Series 2 Convertible Note
Deed Poll made 17 February 2011



By Mission
NewEnergy Limited ACN 117 065 719 ("Mission")
In favour of the Noteholders from time to time



Background



| | A | Mission proposes to issue Convertible Notes on the terms and conditions contained in the Convertible Note Conditions.
| | - | ---------------------------------------------------------------------------------------------------------------------



| | B | It is intended that the Noteholders will have the benefit of this document.
| | - | ---------------------------------------------------------------------------



Operative provisions





|
|



| | 1. | Definitions and interpretation
| | -- | ------------------------------



Definitions



| | 1.1 | In this document:
| | --- | -----------------



| | (a) | "Convertible Note Conditions" means, generally, the terms and conditions contained in the annexure as amended,
varied or replaced from time to time; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | words and expressions defined, or incorporated by reference into the Convertible Note Conditions, have the same meanings when
used in this document.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------



Interpretation



| | 1.2 | Condition 23(a) of the Convertible Note Conditions applies to the interpretation of this document as if every reference to
"these Conditions" is replaced with "this document" and to a "Condition" is replaced with a "clause".
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|
|



| | 2. | Nature and status of Convertible Notes
| | -- | --------------------------------------



Constitution of Convertible Notes



| | 2.1 | Each Convertible Note is a debt obligation of Mission constituted by, and owing under, this document.
| | --- | -----------------------------------------------------------------------------------------------------



Terms of Convertible Notes



| | 2.2 | Each Convertible Note is issued on, and subject to, the provisions of this document and the Convertible Note Conditions.
| | --- | ------------------------------------------------------------------------------------------------------------------------



Form of Convertible Notes



| | 2.3 | Each Convertible Note will be issued in registered form by entry in the Register.
| | --- | ---------------------------------------------------------------------------------



Creation of Convertible Notes



| | 2.4 | Each Convertible Note will be created and issued immediately upon the entry in the Register of the subscriber for that Convertible
Note as its initial Noteholder.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



1







Effect of registration



| | 2.5 | Each entry in the Register in respect of a Convertible Note constitutes an unconditional and irrevocable covenant by Mission
in favour of the person whose name is so registered that Mission will:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) | (Make all payments): make all payments of principal, distributions and other amounts in respect of the Convertible Note
in accordance with this document and the Convertible Note Conditions; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | (Perform other obligations): perform all of its other obligations in full, and by the due dates, referred to in this
document and the Convertible Note Conditions.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|
|



| | 3. | Enforceability
| | -- | --------------



Noteholder may enforce



| | 3.1 | This document operates as a deed poll and is enforceable against Mission in accordance with its terms by each Noteholder in
respect of the Convertible Notes held by it, even though the Noteholder is not a party to, or is not in existence at the time of
execution and delivery of, this document.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Noteholders bound



| | 3.2 | Each Noteholder, and each person claiming through each Noteholder, is bound by, and is deemed to have notice of, the provisions
of this document and the Convertible Note Conditions.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Independent enforcement



| | 3.3 | Each Noteholder may enforce its rights under this document and the Convertible Note Conditions independently from each other
Noteholder, subject to any limitations imposed by this document and the Convertible Note Conditions.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|
|





| | 4. | General
| | -- | -------



Governing Law



| | 4.1 | This document is governed by and must be construed according to the law applying in Western Australia.
| | --- | ------------------------------------------------------------------------------------------------------



Jurisdiction



| | 4.2 | Mission and each Noteholder irrevocably:
| | --- | ----------------------------------------



| | (a) | submits to the non-exclusive jurisdiction of the courts of Western Australia and the courts competent to determine appeals
from those courts, with respect to any proceedings which may be brought at any time relating to this document, the Convertible
Note Conditions and the Notes; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | waives any objection it may now or in the future have to the venue of any proceedings, and any claim they may now or in the
future have that any proceedings have been brought in an inconvenient forum, if that venue falls within clause 4.1.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2







Executed as a deed.



Executed by Mission NewEnergy Limited ACN117 065 719 in accordance with section 127 of theCorporations Act by or in the presence of:



|                                         |  |                                                        
|---------------------------------------- |  | -------------------------------------------------------
|Signature of Secretary/other Director    |  | Signature of Director or Sole Director and Secretary   
|                                         |  |                                                        
|                                         |  |                                                        
|Name of Secretary/other Director in full |  | Name of Director or Sole Director and Secretary in full



3







|Annexure - Convertible Note Conditions
|--------------------------------------
|                                      



The following are the terms and conditions of each Convertible
Note



| | 1 | Interpretation and Definitions
| | - | ------------------------------



| | 1.1 | Unless the context otherwise requires:
| | --- | --------------------------------------



"Allotment Date" means, in respect
of a Share issued on Conversion of a Convertible Note, the date on which the Share is allotted and issued under Condition 6.



