Exhibit 10.2


 





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 TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.


 


Freedom
Leaf Inc.


 


Convertible
Note


 


 


	Issuance Date: November 18,
    2019	Original Principal Amount: U.S. $5,000,000.00


 


FOR VALUE RECEIVED,
Freedom Leaf Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of MCP Wellness
II LP, a Delaware limited partnership, or its registered assigns (“Holder”) the amount set out above as the
Original Principal Amount (as increased on any Interest Date, or as reduced pursuant to the terms hereof pursuant to redemption,
conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration,
redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”)
on any outstanding Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the “Issuance
Date”) until the same becomes due and payable, whether upon an Interest Date (as defined below) or the Maturity Date
or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Note
(including all Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of
an issue of Convertible Notes issued pursuant to that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated on or around the date hereof, by and among, inter alia, the Company and the Holder on the Closing Date (collectively,
the “Notes” and such other Convertible Notes, the “Other Notes”). Certain capitalized terms
used herein are defined in Section 26.


 


1.            
PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder the
outstanding Principal amount, together with any accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and
Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.


 







2.            
INTEREST; INTEREST RATE.


 


(a)       
Interest on this Note shall commence accruing on the Issuance Date and shall accrue daily
at the Interest Rate on the outstanding Principal amount from time to time, shall be computed on the basis of a 360-day year comprised
of twelve 30-day months from the actual number of days elapsed and shall be payable in arrears for each Interest Period on the
last day of the applicable Interest Period during the period beginning on the Issuance Date and ending, subject to earlier acceleration,
redemption or conversion, on, and including, the Maturity Date (even if the Maturity Date is not the last day of an Interest Period)
(each, an “Interest Date”), with the first Interest Date being December 31, 2019. Interest shall be payable
under this Note not in cash but by increasing the Principal amount of this Note by an amount equal to the Interest accrued for
the applicable Interest Period. From and after the occurrence and during the continuance of any Event of Default, the Interest
Rate shall be increased to eighteen percent (18%). In the event that such Event of Default is subsequently cured, the adjustment
referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest
as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the
extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event
of Default.


 


 


 






    
	 	1	 




     


    

 


3.            
CONVERSION OF NOTES. This Note shall be convertible into shares of Common Stock (as
defined below), on the terms and conditions set forth in this Section 3.


 


(a)        
Conversion Right. Subject to the provisions of Section 3(d), at any time or times on
or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount
(as defined below) into fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion
Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance
would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common
Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with
respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.


 


(b)        
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any
Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(the “Conversion Rate”).


 


(i)                
“Conversion Amount” means the portion of the Principal (including for the
avoidance of doubt any accrued Interest added to such Principal pursuant to Section 2(a) hereof) to be converted, redeemed or otherwise
with respect to which this determination is being made.


 


(ii)             
“Conversion Price” means, as of any Conversion Date or other date of determination,
$0.20, subject to adjustment as provided herein.


 





(c)        
Mechanics of Conversion.


 


(i)                
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on
any date (a “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto
as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section 3(c)(iii), surrender
this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction). On or before the first (1st) Trading Day following
the date of receipt of a Conversion Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or
before the second (2nd) Trading Day following the date of receipt of a Conversion Notice (the “Share Delivery
Date”), the Company shall provided that the Transfer Agent is participating in The Depository Trust Company’s (“DTC”)
Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be
entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission
system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver
(via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of
the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically
surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal
portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than two
(2) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note
(in accordance with Section 16(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive
the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date. In the event of a partial conversion of this Note pursuant hereto, the Principal
amount converted shall be deducted as set forth in the Conversion Notice.


