Exhibit 10.3


 


NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (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.


 


	Principal
    Amount: US$80,000.00	Issue
    Date: March 20, 2017




Purchase
Price: US$80,000.00


 


CONVERTIBLE PROMISSORY NOTE


 


FOR VALUE
RECEIVED, NIGHTFOOD HOLDINGS, INC., a Nevada corporation (hereinafter called the "Borrower"), hereby promises
to pay to the order of AUCTUS FUND, LLC, a Delaware limited liability company, or registered assigns (the
"Holder") the sum of US$80,000.00 together with any interest as set forth herein, on December 20, 2017 (the
"Maturity Date"), and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%)
(the "Interest Rate") per annum from the date hereof (the "Issue Date") until the same becomes due and
payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in
part except as otherwise explicitly set forth herein.. Any amount of principal or interest on this Note which is not paid
when due shall bear interest at the rate of twenty-four percent (24%) per annum from the due date thereof until the same is
paid (the "Default Interest"). Interest shall commence accruing on the date that the Note is fully paid and shall
be computed on the basis of a 360-day year and the actual number of days elapsed. All payments due hereunder (to the extent
not converted into common stock, $0.001 par value per share (the "Common Stock") in accordance with the terms
hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the
Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall
instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not
the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account
for purposes of determining the amount of interest due on such date. As used in this Note, the term "business day"
shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are
authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to
which this Note was originally issued (the "Purchase Agreement").


 



    	 		 



     


    

 


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


 


The following terms shall apply to this Note:


 


ARTICLE I. CONVERSION RIGHTS


 


1.1     
Conversion Right. The Holder shall have the right from time to time, and at any time following the 180th day
after the Issue Date and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined
in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this
Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable
shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the
Borrower into which such Common Stock shall hereafter be changed or reclassified at the Conversion Price (as defined below) determined
as provided herein (a "Conversion"); provided, however, that in no event shall the Holder be entitled
to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion
of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to
which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of
more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided,
further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not
less than 61 days' prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until
such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares
of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached
hereto as Exhibit A (the "Notice of Conversion"), delivered to the Borrower by the Holder in accordance with Section
1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably
expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion
Date"). The term "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the principal
amount of this Note to be converted in such conversion plus (2) at the Holder's option, accrued and unpaid interest, if
any, on such principal amount at the interest rates provided in this Note to the Conversion Date, provided however, that the Borrower
shall have the right to pay any or all interest in cash plus (3) at the Holder's option, Default Interest, if any, on the
amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's option, any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.


 






    	 	2	 



     


    

 


1.2      Conversion Price.


 


Calculation
of Conversion Price. Subject to the adjustments described herein, and provided that no Event of Default (as defined in Article
III) has occurred, the conversion price (the "Conversion Price") shall equal the lesser of (i) 60% multiplied by the
average of the two (2) lowest Trading Prices (as defined below) (representing a discount rate of 40%) during the previous twenty-five
(25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion
Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower
relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 60% multiplied by the Market
Price (as defined herein) (representing a discount rate of 40%). "Market Price" means the average of the two (2) lowest
Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the latest complete
Trading Day prior to the Conversion Date. "Trading Prices" means, for any security as of any date, the lesser of (i)
the lowest trade price on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service ("Reporting
Service") designated by the Holder or, if the OTC Pink is not the principal trading market for such security, the trading
price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no
trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers
for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc., or (ii) the closing bid
price on the OTC Pink, OTCQB or applicable trading market as reported by a Reporting Service designated by the Holder or, if the
OTC Pink is not the principal trading market for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in
the "pink sheets" by the National Quotation Bureau, Inc. To the extent the Conversion Price of the Borrower's Common
Stock closes below the par value per share, the Borrower will take all steps necessary to solicit the consent of the stockholders
to reduce the par value to the lowest value possible under law. The Borrower agrees to honor all conversions submitted pending
this adjustment. Furthermore, the Conversion Price may be adjusted downward if, within three (3) business days of the transmittal
of the Notice of Conversion to the Borrower, the Common Stock has a closing bid which is 5% or lower than that set forth in the
Notice of Conversion. If the shares of the Borrower's Common Stock have not been delivered within three (3) business days to the
Borrower, the Notice of Conversion may be rescinded. At any time after the Closing Date, if in the case that the Borrower's Common
Stock is not deliverable by DWAC (including if the Borrower's transfer agent has a policy prohibiting or limiting delivery of
shares of the Borrower's Common Stock specified in a Notice of Conversion), an additional 12% discount will apply for all future
conversions under all Notes. If in the case that the Borrower's Common Stock is "chilled" for deposit into the DTC system
and only eligible for clearing deposit, an additional 15% discount shall apply for all future conversions under all Notes while
the "chill" is in effect. If in the case of both of the above, an additional cumulative 25% discount shall apply. Additionally,
if the Company ceases to be a reporting company pursuant to the 1934 Act or if the Note cannot be converted into free trading
shares after one hundred eighty-one (181) days from the Issue Date, an additional 15% discount will be attributed to the Conversion
Price. If the Trading Prices cannot be calculated for such security on such date in the manner provided above, the Trading Prices
shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being
converted for which the calculation of the Trading Prices is required in order to determine the Conversion Price of such Notes.
"Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTC Pink, OTCQB or on the
principal securities exchange or other securities market on which the Common Stock is then being traded. The Borrower shall be
responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. Holder shall be entitled to
deduct $500.00 from the conversion amount in each Notice of Conversion to cover Holder's deposit fees associated with each Notice
of Conversion.


