Exhibit
10.4


CONVERTIBLE
PROMISSORY NOTE 


 


	Effective
    Date: February 27, 2019	U.S.
    $1,050,000.00


 


FOR
VALUE RECEIVED, China Recycling Energy Corporation, a Nevada corporation (“Borrower”),
promises to pay to Iliad Research and Trading, L.P., a Utah limited partnership,
or its successors or assigns (“Lender”), $1,050,000.00 and any interest, fees, charges, and late fees on the
date that is twenty-four (24) months after the Purchase Price Date (the “Maturity Date”) in accordance with
the terms set forth herein and to pay interest on the Outstanding Balance at the rate of eight percent (8%) per annum from the
Purchase Price Date until the same is paid in full. This Convertible Promissory Note (this “Note”) is issued
and made effective as of February 27, 2019 (the “Effective Date”). This Note is issued pursuant to that certain
Securities Purchase Agreement dated February 27, 2019, as the same may be amended from time to time, by and between Borrower and
Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in Attachment 1
attached hereto and incorporated herein by this reference.


 


This
Note carries an OID of $50,000.00, all of which amount is included in the initial principal balance of this Note. The purchase
price for this Note shall be $1,000,000.00 (the “Purchase Price”), computed as follows: $1,050,000.00 original
principal balance, less the OID. The Purchase Price shall be payable by Lender via wire transfer of immediately available funds.


 


Payment;
Prepayment; Maturity Date Extension.


 


1.1.
Payment. Provided there is an Outstanding Balance, on each Redemption Date (as defined below), Borrower shall pay to Lender
an amount equal to the Redemption Amount (as defined below) due on such Redemption Date in accordance with Section 8. All
payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares (as defined below), as
provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments
shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid
interest, and thereafter, to (d) principal.


 


1.2.
Prepayment. Notwithstanding the foregoing, so long as Borrower has not received a Lender Conversion Notice (as defined
below) or a Redemption Notice (as defined below) from Lender where the applicable Conversion Shares have not yet been delivered
and so long as no Event of Default has occurred since the Effective Date (whether declared by Lender or undeclared and regardless
of whether or not cured), then Borrower shall have the right, exercisable on not less than five (5) Trading Days prior written
notice to Lender to prepay the Outstanding Balance of this Note, in full, in accordance with this Section 1.2. Any notice of prepayment
hereunder (an “Optional Prepayment Notice”) shall be delivered to Lender at its registered address and shall
state: (i) that Borrower is exercising its right to prepay this Note, and (ii) the date of prepayment, which shall be not less
than five (5) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional
Prepayment Date”), Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order
of Lender as may be specified by Lender in writing to Borrower. If Borrower exercises its right to prepay this Note, Borrower
shall make payment to Lender of an amount in cash equal to 125% (the “Prepayment Premium”) multiplied by the
then Outstanding Balance of this Note (the “Optional Prepayment Amount”). In the event Borrower delivers the
Optional Prepayment Amount to Lender prior to the Optional Prepayment Date or without delivering an Optional Prepayment Notice
to Lender as set forth herein without Lender’s prior written consent, the Optional Prepayment Amount shall not be deemed
to have been paid to Lender until the Optional Prepayment Date. Moreover, in such event the Optional Prepayment Liquidated Damages
Amount will automatically be added to the Outstanding Balance of this Note on the day Borrower delivers the Optional Prepayment
Amount to Lender. In the event Borrower delivers the Optional Prepayment Amount without an Optional Prepayment Notice, then the
Optional Prepayment Date will be deemed to be the date that is five (5) Trading Days from the date that the Optional Prepayment
Amount was delivered to Lender and Lender shall be entitled to exercise its conversion rights set forth herein during such five
(5) day period.


 






     


     


    

 


1.3.
Maturity Date Extension. In the event this Note has not been repaid by the Maturity Date and provided that no Event of
Default shall have occurred hereunder at any time after the Effective Date, then the Maturity Date shall automatically be extended
for an additional year (the “Extension Period”). No interest shall accrue on this Note during the Extension
Period. Notwithstanding the foregoing, upon the occurrence of an Event of Default during the Extension Period, the Extension Period
shall immediately terminate and this Note shall immediately be due and payable in full.


 


2.
Security. This Note is not secured.


 


3.
Lender Optional Conversion.


 


3.1.
Lender Conversions. Lender has the right at any time after the Purchase Price Date until the Outstanding Balance has been
paid in full, including without limitation until any Optional Prepayment Date (even if Lender has received an Optional Prepayment
Notice) or at any time thereafter with respect to any amount that is not prepaid (each instance of conversion is referred to herein
as a “Lender Conversion”) all or any part of the Outstanding Balance into shares (“Lender Conversion
Shares”) of fully paid and non-assessable common stock, $0.001 par value per share (“Common Stock”),
of Borrower as per the following conversion formula: the number of Lender Conversion Shares equals the amount being converted
(the “Conversion Amount”) divided by the Lender Conversion Price (as defined below). Conversion notices in
the form attached hereto as Exhibit A (each, a “Lender Conversion Notice”) may be effectively delivered
to Borrower by any method of Lender’s choice (including but not limited to facsimile, email, mail, overnight courier, or
personal delivery), and all Lender Conversions shall be cashless and not require further payment from Lender. Borrower shall deliver
the Lender Conversion Shares from any Lender Conversion to Lender in accordance with Section 9 below.