 


 


 






    
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(ii)             
Company’s Failure to Timely Convert. If the Company shall fail, for any reason
or for no reason, to issue to the Holder within two (2) Trading Days after the Company’s receipt of a facsimile copy of a
Conversion Notice, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s balance account with
DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of any Conversion
Amount (as the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to the
Holder, (1) the Company shall pay in cash to the Holder on each day after such second (2nd) Trading Day that the issuance
of such shares of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares
of Common Stock not issued to the Holder on a timely basis 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 Company could have issued such shares
of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice to the Company, may void
its Conversion Notice 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 Conversion Notice; provided that the voiding of a Conversion Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise.
In addition to the foregoing, if within two (2) Trading Days after the Company’s receipt of the facsimile copy of a Conversion
Notice, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the
Company’s share register or credit the Holder’s or its designee’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if
on or after such second (2nd) 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 conversion that the
Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within two (2) Business
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 out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver
such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to
the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account
with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder
(as the case may be) 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 Sale Price of the Common Stock on the Trading Day immediately
preceding the Conversion Date.


 


(iii)           
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion
of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this
Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided
the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note
upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late
Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall
use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note
upon conversion.


 


 


 






    
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(iv)            
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion
Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions
of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to
have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based
on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount
of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable
to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common
Stock not in dispute and resolve such dispute in accordance with Section 21.


 


(d)        
Limitations on Conversions.


 


(i)                
Beneficial Ownership. Notwithstanding anything to the contrary contained in this Note,
this Note shall not be convertible by the Holder hereof, and the Company shall not effect any conversion of this Note or otherwise
issue any shares of Common Stock to the extent (but only to the extent) that, if after giving effect to such conversion, the Holder
or any of its affiliates would beneficially own in excess of 4.9% (the “Maximum Percentage”) of the outstanding
shares of Common Stock immediately after giving effect to such conversion. By written notice to the Company, the Holder
may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.9% specified in such
notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice
is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of
the Notes. To the extent the above limitation applies, the determination of whether this Note shall be convertible (vis-à-vis
other convertible, exercisable or exchangeable securities owned by the Holder) shall, subject to such Maximum Percentage limitation,
be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No
prior inability to convert this Note, or to issue shares of Common Stock, pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. For purposes
of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined by the Holder in accordance with Section 13(d) of the 1934 Act (as defined
in the Securities Purchase Agreement) and the rules and regulations promulgated thereunder. The provisions of this paragraph shall
be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation.
The limitations contained in this paragraph shall apply to a successor Holder of this Note. For any reason at any time, upon the
written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without limitation, pursuant to this Note or securities issued pursuant to
the Securities Purchase Agreement. Each delivery of a Conversion Notice by the Holder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Conversion
Shares requested by the Holder in such Conversion Notice is permitted under this paragraph.


 


 


 






    
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4.            
RIGHTS UPON EVENT OF DEFAULT.


 


(a)        
Event of Default. Each of the following events shall constitute an “Event
of Default”:


 


(i)                
the suspension from trading or failure of the Common Stock to be listed on an Eligible Market
for a period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period;


 


(ii)             
the Company’s (A) failure to cure a Conversion Failure by delivery of the required number
of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or (B) notice, written or oral, to
any holder of the Notes, including, without limitation, by way of public announcement or through any of its agents, at any time,
of its intention not to comply with a request for conversion of any Notes into shares of Common Stock that is requested in accordance
with the provisions of the Notes, other than pursuant to Section 3(d);


 


(iii)           
at any time following the tenth (10th) consecutive day that the Holder’s
Authorized Share Allocation is less than the number of shares of Common Stock that the Holder would be entitled to receive upon
a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d)
or otherwise);


 


(iv)            
the Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal,
Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s or
any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined
in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failure to pay Interest
and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least five (5) Trading
Days;


 


(v)              
the Company fails to remove any restrictive legend on any certificate or any shares of Common
Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities acquired by the Holder under the
Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement,
unless otherwise then prohibited by applicable federal securities laws, and any such remains uncured for at least five (5) Trading
Days;


 


(vi)            
the occurrence of any default under, redemption of or acceleration prior to maturity of any
Indebtedness (as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect
to (A) Permitted Senior Indebtedness and (B) any Other Notes;