"Application Form" means an application
for Convertible Notes or entitlement and acceptance form attached to the offer for the issue of Convertible Notes.



"ASPL Settlement Rules" means the
settlement and transfer rules of ASX Settlement Pty Ltd as amended or replaced from time to time.



"ASX" means Australian Securities
Exchange Limited.



"AWST"means Australian
Western Standard Time.



"Board" means the Board of directors
of the Company.



"Business Day" means any day that
is not a Saturday, Sunday or any other day which is a public holiday or a bank holiday in the place where an act is to be performed
or a payment is to be made.



"Cleansing Notice" means a notice
given by the Company under section 708A(6) of the Corporations Act.



"Company" means Mission NewEnergy
Limited ACN 117 065 719 of Level 8, 50 St Georges Terrace, Perth, Western Australia.



"Conditions" means these terms
and conditions of issue of the Convertible Notes.



"Constitution" means the constitution
of the Company.



"Conversion" means the conversion
of the Convertible Notes into Shares in accordance with these Conditions, and "Convert" and "Converted"
will be interpreted accordingly.



"Conversion Date" means, in respect
of a Convertible Note, the date on which it is Converted.



"Conversion Notice" means a notice
in substantially the form set out in Schedule 1.



"Conversion Number" is 4 subject
to adjustment in accordance with Conditions 8 to 11.



"Convertible Note" means a Convertible
Note having the Face Value and issued in accordance with and subject to these Conditions.



"Convertible Note Certificate"
means the document of that name to which these Conditions of issue are attached.



"Corporations Act" means the Corporations
Act 2001 (Cth).



"Event of Default" means any of
the events of default set out in Condition 16.



"Exchange Offer Letter" means the
letter to Noteholders from the Company dated on or around [●] 2011 offering Series 2 Convertible Notes in exchange for existing
convertible notes held by Noteholders.



4







"Face Value" means the face value
of a Convertible Note as set out in Condition 2(b).



"Government Agency" means any foreign
or Australian government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority,
tribunal, agency or entity, or any minister of the Crown in right of the Commonwealth of Australia or any state.



"Insolvency Event" means in relation
to a body corporate:



| | (a) | the body corporate being unable to pay all of its debts, as and when they become due and payable;
| | --- | -------------------------------------------------------------------------------------------------



| | (b) | an administrator of the body corporate being appointed under the Corporations Act;
| | --- | ----------------------------------------------------------------------------------



| | (c) | the body corporate or a subsidiary executing a deed of company arrangement otherwise than for the purpose of an amalgamation
or reconstruction;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | the entry by the body corporate into a scheme of arrangement or a composition with, or assignment for the benefit of, all or
any class of its creditors, or a moratorium involving any of them, otherwise than for the purpose of an amalgamation or reconstruction;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | the body corporate being insolvent within the meaning of section 95A(2) of the Corporations Act;
| | --- | ------------------------------------------------------------------------------------------------



| | (f) | the body corporate being or stating that it is unable to pay its debts when they fall due;
| | --- | ------------------------------------------------------------------------------------------



| | (g) | the appointment of a receiver or receiver and manager in respect of the body corporate or any part of its property; or
| | --- | ----------------------------------------------------------------------------------------------------------------------



| | (h) | the making of a winding up or dissolution order, or the passing of a resolution for winding up or dissolution, in respect of
the body corporate except for the purposes of reconstruction or amalgamation.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



"Issue Date" means, in respect
of a Convertible Note, the date on which the Convertible Note is issued.



"Listing Rules" means at any time
the listing rules of the ASX in force at that time.



"Material Adverse Effect" means
a material adverse effect on the ability of the Company to perform its obligations under these Conditions or on the financial condition
or business of the Company.



"Maturity Date" means, in respect
of a Convertible Note, 16 May, 2014.



"Note Deed Poll" means the note
deed poll under which the Convertible Notes are constituted.



"Noteholder" means, in relation
to any Convertible Notes, the person registered in the Register as the holder of those Convertible Notes.



"Register" means the register of
Noteholders maintained by the Company under Condition 19.



"Registration Statement" means
the registration statement on Form F-1 filed prior to the Issue Date with the US Securities and Exchange
Commission for the purpose of the public offering of the Shares in the United States and the listing of the Shares on NASDAQ .



"Regulatory Authority" means any
of ASIC, ASX, the Takeovers Panel or any Government Agency, whether having jurisdiction in Australia or elsewhere.