 






    	 	3	 



     


    

 


(a)     
Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary,
in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other
than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or
transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly
announces a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the
announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, "Adjusted Conversion
Price Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which
a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination
or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.


 


(b)     
Pro Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to
the Holder in connection with a conversion of this Note, the Borrower shall issue to the Holder the number of shares of Common
Stock not in dispute and resolve such dispute in accordance with Section 4.13.


 



    	 	4	 



     


    

 


1.3     Authorized
Shares.The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase
Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is
actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)
(the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance with the Borrower's
obligations pursuant to Section 3(d) of the Purchase Agreement. The Borrower represents that upon issuance, such shares will
be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make
any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be
convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that
thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights,
for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent
to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this
Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of
this Note. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than the initial Reserved Amount,
regardless of any prior conversions.


 


If, at any time the Borrower does
not maintain or replenish the Reserved Amount within three (3) business days of the request of the Holder, the principal amount
of the Note shall increase by Five Thousand and No/100 United States Dollars ($5,000) (under Holder's and Borrower's expectation
that any principal amount increase will tack back to the Issue Date) per occurrence.


 


1.4      Method of Conversion.


 


(a)      
 Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to
time following the 180th day after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile,
email or other reasonable means of communication dispatched on the Conversion Date prior to 5:00 p.m., New York, New York time)
and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.


 


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


 






    	 	5	 



     


    

 


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


 


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


 


(e)     
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the
Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be
the Conversion Date so long as the Notice of Conversion is received by the Borrower before 5:00 p.m., New York, New York time,
on such date.








 






    	 	6	 



     


    

 


(f)     

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


 


(g)      DTC Eligibility & Sub-Penny. If the Borrower fails to maintain its status as "DTC
Eligible" for any reason, or, if the Conversion Price is less than $0.01, the principal amount of the Note shall increase
by Fifteen Thousand and No/100 United States Dollars ($15,000) (under Holder's and Borrower's expectation that any principal amount
increase will tack back to the Issue Date). In addition, the Variable Conversion Price shall be redefined to mean forty percent
(40%) multiplied by the Market Price, subject to adjustment as provided in this Note.


 


(h)      Failure
to Deliver Common Stock Prior to Delivery Deadline. Without in any way limiting the Holder's right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable
upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in
Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $1,000 per day in
cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock until the Borrower issues and
delivers a certificate to the Holder or credit the Holder's balance account with OTC for the number of shares of Common Stock
to which the Holder is entitled upon such Holder's conversion of any Conversion Amount (under Holder's and Borrower's
expectation that any damages will tack back to the Issue Date).. Such cash amount shall be paid to Holder by the fifth day of
the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by
the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note,
in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount
shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right
to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with
such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated
damages provision contained in this Section 1.4(h) are justified.