 


(vii)         
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for
the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or
any Subsidiary by a third party, shall not be dismissed within thirty (30) days of their initiation;


 


 


 






    
	 	5	 




     


    

 


(viii)       
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under
any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document
in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal,
state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial
part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of
any such action or the taking of any action by any Person to commence a UCC foreclosure sale or any other similar action under
federal, state or foreign law;


 


(ix)            
the entry by a court of (i) a decree, order, judgment or other similar document in respect
of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging
the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization,
arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or
foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar
document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30)
consecutive days;


 


(x)              
a final judgment or judgments for the payment of money in excess of $250,000 individually,
or $500,000 in the aggregate, are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within
ninety (90) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within ninety (90)
days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an
indemnity from a credit worthy party shall not be included in calculating the amounts set forth above so long as the Company provides
the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory
to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as
the case may be) will receive the proceeds of such insurance or indemnity within ninety (90) days of the issuance of such judgment;


 


(xi)            
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay,
when due, or within any applicable grace period, any payment with respect to any individual Indebtedness in excess of $250,000
due to any third party (or aggregate Indebtedness in excess of $500,000 due to any third parties), other than, with respect to
unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP, or
otherwise be in breach or violation of any agreement for monies owed or owing in an amount in excess of $250,000 individually,
or $500,000 in the aggregate, in each case, which breach or violation permits the other party thereto to declare a default or otherwise
accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage
of time or the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary,
which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including
results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its
Subsidiaries, individually or in the aggregate;


 


 


 






    
	 	6	 




     


    

 


(xii)         
the Company or any Subsidiary materially breaches any representation, warranty, covenant or
other term or condition of any Transaction Document, except, in the case of a breach of a covenant of any Transaction Document
which is curable, only if such breach remains uncured for a period of at least five (5) Trading Days;


 


(xiii)       
any material breach or failure in any respect by the Company or any Subsidiary to comply with
any provision of Section 12 of this Note;


 





(xiv)        
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes;


 


(xv)          
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs.


 


(b)        
Redemption Right. Upon the occurrence of an Event of Default with respect to this Note
or any Other Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier
(with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier
of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may
require the Company to redeem all or any portion of this Note by delivering written notice thereof (the “Event of Default
Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note
the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b)
shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the sum of the Conversion Amount to
be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late Charges
with respect to such Conversion Amount and Interest and (B) the Redemption Premium and (ii) the product of (X) the Conversion Rate
with respect to such sum of the Conversion Amount together with accrued and unpaid Interest with respect to such Conversion Amount
and accrued and unpaid Late Charges with respect to such Conversion Amount and Interest in effect at such time as the Holder delivers
an Event of Default Redemption Notice and (Y) the product of (1) the Equity Value Redemption Premium and (2) the greater of (I)
the Closing Sale Price of the Common Stock on the date immediately preceding such Event of Default, (II) the Closing Sale Price
of the Common Stock on the date immediately after such Event of Default and (III) the Closing Sale Price of the Common Stock on
the date the Holder delivers the Event of Default Redemption Notice (the “Event of Default Redemption Price”).
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 10. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any interest thereon) is paid in full,
the Conversion Amount submitted for redemption under this Section 4(b) (together with any interest thereon) may be converted, in
whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant
hereto, the Principal amount redeemed shall be deducted as set forth in the Event of Default Redemption Notice. The parties hereto
agree that in the event of the Company’s redemption of any portion of the Note under this Section 4(b), the Holder’s
damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and
the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption
premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s
actual loss of its investment opportunity and not as a penalty.


 


 


 






    
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5.            
RIGHTS UPON FUNDAMENTAL TRANSACTION.