 


3.2.
Lender Conversion Price. Subject to adjustment as set forth in this Note, the price at which Lender has the right to convert
all or any portion of the Outstanding Balance into Common Stock is $3.00 per share of Common Stock (the “Lender Conversion
Price”). However, in the event the Market Capitalization falls below the Minimum Market Capitalization at any time,
then in such event the Lender Conversion Price for all Lender Conversions occurring after the first date of such occurrence shall
equal the lower of the Lender Conversion Price and the Market Price as of any applicable date of Conversion.


 






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4.
Defaults and Remedies.


 


4.1.
Defaults. The following are events of default under this Note (each, an “Event of Default”): (a) Borrower
fails to pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) Borrower fails to
deliver any Lender Conversion Shares in accordance with the terms hereof except such failure to deliver is due to ownership limitation
as set forth in Section 11 or otherwise legally restricted; (c) Borrower fails to deliver any Redemption Conversion Shares (as
defined below) in accordance with the terms hereof except such failure to deliver is due to ownership limitation as set forth
in Section 11 or otherwise legally restricted; (d) a receiver, trustee or other similar official shall be appointed over Borrower
or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed
or discharged within sixty (60) days; (e) Borrower fails to pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any; (f) Borrower makes a general assignment for the benefit of creditors;
(g) Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); (h) an involuntary
bankruptcy proceeding is commenced or filed against Borrower; (i) Borrower defaults or otherwise fails to observe or perform any
covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document, other than those
specifically set forth in this Section 4.1 and Section 4 of the Purchase Agreement; (j) any representation, warranty or other
statement made or furnished by or on behalf of Borrower to Lender herein, in any Transaction Document, or otherwise in connection
with the issuance of this Note is false, incorrect, incomplete or misleading in any material respect when made or furnished; (k)
the occurrence of a Fundamental Transaction without Lender’s prior written consent; (l) Borrower fails to maintain the Share
Reserve as required under the Purchase Agreement; (m) Borrower effectuates a reverse split of its Common Stock without twenty
(20) Trading Days prior written notice to Lender; (n) any money judgment, writ or similar process is entered or filed against
Borrower or any subsidiary of Borrower or any of its property or other assets for more than $1,000,000.00, and shall remain unvacated,
unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented to by Lender; (o) Borrower fails to
be DWAC Eligible; (p) Borrower fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement; or (q)
Borrower breaches any covenant or other term or condition contained in any Other Agreements. Notwithstanding the foregoing, the
occurrence of the events described in Section 4.1(j) – (q) above shall not be considered an Event of Default if such event
is cured within five (5) Trading Days of the occurrence of such event.


 


4.2.
Remedies. At any time and from time to time after Lender becomes aware of the occurrence of any Event of Default, Lender
may accelerate this Note by written notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash
at the Mandatory Default Amount. Notwithstanding the foregoing, at any time following the occurrence of any Event of Default,
Lender may, at its option, elect to increase the Outstanding Balance by applying the Default Effect (subject to the limitation
set forth below) via written notice to Borrower without accelerating the Outstanding Balance, in which event the Outstanding Balance
shall be increased as of the date of the occurrence of the applicable Event of Default pursuant to the Default Effect, but the
Outstanding Balance shall not be immediately due and payable unless so declared by Lender (for the avoidance of doubt, if Lender
elects to apply the Default Effect pursuant to this sentence, it shall reserve the right to declare the Outstanding Balance immediately
due and payable at any time and no such election by Lender shall be deemed to be a waiver of its right to declare the Outstanding
Balance immediately due and payable as set forth herein unless otherwise agreed to by Lender in writing). Notwithstanding the
foregoing, upon the occurrence of any Event of Default described in clauses (d), (e), (f), (g) or (h) of Section 4.1, the Outstanding
Balance as of the date of acceleration shall become immediately and automatically due and payable in cash at the Mandatory Default
Amount, without any written notice required by Lender. For the avoidance of doubt, Lender may continue making Lender Conversions
and Redemption Conversions (as defined below) at any time following an Event of Default until such time as the Outstanding Balance
is paid in full. Borrower further acknowledges and agrees that Lender may continue making Conversions following the entry of any
judgment or arbitration award in favor of Lender until such time that the entire judgment amount or arbitration award is paid
in full. Borrower agrees that any judgment or arbitration award will, by its terms, be made convertible into Common Stock. Any
Conversions made following a judgment or arbitration award shall be made pursuant to the conversion mechanics for Redemption Conversions
set forth in Section 8 of this Note. In such event, Borrower and Lender agree that it is their expectation that any such judgment
amount or arbitration award that is converted will tack back to the Purchase Price Date for purposes of determining the holding
period under Rule 144. Additionally, following the occurrence of any Event of Default, Borrower may, at its option, pay any Lender
Conversion in cash instead of Lender Conversion Shares by paying to Lender on or before the applicable Delivery Date (as defined
below) a cash amount equal to the number of Lender Conversion Shares set forth in the applicable Lender Conversion Notice multiplied
by the highest intra-day trading price of the Common Stock that occurs during the period beginning on the date the applicable
Event of Default occurred and ending on the date of the applicable Lender Conversion Notice. In connection with acceleration described
herein, Lender may enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable
law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender shall have all
rights as a holder of the Note until such time, if any, as Lender receives full payment pursuant to this Section 4.2. No such
rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Nothing herein shall
limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver Conversion Shares
upon Conversion of the Note as required pursuant to the terms hereof.


 



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4.3.
Certain Additional Rights. Notwithstanding anything to the contrary herein, in the event Borrower fails to make any payment
when due or fails to deliver any Conversion Shares as and when required under this Note, then the Lender Conversion Price for
all Lender Conversions occurring after the date of such failure to pay shall equal the lower of the Lender Conversion Price and
the Market Price as of any applicable date of Conversion. For the avoidance of doubt, Lender’s exercise of the rights granted
to it pursuant to this Section 4.3 shall not relieve Borrower of its obligation to continue paying the Redemption Amount on all
future Redemption Dates.


 


5.
Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset
it now has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments or Conversions called
for herein in accordance with the terms of this Note.


 


6.
Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the
party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other
provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing
waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in
writing.


 


7.
Adjustment of Lender Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision hereof,
if Borrower at any time on or after the Effective Date subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Lender Conversion Price in
effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision hereof, if Borrower
at any time on or after the Effective Date combines (by combination, reverse stock split or otherwise) one or more classes of
its outstanding shares of Common Stock into a smaller number of shares, the Lender Conversion Price in effect immediately prior
to such combination will be proportionately increased. Any adjustment pursuant to this Section 7 shall become effective immediately
after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7 occurs
during the period that a Lender Conversion Price is calculated hereunder, then the calculation of such Lender Conversion Price
shall be adjusted appropriately to reflect such event.


 






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8.
Borrower Redemptions.


 


8.1.
Redemption Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Redemption Conversion
(as defined below) (the “Redemption Conversion Price”) shall be the lesser of (a) the Lender Conversion Price,
and (b) the Market Price.


 


8.2.
Redemption Conversions. Beginning on the date that is six (6) months after the Purchase Price Date, Lender shall have the
right, exercisable at any time in its sole and absolute discretion, to redeem all or any portion of the Note (such amount, the
“Redemption Amount”) by providing Borrower with a notice substantially in the form attached hereto as Exhibit
B (each, a “Redemption Notice”, and each date on which Lender delivers a Redemption Notice, a “Redemption
Date”). Notwithstanding the foregoing, during the nine-month period following the Purchase Price Date, Lender may not,
in the aggregate, redeem more than 50% of the then-current Outstanding Balance (the “Maximum Redemption Amount Cap”);
provided, however that the Maximum Redemption Amount Cap shall no longer apply after the earlier of the first occurrence
of any Event of Default hereunder and the date that is nine (9) months from the Purchase Price Date. For the avoidance of doubt,
Lender may submit to Borrower one (1) or more Redemption Notices in any given calendar month so long as the aggregate Redemption
Amounts do not exceed the Maximum Redemption Amount Cap (for so long as the Maximum Redemption Amount Cap remains in effect; thereafter,
there shall be no limit on the Redemption Amounts). Payments of each Redemption Amount may be made (a) in cash, or (b) by converting
such Redemption Amount into shares of Common Stock (“Redemption Conversion Shares”, and together with the Lender
Conversion Shares, the “Conversion Shares”) in accordance with this Section 8 (each, a “Redemption
Conversion”) per the following formula: the number of Redemption Conversion Shares equals the portion of the applicable
Redemption Amount being converted divided by the Redemption Conversion Price, or (c) by any combination of the foregoing, so long
as the cash is delivered to Lender on the third Trading Day immediately following the applicable Redemption Date and the Redemption
Conversion Shares are delivered to Lender on or before the applicable Delivery Date. Notwithstanding the foregoing, Borrower will
not be entitled to elect a Redemption Conversion with respect to any portion of any applicable Redemption Amount and shall be
required to pay the entire amount of such Redemption Amount in cash, if on the applicable Redemption Date there is an Equity Conditions
Failure, and such failure is not waived in writing by Lender. Notwithstanding that failure to repay this Note in full by the Maturity
Date is an Event of Default, the Redemption Dates shall continue after the Maturity Date pursuant to this Section 8 until
the Outstanding Balance is repaid in full.


 


8.3.
Allocation of Redemption Amounts. Following its receipt of a Redemption Notice, Borrower may either ratify Lender’s
proposed allocation in the applicable Redemption Notice or elect to change the allocation by written notice to Lender by email
or fax within twenty-four (24) hours of its receipt of such Redemption Notice, so long as the sum of the cash payments and the
amount of Redemption Conversions equal the applicable Redemption Amount. If Borrower fails to notify Lender of its election to
change the allocation prior to the deadline set forth in the previous sentence, it shall be deemed to have ratified and accepted
the allocation set forth in the applicable Redemption Notice prepared by Lender. Borrower acknowledges and agrees that the amounts
and calculations set forth thereon are subject to correction or adjustment because of error, mistake, or any adjustment resulting
from an Event of Default or other adjustment permitted under the Transaction Documents (an “Adjustment”). Furthermore,
no error or mistake in the preparation of such notices, or failure to apply any Adjustment that could have been applied prior
to the preparation of a Redemption Notice may be deemed a waiver of Lender’s right to enforce the terms of any Note, even
if such error, mistake, or failure to include an Adjustment arises from Lender’s own calculation. Borrower shall deliver
the Redemption Conversion Shares from any Redemption Conversion to Lender in accordance with Section 9 below on or before each
applicable Delivery Date. If Borrower elects to pay a Redemption Amount in cash, such payment must be delivered on the second
Trading Day immediately following the Redemption Date. If Borrowers elects to make a payment in cash and fails to make such payment
by the required due date on two (2) separate occasions, Borrower shall lose the right to make payments of Redemption Amounts in
cash in the future without Lender’s written consent.