 


(i)     
Rescindment of a Notice of Conversion. If (i) the Borrower fails to respond to Holder within one (1) business
day from the Conversion Date confirming the details of Notice of Conversion, (ii) the Borrower fails to provide any of the shares
of the Borrower's Common Stock requested in the Notice of Conversion within three (3) business days from the date of receipt of
the Note of Conversion, (iii) the Holder is unable to procure a legal opinion required to have the shares of the Borrower's Common
Stock issued unrestricted and/or deposited to sell for any reason related to the Borrower's standing, (iv) the Holder is unable
to deposit the shares of the Borrower's Common Stock requested in the Notice of Conversion for any
reason related to the Borrower's standing, (v) at any time after a missed Deadline, at the Holder's sole discretion, or (vi) if
OTC Markets changes the Borrower's designation to 'Limited Information' (Yield), 'No Information' (Stop Sign), 'Caveat Emptor'
(Skull & Crossbones), `OTC', 'Other OTC' or 'Grey Market' (Exclamation Mark Sign) or other trading restriction on the day
of or any day after the Conversion Date, the Holder maintains the option and sole discretion to rescind the Notice of Conversion
("Rescindment") with a "Notice of Rescindment."


 






    	 	7	 



     


    

 


1.5     Concerning the Shares.
The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold
pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished
with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from
such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ("Rule
144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule 144) of the Borrower who agrees
to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined
in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth
below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act
or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that
can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been
so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or
an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:


 


"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."


 



    	 	8	 



     


    

 


The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if
(i) the Borrower or its transfer agent shall have received 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 Common Stock may be made
without registration under the Act, which opinion shall be reasonably accepted by the Borrower so that the sale or transfer
is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for
sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule
144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the
event that the Borrower 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, at the Deadline, it will be
considered an Event of Default pursuant to Section 3.2 of the Note.


 


1.6      Effect of Certain Events.


 


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


 


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


 






    	 	9	 



     


    

 


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


 


(d)     Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues
or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, except for shares of Common Stock
issued directly to vendors or suppliers of the Borrower in satisfaction of amounts owed to such vendors or suppliers (provided,
however, that such vendors or suppliers shall not have an arrangement to transfer, sell or assign such shares of Common Stock
prior to the issuance of such shares), any shares of Common Stock for no consideration or for a consideration per share (before
deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the
Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a "Dilutive
Issuance"), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration
per share received by the Borrower in such Dilutive Issuance.


 


The Borrower shall
be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights
or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to
purchase Common Stock or other securities convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter
referred to as "Options") and the price per share for which Common Stock is issuable upon the exercise of such
Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share.
For purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as
consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon
the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii)
the maximum total number of shares of Common Stock issuable upon the exercise of all
such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the
Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the
conversion or exchange of Convertible Securities issuable upon exercise of such Options.


 



    	 	10	 



     


    

 


Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the
price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect,
then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof
at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.


 


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


 


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


 






    	 	11	 



     


    

 


1.7     Trading
Market Limitations.Unless permitted by the applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note
and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares
of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the
Common Stock is then traded (the "Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on the
Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock
dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof.
Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the
rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction
over the Borrower or any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum
Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.2
of the Note.


 


1.8     Status as Shareholder.
Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot
be issued because their issuance would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share Amount) shall
be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder of such converted portion of this Note
shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies
provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the
terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior
to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note
for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower)
the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower
shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its
records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights
and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the
extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion
Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to convert this
Note.


 


1.9     Prepayment. Notwithstanding
anything to the contrary contained in this Note, the Borrower may prepay the amounts outstanding hereunder pursuant to the following
terms and conditions:


 


(a)     At any time during
the period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue Date, the Borrower
shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay
the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to
135%, multiplied by the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest
on the unpaid principal amount of this Note plus (y) Default Interest, if any.


 



    	 	12	 



     


    

 





(b)     
At any time during the period beginning the day which is ninety one (91) days following the Issue Date and ending on the
date which is one hundred eighty (180) days following the Issue Date, the Borrower shall have the right, exercisable on not less
than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued
interest), in full by making a payment to the Holder of an amount in cash equal to 150%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
plus (y) Default Interest, if any.


 


(c)     After the expiration of one hundred eighty (180) days following the date of the Note, the Borrower shall have no right
of prepayment.


  


Any notice of prepayment
hereunder (an "Optional Prepayment Notice") shall be delivered to the Holder of the Note at its registered addresses
and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be
not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the "Optional
Prepayment Date"), the Borrower shall make payment of the applicable prepayment amount to or upon the order of the Holder
as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the
Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note
within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the
Note pursuant to this Section 1.9.


 


ARTICLE II. CERTAIN COVENANTS


 


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


 


2.2     Restriction on Stock Repurchases.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent
redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any
one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options
to purchase or acquire any such shares.


