares or other equity securities; or (iii) enter into any agreement with respect to any of the foregoing.


 


(9)
This Debenture shall not entitle the Holder to any of the rights of a shareholder of the Company, including without limitation,
the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of shareholders
or any other proceedings of the Company.


 


(10)
This Debenture shall be governed by and construed in accordance with the laws of the State of New York, without giving effect
to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Supreme Court of the State of New York located
in the City of New York, Borough of Manhattan, and the U.S. District Court for the Southern District of New York in connection
with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions. THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’
ACCEPTANCE OF THIS AGREEMENT.


 


(11)
If any party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.


 


(12)
Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the
Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this
Debenture. Any waiver must be in writing.


 


(13)
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable
laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted
rate of interest.

 







    11


     


    

 


(14)
CERTAIN DEFINITIONS. For purposes of this Debenture, the following terms shall have the following meanings:


 


(a)
“Applicable Price” shall have the meaning set forth in Section 5(a).


 


(b)
“Bloomberg” means Bloomberg Financial Markets.


 


(c)
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in
the United States or a day on which banking institutions are authorized or required by law or other government action to close.


 


(d)
“Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty
percent (50%) of the voting power of the Company (except that the acquisition of voting securities by the Holder or any other
current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof),
(b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company (other
than as due to the death or disability of a member of the board of directors) which is not approved by a majority of those individuals
who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board
of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of
directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets
of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d)
the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the
events set forth above in (a), (b) or (c). No transfer to a wholly-owned subsidiary shall be deemed a Change of Control Transaction
under this provision.


 


(e)
“Closing Bid Price” means the price per share in the last reported trade of the Ordinary Shares on the Primary
Market or on the exchange which the Ordinary Shares are then listed as quoted by Bloomberg.


 


(f)
“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Ordinary Shares.


 


(g)
“Commission” means the Securities and Exchange Commission.


 


(h)
“Dilutive Issuance” shall have the meaning set forth in Section 5(a).


 





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(i)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.


 


(j)
“Floor Price” means $0.50 per share.


 


(k)
“Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation
of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation
with a wholly owned subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale
of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to tender
or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the
Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares are effectively converted into or
exchanged for other securities, cash or property.


 


(l)
“New Issuance Price” shall have the meaning set forth in Section 5(a).


 


(m)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Ordinary Shares or
Convertible Securities.


 


(n)
“Ordinary Shares” means the Company’s Ordinary Shares, par value $0.0001 par value per share, and any
capital stock into which such shares shall have been changed or any share capital resulting from a reclassification of such
Ordinary Shares.


 


(o)
“Other Debentures” means any other debentures issued pursuant to the Securities Purchase Agreement and any
other debentures, notes, or other instruments issued in exchange, replacement, or modification of the foregoing.


 


(p)
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government
or political subdivision thereof or a governmental agency.


 


(q)
“Primary Market” means the Nasdaq Capital Market and any successor to any of the foregoing markets or exchanges.


 


(r)
“Redemption Premium” means 15% of the Principal amount being redeemed.


 


(s)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.


 


(t)
“Trading Day” means a day on which the Ordinary Shares are quoted or traded on a Primary Market on which the
shares are then quoted or listed; provided, that in the event that the Ordinary Shares are not listed or quoted, then Trading
Day shall mean a Business Day.


 







    13


     


    

 


(u)
“Transaction Document(s)” shall mean this Debenture, along with the Securities Purchase Agreement, and any
other documents or agreements entered into in connection with the foregoing.


 


(v)
“Underlying Shares” means the Ordinary Shares issuable upon conversion of this Debenture in accordance with
the terms hereof.


 


(w)
“Underlying Shares Registration Statement” means a registration statement meeting the requirements set forth
in the Registration Rights Agreement, covering among other things the resale of the Ordinary Shares, and naming the Holder as
a “selling shareholder” thereunder.


 


(x)
“VWAP” means, for the Ordinary Shares as of any date, the daily dollar volume-weighted average price for such
security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily
Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg.


 


[Signature
Page Follows]


 




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


 


	 	COMPANY:
	 	DRAGON VICTORY INTERNATIONAL
	 	LIMITED
	 	 	 
	 	By:	/s/ Liu Limin
	 	Name: 	 Liu Limin
	 	Title:	 CEO & Chairman of the Board




 







     


     


    

  


EXHIBIT
I


CONVERSION
NOTICE


 


(To
be executed by the Holder in order to Convert the Debenture)


 


TO:
DRAGON VICTORY INTERNATIONAL LIMITED


 


Via
Email:


 


The
undersigned hereby irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Debenture No. LYL-1
into Ordinary Shares of DRAGON VICTORY INTERNATIONAL LIMITED, according to the conditions stated therein, as of the
Conversion Date written below.


 


	Conversion
    Date:
	 
	Principal
    Amount to be Converted:
	 
	Accrued
    Interest to be Converted:
	 
	Total
    Conversion Amount to be converted:
	 
	Fixed
    Conversion Price:
	 
	Variable
    Conversion Price:
	 
	Applicable
    Conversion Price:
	 
	Number
    of Ordinary Shares to be Issued:
	 

        Please
        issue the Ordinary Shares in the following name and to the following address:

	[________________]


 


	Authorized Signature:	 	 
	Name:	 	 
	Title:	 	 
	Broker DTC Participant Code:  	 	 
	Account Number: