Exhibit
10.4


 


NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A,
REGULATION S, OR OTHER APPLICABLE EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


 


	Principal Amount: $333,333.33	 Issue Date: June 10, 2021




	Actual  Amount of Purchase Price: $300,000.00




 


CONVERTIBLE
PROMISSORY NOTE


 


FOR
VALUE RECEIVED, SIMPLICITY ESPORTS AND GAMING COMPANY, a Delaware corporation (hereinafter called the
“Borrower”), hereby promises to pay to the order of GS CAPITAL PARTNERS, LLC, a Delaware limited liability
company, or registered assigns (the “Holder”), in the form of lawful money of the United States of America, the
principal sum of $333,333.33 (the “Principal Amount”) (subject to adjustment herein), with a purchase price of
$300,000.00 (the “Consideration”) plus an original issue discount in the amount of $33,333.33 (the “OID”),
and to pay interest on the Principal Amount under this Note at the rate of twelve percent (12%) (the “Interest Rate”)
per annum guaranteed from the date that the amount of Consideration is fully funded in accordance with the terms of this Note until
the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise, as further provided
herein; with the understanding that the first six (6) months of interest shall be guaranteed and earned in full as of the Issue Date
hereof, and the remaining eighteen (18) months interest due hereunder shall be deemed earned in full if any amount is outstanding
under this Note after one hundred eighty (180) days from the Issue Date hereof. The Holder shall pay the Consideration on the Issue
Date as set forth above (the “Issue Date”), and the outstanding principal amount under this Note shall be $333,333.33
(which includes the OID). The maturity date for this Note shall be twenty-four (24) months from the Issue Date (“Maturity
Date”), and is the date upon which the principal sum as well as any accrued and unpaid interest and other fees shall be due
and payable. Notwithstanding any other provision of this Note or any related transaction documents, Borrower may prepay this Note
only pursuant to Section 1.9 hereof.


 


It
is further acknowledged and agreed that the Principal Amount owed by Borrower under this Note shall be increased by the amount of all
expenses up to a maximum of $1,000 incurred by the Holder relating to any conversion of this Note into shares of Common Stock. All such
expenses shall be deemed added to the Principal Amount hereunder to the extent such expenses are paid by the Holder.


 


Interest
shall commence accruing on the date that the Note is fully funded and shall be computed on the basis of a 365-day year and the actual
number of days elapsed. Any Principal Amount or interest on this Note which is not paid when due shall bear interest at the rate the
lesser of (a) twenty percent (20%) per annum from the due date thereof until the same is paid (“Default Interest”); or (b)
the maximum rate allowed by law.


 




    	1



     


    

 


All
payments due hereunder (to the extent not converted into shares of common stock of the Borrower (the “Common Stock”) in accordance
with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the
Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount
expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next
succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid
in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due
on such date.


 


Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”). As used
in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks
in the city of New York, New York are authorized or required by law or executive order to remain closed. As used herein, the term “Trading
Day” means any day that shares of Common Stock are listed for trading or quotation on the Principal Market (as defined in the Purchase
Agreement), any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE American.


 


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


 


The
following terms shall apply to this Note:


 


ARTICLE
I. CONVERSION RIGHTS


 


1.1 Conversion
Right. The Holder shall have the right, at any time while the Conversion Shares are subject to an effective Registration Statement,
or if no Registration Statement covering the Conversion Shares is effective, at any time after one hundred eighty (180) days from the
Issue Date hereof, so long as there are amounts outstanding under the Note, to convert all or any portion of the then outstanding and
unpaid Principal Amount and interest (including any Default Interest) into fully paid and non-assessable shares of Common Stock, as such
Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock
shall hereafter be changed or reclassified, at the Conversion Price (as defined below) determined as provided herein (a “Conversion”);
provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion
of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Note
or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous
to the limitations contained herein) and (2) the number of Conversion Shares issuable upon the conversion of the portion of this Note
with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates
of more than 4.99% of the then outstanding shares of Common Stock. For purposes of the proviso set forth in the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided,
however, that the limitations on conversion may be waived (up to 9.99%) by the Holder upon, at the election of the Holder, not less
than sixty-one (61) days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply
until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of Conversion
Shares to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the
applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit
A (the “Notice of Conversion”), delivered to the Borrower or Borrower’s transfer agent by the Holder in accordance
with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e- mail (or by other means resulting in,
or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York
time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any
conversion of this Note, the sum of (1) the Principal Amount of this Note to be converted in such conversion plus (2) at the Holder’s
option, accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the Conversion Date, plus (3) at
the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) or (2).


 




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1.2 Conversion
Price.