 






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9.
Method of Conversion Share Delivery. On or before the close of business on the fifth (5th) Trading Day following
each Redemption Date or the fifth (5th) Trading Day following the date of delivery of a Lender Conversion Notice, as
applicable (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible at such time, deliver or cause
its transfer agent to deliver the applicable Conversion Shares electronically via DWAC to the account designated by Lender in
the applicable Lender Conversion Notice or Redemption Notice. If Borrower is not DWAC Eligible, it shall deliver to Lender or
its broker (as designated in the Lender Conversion Notice or Redemption Notice, as applicable), via reputable overnight courier,
a certificate representing the number of shares of Common Stock equal to the number of Conversion Shares to which Lender shall
be entitled, registered in the name of Lender or its designee. For the avoidance of doubt, Borrower has not met its obligation
to deliver Conversion Shares by the Delivery Date unless Lender or its broker, as applicable, has actually received the certificate
representing the applicable Conversion Shares no later than the close of business on the relevant Delivery Date pursuant to the
terms set forth above. Moreover, and notwithstanding anything to the contrary herein or in any other Transaction Document, in
the event Borrower or its transfer agent refuses to deliver any Conversion Shares to Lender on grounds that such issuance is in
violation of Rule 144 under the Securities Act of 1933, as amended (“Rule 144”), Borrower shall deliver or
cause its transfer agent to deliver the applicable Conversion Shares to Lender with a restricted securities legend, but otherwise
in accordance with the provisions of this Section 9. In conjunction therewith, Borrower will also deliver to Lender a written
opinion from its counsel or its transfer agent’s counsel opining as to why the issuance of the applicable Conversion Shares
violates Rule 144.


 


10.
Conversion Delays. If Borrower fails to deliver Conversion Shares in accordance with the timeframes stated in Sections
9, Lender, at any time prior to selling all of those Conversion Shares may rescind in whole or in part that particular Conversion
attributable to the unsold Conversion Shares, with a corresponding increase to the Outstanding Balance (any returned amount will
tack back to the Purchase Price Date for purposes of determining the holding period under Rule 144). In addition, for each Lender
Conversion, in the event that Lender Conversion Shares are not delivered by the sixth (6th) Trading Day (inclusive
of the day of the Lender Conversion), a late fee equal to the greater of (a) $500.00 and (b) 2% of the applicable Lender Conversion
Share Value rounded to the nearest multiple of $100.00 (but in any event the cumulative amount of such late fees for each Lender
Conversion shall not exceed 100% of the applicable Lender Conversion Share Value) will be assessed for each day after the fifth
(5th) Trading Day (inclusive of the day of the Lender Conversion) until Lender Conversion Share delivery is made; and
such late fee will be added to the Outstanding Balance (such fees, the “Conversion Delay Late Fees”). For illustration
purposes only, if Lender delivers a Lender Conversion Notice to Borrower pursuant to which Borrower is required to deliver 100,000
Lender Conversion Shares to Lender and on the Delivery Date such Lender Conversion Shares have a Lender Conversion Share Value
of $20,000.00 (assuming a Closing Trade Price on the Delivery Date of $0.20 per share of Common Stock), then in such event a Conversion
Delay Late Fee in the amount of $500.00 per day (the greater of $500.00 per day and $20,000.00 multiplied by 2%, which is $400.00)
would be added to the Outstanding Balance of the Note until such Lender Conversion Shares are delivered to Lender. For purposes
of this example, if the Lender Conversion Shares are delivered to Lender twenty (20) days after the applicable Delivery Date,
the total Conversion Delay Late Fees that would be added to the Outstanding Balance would be $10,000.00 (20 days multiplied by
$500.00 per day). If the Lender Conversion Shares are delivered to Lender one hundred (100) days after the applicable Delivery
Date, the total Conversion Delay Late Fees that would be added to the Outstanding Balance would be $20,000.00 (100 days multiplied
by $500.00 per day, but capped at 100% of the Lender Conversion Share Value).


 






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11.
Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents,
if at any time Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance
would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares
of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the
“Maximum Percentage”), then Borrower must not issue to Lender shares of Common Stock which would exceed the
Maximum Percentage. For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section
13(d) of the 1934 Act. The shares of Common Stock issuable to Lender that would cause the Maximum Percentage to be exceeded are
referred to herein as the “Ownership Limitation Shares”. Borrower will reserve the Ownership Limitation Shares
for the exclusive benefit of Lender. From time to time, Lender may notify Borrower in writing of the number of the Ownership Limitation
Shares that may be issued to Lender without causing Lender to exceed the Maximum Percentage. Upon receipt of such notice, Borrower
shall be unconditionally obligated to immediately issue such designated shares to Lender, with a corresponding reduction in the
number of the Ownership Limitation Shares. Notwithstanding the forgoing, the term “4.99%” above shall be replaced
with “9.99%” at such time as the Market Capitalization is less than $10,000,000.00. Notwithstanding any other provision
contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such
increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by Lender as set forth below. By written
notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be
effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and
non-waivable and shall apply to all affiliates and assigns of Lender.