 


2.3     Borrowings.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written
consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable
instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in
existence or committed on the date hereof and of which the Borrower has informed Holder in
writing prior to the date hereof, (b) indebtedness to trade creditors financial institutions or other lenders incurred in the
ordinary course of business or (c) borrowings, 50% of the proceeds of which shall be used to repay this Note.


 






    	 	13	 



     


    

 


2.4     Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's
written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business.
Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.


 


2.5     Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder's written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including,
without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof,
(b) made in the ordinary course of business or (c) not in excess of $100,000.


 


2.6     Section 3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction
or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9)
of the Securities Act (a "3(a)(9) Transaction") or Section 3(a)(10) of the Securities Act (a "3(a)(10) Transaction").
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10)
Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note,
but not less than Fifteen Thousand Dollars $15,000, will be assessed and will become immediately due and payable to the Holder
at its election in the form of cash payment or addition to the balance of this Note.


 


2.7     Preservation of Existence,
etc. The Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or
minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such qualification necessary.


 


2.8     Non-circumvention. The
Borrower hereby covenants and agrees that the Borrower will not, by amendment of its Certificate or Articles of Incorporation or
Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of
this Note, and will at all times in good faith carry out all the provisions of this Note and take all action as may be required
to protect the rights of the Holder.


 






    	 	14	 



     


    

 






ARTICLE III. EVENTS OF DEFAULT


 


If any of the following events of default (each, an "Event
of Default") shall occur:


 


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


 


3.2     Conversion and the Shares. The Borrower (i) fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, (iii) directs its transfer agent not to transfer or delays, impairs, and/or hinders
its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock
to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iv) fails
to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common
Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any
written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any
such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be
rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion, (v) fails to remain
current in its obligations to its transfer agent, (vi) causes a conversion of this Note is delayed, hindered or frustrated due
to a balance owed by the Borrower to its transfer agent, and/or (vii) fails to repay Holder, within forty eight (48) hours of a
demand from the Holder, any amount of funds advanced by Holder to Borrower's transfer agent in order to process a conversion.


 


3.3     Failure to Deliver Transaction
Expense Amount. The Borrower fails to deliver the Transaction Expense Amount (as defined in the Purchase Agreement) to the
Holder within three (3) business days of the date such amount is due.


 


3.4     Breach of Covenants.
The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents
including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice
thereof to the Borrower from the Holder.


 


3.5     Breach of Representations
and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given
in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or
misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse
effect on the rights of the Holder with respect to this Note or the Purchase Agreement.


 






    	 	15	 



     


    

 






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


 


3.7     Judgments. Any money
judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its
property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days
unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


3.8     Bankruptcy.Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the
Borrower, or the Borrower admits in writing its inability to pay its debts generally as they mature, or have filed against it
an involuntary petition for bankruptcy relief, all under federal or state laws as applicable or the Borrower admits in
writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for
bankruptcy relief, all under international, federal or state laws as applicable.


 


3.9    Delisting of Common Stock.
The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National Market,
Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange


 


3.10   Failure
to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including
but not limited to becoming delinquent in its filings); and/or the Borrower shall cease to be subject to the reporting requirements
of the Exchange Act.


 


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


 


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


 


3.13    Maintenance of Assets.
The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are
necessary to conduct its business (whether now or in the future), or any disposition or conveyance of any material asset of the
Company.


 






    	 	16	 



     


    

 





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


 


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


 


3.16     Replacement of Transfer
Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective
date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to
the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved
Amount) signed by the successor transfer agent to Borrower and the Borrower.


 


3.17     Cessation of Trading.
Any cessation of trading of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National Market, Nasdaq Small Cap Market,
New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange, and such cessation of trading shall continue for a period
of five consecutive (5) Trading Days.


 


3.18     Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements (as defined
herein), after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered
a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply
all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other
Agreement or hereunder . "Other Agreements" means, collectively, all agreements and instruments between, among or by:
(1) the Borrower, and, or for the benefit of, (2) the Holder (and any affiliate of the Holder) or any other third party, including,
without limitation, promissory notes; provided, however, the term "Other Agreements" shall not include the agreements
and instruments defined as the Documents. Each of the loan transactions will be cross-defaulted with each other loan transaction
and with all other existing and future debt of Borrower to the Holder.


 


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


 


3.20     OTC Markets Designation.
OTC Markets changes the Borrower's designation to 'No Information' (Stop Sign), 'Caveat Emptor' (Skull and Crossbones), or 'OTC',
`Other OTC' or 'Grey Market' (Exclamation Mark Sign).


 






    	 	17	 



     


    

 


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


 


Upon the occurrence and during the continuation
of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in
full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND
THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM
(AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified
in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon acceleration),
3.3, 3.4, 3.6, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16. 3.17, 3.18, 3.19, 3.20, and/or 3.21 exercisable through the
delivery of written notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event
of Default specified the remaining sections of Article III (other than failure to pay the principal hereof or interest thereon
at the Maturity Date specified in Section 3.1 hereof), the Note shall become immediately due and payable and the Borrower shall
pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to (i) 150% times the sum
of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal
amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any,
on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in
clauses (x), (y) and (z) shall collectively be known as the "Default Sum") or (ii) at the option of the Holder, the
"parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common
Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading
Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of determining the lowest
applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date
in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Trading Prices for the
Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the
Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall immediately become due
and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including,
without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and
remedies available at law or in equity. Further, if a breach of Sections 3.9, 3.10 and/or 3.19 occurs or is continuing after the
six (6) month anniversary of this Note, then the principal amount of the Note shall increase by Fifteen Thousand and No/100 United
States Dollars ($15,000) (under Holder's and Borrower's expectation that any principal amount increase will tack back to the Issue
Date) and the Holder shall be entitled to use the lowest Trading Prices during the delinquency period as a
base price for the conversion with the Variable Conversion Price shall be redefined to mean forty percent (40%) multiplied by
the Market Price, subject to adjustment as provided in this Note. For example, if the lowest Trading Prices during the delinquency
period is $0.01 per share and the conversion discount is 50%, then the Holder may elect to convert future conversions at $0.005
per share. If this Note is not paid at Maturity Date, then the outstanding principal due under this Note shall increase by Fifteen
Thousand and No/100 United States Dollars ($15,000).


 






    	 	18	 



     


    

 


If the Borrower fails to pay the Default Amount within
five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time,
so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require
the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of
the Borrower equal to the Default Amount divided by the Conversion Price then in effect. This requirement by the Borrower shall
automatically apply upon the occurrence of an Event of Default without the need for any party to give any notice or take any other
action.


 


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 Borrower for its attorneys' fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.


 


ARTICLE IV. MISCELLANEOUS


 


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


 


4.2     Notices. All notices,
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 Borrower, to:


 


Nightfood
Holdings, Inc.


520
White Plains Road, Suite 500


Tarrytown,
NY 10591


Attn:
Sean Folkson


E-mail:
nightfood@nightfood.com



 



    	 	19	 



     


    




 


With
a copy to (which copy shall not constitute notice):


 


Frank
J. Hariton, Esq.

1065 Dobbs Ferry Road White Plains, NY 10607 

E-mail: hariton@sprynet.com


 


If
to the Holder:


 


Auctus
Fund, LLC


101
Arch Street, 20th Floor


Boston,
MA 02110


Attn: Lou Posner


Facsimile:
(617) 532-6420


 


With
a copy to (which copy shall not constitute notice):


 


Laura
Anthony, Esq.


Legal 
& Compliance, LLC


330
Clematis Street, Suite 217


West
Palm Beach, FL 33401


e-mail:
LAnthony@LegalandCompliance.com


 


4.3     Amendments. This Note
and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term "Note"
and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant
to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.


 


4.4     Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined in Rule 501(a)
of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection
with a bona fide margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Note,
acknowledge and agree that following conversion of a portion of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on the face hereof.


 






    	 	20	 



     


    

 






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


 


4.6     Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada without regard to
principles of conflicts of laws. Any action brought by either party against the other concerning the transactions
contemplated by this Note shall be brought only in the state courts of Massachusetts or in the federal courts located in the
Commonwealth of Massachusetts. The parties to this Note 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 BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY. 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 Note 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.


 


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


 


4.8     Purchase Agreement. By
its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.


 






    	 	21	 



     


    

 






4.9     Notice of Corporate Events. Except as otherwise provided below, the
Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into
Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower's shareholders (and
copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of
its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution,
any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization)
any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders
who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of
the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder,
at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution,
right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event
to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder
hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9 including,
but not limited to, name changes, recapitalizations, etc. as soon as possible under law.