 


(a) Calculation
of Conversion Price. The per share conversion price into which Principal Amount and interest (including any Default Interest) under
this Note shall be convertible into shares of Common Stock hereunder shall be $11.50 per share (the “Fixed Conversion Price”);
provided however, that upon failure to make any payment called for hereunder at any time after the Issue Date hereof, but prior
to the Conversion Date, the Conversion Price shall be $10.00 per share (the “Default Fixed Conversion Price”). The Fixed
Conversion Price or the Default Fixed Conversion Price, as applicable, is referred to as the “Conversion Price”. To the extent
the Conversion Price is below the par value per share, the Borrower will take all steps necessary to solicit the consent of the stockholders
to reduce the par value to the lowest value possible under law, provided however that the Borrower agrees to honor all conversions submitted
pending this decrease. If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value
of the Common Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such conversion
and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional Principal”
means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of Conversion Shares issuable
upon such conversion to equal the same number of Conversion Shares as would have been issued had the Conversion Price not been adjusted
by the Holder to the par value price. In the event the Borrower has a DTC “Chill” on its shares, an additional discount of
ten percent (10%) shall apply to the Conversion Price while that “Chill” is in effect.


 


(b) Conversion
Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public announcement that it intends to be acquired by, consolidate, or merge with any other corporation or entity (other
than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower; or (ii) any person, group or entity (including the Borrower) publicly announces
a tender offer to purchase fifty percent (50%) or more of the Common Stock (or any other takeover scheme) (any such transaction referred
to in clause (i) or (ii) being referred to herein as a “Change in Control” and the date of the announcement referred to in
clause (i) or (ii) is being referred to herein as the “Announcement Date”), then the Conversion Price shall, effective upon
the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower
of (x) the Conversion Price and (y) a ten percent (10%) discount to the Acquisition Price (as defined below). From and after the Adjusted
Conversion Price Termination Date, the Conversion Price shall be determined as set forth in Section 1.2(a). For purposes hereof, “Adjusted
Conversion Price Termination Date” shall mean, with respect to any proposed Change in Control for which a public announcement as
contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person,
group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed Change
in Control which caused this Section 1.2(b) to become operative. For purposes hereof, “Acquisition Price” shall mean a price
per share of Common Stock derived by dividing (x) the total consideration (in cash, equity, earn- out or similar payments or otherwise)
paid or to be paid to the Borrower or its shareholders in the Change in Control transaction by (y) the number of authorized shares of
Common Stock outstanding as of the business day prior to the Announcement Date.


 




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1.3 Authorized
and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, the Borrower will reserve from
its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of a
number of Conversion Shares equal to the greater of: (a) 805,000 shares of Common Stock or (b) the sum of (i) the number of Conversion
Shares issuable upon the full conversion of this Note (assuming no payment of Principal Amount or interest) as of any issue date (taking
into consideration any adjustments to the Conversion Price pursuant to Section 2 hereof or otherwise) multiplied by (ii) three
(3) (the “Reserved Amount”). In the event that the Borrower shall be unable to reserve the entirety of the Reserved Amount
(the “Reserve Amount Failure”), the Borrower shall promptly take all actions necessary to increase its authorized share capital
to accommodate the Reserved Amount (the “Authorized Share Increase”), including without limitation, all board of directors
actions and approvals and promptly calling and holding a special meeting of its shareholders no more than sixty (60) days following the
Reserve Amount Failure to seek approval of the Authorized Share Increase via the solicitation of proxies. Notwithstanding the foregoing,
in no event shall the Reserved Amount be lower than the initial Reserved Amount, regardless of any prior conversions. The Borrower represents
that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non- assessable. In addition, if the Borrower
shall issue any securities or make any change to its capital structure which would change the number of Conversion Shares into which
this Note shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that
thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion
of this Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Conversion
Shares or instructions to have the Conversion Shares issued as contemplated by Section 1.4(f) hereof; and (ii) agrees that its issuance
of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates
or cause the Borrower to electronically issue shares of Common Stock to execute and issue the necessary certificates for the Conversion
Shares or cause the Conversion Shares to be issued as contemplated by Section 1.4(f) hereof in accordance with the terms and conditions
of this Note.


 


If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under this Note.


 


1.4 Method
of Conversion.




 


(a) Mechanics
of Conversion. Subject to the other provisions herein, this Note may be converted by the Holder in whole or in part, on any Trading
Day, while any amounts are outstanding hereunder, by submitting to the Borrower or Borrower’s transfer agent a Notice of Conversion
(by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New
York time). Any Notice of Conversion submitted after 11:59 p.m., New York, New York time, shall be deemed to have been delivered and
received on the next Trading Day.


 


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


 




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


 


(d) Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable
means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower
shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Conversion Shares
(or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof) within three (3) Trading Days after
such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid Principal Amount and interest (including
any Default Interest) under this Note, surrender of this Note). If the Borrower shall fail for any reason or for no reason to issue to
the Holder on, or prior to, the Deadline a certificate for the number of Conversion Shares, or to which the Holder is entitled hereunder
and register such Conversion Shares on the Borrower’s share register, or to credit the Holder’s balance account with DTC
(as defined below) for such number of Conversion Shares to which the Holder is entitled upon the Holder’s conversion of this Note
(a “Conversion Failure”), then, in addition to all other remedies available to the Holder, (i) the Borrower shall pay in
cash to the Holder on each day after the Deadline and during such Conversion Failure an amount equal to two percent (2.0%) of the product
of (A) the sum of the number of Conversion Shares not issued to the Holder on or prior to the Deadline and to which the Holder is entitled
and (B) the closing sale price of the Common Stock on the Trading Day immediately preceding the last possible date which the Borrower
could have issued such Conversion Shares to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon written notice
to the Borrower, may void its Notice of Conversion with respect to, and retain or have returned, as the case may be, any portion of this
Note that has not been converted pursuant to such Notice of Conversion; provided that the voiding of a Notice of Conversion shall not
affect the Borrower’s obligations to make any payments which have accrued prior to the date of such notice. In addition to the
foregoing, if on or prior to the Deadline the Borrower shall fail to issue and deliver a certificate to the Holder and register such
Conversion Shares on the Borrower’s share register or credit the Holder’s balance account with DTC for the number of Conversion
Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Borrower’s obligation pursuant
to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder
anticipated receiving from the Borrower, then the Borrower shall, within two (2) Trading Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and other reasonable and customary out- of-pocket expenses, if any) for the shares of Common Stock so purchased
(the “Buy-In Price”), at which point the Borrower’s obligation to deliver such certificate (and to issue such Conversion
Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates representing such Conversion Shares or credit such Holder’s balance
account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the closing sales price of the Common Stock on the date of exercise. Nothing shall limit
the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation,
a decree of specific performance or injunctive relief with respect to the Borrower’s failure to timely deliver certificates representing
the Conversion Shares (or to electronically deliver such Conversion Shares) upon the conversion of this Note as required pursuant to
the terms hereof.


 




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(e) Obligation
of Borrower to Deliver Common Stock. At the time that the Holder submits the Notice of Conversion to the Borrower or Borrower’s
transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon such conversion, the outstanding
Principal Amount and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall be reduced to reflect
such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of
this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other
assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s
obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares
as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or
any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record,
or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to
the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in
connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the
Notice of Conversion is sent to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time, on such date.




 


(f) Delivery
of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the Conversion Shares issuable
upon conversion hereof, provided the Borrower is participating in the Depository Trust Borrower (“DTC”) Fast Automated Securities
Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance with the provisions contained in
Section 1.1 and in this Section 1.4, the Borrower shall use its reasonable best efforts to cause its transfer agent to electronically
transmit the Conversion Shares issuable upon conversion hereof to the Holder by crediting the account of Holder’s Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system.


 


1.5 Concerning
the Shares. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred unless (i) such shares
are sold pursuant to an effective registration statement under the 1933 Act; or (ii) the Borrower or its transfer agent shall have
been furnished with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the Purchase Agreement))
to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration;
or (iii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or
otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in
the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth
below), until such time as the Conversion Shares have been registered under the 1933 Act or otherwise may be sold pursuant to an
applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately
sold, each certificate for the Conversion Shares that has not been so included in an effective registration statement or that has
not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a
legend substantially in the following form, as appropriate:


 


“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO AN APPLICABLE EXEMPTION
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 




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The
legend set forth above shall be removed and the Borrower shall issue to the Holder a certificate for the applicable Conversion Shares
without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by electronic delivery
by crediting the account of such Holder’s broker with DTC, if, unless otherwise required by applicable state securities laws: (a)
such Conversion Shares are registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be
sold pursuant to an applicable exemption without any restriction as to the number of securities as of a particular date that can then
be immediately sold, or (b) the Borrower or the Holder provides the Legal Counsel Opinion (as contemplated by and in accordance with
the Purchase Agreement) to the effect that a public sale or transfer of such Conversion Shares may be made without registration under
the 1933 Act, which opinion shall be accepted by the Borrower so that the sale or transfer is effected. The Borrower shall be responsible
for the fees of its transfer agent and all DTC fees associated with any such issuance. The Holder agrees to sell all Conversion Shares,
including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery
requirements, if any. In the event that the Borrower does not accept the opinion of counsel provided by the Holder with respect to the
transfer of Conversion Shares pursuant to an exemption from registration at the Deadline, notwithstanding that the conditions of the
applicable exemption, have been met, it will be considered an Event of Default under this Note.


