FORM OF CONVERTIBLE NOTE


 


THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES INTO
WHICH IT MAY BE CONVERTED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). NO SALE
OR DISPOSITION MAY BE AFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN APPLICABLE EXEMPTION THEREFROM.


 


EMMAUS LIFE SCIENCES,
INC.


 


Convertible Promissory Note


(Cash Interest)


(On Demand Up To 1 Year)


 


	Principal Amount: 	$_____________________ 	 	Loan Date:	__________________


 


FOR VALUE RECEIVED, Emmaus Life Sciences,
Inc., a Delaware corporation, located at 20725 S. Western Ave., Suite 136, Torrance, CA 90501 (“Borrower”) agrees to
pay to _____________ (“Lender”), the sum of $_________ U.S. Dollars (“Principal Amount”), together with
accrued interest thereon at the rate of eight percent (8%) per annum, under the following terms and conditions of this Convertible
Promissory Note (“Note”).


 


1.           Terms
of Repayment (Balloon Payment):  From the Loan Date and continuing thereafter upon Lender’s demand after three
month of Loan Date or until the one (1) year anniversary date of the Loan Date, the interest shall accrue at eight percent (8%)
simple interest of the Loan Amount, as set forth in Attachment 1 hereto. Lender shall have the right to convert the loan amount
plus the accrued interest to common stocks at the stock price of $3.60 within the term. The entire unpaid principal and any accrued
interest shall become immediately due and payable upon 1 year of the Loan Date.


 


2.            Prepayment:  This
Note may be prepaid in whole or in part at any time without premium or penalty. All prepayments shall be first be applied to interest,
and then to outstanding principal payments in order of their maturity.


 


3.            Place
of Payment:  All payments due under this note shall be sent to the Lender’s address, as noted in Attachment
1 hereto, or at such other place as the holder of this Note may designate in writing in the future.


 


4.            Conversion
Option:  At any time during the one year term of this Note, Lender shall, by giving written Notice of Conversion
to the Borrower in the form attached hereto as Exhibit A, have the right to convert the Principal Amount to shares of Common Stock
of Borrower (the “Shares”) at the Conversion Price of $3.60 per share. Upon conversion of this Note, Lender shall be
subject to all requirements and transfer restrictions that Borrower may then have in effect with respect to the Shares and purchasers
of Shares.


 


5.            Warrant:
Lender is entitled to the warrant to purchase number of shares equivalent to 25% of convertible shares. The warrant shall be exercisable
within three (3) years of Loan Date. The warrant share price shall be discounted 25% from the fair market trading value at the
time of exercise.


 


6.            Default:  In
the event of default, the Borrower agrees to pay all costs and expenses incurred by the Lender, including all reasonable attorney
fees as permitted by law for the collection of this Note upon default.


 


7.            Acceleration
of Debt:  If Borrower fails to make any payment due under the terms of this Note or seeks relief under the U.S. Bankruptcy
Code, or suffers an involuntary petition in bankruptcy or receivership that is not vacated within thirty (30) days, the entire
balance of this Note and any interest accrued thereon shall be immediately due and payable to the holder of this Note.


 



    	 



    	 



    

 


8.           Modification:  No
modification or waiver of any of the terms of this Agreement shall be allowed unless by written agreement signed by the parties.
No waiver of any breach or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar
nature.


 


9.           Transfer
of the Note:  The Borrower hereby waives any notice of the transfer of this Note by the Lender or by any subsequent
holder of this Note, agrees to remain bound by the terms of this Promissory Note subsequent to any transfer, and agrees that the
terms of this Note may be fully enforced by any subsequent holder of the Note.


 


10.         Severability
of Provisions:  If any portion of this Note is deemed unenforceable, all other provisions of this Note shall remain
in full force and effect.


 


11.         Choice
of Law:  All terms and conditions of this Note shall be interpreted under the laws of California, U.S.A.


 


Signed Under Penalty of Perjury, this ___ day of _______
2012.


 


Emmaus Life Sciences, Inc.


 


	By:  	/s/ Yutaka Niihara	 
	 	Yutaka Niihara, M.D., President and CEO	 


 


 



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ATTACHMENT 1


 


	Lender’s Name:	 	 
	 	 	 
	Lender’s Address	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Loan Amount:	 	 
	 	 	 
	Annual Interest at 8%

Per Annum on Loan Amount:	$______	 
	 	 	 
	Maturity Date:	____________	 


 



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EXHIBIT A


 


NOTICE OF CONVERSION


 


(To be executed by Lender in order to
convert the Note)


 


TO: Emmaus Life Sciences, Inc.


 


 


The undersigned hereby irrevocably elects to convert $ ________________________
of the principal amount of the Note issued to Lender by Emmaus Life Sciences, Inc. (the “Company”) into shares of Common
Stock of the Company according to the conditions stated therein, as of the Conversion Date written below.


 


	Conversion Date:	 	 
	 	 	 
	Applicable Conversion Price:	 	 
	 	 	 
	Signature:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Address:	 	 
	 	 	 
	Amount to be	 	 
	converted:	$	 
	 	 	 
	Amount of Note	 	 
	unconverted:	$	 
	 	 	 
	Number of shares of	 	 
	Common Stock to be issued:	 	 
	 	 	 
	Please issue the shares of Common Stock in the following name and to the following address:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Address:	 	 
	 	 	 
	Phone Number:	 	 


 



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[INFORMATION FOR PURPOSES OF FILING WITH THE SECURITIES AND EXCHANGE
COMMISSION]


 


SCHEDULE A


 


INDIVIDUALS AND ENTITIES WHO ENTERED INTO
THE CONVERTIBLE NOTE


 


	Lender	 	Loan Date	 	 	Principal Amount	 
	Yukio Hasegawa	 	 	February 15, 2012	 	 	$	133,333.20	 
	Robert & Megumi Jo	 	 	February 18, 2012	 	 	$	100,000.00	 
	Hiroshi Iguchi	 	 	February 20, 2012	 	 	$	133,333.20	 
	Saito Family Trust	 	 	February 20, 2012	 	 	$	100,000.00	 
	J.R. Downey	 	 	March 2, 2012	 	 	$	150,004.80	 



 



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