 


4.10    Usury. If it shall be
found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable
provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest permitted under
applicable law. The Borrower covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage
of any law that would prohibit or forgive the Borrower from paying all or a portion of the principal or interest on this Note.


 


4.11    Remedies. The Borrower
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent
and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach
of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower
of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity,
and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach
of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without
any bond or other security being required. No provision of this Note shall alter or impair the obligation of the Borrower, 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.


 


4.12    Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to
conform 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.


 






    	 	22	 



     


    

 


4.13    Dispute Resolution.
In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount,
Default Sum, Closing or Maturity Date, the closing bid price, or fair market value (as the case may be) or the arithmetic calculation
of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or the Holder shall submit the
disputed determinations or arithmetic calculations via facsimile (i) within two (2) Business Days after receipt of the applicable
notice giving rise to such dispute to the Borrower or the Holder or (ii) if no notice gave rise to such dispute, at any time after
the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Borrower are unable to agree upon such
determination or calculation within two (2) Business Days of such disputed determination or arithmetic calculation (as the case
may be) being submitted to the Borrower or the Holder, then the Borrower shall, within two (2) Business Days, submit via facsimile
(a) the disputed determination of the Conversion Price, the closing bid price, the or fair market value (as the case may be) to
an independent, reputable investment bank selected by the Borrower and approved by the Holder or (b) the disputed arithmetic calculation
of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Default Sum to an independent, outside accountant
selected by the Holder that is reasonably acceptable to the Borrower. The Borrower shall cause at its expense the investment bank
or the accountant to perform the determinations or calculations and notify the Borrower and the Holder of the results no later
than ten (10) Business Days from the time it receives such disputed determinations or calculations. Such investment bank's or accountant's
determination or calculation shall be binding upon all parties absent demonstrable error.


 


4.14    Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder's option, shall become a part of the transaction documents with the Holder. The types of
terms contained in another security that may be more favorable to the holder of such security include, but are not limited to,
terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts,
stock sale price, private placement price per share, and warrant coverage.


 


4.15    Piggyback Registration Rights.
The Borrower shall include on the next registration statement the Borrower files with SEC (or on the subsequent registration statement
if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in
liquidated damages of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand and No/100 United
States Dollars ($15,000), being immediately due and payable to the Holder at its election in the form of cash payment or addition
to the balance of this Note.


 



[signature page follows]


 






    	 	23	 



     


    

 






IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its
duly authorized officer as of the date first above written.


 





	 	NIGHTFOOD HOLDINGS, INC.
	 	 	 
	 	By:	/s/ Sean Folkson 
	 	Name: 	Sean Folkson
	 	Title: 	Chief Executive Officer




 






    	 	24	 



     


    

 





EXHIBIT A


NOTICE OF CONVERSION


 


The undersigned
hereby elects to convert $__________________ principal amount of the Note (defined below) together with
$__________________of accrued and unpaid interest thereto, totaling $_________________ into that number of shares of
Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below, of Nightfood
Holdings, Inc., a Nevada corporation (the "Borrower"), according to the conditions of the convertible note of the
Borrower dated as of March 20, 2017 (the "Note"), as of the date written below. No fee will be charged to the
Holder for any conversion, except for transfer taxes, if any.


 


Box Checked as to applicable instructions:


 


	 	[
    ]	The
    Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal At Custodian system ("DWAC Transfer").




 


	 		Name
    of DTC Prime Broker: 

    Account Number:




 


	 	[
    ]	The
    undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
    set forth below (which numbers are based on the Holder's calculation attached hereto) in the name(s) specified immediately
    below or, if additional space is necessary, on an attachment hereto:




 


	 	Name:
    [NAME]   	 
	 	Address:
    [ADDRESS]	 





	 	Date
    of Conversion:	____________
     
	 	Applicable
    Conversion Price:	$____________
     
	 	Number
    of Shares of Common Stock to be Issued	____________
     
	 	Pursuant
    to Conversion of the Notes:	____________
     
	 	Amount
of Principal Balance Due remaining 

Under the Note after this conversion:  	____________
     
	 	Accrued
    and unpaid interest remaining:  	____________
       





	 	[HOLDER]	 
	 	 	 	 
	 	By:		 
	 	Name:
    	[NAME]	 
	 	Title:
    	[TITLE]	 
	 	Date:	[DATE]