 


12.
Payment of Collection Costs. If this Note is placed in the hands of an attorney for collection or enforcement prior to
commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Lender
otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note, then Borrower shall pay
the costs incurred by Lender for such collection, enforcement or action including, without limitation, attorneys’ fees and
disbursements. Borrower also agrees to pay for any costs, fees or charges of its transfer agent that are charged to Lender pursuant
to any Conversion or issuance of shares pursuant to this Note.


 


13.
Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the
right to have any such opinion provided by its counsel.


 


14.
Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase
Agreement to determine the proper venue for any disputes are incorporated herein by this reference.


 


15.
Resolution of Disputes.


 


15.1.
Arbitration of Disputes. By its acceptance of this Note, each party agrees to be bound by the Arbitration Provisions (as
defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.


 


15.2.
Calculation Disputes. Notwithstanding the Arbitration Provisions, in the case of a dispute as to any Calculation (as defined
in the Purchase Agreement), such dispute will be resolved in the manner set forth in the Purchase Agreement.


 






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16.
Cancellation. After repayment or conversion of the entire Outstanding Balance, this Note shall be deemed paid in full,
shall automatically be deemed canceled, and shall not be reissued.


 


17.
Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.


 


18.
Assignments. Neither party may assign this Note without the prior written consent of the other party; provided, however,
that Lender may assign this Note to any of its affiliates or any trust where John M. Fife’s descendants are beneficiaries
without Borrower’s consent. Any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned
or transferred by Lender without the consent of Borrower.


 


19.
Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Note and
the documents and instruments entered into in connection herewith.


 


20.
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with the subsection of the Purchase Agreement titled “Notices.”


 


21.
Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions
of this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the
parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments, or other charges assessed under this Note are not penalties
but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Lender’s and Borrower’s
expectations that any such liquidated damages will tack back to the Purchase Price Date for purposes of determining the holding
period under Rule 144).


 


22.
Waiver of Jury Trial. EACH OF LENDER AND BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE RELATIONSHIPS OF THE PARTIES HERETO
BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE
STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING
SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.


 


23.
Voluntary Agreement. Borrower has carefully read this Note and has asked any questions needed for Borrower to understand
the terms, consequences and binding effect of this Note and fully understand them. Borrower has had the opportunity to seek the
advice of an attorney of Borrower’s choosing, or has waived the right to do so, and is executing this Note voluntarily and
without any duress or undue influence by Lender or anyone else.


 


24.
Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve
the objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full
force and effect.


 


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    8


     


    

 


IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date.


 


	 	BORROWER:
	 	China Recycling Energy Corporation
	 	 	 
	 	By:	 
	 	 	Guohua Ku,
	 	 	Chairman & Chief Executive Officer




 


ACKNOWLEDGED,
ACCEPTED AND AGREED:


 


LENDER:


 


	Iliad Research and Trading, L.P.	 
	 	 	 	 	 
	By: Iliad Management, LLC, its General Partner	 
	 	 	 	 	 
	 	By:	Fife Trading, Inc., its Manager	 
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	John M. Fife, President	 




 




    [Signature Page to
Convertible Promissory Note]


     


    

 


ATTACHMENT
1


DEFINITIONS


 


For
purposes of this Note, the following terms shall have the following meanings:


 


A1.
“Bloomberg” means Bloomberg L.P. (or if that service is not then reporting the relevant information regarding
the Common Stock, a comparable reporting service of national reputation selected by Lender and reasonably satisfactory to Borrower).


 


A2.
“Closing Bid Price” and “Closing Trade Price” means the last closing bid price and last
closing trade price, respectively, for the Common Stock on its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of the Common Stock prior to 4:00:00 p.m., New
York time, as reported by Bloomberg, or, if its principal market is not the principal securities exchange or trading market for
the Common Stock, the last closing bid price or last trade price, respectively, of the Common Stock on the principal securities
exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of the Common Stock in the over-the-counter market on the electronic
bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is
reported for the Common Stock by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for the Common Stock as reported by OTC Markets Group, Inc., and any successor thereto. If the Closing Bid Price or the Closing
Trade Price cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Trade Price (as the case may be) of the Common Stock on such date shall be the fair market value as mutually determined
by Lender and Borrower. If Lender and Borrower are unable to agree upon the fair market value of the Common Stock, then such dispute
shall be resolved in accordance with the procedures in Section 15.2. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during such period.


 


A3.
“Conversion” means a Lender Conversion under Section 3 or a Redemption Conversion under Section 8.