"Securities" means Shares or a
right or option to acquire Shares in the Company.



5







"Share" means a fully paid ordinary
share in the capital of the Company.



"Subsidiary" and "Related
Body Corporate" have the meaning given to those terms by the Corporations Act.



"Takeovers Panel" means the Panel
as defined by the Corporations Act.



"Tax" means any taxes, duties,
fees, rates, charges and imposts of all kinds assessed, levied or imposed by the Commonwealth, a state or any other government,
regional, municipal or local authority (Australian or overseas) and includes capital gains tax, fringe benefits tax, income tax,
withholding tax, prescribed payments tax, superannuation guarantee charge, training guarantee levy, undistributed profits tax,
payroll tax, goods and services tax, group tax, land tax, import duty, excise, stamp duty, municipal and water rates, interest
on tax payments and additional tax by way of penalty.



"VWAP" means the volume weighted
average sale price of Shares sold on ASX calculated:



| | (a) | including all on-market trades without condition codes and any trades with condition codes XT (Crossed Trade) and SH (Short
Trade) ; but
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------



| | (b) | excluding any off-market trades, any trades with condition codes other than those condition codes referred to in paragraph
(a) above or any trades that are subsequently cancelled.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2 | The Notes
| | - | ---------



| | (a) | The Company acknowledges its indebtedness in respect of, and promises to pay all amounts due in relation to, each Convertible
Note on the terms contained in the Note Deed Poll and these Conditions.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Each Convertible Note has a face value of $65.00("Face Value").
| | --- | ---------------------------------------------------------------



| | (c) | Noteholders will receive Convertible Notes fully paid to the Face Value in accordance with the terms of the Exchange Offer
Letter.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



| | (d) | The Company may issue Convertible Notes up to a total face value of AU$65,000,000.
| | --- | ----------------------------------------------------------------------------------



| | (e) | Every offer for issue, or invitation to apply for the issue, of the Convertible Notes within the Commonwealth of Australia
must be one that does not need disclosure to investors under Part 6D.2 of the Corporations Act and is not made to a person who
is a "retail client" within the meaning of section 761G of the Corporations Act.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3 | General Terms of Issue of Convertible Notes
| | - | -------------------------------------------



| | (a) | Each Convertible Note:
| | --- | ----------------------



| | (i) | is Convertible in accordance with Condition 5;
| | --- | ----------------------------------------------



| | (ii) | is redeemable in accordance with Condition 13;
| | ---- | ----------------------------------------------



| | (iii) | is interest bearing in accordance with Condition 4;
| | ----- | ---------------------------------------------------



| | (iv) | is an unsecured obligation of the Company ranking equally with any other Convertible Notes and other unsecured creditors of
the Company; and
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | is only transferable in accordance with Condition 7.
| | --- | ----------------------------------------------------



| | (b) | If a Convertible Note is redeemed by the Company or Converted then the Convertible Note is automatically cancelled and may
not be re-issued.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



6







| | (c) | The Company will not apply for official quotation of the Convertible Notes on ASX or any other stock exchange.
| | --- | --------------------------------------------------------------------------------------------------------------



| | (d) | Except as otherwise provided for in these Conditions, a Convertible Note does not give its Noteholder the right to participate
in issues of new securities or capital reconstructions affecting the holders of Shares.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4 | Interest
| | - | --------



An interest of 4.00% p.a. is payable semi-annually
on each 6 month and 12 month anniversary of the Issue Date in arrears in respect of the Convertible Notes based on a year of 365
days.



| | 5 | Conversion of Convertible Notes
| | - | -------------------------------



| | (a) | The Noteholder may, at any time prior to 2.00pm AWST on the Maturity Date, elect to Convert some or all of its Convertible
Notes by giving a Conversion Notice to the Company on receipt of which by the Company, those Convertible Notes will be deemed to
Convert and such Conversion Notice once given is irrevocable.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The Company may elect to Convert some or all of the Convertible Notes at any time when the daily VWAP for a period of 90 consecutive
trading days is 0.75 times the Face Value, provided that no Event of Default has occurred and is continuing. The Company is required
to give a Noteholder 10 Business Days notice prior to converting all or any of the Convertible Notes under this Condition 5(b)
and the Company must notify the Noteholder that the Conversion has occurred within 10 Business Days.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | On Conversion of all or any of the Convertible Notes pursuant to Conditions 5(a) or 5(b), a Noteholder is entitled to be allotted
the Conversion Number of Shares for each Convertible Note it holds that is Converted. Where the total number of Shares that a Noteholder
becomes entitled to on Conversion includes a fraction, that number will be rounded down to the next whole number.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | A Convertible Note is not capable of Conversion in part.
| | --- | --------------------------------------------------------