 


1.6 Effect
of Certain Events.




 


(a) Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the
assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as
defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default pursuant to which
the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to
the Default Amount (defined in Section 3.25); or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any
individual, corporation, limited liability Borrower, partnership, association, trust or other entity or organization.


 


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


 




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


 


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


 


(e) Dilutive
Issuance. If, for any securities issued by the Borrower on or after the Issue Date, excluding any exchange securities for securities
entered into prior to the Issue Date, the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues,
sells or grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants
any right to reprice, or otherwise disposes of, or issues (or has sold or issued as of the Issue Date, as the case may be, or announces
any sale, grant or any option to purchase or other disposition), securities convertible into, exercisable for, or otherwise entitle any
person or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of this Note, and any convertible
notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective price per share that is lower than
the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive
Issuance”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced, at the option of the Holder, to a price equal
the Base Conversion Price. Notwithstanding the foregoing, no adjustment will be made under this Section 1.6(e) in respect of an Exempt
Issuance. In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section
1.6(e) shall be calculated as if all such securities were issued at the initial closing. This Section shall also be subject to the mechanics
of Section 1.6(g) “Pending Legislation” clause herein. If any adjustment made under this Section is the result of a variable
priced feature of the relevant security, only the actual price of the issuance will be incorporated herein as the new Fixed Conversion
Price, but the variable feature itself will not be incorporated herein.


 




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An
“Exempt Issuance” shall mean the issuance of (a) shares of Common Stock or other securities to officers or directors of
the Borrower pursuant to any stock or option or similar equity incentive plan duly adopted for such purpose, by a majority of the
non-employee members of the Borrower’s Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose in a manner which is consistent with the Borrower’s prior business practices; (b)
securities issued pursuant to a merger, consolidation, acquisition or similar business combination approved by a majority of the
disinterested directors of the Borrower, provided that any such issuance shall only be to a Person (or to the equity holders of a
Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with
the business of the Borrower and shall provide to the Borrower additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Borrower is issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities; (c) securities issued pursuant to any equipment loan or leasing arrangement, real
property leasing arrangement or debt financing from a bank or similar financial institution approved by a majority of the
disinterested directors of the Borrower; (d) securities issued under the Form 1-A or S-1 filed and declared effective by the
Securities and Exchange Commission as of the date hereof; (e) existing convertible debt and equity lines of credit in existence on
the date hereof, (f) private placements of Common Stock by the Borrower; or (g) securities issued with respect to which the
Holder waives its rights in writing under this Section 1.6(e).


 


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


 


(g) Pending
Legislation. As of the Issue Date hereof, proposed legislation exists, namely proposed amendments to Rule 144(d)(3)(ii) proposed
on December 22, 2020 in SEC Release 2020-336, that would fundamentally change the economic terms of this Note. In the event the rule
becomes law and becomes effective while any amounts are outstanding under this Note or the Warrant, any Conversion Price hereof that
is deemed to be market-adjusted or market-variable in nature as defined therein, shall be automatically amended so that this Note
contains only the Fixed Conversion Price of $11.50 per share. In the event the final rule, or any other combination of final
rules, make this provision inoperable, invalid, or otherwise has an effect that changes the economics of the transactions
contemplated hereby, the pertinent clause or mechanic of operation shall be stricken so that only the Fixed Conversion Price
provision shall remain.


 




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1.7 Adjustments to Conversion Price.




 


(a) At
any time after the Issue Date, (i) if in the case that the Borrower’s Common Stock is not deliverable by DWAC (including if
the Borrower’s transfer agent has a policy prohibiting or limiting delivery of shares of the Borrower’s Common Stock
specified in a Notice of Conversion); (ii) if the Borrower ceases to be a reporting company pursuant or subject to the Exchange Act;
(iii) if the Borrower subsequently loses a market (including the OTC Pink, OTCQB or an equivalent replacement exchange) for its
Common Stock; (iv) if the Borrower fails to maintain its status as “DTC Eligible” for any reason; (v) if the Note cannot
be converted into free trading shares on or after six (6) months from the Issue Date; (vi) if at any time the Borrower does not
maintain or replenish the Reserved Amount (as defined herein) within three (3) business days of the request of the Holder; (vii) if
the Borrower fails to maintain the listing of its Common Stock on at least one of any tier of the OTC Markets or an equivalent
replacement exchange, any tier of the Nasdaq Stock Market, the New York Stock Exchange (including the NYSE American); (viii) if the
Borrower fails to comply with the reporting requirements of the Exchange Act; the reporting requirements necessary to satisfy the
availability of Rule 144 to the Holder or its assigns, including but not limited to the timely fulfillment of its filing
requirements as a fully-reporting issuer registered with the SEC; (ix) if the Borrower effectuates a reverse split of its Common
Stock without twenty (20) days’ prior written notice to the Holder; (x) if subsequently OTC Markets changes the
Borrower’s designation to ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull and Crossbones), or
‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign); (xi) the restatement of any
financial statements filed by the Borrower with the SEC for any date or period from two (2) years prior to the Issue Date of this
Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated
financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the
Purchase Agreement; (xii) any cessation of trading of the Common Stock on at least one of any tier of the OTC Markets or an
equivalent replacement exchange, any tier of the Nasdaq Stock Market, the New York Stock Exchange (including the NYSE American), and
such cessation of trading shall continue for a period of three consecutive (3) Trading Days; (xiii) the Borrower loses the
“bid” price for its Common Stock ($0.0001 on the “Ask” with zero market makers on the “Bid” per
Level 2); or (xiv) if the Holder is notified in writing by the Borrower or the Borrower’s transfer agent that the Borrower
does not have the necessary amount of authorized and issuable shares of Common Stock available to satisfy the issuance of Conversion
Shares pursuant to a Conversion Notice, then in addition to all other remedies under this Note, the Holder shall be entitled to
apply a fifteen percent (15%) discount to the Conversion Price for each occurrence, cumulative, or otherwise and that discount shall
apply to all future conversions under the Note.