 


A4.
“Conversion Factor” means 75%, subject to the following adjustments. If at any time after the Effective Date,
Borrower is not DWAC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future Conversions.
If at any time after the Effective Date, the Conversion Shares are not DTC Eligible, then the then-current Conversion Factor will
automatically be reduced by an additional 5% for all future Conversions. Finally, in addition to the Default Effect, if any Major
Default occurs after the Effective Date, the Conversion Factor shall automatically be reduced for all future Conversions by an
additional 5% for each of the first three (3) Major Defaults that occur after the Effective Date (for the avoidance of doubt,
each occurrence of any Major Default shall be deemed to be a separate occurrence for purposes of the foregoing reductions in Conversion
Factor, even if the same Major Default occurs three (3) separate times). For example, the first time Borrower is not DWAC Eligible,
the Conversion Factor for future Conversions thereafter will be reduced from 75% to 70% for purposes of this example. Following
such event, the first time the Conversion Shares are no longer DTC Eligible, the Conversion Factor for future Conversions thereafter
will be reduced from 70% to 65% for purposes of this example. If, thereafter, there are three (3) separate occurrences of a Major
Default pursuant to Section 4.1(c), then for purposes of this example the Conversion Factor would be reduced by 5% for the first
such occurrence, and so on for each of the second and third occurrences of such Major Default.


 


A5.
“Default Effect” means multiplying the Outstanding Balance as of the date the applicable Event of Default occurred
by (a) 15% for each occurrence of any Major Default, or (b) 5% for each occurrence of any Minor Default, and then adding the resulting
product to the Outstanding Balance as of the date the applicable Event of Default occurred, with the sum of the foregoing then
becoming the Outstanding Balance under this Note as of the date the applicable Event of Default occurred; provided that the Default
Effect may only be applied three (3) times hereunder with respect to Major Defaults and three (3) times hereunder with respect
to Minor Defaults; and provided further that the Default Effect shall not apply to any Event of Default pursuant to Section 4.1(b)
hereof. Notwithstanding the foregoing, in no event shall the Default Effect result in increases to the Outstanding Balance exceeding,
in the aggregate, 25%.


 






    
Attachment 1 to Convertible Promissory Note, Page 1


     


    

 


A6.
“DTC” means the Depository Trust Company or any successor thereto.


 


A7.
“DTC Eligible” means, with respect to the Common Stock, that such Common Stock is eligible to be deposited
in certificate form at the DTC, cleared and converted into electronic shares by the DTC and held in the name of the clearing firm
servicing Lender’s brokerage firm for the benefit of Lender.


 


A8.
“DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer program.


 


A9.
“DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.


 


A10.
“DWAC Eligible” means that (a) Borrower’s Common Stock is eligible at DTC for full services pursuant
to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system; (b) Borrower has
been approved (without revocation) by DTC’s underwriting department; (c) Borrower’s transfer agent is approved as
an agent in the DTC/FAST Program; (d) the Conversion Shares are otherwise eligible for delivery via DWAC; (e) Borrower has previously
delivered all Conversion Shares to Lender via DWAC; and (f) Borrower’s transfer agent does not have a policy prohibiting
or limiting delivery of the Conversion Shares via DWAC.


 


A11.
“Equity Conditions Failure” means that any of the following conditions has not been satisfied during any applicable
Equity Conditions Measuring Period (as defined below): (a) with respect to the applicable date of determination all of the
Conversion Shares would be freely tradable under Rule 144 or without the need for registration under any applicable federal or
state securities laws (in each case, disregarding any limitation on conversion of this Note); (b) on each day during the
period beginning one month prior to the applicable date of determination and ending on and including the applicable date of determination
(the “Equity Conditions Measuring Period”), the Common Stock is listed or designated for quotation (as applicable)
on any of NYSE, NASDAQ, OTCQX, or OTCQB (each, an “Eligible Market”) and shall not have been suspended from
trading on any such Eligible Market (other than suspensions of not more than two (2) Trading Days and occurring prior to
the applicable date of determination due to business announcements by Borrower); (c) on each day during the Equity Conditions
Measuring Period, Borrower shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis
as set forth in Section 8.1 hereof and all other shares of capital stock required to be delivered by Borrower on a timely
basis as set forth in the other Transaction Documents; (d) any shares of Common Stock to be issued in connection with the
event requiring determination may be issued in full without violating Section 11 hereof (Lender acknowledges that Borrower
shall be entitled to assume that this condition has been met for all purposes hereunder absent written notice from Lender); (e) any
shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating
the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable);
(f) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended
Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (g) Borrower shall have
no knowledge of any fact that would reasonably be expected to cause any of the Conversion Shares to not be freely tradable without
the need for registration under any applicable state securities laws (in each case, disregarding any limitation on conversion
of this Note); (h) on each day during the Equity Conditions Measuring Period, Borrower otherwise shall have been in material
compliance with each, and shall not have breached any, term, provision, covenant, representation or warranty of any Transaction
Document; (i) without limiting clause (j) above, on each day during the Equity Conditions Measuring Period, there shall not
have occurred an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default;
(k) on each Redemption Date, the average and median daily dollar volume of the Common Stock on its principal market for the previous
twenty (20) and two hundred (200) Trading Days shall be greater than $200,000.00; (l) the ten (10) day average VWAP of the Common
Stock is greater than $1.00, (m) the Market Capitalization shall be above the Minimum Market Capitalization; and (n) the Common
Stock shall be DWAC Eligible as of each applicable Redemption Date or other date of determination.


 


A12.
“Excluded Securities” means any shares of Common Stock, options, or convertible securities issued or issuable
in connection with any Approved Stock Plan; provided that the option term, exercise price or similar provisions of any
issuances pursuant to such Approved Stock Plan are not amended, modified or changed on or after the Purchase Price Date.