 


(a)        
Assumption. The Company shall not enter into or be party to a Fundamental Transaction
unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction
Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory
to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder
of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal
amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes
and having similar ranking to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent
Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the
occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the
Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of
the Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other
property (except such items still issuable under Section 6, which shall continue to be receivable thereafter) issuable upon the
conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon
the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without
regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. The provisions
of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to
any limitations on the conversion of this Note.


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    
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(b)       
Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading
Days prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction,
the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Fundamental Transaction
Notice”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction Notice
and ending on the later of twenty (20) Trading Days after (A) consummation of such Fundamental Transaction or (B) the date of receipt
of such Fundamental Transaction Notice, the Holder may require the Company to redeem all or any portion of this Note by delivering
written notice thereof (“Fundamental Transaction Redemption Notice”) to the Company, which Fundamental Transaction
Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this Note subject to redemption
pursuant to this Section 5 shall be redeemed by the Company in cash at a price equal to the greater of (i) the sum of (x) the product
of the Fundamental Transaction Redemption Premium and the Conversion Amount being redeemed and (y) the amount of any accrued but
unpaid Interest on such Conversion Amount being redeemed and accrued and unpaid Late Charges, if any, with respect to such Conversion
Amount and Interest through the date of such redemption payment and (ii) the product of (x) the Equity Value Redemption Premium
and (y) the sum of (1) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by dividing
(I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of Common Stock to be
paid to the holders of the shares of Common Stock upon consummation of the Fundamental Transaction (any such non-cash consideration
to be valued at the higher of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation
of such Fundamental Transaction, the Closing Sale Price on the Trading Day immediately following the public announcement of such
proposed Fundamental Transaction and the Closing Sale Price on the Trading Day immediately prior to the public announcement of
such proposed Fundamental Transaction) by (II) the Conversion Price plus (2) the amount of any accrued but unpaid Interest on such
Conversion Amount being redeemed and accrued and unpaid Late Charges, if any, with respect to such Conversion Amount and Interest
through the date of such redemption payment, (the “Fundamental Transaction Redemption Price”). Redemptions required
by this Section 5 shall be made in accordance with the provisions of Section 10 and shall have priority to payments to stockholders
in connection with a Fundamental Transaction. To the extent redemptions required by this Section 5(b) are deemed or determined
by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Fundamental Transaction
Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under this
Section 5(b) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant
to Section 3. In the event of a partial redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted
as set forth in the Fundamental Transaction Redemption Notice. The parties hereto agree that in the event of the Company’s
redemption of any portion of the Note under this Section 5(b), the Holder’s damages would be uncertain and difficult to estimate
because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable
substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by
the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and
not as a penalty.


 


 


 


 


 


 


 


 


 






    
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6.            
RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.


 


(a)        
Purchase Rights. In addition to any adjustments pursuant to Section 7 below, if at
any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which
the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion
of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) 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 (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the
Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage).


 


(b)       
Other Corporate Events. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled
to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion
of this Note (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to
which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held
by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities
or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in
such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the
form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall
be applied without regard to any limitations on the conversion or redemption of this Note.


 


7.            
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.


 


(a)        
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever from
and after the Issuance Date the Company issues or sells, or in accordance with this Section 7(a) is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the
Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share
(the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such
issue or sale or deemed issuance or sale (such lesser price being referred to as the “Applicable Price”) (the
foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Conversion Price then in
effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price
under this Section 7(a), the following shall be applicable:


 


 


 









    
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(i)                
Issuance of Options. If the Company in any manner grants or sells any Options and the
lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share. For purposes of this Section 7(a)(i), the “lowest price per
share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting
or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable
upon exercise of such Option. Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the
actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.


 







(ii)             
Issuance of Convertible Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise
or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security
and upon conversion, exercise or exchange of such Convertible Security. Except as contemplated below, no further adjustment of
the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange
of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options
for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except
as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.


 


(iii)           
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided
for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common
Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted
to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such
increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be)
at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Issuance Date are increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this
Section 7(a) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.


 


 





 






    
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(iv)            
Calculation of Consideration Received. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration
is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (i) the
aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (ii) the fair
market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold
in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the
Company. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares
of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such
security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options
or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as
the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly
by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within
five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.


 







(v)              
Record Date. If the Company takes a record of the holders of shares of Common Stock
for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date
will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase
(as the case may be).


 


(b)       
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If
the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Issuance Date combines (by
combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment
pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination. If
any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder,
then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.


 


(c)        
Other Events. In the event that the Company (or any direct or indirect subsidiary
thereof) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate
to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not
expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company’s Board of Directors (the “Board”) shall
in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 7(c) will increase the Conversion Price as otherwise determined
pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting
its interests hereunder against such dilution, then the Board and the Holder shall agree, in good faith, upon an independent investment
bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and
whose fees and expenses shall be borne by the Company.


 


 


 






    
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8.           
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not,
by amendment of its Articles of Incorporation, 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 of the provisions of this Note
and take all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon conversion of this
Note above the Conversion Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this
Note, and (iii) shall, so long as any of the Notes are outstanding, take all action necessary to reserve and keep available out
of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Notes, the maximum
number of shares of Common Stock as shall from time to time be necessary to effect the conversion of the Notes then outstanding
(without regard to any limitations on conversion).


 


9.            
RESERVATION OF AUTHORIZED SHARES.


 


(a)        
Reservation. The Company shall initially reserve out of its authorized and unissued
Common Stock a number of shares of Common Stock for each of the Notes equal to 120% of the entire Conversion Rate with respect
to the entire Conversion Amount of each such Note as of the Issuance Date. So long as any of the Notes are outstanding, the Company
shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose
of effecting the conversion of the Notes, 120% of the number of shares of Common Stock as shall from time to time be necessary
to effect the conversion of all of the Notes then outstanding; provided that at no time shall the number of shares of Common
Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations
on conversions) (the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions
of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based
on the original principal amount of the Notes held by each holder at the Closing (as defined in the Securities Purchase Agreement)
or increase in the number of reserved shares (as the case may be) (the “Authorized Share Allocation”). In the
event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro
rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of
the Notes then held by such holders.


 


(b)        
Insufficient Authorized Shares. If, notwithstanding Section 9(a), and not in limitation
thereof, at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number
of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that
they approve such proposal.


 


 


 






    
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10.          
HOLDER’S REDEMPTIONS.


 


(a)        
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price
to the Holder within five (5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption
Notice. If the Holder has submitted a Fundamental Transaction Redemption Notice in accordance with Section 5(b), the Company shall
deliver the applicable Fundamental Transaction Redemption Price to the Holder concurrently with the consummation of such Fundamental
Transaction if such notice is received prior to the consummation of such Fundamental Transaction and within five (5) Business Days
after the Company’s receipt of such notice otherwise. In the event of a redemption of less than all of the Conversion Amount
of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section
16(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption
Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder
all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable
Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x)
the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately
return this Note, or issue a new Note (in accordance with Section 16(d)) to the Holder representing the sum of such Conversion
Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late
Charges with respect to such Conversion Amount and Interest and (z) the Conversion Price of this Note or such new Notes shall be
adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided
and (B) the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is
voided. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall
not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such notice
with respect to the Conversion Amount subject to such notice.


 


(b)       
Redemption by Other Holders. Upon the Company’s receipt of notice from any of
the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events
or occurrences described in Section 4(b) or Section 5(b) (each, an “Other Redemption Notice”), the Company shall
immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile a copy of such notice.
If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period
beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s
applicable Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt
of the Holder’s applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts
designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then
the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of
the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company
during such seven (7) Business Day period.


 


11.          
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except
as required by law, and as expressly provided in this Note.


 


12.          
COVENANTS.


 


(a)        
Rank. All payments due under this Note (a) shall rank pari passu with all
Other Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries, other than the Permitted Senior
Indebtedness.