 


(b) The
Conversion Price shall be subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating
to the Common Stock, combinations, recapitalization, reclassifications, extraordinary distributions and similar events that occur on
or after the Issue Date. By way of example and not limitation, in the event of forward split of the Common Stock following the Issue
Date in which each share of Common Stock is converted into two shares of Common Stock, the Conversion Price shall be reduced by 50%,
and in the event of a reverse split of the Common Stock following such applicable time in which each two shares of Common Stock are converted
into one share of Common Stock, the Conversion Price shall be increased by 100%.


 


1.8 Status
as Shareholder. Upon submission of a Notice of Conversion by Holder, (i) the Conversion Shares covered thereby (other than the Conversion
Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock, and (ii) the Holder’s rights as a Holder of such
converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common
Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower
to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common
Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion
of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying
the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and
the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust
its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights
and remedies for the Borrower’s failure to convert this Note.


 




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1.9 Prepayment.
Notwithstanding anything to the contrary contained in this Note, subject to the terms of this Section, at any time during the period
beginning on the Issue Date and ending at Maturity (“Prepayment Termination Date”), Borrower shall have the right, exercisable
on not less than five (5) Trading Days’ prior written notice to the Holder, to prepay all or any portion of the outstanding balance
on this Note (principal and accrued interest), (such elected amount being the “Optional Prepayment Amount”), in accordance
with this Section. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder
of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note; (2) the date
of prepayment which shall be not more than five (5) Trading Days from the date of the Optional Prepayment Notice; and (3) the amount
of the Optional Prepayment Amount that the Borrower is paying. Notwithstanding Holder’s receipt of the Optional Prepayment Notice
the Holder may convert, or continue to convert the Note in whole or in part until the Optional Prepayment Amount (as defined herein)
is paid to the Holder. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment
of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the
Borrower at least one (1) business day prior to the Optional Prepayment Date.


 


1.10 Repayment
from Proceeds. While any portion of the outstanding Principal Amount and interest (including Default Interest) under this Note
are due and owing, if the Borrower receives cash proceeds from any source or series of related or unrelated sources, including but
not limited to, the issuance of equity or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities
pursuant to an equity line of credit of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of
Borrower’s receipt of such proceeds, inform the Holder of such receipt, following which the Holder shall have the right in its
sole discretion to require the Borrower to immediately apply up to 50% of the proceeds therefrom to repay all or any portion of the
outstanding Principal Amount and interest (including any Default Interest) then due under this Note; provided however that the first
$3,000,000.00 of equity financing received by the Borrower shall be excepted from the requirements of this Section 1.10. Failure of
the Borrower to comply with this provision shall constitute an Event of Default.


 


ARTICLE
II. RANKING AND CERTAIN COVENANTS


 


2.1 Ranking
and Security. The obligations of the Borrower under this Note shall be subordinate with respect to any and all Indebtedness incurred
as of or following the Issue Date.


 


2.2 Other
Indebtedness. So long as the Borrower shall have any obligation under this Note, the Borrower shall not (directly or indirectly through
any Subsidiary or affiliate) incur or suffer to exist or guarantee any Indebtedness that is senior to (in priority of payment and performance)
the Borrower’s obligations hereunder unless the proceeds of such Indebtedness are used to pay off the interest and principal under
this Note. As used in this Section 2.2, the term “Borrower” means the Borrower and any Subsidiary of the Borrower. As used
herein, the term “Indebtedness” means (a) all indebtedness of the Borrower for borrowed money, but not including deferred
purchase price obligations in place as of the Issue Date and as disclosed in the SEC Documents or obligations to trade creditors incurred
in the ordinary course of business; (b) all obligations of the Borrower evidenced by notes, bonds, debentures or other similar instruments;
(c) purchase money indebtedness hereafter incurred by the Borrower to finance the purchase of fixed or capital assets, including all
capital lease obligations of the Borrower which do not exceed the purchase price of the assets funded; (d) all guarantee obligations
of the Borrower in respect of obligations of the kind referred to in clauses (a) through (c) above that the Borrower would not be permitted
to incur or enter into; and (e) all obligations of the kind referred to in clauses (a) through (d) above that the Borrower is not permitted
to incur or enter into that are secured or unsecured by (or for which the holder of such obligation has an existing right, contingent
or otherwise, to be secured or unsecured by) any lien or encumbrance on property (including accounts and contract rights) owned by the
Borrower, whether or not the Borrower has assumed or become liable for the payment of such obligation.


 


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


 




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


 


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


 


2.6 Advances
and Loans; Affiliate Transactions. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, lend money, give credit, make advances to or enter into any transaction with any person, firm, joint
venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except
loans, credits or advances (a) in existence or committed on the Issue Date and which the Borrower has informed Holder in writing prior
to the Issue Date, (b) in regard to transactions with unaffiliated third parties, made in the ordinary course of business, (c) in regard
to transactions with unaffiliated third parties, not in excess of $150,000.00 or (d) in regard to transactions with any subsidiaries
of the Borrower.


 


2.7 Section
3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement
structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities Act
(a “3(a)(9) Transaction”) or Section 3(a)(l0) of the Securities Act (a “3(a)(l0) Transaction”). In the event
that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(l0) Transaction while
this note is outstanding, a liquidated damages charge of twenty-five percent (25%) of the outstanding principal balance of this Note,
but not less than Twenty-Five Thousand Dollars ($25,000), will be assessed and will become immediately due and payable to the Holder
at its election in the form of a cash payment or added to the balance of this Note (under Holder’s and Borrower’s expectation
that this amount will tack back to the Issue Date).


 


2.8  Preservation
of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, (a) change the nature of its business in a material respect; (b) sell, divest, change the structure
of any material assets other than in the ordinary course of business; or (c) enter into any variable rate transactions or Merchant Cash
Advance transactions except as in effect the date hereof. In addition, so long as the Borrower shall have any obligation under this Note,
the Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges,
and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum assets) to become or
remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in
which the transaction of its business makes such qualification necessary. Furthermore, so long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder’s written consent, solicit any offers for, respond to any unsolicited
offers for, or conduct any negotiations with, any other person or entity with respect to any Variable Rate Transaction or investment.


 


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


 




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2.10 Lost,
Stolen or Mutilated Note. Upon receipt by the Borrower of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Borrower
in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Borrower shall execute and deliver
to the Holder a new Note.


 


ARTICLE
III. EVENTS OF DEFAULT


 


It
shall be considered an event of default if any of the following events listed in this Article III (each, an “Event of Default”)
shall occur; provided however, that Borrower shall have three (3) calendar days to cure any Event of Default under this Note or
any of the other Transaction Documents, unless another time period (whether longer or shorter) is specified therein:


 


3.1 Conversion
and the Shares. The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing that it will
not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of
this Note; (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note;
(iii) fails to reserve the Reserved Amount at all times; or (iv) the Borrower itself, or the Borrower directs its transfer agent, not
to transfer or delays, impairs, or hinders its transfer agent in transferring (or issuing electronically or in certificated form) any
certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required
by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, or hinders its transfer agent from
removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion
Shares issued to the Holder upon conversion of, or otherwise pursuant to this Note as and when required by this Note (or makes any written
announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure
shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing)
for five (5) Trading Days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain
current in its obligations to its transfer agent. It shall be an Event of Default of this Note, if a conversion of this Note is delayed,
hindered, or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances
any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower
to the Holder, in cash within forty-eight (48) hours of notice from the Holder, or in shares of the Borrower’s Common Stock, in
the Holder’s sole discretion.


 


3.2 Breach
of Agreements and Covenants. The Borrower breaches any material agreement, covenant or other material term or condition contained
in the Purchase Agreement, this Note, the Warrant, the Irrevocable Transfer Agent Instructions or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or therewith.


 


3.3 Breach
of Representations and Warranties. Any material representation or warranty of the Borrower made in the Purchase Agreement, this Note,
the Warrant, the Irrevocable Transfer Agent Instructions or in any agreement, statement or certificate given in writing pursuant hereto
or in connection herewith or therewith shall be false or misleading in any material respect when made and the breach of which has (or
with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.


 


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


 




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3.5 Judgments. Any
money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of
its property or other assets for more than $150,000.00, and shall remain unvacated, unbonded or unstayed for a period of
twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


3.6 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.


 


3.7 Delisting
of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of any tier of the OTC Markets,
or any tier of the Nasdaq Stock Market or the New York Stock Exchange (including the NYSE American).


 


3.8 Failure
to Comply with the 1934 Act. At any time after the Issue Date, the Borrower shall fail to comply with the reporting requirements
of the 1934 Act or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act.


 


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


 


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


 


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


 


3.12 Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from
two (2) years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would,
by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect
to this Note or the Purchase Agreement.


 


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


 


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


 


3.15 DTC
“Chill”. The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC’s services,
such as limiting a DTC participant’s ability to make a deposit or withdrawal of the security at DTC) on any of the Borrower’s
securities.


 


3.16 Illegality.
Any court of competent jurisdiction issues an order declaring this Note, the Purchase Agreement, or any provision hereunder or thereunder
to be illegal.


 




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3.17. DWAC
Eligibility. In addition to the Event of Default in Section 3.15, the Common Stock is otherwise not eligible for trading
through the DTC’s Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs.


 


3.18 Variable
Rate Transactions; Dilutive Issuances. The Borrower (i) issues shares of Common Stock (or convertible securities or Purchase Rights)
pursuant to an equity line of credit of the Borrower or otherwise in connection with a Variable Rate Transaction except for existing
lines of credit or Variable Rate Transactions existing as of the date hereof; (ii) adjusts downward the “floor price” at
which shares of Common Stock (or convertible securities or Purchase Rights) may be issued under an equity line of credit or otherwise
in connection with a Variable Rate Transaction (or entered into in the future) except for existing lines of credit or Variable Rate Transactions
existing as of the date hereof; or (iii) a Dilutive Issuance is triggered as provided in this Note.


 


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


 


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


 


3.21 Unavailability
of Rule 144. If, at any time on or after the date which is six (6) months after the Issue Date, except due to the Holder’s
actions or inactions, the Holder is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably
acceptable to the Holder, the Holder’s brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in
order to facilitate the Holder’s conversion of any portion of the Note into free trading shares of the Borrower’s Common
Stock pursuant to Rule 144; or (ii) thereupon deposit such shares into the Holder’s brokerage account.


 


3.22 Suspension
of Trading of Common Stock. If, at any time, the Borrower’s Common Stock (i) is suspended from trading; (ii) halted from trading;
or (iii) fails to be quoted or listed (as applicable) on any level of the OTC Markets, any tier of the NASDAQ Stock Market, the New York
Stock Exchange, (including the NYSE American).


 


3.23 Failure
to Make Payment. If upon the Maturity Date, the Borrower shall fail to pay any then outstanding principal, interest, and fees due
hereunder. In addition to the remedies available under Section 3.25, the Conversion Price hereunder shall be set at the Default Fixed
Conversion Price. The adjustment to the Default Fixed Conversion Price shall only apply to an Event of Default under this Section 3.23.


 


3.24 Failure
to Register. The Borrower shall fail to comply with any of the requirements of the Registration Rights Agreement entered into in
connection with this Note and the Purchase Agreement.


 


3.25 Rights
and Remedies Upon an Event of Default. Upon the occurrence and during the continuation of any Event of Default specified in this
Article III, this Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount (the “Default Amount”) equal to the Principal Amount then outstanding plus accrued interest
(including any Default Interest) through the date of full repayment multiplied by one hundred twenty-five percent (125%). Holder may,
in its sole discretion, determine to accept payment part in Common Stock and part in cash. For purposes of payments in Common Stock,
the conversion formula set forth in Section 1.2, including if the Event of Default is pursuant to Section 3.23 hereof, the Default Fixed
Conversion Price. Upon an uncured Event of Default, all amounts payable hereunder shall immediately become due and payable, all without
demand, presentment or notice, all of which hereby are expressly waived by the Borrower, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available
at law or in equity, including, without limitation.


 




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ARTICLE
IV. MISCELLANEOUS


 


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


 


4.2 Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served; (ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid; (iii) delivered by reputable air courier service with charges prepaid; or (iv) transmitted by hand delivery,
telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand
delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address
or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a business day during normal business hours where such notice
is to be received), or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:


 


If
to the Borrower, to:


 


SIMPLICITY
ESPORTS AND GAMING COMPANY


7000
West Palmetto Park Road, Suite 505 Boca Raton, Florida 33433


Attention:
Roman Franklin


e-mail:
roman@simplicityesports.com


 


If
to the Holder:


 


GS
CAPITAL PARTNERS, LLC


30
Washington Street, Suite 5L


Brooklyn, New York 11201


Attention: Gabe Sayegh


e-mail:
gabe@gscapitalfund.com


 


4.3 Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term
“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.