 


A13.
“Free Trading” means that (a) the shares or certificate(s) representing the applicable shares of Common Stock
have been cleared and approved for public resale by the compliance departments of Lender’s brokerage firm and the clearing
firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage
firm and have been deposited into such clearing firm’s account for the benefit of Lender.


 






    
Attachment 1 to Convertible Promissory Note, Page 2


     


    

 


A14.
“Fundamental Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is
the surviving corporation) any other person or entity, or (ii) Borrower or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other person or entity, or (iii) Borrower or any of its subsidiaries shall,
directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange
offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of Borrower (not including any
shares of voting stock of Borrower held by the person or persons making or party to, or associated or affiliated with the persons
or entities making or party to, such purchase, tender or exchange offer), or (iv) Borrower or any of its subsidiaries shall,
directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other
person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Borrower
(not including any shares of voting stock of Borrower held by the other persons or entities making or party to, or associated
or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business
combination), or (v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of Borrower’s
Common Stock, or (b) any “person” or “group” (as these terms are used for purposes of Sections 13(d)
and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented
by issued and outstanding voting stock of Borrower.


 


A15.
“Lender Conversion Share Value” means the product of the number of Lender Conversion Shares deliverable pursuant
to any Lender Conversion multiplied by the Closing Trade Price of the Common Stock on the Delivery Date for such Lender Conversion.


 


A16.
“Major Default” means any Event of Default occurring under Sections 4.1(a), 4.1(c), 4.1(l), or 4.1(p) of this
Note.


 


A17.
“Mandatory Default Amount” means the greater of (a) the Outstanding Balance divided by the Redemption Conversion
Price on the date the Mandatory Default Amount is demanded, multiplied by the VWAP on the date the Mandatory Default Amount is
demanded, or (b) the Outstanding Balance following the application of the Default Effect.


 


A18.
“Market Capitalization” means a number equal to (a) the average VWAP of the Common Stock for the immediately
preceding fifteen (15) Trading Days, multiplied by (b) the aggregate number of outstanding shares of Common Stock as reported
on Borrower’s most recently filed Form 10-Q or Form 10-K.


 


A19.
“Market Price” means the Conversion Factor multiplied by the lowest Closing Bid Price during the twenty (20)
Trading Days immediately preceding the applicable Conversion.


 


A20.
“Minimum Market Capitalization” means $8,000,000.00.


 


A21.
“Minor Default” means any Event of Default that is not a Major Default.


 


A22.
“OID” means an original issue discount.


 


A23.
“Optional Prepayment Liquidated Damages Amount” means an amount equal to the difference between (a) the product
of (i) the number of shares of Common Stock obtained by dividing (1) the applicable Optional Prepayment Amount by (2) the Lender
Conversion Price as of the date Borrower delivered the applicable Optional Prepayment Amount to Lender, multiplied by (ii) the
Closing Trade Price of the Common Stock on the date Borrower delivered the applicable Optional Prepayment Amount to Lender, and
(b) the applicable Optional Prepayment Amount paid by Borrower to Lender. For illustration purposes only, if the applicable Optional
Prepayment Amount were $50,000.00, the Lender Conversion Price as of the date the Optional Prepayment Amount was paid to Lender
was equal to $0.75 per share of Common Stock, and the Closing Trade Price of a share of Common Stock as of such date was equal
to $1.00, then the Optional Prepayment Liquidated Damages Amount would equal $16,666.67 computed as follows: (a) $66,666.67 (calculated
as (i) (1) $50,000.00 divided by (2) $0.75 multiplied by (ii) $1.00) minus (b) $50,000.00.


 






    
Attachment 1 to Convertible Promissory Note, Page 3


     


    

 


A24.
“Other Agreements” means, collectively, (a) all existing and future agreements and instruments between, among
or by Borrower (or an affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement
or a material agreement that affects Borrower’s ongoing business operations.


 


A25.
“Outstanding Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as
the case may be, pursuant to the terms hereof for payment, Conversion, offset, or otherwise, plus the OID, accrued but unpaid
interest, collection and enforcements costs (including attorneys’ fees) incurred by Lender, transfer, stamp, issuance and
similar taxes and fees related to Conversions, and any other fees or charges (including without limitation Conversion Delay Late
Fees) incurred under this Note.


 


A26.
“Purchase Price Date” means the date the Purchase Price is delivered by Lender to Borrower.


 


A27.
“Trading Day” means any day on which the New York Stock Exchange is open for trading.


 


A28.
“VWAP” means the volume weighted average price of the Common stock on the principal market for a particular
Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg. 


 




    
Attachment 1 to Convertible Promissory Note, Page 4


     


    

 


EXHIBIT
A


 


Iliad
Research and Trading, L.P.


303
East Wacker Drive, Suite 1040


Chicago,
Illinois 60601


 


	China
    Recycling Energy Corporation	 	Date:
    __________________
	Attn:
    GuangYu Wu, CEO	 	 
	Suite
    909, Tower B	 	 
	Chang
    An International Building	 	 
	Xi
    An City, 710068	 	 
	China	 	 


 


LENDER
CONVERSION NOTICE


 


The
above-captioned Lender hereby gives notice to China Recycling Energy Corporation, a Nevada corporation (the “Borrower”),
pursuant to that certain Convertible Promissory Note made by Borrower in favor of Lender on February 27, 2019 (the “Note”),
that Lender elects to convert the portion of the Note balance set forth below into fully paid and non-assessable shares of Common
Stock of Borrower as of the date of conversion specified below. Said conversion shall be based on the Lender Conversion Price
set forth below. In the event of a conflict between this Lender Conversion Notice and the Note, the Note shall govern, or, in
the alternative, at the election of Lender in its sole discretion, Lender may provide a new form of Lender Conversion Notice to
conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.