| | 6 | Allotment and Ranking of Shares
| | - | -------------------------------



| | (a) | The Company must issue the Shares that a Noteholder becomes entitled to under Condition 5(c) no later than 3 Business Days
after the Conversion Date. For the avoidance of doubt, the Noteholder for the purpose of any record date shall be deemed to own
such Shares as at the Conversion Date.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The Company will procure that a holding statement for any Shares is sent to the relevant Noteholders in accordance with the
ASPL Settlement Rules.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | The Company will apply for the Shares issued on Conversion of Convertible Notes to be quoted on ASX as soon as practicable,
and in any event within 2 Business Days of the Allotment Date and, if appropriate, on any other stock exchange on which the Company
is listed at that time.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Subject to the restrictions set out in Condition 7, Shares issued on Conversion will rank equally in all respects with the
other Shares on issue at the Allotment Date.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



7









| | 7 | Transferability
| | - | ---------------



Convertible Notes and Shares issued under Condition
6 are transferable, in accordance with applicable laws, but no Convertible Notes or Shares may be transferred to a person whose
voting power for the purposes of Chapter 6 of the Corporations Act would increase above 20% upon the occurrence of such transfer
(or upon the subsequent Conversion of the Convertible Notes subject to such transfer) unless Company shareholder approval is given
to the transfer pursuant to item 7 of section 611 of the Corporations Act.



| | 8 | Adjustments for Bonus Issues and Rights Issues
| | - | ----------------------------------------------



| | (a) | Subject to Condition 8(b), if the Company makes a pro rata bonus issue or a rights issue of Securities to holders of Shares,
the Conversion Number automatically adjusts in accordance with the following formula:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------









where:



New CN means the Conversion Number that will
apply after the application of this formula;



Old CN means the Conversion Number that applied
immediately before the application of this formula;



P means the VWAP during the period from the
1st Business Day after the announcement of the bonus or rights issue to ASX up to and including the last Business Day of trading
cum rights or bonus issue;



S means the number of Shares on issue immediately
before the issue of new Shares pursuant to the rights or bonus issue of Securities;



New S means the number of Shares to be issued
pursuant to the rights or bonus issue of Securities; and



SP means the subscription price per Share
for a rights issue and 0 for a bonus issue.



| | (b) | No adjustment will be made if:
| | --- | ------------------------------



| | (i) | the component "SP" exceeds the component "P"; or
| | --- | ------------------------------------------------



| | (ii) | the issue of Shares is made pursuant to a dividend reinvestment plan, bonus share plan, employee or executive share or option
plan, or a share top up plan.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9 | Adjustments for Off-Market Buy-Backs
| | - | ------------------------------------



| | (a) | Subject to Condition 9(b), if the Company undertakes an off-market buy-back of Shares, the Conversion Number automatically
adjusts in accordance with the following formula:
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------















where:



New CN means the Conversion Number that will
apply after the application of this formula;



Old CN means the Conversion Number that applied
immediately before the application of this formula;



8







P means the VWAP during the 20 Business Days
(including Business Days on which Shares are not traded on ASX) before the announcement of the buy-back;



S means the number of Shares on issue immediately
before the buy-back;



BBS means the number of Shares bought-back
under the buy-back; and



BBP means the buy-back price per Share.



| | (b) | No adjustment will be made if the component "BBP" is less than the component "P".
| | --- | ---------------------------------------------------------------------------------



| | 10 | Adjustments for Returns Of Capital
| | -- | ----------------------------------



If the Company makes a return of capital to the
holders of Shares (other than by way of a buy-back of Shares), the Conversion Number automatically adjusts in accordance with the
following formula:









where:



New CN means the Conversion Number that will
apply after the application of this formula;



Old CN means the Conversion Number that applied
immediately before the application of this formula;



P means the VWAP during the period from the
first Business Day after the announcement of the return of capital to ASX up to and including the last Business Day of trading
cum the return of capital;



C means the amount of cash and value of property
distributed (as reasonably determined by the Board) to holders of Shares per Share provided that C must not be less than 0.



| | 11 | Adjustments for Capital Reconstructions
| | -- | ---------------------------------------