 




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4.4 Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Neither the Borrower nor the Holder shall assign this Note or any rights or obligations hereunder without
the prior written consent of the other. Notwithstanding the foregoing, the Holder may assign its rights hereunder to any “accredited
investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder, or to any of its “affiliates”,
as that term is defined under the 1934 Act, without the consent of the Borrower. Notwithstanding anything in this Note to the contrary,
this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.


 


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


 


4.6 Governing
Law; Venue; Attorney’s Fees. This Note shall be governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the state courts
located in the state of New York or federal courts located in the state of New York. The Borrower hereby irrevocably waives any objection
to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue
or based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED
HEREBY. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action
or proceeding in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby or thereby
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted
by law. The prevailing party in any action or dispute brought in connection with this the Note or any other agreement, certificate, instrument
or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and
costs.


 


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


 


4.8 Purchase
Agreement. The Borrower and the Holder shall be bound by the applicable terms of the Purchase Agreement and the documents entered
into in connection herewith and therewith.


 




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4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock
unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the
event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other
right, or for the purpose of determining shareholders who are entitled to vote in connection with any Change in Control or any proposed
liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior
to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief
statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The
Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.


 


4.10 Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach
of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the
provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition
to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to
enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security
being required.


 


4.11 Construction;
Headings. This Note shall be deemed to be jointly drafted by the Borrower and the Holder and shall not be construed against any person
as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation
of, this Note.


 


4.12 Usury.
To the extent it may lawfully do so, the Borrower hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right or remedy under
this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided that the total liability
of the Borrower under this Note for payments which under the applicable law are in the nature of interest shall not exceed the maximum
lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall
any rate of interest or default interest, or both of them, when aggregated with any other sums which under the applicable law in the
nature of interest that the Borrower may be obligated to pay under this Note exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by applicable law and applicable to this Note is increased or decreased by statute or any official
governmental action subsequent to the Issue Date, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable
to this Note from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Borrower to the Holder with respect to indebtedness evidenced by this
the Note, such excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Borrower,
the manner of handling such excess to be at the Holder’s election.


 


4.13 Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law (including any
judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision of this Note.


 




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4.14 Most-Favored
Nation. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any new
security, with any term that the Holder reasonably believes is more favorable to the holder of such security or with a term in favor
of the holder of such security that the Holder reasonably believes was not similarly provided to the Holder in this Note, then (i)
the Holder shall notify the Borrower of such additional or more favorable term within one (1) business day of the issuance or
amendment (as applicable) of the respective security, and (ii) such term, at Holder’s option, shall become a part of the
transaction documents with the Holder (regardless of whether the Borrower complied with the notification provision of this Section
4.14). The types of terms contained in another security that may be more favorable to the holder of such security include, but are
not limited to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, and original
issue discounts. If Holder elects to have the term become a part of the transaction documents with the Holder, then the Borrower
shall immediately deliver acknowledgment of such adjustment in form and substance reasonably satisfactory to the Holder (the
“Acknowledgment”) within one (1) business day of Borrower’s receipt of request from Holder, provided that
Borrower’s failure to timely provide the Acknowledgment shall not affect the automatic amendments contemplated hereby.


 


4.15 Dispute
Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment amount or
Default Amount, Issue, Closing or Maturity Date, the closing bid price, or fair market value (as the case may be) or the arithmetic calculation
of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or the Holder shall submit the disputed
determinations or arithmetic calculations via facsimile (i) within one (1) Trading Day after receipt of the applicable notice giving
rise to such dispute to the Borrower or the Holder or (ii) if no notice gave rise to such dispute, at any time after the Holder learned
of the circumstances giving rise to such dispute. If the Holder and the Borrower are unable to agree upon such determination or calculation
within five (5) Trading Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Borrower
or the Holder, then the Borrower shall, within three (3) Trading Days, submit (a) the disputed determination of the Conversion Price,
the closing bid price, the or fair market value (as the case may be) to an independent, reputable investment bank selected by the Borrower
and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower
shall cause at its expense the investment bank or the accountant to perform the determinations or calculations and notify the Borrower
and the Holder of the results no later than one (1) Trading Day from the time it receives such disputed determinations or calculations.
Such investment bank’s or accountant’s determination or calculation shall be binding upon all parties absent demonstrable
error.


 


[SIGNATURE
PAGE FOLLOWS]


 




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IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on June 10, 2021.


 


	SIMPLICITY
    ESPORTS AND GAMING COMPANY	 
	 	 
	By:	/s/
    Roman Franklin	 
	Name:	Roman
    Franklin	 
	Title:	Chief
    Executive Officer	 


 




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