 


(b)        
Incurrence of Indebtedness. So long as this Note is outstanding, the Company shall
not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer
to exist any Indebtedness, other than the Permitted Indebtedness.


 


 


 






    
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(c)       
Existence of Liens. So long as this Note is outstanding, the Company shall not, and
the Company shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned
by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens.


 


(d)       
Restricted Payments. The Company shall not, and the Company shall not permit any of
its Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment
of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions
or otherwise), all or any portion of any Indebtedness (other than Permitted Senior Indebtedness), whether by way of payment in
respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise
made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii)
an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.


 


(e)       
Restriction on Redemption and Cash Dividends. Until all of the Notes have been converted,
redeemed or otherwise satisfied in accordance with their terms, the Company shall not, directly or indirectly, redeem, repurchase
or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent of the Holder.


 


(f)        
Restriction on Transfer of Assets. The Company shall not, and shall cause each Subsidiary
to not, sell, lease, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned or hereafter acquired
whether in a single transaction or a series of related transactions, other than (i) sales, leases, conveyances and other dispositions
of such assets or rights by the Company and its Subsidiaries that, in the aggregate, do not have a fair market value in excess
of $100,000 in any twelve (12) month period and (ii) sales of inventory in the ordinary course of business.


 


(g)       
Acceleration of Indebtedness. The Company shall not permit any Indebtedness of the
Company or any of the Subsidiaries to accelerate prior to the Maturity Date, other than Permitted Senior Indebtedness.


 


13.         
PARTICIPATION. The Holder, as the holder of this Note, shall be entitled to receive
such dividends paid and distributions made to the holders of Common Stock to the same extent as if the Holder had converted this
Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of Common
Stock on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock (provided, however, that to the extent that the
Holder’s right to participate in any such dividend or distribution would result in the Holder exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such dividend or distribution to such extent (or the beneficial ownership
of any such shares of Common Stock as a result of such dividend or distribution to such extent) and such dividend or distribution
to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Maximum Percentage).


 


14.          
AMENDING THE TERMS OF NOTES. The prior written consent of the Holder shall be required
for any change or amendment to this Note. No consideration shall be offered or paid to the Holder to amend or consent to a waiver
or modification of any provision of this Note unless the same consideration is also offered to all of the holders of the Other
Notes. The Holder shall be entitled, at its option, to the benefit of any amendment to any of the Other Notes.


 


15.          
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note
may be offered, sold, assigned or transferred by the Holder without the consent of the Company, unless registered pursuant to the
Securities Act or an applicable exemption from registration exists, or the Note or any shares of Common Stock issued upon conversion
of this Note is sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act. 


 


 


 






    
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16.          
REISSUANCE OF THIS NOTE.


 


(a)        
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to
the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with
Section 16(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and,
if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 16(d)) to the Holder
representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge
and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note,
the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.


 


(b)        
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and
the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon
surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section
16(d)) representing the outstanding Principal.


 


(c)        
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 16(d)
and in principal amounts of at least $5,000) representing in the aggregate the outstanding Principal of this Note, and each such
new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.


 


(d)        
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant
to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face
of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 16(a) or Section
16(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection
with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new
Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of
this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and
Late Charges on the Principal and Interest of this Note, from the Issuance Date.


 


17.          
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the
other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to
comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this
instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be
entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.


 


18.          
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the
hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy,
reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection
with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and
disbursements.


 


 


 






    
	 	16	 




     


    

 


19.          
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company
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. Terms used in this Note but defined in the
other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents
unless otherwise consented to in writing by the Holder.


 


20.          
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 privilege. No
waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.