If Shares are reconstructed, consolidated, divided
or reclassified into a lesser or greater number of securities:



| | (a) | the Convertible Notes will be reconstructed, consolidated, divided or reclassified on the same basis in accordance with the
Listing Rules or the rules of any other stock exchange as they apply to the Company; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | the Conversion Number will be adjusted as reasonably determined appropriate by the Board.
| | --- | -----------------------------------------------------------------------------------------



| | 12 | Discretion in Adjustments
| | -- | -------------------------



If the Board determines in its reasonable opinion
that the application of any of Conditions 8 to 11 would affect the relative value of Convertible Notes and Shares to the detriment
to the Noteholders, the Board may:



| | (a) | make any alterations to the Face Value of Convertible Notes or the Conversion Number; or
| | --- | ----------------------------------------------------------------------------------------



| | (b) | offer Noteholders the ability to participate in any distribution that they would have been entitled to as holders of Shares
had their Convertible Notes been converted immediately prior to the date that holders of Shares were entitled to participate in
the distribution,
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9







where the Board reasonably considers it appropriate
or necessary to do so in order to maintain the relative value of Convertible Notes and Shares.



| | 13 | Redemption
| | -- | ----------



| | (a) | Unless otherwise Converted by the Noteholder or the Company in accordance with Condition 5, the Company must redeem each Convertible
Note on its Maturity Date (such redemption by the Company may only occur after 2pm AWST on the Maturity Date).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Other than pursuant to Condition 13(a) above, Condition 16 below, Condition 17 (a) (ix) below or as otherwise agreed by the
Company and the Noteholder in writing, the Company may not redeem the Convertible Notes.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Unless otherwise agreed by the Noteholder and the Company in writing, a Convertible Note is redeemed by the Company paying
the Noteholder the Face Value of that Convertible Note, plus any accrued but unpaid interest, in Australian dollars by deposit
into an account with an Australian bank or other financial institution nominated by the Noteholder or by cheque drawn in favour
of the Noteholder and sent by pre-paid post to the address of the Noteholder recorded in the Register.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 14 | Notices of, and Voting at, General Meetings
| | -- | -------------------------------------------



| | (a) | Noteholders have the same right as holders of Shares to receive accounts, reports and notices of general meetings of the Company's
shareholders and to attend those meetings.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Noteholders are not entitled to speak or vote at general meetings of the Company's shareholders except as provided for in the
Corporations Act or the Listing Rules.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | If a Noteholder holds Shares, nothing in this Condition 14 will prevent the Noteholder from speaking or voting at general meetings
of the Company's shareholders in its capacity as shareholder.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 15 | Representations and Warranties
| | -- | ------------------------------



The Company represents and warrants for the benefit
of each Noteholder as at the Issue Date that other than as disclosed in writing to the Noteholders:



| | (a) | the Company is a corporation validly existing under the laws of the place of its incorporation;
| | --- | -----------------------------------------------------------------------------------------------



| | (b) | the Company has full power and authority to issue Convertible Notes on these Conditions;
| | --- | ----------------------------------------------------------------------------------------



| | (c) | no event has occurred and is continuing which constitutes an Event of Default or which with lapse of time or notice of other
conditions would become an Event of Default;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | to the best of the Company's knowledge, information and belief no litigation, arbitration, Tax claim, dispute or administrative
or other proceeding is current or pending or to its knowledge, threatened, which if adversely determined is likely to have a Material
Adverse Effect;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | the Company has the corporate power to enter into and perform its obligations under the Note Deed Poll, these Conditions, the
Convertible Notes, the Exchange Offer Letter and any related document (the "Transaction Documents") and to carry
out the transactions contemplated by the Transaction Documents;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10







| | (f) | the Company has taken all necessary corporate action to authorise the entry into and performance of the Transaction Documents
and to carry out the transactions contemplated by the Transaction Documents;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) | neither the entry into nor performance by the Company of its obligations under the Transaction Documents nor any transaction
contemplated under the Transaction Documents violates in any material respect any provision of any judgment binding on it, its
constituent documents, any law or any document, agreement or other arrangement binding on it or its assets;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (h) | on the Issue Date, the Company will have the capital structure set out in the Registration Statement;
| | --- | -----------------------------------------------------------------------------------------------------