 


A.
Date of Conversion: ____________


B.
Lender Conversion #: ____________


C.
Conversion Amount: ____________


D.
Lender Conversion Price: _______________


E.
Lender Conversion Shares: _______________ (C divided by D)


F.
Remaining Outstanding Balance of Note: ____________*


 


*
Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined
in the Purchase Agreement), the terms of which shall control in the event of any dispute between the terms of this Lender Conversion
Notice and such Transaction Documents.


 


Please
transfer the Lender Conversion Shares electronically (via DWAC) to the following account:


 


	Broker:	 		Address: 	 
	DTC#:	 	 	 	 
	Account
    #:	 	 	 	 
	Account
    Name:	 	 	 	 


 


To
the extent the Lender Conversion Shares are not able to be delivered to Lender electronically via the DWAC system, deliver all
such certificated shares to Lender via reputable overnight courier after receipt of this Lender Conversion Notice (by facsimile
transmission or otherwise) to:


 


_____________________________________


 


_____________________________________


   






    

Exhibit A to Convertible Promissory Note, Page 1


     


    

 


	Sincerely,	 
	 	 
	Lender:	 
	 	 
	Iliad Research and Trading, L.P.	 
	 	 
	By: Iliad Management,
    LLC, its General Partner	 
	 	 
	 	By: Fife Trading, Inc., its Manager	 
	 	 
	 		By:	 	 
	 	 	 	John M. Fife, President	 




  




    

Exhibit A to Convertible Promissory Note, Page 2


     


    

 


EXHIBIT
B


 


Iliad
Research and Trading, L.P.


303
East Wacker Drive, Suite 1040


Chicago,
Illinois 60601


 


	China Recycling Energy Corporation	 	Date: __________________
	Attn: Guohua Ku, Chairman & CEO	 	 
	4/F Block C	 	 
	Rong Cheng Yun Gu Building 	 	 
	Xi An City 710068	 	 
	China 	 	 




 


REDEMPTION
NOTICE


 


The
above-captioned Lender hereby gives notice to China Recycling Energy Corporation, a Delaware corporation (the “Borrower”),
pursuant to that certain Convertible Promissory Note made by Borrower in favor of Lender on February 27, 2019 (the “Note”),
that Lender elects to redeem a portion of the Note in Redemption Conversion Shares or in cash as set forth below. In the event
of a conflict between this Redemption Notice and the Note, the Note shall govern, or, in the alternative, at the election of Lender
in its sole discretion, Lender may provide a new form of Redemption Notice to conform to the Note. Capitalized terms used in this
notice without definition shall have the meanings given to them in the Note.


 


REDEMPTION
INFORMATION






 


		A.	Redemption Date: ____________, 201_



		B.	Redemption Amount: ____________



		C.	Portion of Redemption Amount to be Paid in Cash: ____________



		D.	Portion of Redemption Amount to be Converted into Common Stock: ____________ (B minus C)



		E.	Redemption Conversion Price: _______________ (lower of (i) Lender Conversion Price in effect and
(ii) Market Price as of Redemption Date)



		F.	Redemption Conversion Shares: _______________ (D divided by E)



		G.	Remaining Outstanding Balance of Note: ____________ *







 


*
Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined
in the Purchase Agreement), the terms of which shall control in the event of any dispute between the terms of this Redemption
Notice and such Transaction Documents.


 


2.
EQUITY CONDITIONS CERTIFICATION (Section to be completed by Borrower)


 


		A.	Market Capitalization:________________
	 	 	 
	 	(Check One)
	 	 
		B.	_________ Borrower herby certifies that no Equity Conditions Failure exists as of the applicable
Redemption Date.
	 	 	 
		C.	_________ Borrower hereby gives notice that an Equity Conditions
Failure has occurred and requests a waiver from Lender with respect thereto. The Equity Conditions Failure is as follows:





 




    
Exhibit B to Convertible Promissory Note, Page 1


     


    

 





 



 





 



 





 



 


Please
transfer the Redemption Conversion Shares, if applicable, electronically (via DWAC) to the following account:


 


	Broker:	 		Address: 	 
	DTC#:	 	 	 	 
	Account
    #:	 	 	 	 
	Account
    Name:	 	 	 	 


 


To
the extent the Redemption Conversion Shares are not able to be delivered to Lender electronically via the DWAC system, deliver
all such certificated shares to Lender via reputable overnight courier after receipt of this Redemption Notice (by facsimile transmission
or otherwise) to:


 


_____________________________________


 


_____________________________________


  


	Sincerely,	 
	 	 
	Lender:	 
	 	 
	Iliad Research and Trading, L.P.	 
	 	 
	By: Iliad Management,
    LLC, its General Partner	 
	 	 
	 	By: Fife Trading, Inc., its Manager	 
	 	 
	 		By:	 	 
	 	 	 	John M. Fife, President	 


  


 


Exhibit
B to Convertible Promissory Note, Page 2