| | (i) | other than as set out in the Registration Statement , there is no obligation of the Company whether arising under any option
or otherwise to issue any equity securities, shares, convertible notes, debentures or securities of any kind or nature whatsoever
in the Company, and there are not agreements or arrangements that could call for the issue of, or grant to any person the right
to call for the issue of, any shares or loan capital of the Company;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (j) | upon the execution of the Transaction Documents by the Company and delivery of the same, the Transaction Documents will constitute
the legal, valid and binding obligations of the Company enforceable against them in accordance with their respective terms;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (k) | the issued capital of the Company was duly and validly authorized and issued and is fully paid, and was issued in accordance
with all applicable securities laws, rules and regulations, or pursuant to valid exemptions therefrom;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (l) | the Company does not have any current or foreseeable obligation to issue further Shares or other such securities in the Company
at this time;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | (m) | the Company is not in violation or default of any provision of (i) its organizational documents, (ii) any judgment, order,
writ, decree or material contract to which it is a party or by which it is bound, or (iii) any provision of any local or foreign
statute, rule or regulation applicable to the Company. Neither the Company nor its Subsidiaries has received any written notice
from any Regulatory Authority that they have committed any criminal, illegal or unlawful act or any violation of or default with
respect to any ordinance, statute, regulation, order, decree or judgment of any court or government agency of relevant jurisdiction
which, if committed by them may have an adverse effect on the Company or its Subsidiaries; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (n) | each of the Company and its Subsidiaries has all franchises, permits, licenses, and any similar authority necessary for the
conduct of its respective business as now being conducted by it and the Company believes in good faith that the Company and its
Subsidiaries can obtain any similar authority for the conduct of the business of each of the Company and its Subsidiaries as contained
in releases to ASX.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 16 | Events of Default and Early Repayment
| | -- | -------------------------------------



Each of the following is an Event of Default (unless
the Noteholder confirms otherwise in writing):



| | (a) | the Company fails to pay the Face Value or other amount when due pursuant to the terms of the Convertible Note Dr otherwise;
| | --- | ----------------------------------------------------------------------------------------------------------------------------



11







| | (b) | the Company fails to carry out any provision of these Conditions and the Company does not remedy that failure within 10 Business
Days after the Noteholder gives written notice to the Company requiring it to be remedied;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | any representations or warranties contained in these Conditions are found to have been false or misleading in any material
respect when made;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | there is an Insolvency Event with respect to the Company;
| | --- | ---------------------------------------------------------



| | (e) | the main business undertaking of the Company is sold or the Company is merged or consolidated with any other entity;
| | --- | --------------------------------------------------------------------------------------------------------------------



| | (f) | a final judgment or judgments for the payment of money aggregating in excess of $1,000,000 are rendered against the Company
or any of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; or
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) | the Company is removed from the Official List of ASX and other stock exchange on which it is listed.
| | --- | ----------------------------------------------------------------------------------------------------



If an Event of Default occurs and is continuing,
then in any such event, and at any time thereafter, the Noteholder may by written notice to the Company require the Company to
immediately redeem the Convertible Notes in accordance with Condition 13(c).



No such written notice is required from the Noteholder
upon the occurrence of an Event of Default specified in Condition 16(d).



| | 17 | Covenants by the Company
| | -- | ------------------------



| | (a) | For so long as the Convertible Notes are outstanding, the Company must:
| | --- | -----------------------------------------------------------------------



| | (i) | comply with these Conditions;
| | --- | -----------------------------



| | (ii) | maintain its corporate existence;
| | ---- | ---------------------------------



| | (iii) | not amend its Constitution or alter the voting or other rights attached to Shares in a manner that is prejudicial to the interests
of Noteholders;
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | not do or omit to do anything that would preclude the issue of a valid Cleansing Notice on the date such notice is required
to be issued under these Conditions;
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | make disclosure of material information to the public as required by the Listing Rules, or the rules of any other stock exchange
on which it is listed and the Corporations Act or any other applicable law;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vi) | not incur a total debt obligation (including any unconverted Convertible Notes outstanding at any given time) of higher than
2.5x its net worth (being paid up equity plus any retained earnings) without the prior consent of at least 75% of Noteholders (on
the basis of one vote for every Convertible Note held unconverted).
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vii) | not issue more than 25% of the Company's share capital in options or convertible notes, without the prior consent of at least
75% of Noteholders (on the basis of one vote for every Convertible Note held at such time unconverted).
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



12







| | (viii) | maintain the capacity to issue sufficient Shares to enable the conversion of all of the outstanding Convertible Notes into
Shares in accordance with the Conditions.
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ix) | ensure that in the event of either material asset sales or consolidation or merger or other business combination transactions,
that the Noteholders be given at least 5 Business Days notice prior to the event and that the obligation on the notes are assumed
by the surviving entity or acquiring entity such that the value of the Notes are not diminished by the event. In any case given
such an event the Noteholders can require the surviving or acquiring company to redeemed the Outstanding Notes for their Face Value
plus any accrued but unpaid interest.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 18 | Certificates
| | -- | ------------



| | (a) | Upon the Conversion of a Convertible Note or the redemption of a Convertible Note by the Company, the Noteholder must deliver
to the Company the Convertible Note Certificate and the Company shall cancel the Convertible Note Certificate. If the Conversion
or redemption relates only to some of the Convertible Notes described in a Convertible Note Certificate, the Company will issue
a further Convertible Note Certificate to the Noteholder in respect of the Convertible Notes not Converted or redeemed.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | If a Convertible Note Certificate becomes worn out or defaced, on production and delivery of that Convertible Note Certificate
to the Company, the Company will cancel it and issue a replacement Convertible Nate Certificate.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | If a Convertible Note Certificate is lost or destroyed, then subject to the Noteholder providing proof of that toss or destruction
and an indemnity satisfactory to the Company (at its expense), the Company will give a new Convertible Note Certificate to the
person entitled to that lost or destroyed Convertible Note Certificate.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 19 | Register
| | -- | --------



| | (a) | The Company must establish and maintain (or cause to be established and maintained) a register of Noteholders that records:
| | --- | ---------------------------------------------------------------------------------------------------------------------------



| | (i) | the names and addresses of all Noteholders;
| | --- | -------------------------------------------



| | (ii) | the number of Convertible Notes held by the Noteholder;
| | ---- | -------------------------------------------------------



| | (iii) | the Face Value for each Convertible Note;
| | ----- | -----------------------------------------



| | (iv) | the date of issue or transfer of the Convertible Notes;
| | ---- | -------------------------------------------------------



| | (v) | details of any redemption or Conversion of the Convertible Notes; and
| | --- | ---------------------------------------------------------------------



| | (vi) | any other information the Company considers necessary or desirable.
| | ---- | -------------------------------------------------------------------



| | (b) | A Noteholder must give the Company notice in writing of any change of name or address or other details, provided that failure
to give such notice shall not affect any of the Company's obligations under the Convertible Notes but provided further that in
this event the Company shall be entitled to rely on the change of name or address or other details previously provided in accordance
with this clause. Notice of change of name or address must be accompanied by such evidence as the Company reasonably requires.
On receipt of the notice, the Company must alter the register of Noteholders accordingly.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13







| | (c) | The register of Noteholders maintained under this Condition, in the absence of manifest error, is conclusive of the details
set out in Condition 19(a).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | No notice of any trust or other interest in any Convertible Note will be entered in the Register and the Company will not be
obliged to take notice of any other interest or claim to a Convertible Note, other than as provided in the Register, except as
ordered by a court of competent jurisdiction or as required by law.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 20 | Amendment
| | -- | ---------



Subject to complying with the Corporations Act or
any other applicable law and the Listing Rules or the rules of any other stock exchange on which it is listed, the Company may:



| | (a) | without the consent or approval of Noteholders amend or add to these Conditions if such amendment or addition is, in the reasonable
opinion of the Board:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i) | of a formal, minor or technical nature;
| | --- | ---------------------------------------



| | (ii) | made to correct a manifest error; or
| | ---- | ------------------------------------



| | (iii) | not likely (taken as a whole with all other amendments or additions) to be disadvantageous or prejudicial to any individual
Noteholder (relative to each other Noteholder) or to the interest of Noteholders as a whole.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | with the consent or approval of Noteholders holding at least 75% of the outstanding Convertible Notes, make any other amendments
or addition to these Conditions.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 21 | Notices
| | -- | -------



| | (a) | Any notice, demand, consent or other communication to be made or given under these Conditions must be in writing and signed
by a person duly authorised by the party giving it and shall be served either by delivery, by facsimile, by email or by pre-paid
courier to the address of the party as specified in Condition 21 (c) or at such substituted address as may be advised by notice
in writing from time to time.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | All notices shall be deemed to be given when sent by:
| | --- | -----------------------------------------------------



| | (i) | pre-paid courier or delivered in person, when delivered;
| | --- | --------------------------------------------------------



| | (ii) | pre-paid post, 2 Business Days after the date of posting (if posted to an address in the same country) or 7 Business Days after
the date of posting (if posted to an address in another country); and
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | facsimile or email, on receipt by the recipient,
| | ----- | ------------------------------------------------



provided that a notice deemed to be given on a day
other than a Business Day or at a time later than 4.00pm in the place at which the notice is given, will be deemed to have been
given at the commencement of business on the next Business Day in that place.



| | (c) | Notice under these Conditions must be given as follows:
| | --- | -------------------------------------------------------



| | (i) | Company
| | --- | -------



Mission NewEnergy Limited
Attention: Mr. Guy Burnett Company Secretary
Tempp Offices, Unit B9,



14







431 Roberts Road
SUBIACO WA 6000
Fax: +61 (08) 9204 2383
Email: guy@missionbiofuels.com



| | (ii) | Noteholder
| | ---- | ----------



The address, fax number or email address set out
in the Register.



| | 22 | Obligations of Noteholders
| | -- | --------------------------



Each Convertible Note is issued on the condition
that each Noteholder is bound by and complies with the terms and conditions of the Note Deed Poll and these Conditions.



| | 23 | Miscellaneous
| | -- | -------------



| | (a) | In these Conditions:
| | --- | --------------------



| | (i) | reference to money or $ is to Australian dollars, unless otherwise stated;
| | --- | --------------------------------------------------------------------------



| | (ii) | the singular includes the plural and the plural includes the singular;
| | ---- | ----------------------------------------------------------------------



| | (iii) | the use of one gender shall include all other genders;
| | ----- | ------------------------------------------------------



| | (iv) | representations, agreements, covenants, obligations or warranties, by more than one person shall include those persons jointly
and each of them severally;
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | a party includes the party's executors, administrators, successors and permitted assigns
| | --- | ----------------------------------------------------------------------------------------



| | (vi) | a person includes a body corporate;
| | ---- | -----------------------------------



| | (vii) | a statute, regulation or provision of a statute or regulation (Statutory Provision) includes:
| | ----- | ---------------------------------------------------------------------------------------------



| | (A) | that Statutory Provision as amended or re-enacted from time to time; and
| | --- | ------------------------------------------------------------------------



| | (B) | a statute, regulation or provision enacted in replacement of that Statutory Provision;
| | --- | --------------------------------------------------------------------------------------



| | (viii) | "including" and similar expressions are not words of limitation;
| | ------ | ----------------------------------------------------------------



| | (ix) | where a word or expression is given a particular meaning, other parts of speech and grammatical forms of that word or expression
have a corresponding meaning; and
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (x) | headings are for convenience only and do not form part of these Conditions or affect their interpretation.
| | --- | ----------------------------------------------------------------------------------------------------------



| | (b) | The law of Western Australia governs these Conditions and the parties submit to the jurisdiction of the courts of Western Australia
and the Federal Court of Australia.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | If anything in these Conditions is unenforceable, illegal or void then it is severed and the rest of these Conditions remains
in force.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------



| | (d) | If an act must be done on a specified day which is not a Business Day, it must be done instead on the next Business Day.
| | --- | ------------------------------------------------------------------------------------------------------------------------



15







| | (e) | A provision of these Conditions must not be construed to the disadvantage of a party merely because that party was responsible
for the preparation of these Conditions or the inclusion of the provision in these Conditions.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | These Conditions incorporate the entire understanding of the parties and supersede all previous arrangements and understandings,
written and oral, between the parties in relation to these Conditions and the Convertible Notes.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) | The Company shall bear the legal costs in connection with the preparation, registration and stamping of all documentation relating
to the Convertible Notes. However, the Company will not be responsible for, or bear, any Taxes that the Noteholder becomes liable
for in respect of Convertible Notes or these Conditions or any legal costs incurred by the Noteholder with respect to obtaining
advice on or negotiating and entering into the Transaction Documents.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (h) | Notwithstanding Condition 23(g), the Company will not be responsible for any stamp duties or similar Taxes payable in any jurisdiction
in connection with any transfer, assignment or other dealing by a Noteholder in respect of its Convertible Notes.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i) | The Company may deduct any amount in respect of Tax it is required to deduct from any payment due to a Noteholder under these
Conditions.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------



| | (j) | Where a calculation is required under these Conditions, the calculation will be performed to 4 decimal places and will be,
in the absence of manifest error, final and binding on the Company and each Noteholder.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16







Schedule 1 - Conversion
Notice



|Notice of conversion or redemption of CRP Note
|----------------------------------------------
|                                              



| | To: | Mission NewEnergy Limited ACN 117 065 719
("Company")
| | --- | -----------------------------------------------------



[Insert name of Noteholder] ("Noteholder"),
gives notice in accordance with Condition 5(a) of the Conditions of Issue of Convertible Notes to convert [insert number
of Convertible Notes to be converted] Convertible Notes held by it into Shares.



The Noteholder applies for such number of Shares
in the capital of the Company as is equal to the number of ordinary shares that the Noteholder is entitled to upon conversion,
as calculated in accordance with Condition 5(c) of the Conditions of Issue of Convertible Notes.



The Noteholder agrees to accept the Shares issued
to it subject to the Constitution and the restrictions on transfer set out in Condition 7 of the Conditions of Issue of Convertible
Notes.



Words used in this notice have the same meaning
as in the Conditions of Issue of Convertible Notes.



Execution by individual:



Signed by [insert name] in the
presence of:



|                                |  | 
|------------------------------- |  | 
|Signature of witness            |  | 
|                                |  | 
|                                |  | 
|Name of witness (BLOCK LETTERS) |  | 
|                                |  | 
|                                |  | 
|Address of witness              |  | 



17