 


21.          
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing
Bid Price, the Closing Sale Price or the fair market value or the arithmetic calculation of the Conversion Rate or any Redemption
Price, the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the
case may be) via facsimile within two (2) Business Days of receipt, or deemed receipt, of the applicable notice or other event
giving rise to such dispute (as the case may be) to the Company or the Holder (as the case may be). If the Holder and the Company
are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination or arithmetic
calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business
Days submit via facsimile (a) the disputed determination of the Closing Bid Price, the Closing Sale Price or fair market value
(as the case may be) to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the
disputed arithmetic calculation of the Conversion Rate or any Redemption Price (as the case may be) to the Company’s independent,
outside accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform
the determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten
(10) Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment
bank’s or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable
error.


 


22.          
NOTICES; PAYMENTS.


 


(a)        
Notices. Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the
Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation
of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to
the Holder.


 


(b)        
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant
to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the
Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement); provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
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 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. Any amount of Principal or other amounts due under the Transaction Documents which is
not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such
amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late
Charge”).


 


 


 






    
	 	17	 




     


    

 


23.          
CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed
on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.


 


24.          
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives
demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note and the Securities Purchase Agreement.


 


25.          
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative
to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any 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. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on
any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
THE COMPANY 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 TRANSACTION CONTEMPLATED HEREBY.


 


26.          
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the
following meanings:


 


(a)        
“Bloomberg” means Bloomberg Financial Markets.


 


(b)        
“Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law to remain closed.


 


(c)        
“Closing Bid Price” and “Closing Sale Price” means,
for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any
of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall
be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 21.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.


 


 


 






    
	 	18	 




     


    

 


(d)        
“Closing Date” shall have the meaning set forth in the Securities Purchase
Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.


 


(e)        
“Common Stock” means (i) the Company’s shares of common stock,
par value $.001 per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock.


 


(f)         
“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.


 


(g)        
“Eligible Market” means the Principal Market, The New York or American
Stock Exchange, Inc., the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market.


 


(h)        
“Equity Value Redemption Premium” means 120%.


 


(i)        
“Excluded Securities” means (i) shares of Common Stock issued upon exercise
or conversion of any exercisable or convertible securities outstanding as of the date hereof, including without limitation the
Notes and Warrants issued pursuant to the Securities Purchase Agreement; (ii) shares of Common Stock or securities convertible
into Common Stock issued to officers, directors, employees, contractors, consultants or other advisors unanimously approved by
the Board; (iii) shares of Common Stock or securities convertible into Common Stock issued in connection with in consideration
for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or
license by the Company; and (iv) shares of Common Stock or securities convertible or exercisable into Common Stock that the holders
of a majority of the outstanding principal amount of Notes issued pursuant to the Securities Purchase Agreement elect in writing
to deem Excluded Securities.


 


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


 


(k)        
“Fundamental Transaction Redemption Premium” means 120%.


 


(l)         
“GAAP” means United States generally accepted accounting principles, consistently
applied.


 


(m)       
“Holder Pro Rata Amount” means a fraction (i) the numerator of which is
the original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal
amount of all Notes issued to the initial purchasers pursuant to the Securities Purchase Agreement on the Closing Date.


 


 


 






    
	 	19	 




     


    

 


(n)        
“Indebtedness” of any Person means all items which, in accordance with
GAAP, would be included in determining total liabilities of such Person as shown on the liability side of a balance sheet as at
the date Indebtedness of such Person is to be determined and, in any event, shall include (without limitation and without duplication):
(i) all trade accounts payable of such Person; (ii) any liability of such Person secured by any Lien on property owned or acquired
by such Person, whether or not such liability shall have been assumed; (iii) all contingent obligations of such Person; (iv) letters
of credit issued for the account of such Person or an affiliate thereof, and all obligations of such Person relating thereto; and
(v) all obligations (other than obligations to pay fees in connection therewith) of such Person in respect of interest rate or
currency swap agreements or similar arrangements.


 


(o)        
“Interest Period” means each of: the period beginning on and including
the Effective Date and ending on December 31, 2019; the period beginning on and including January 1 and ending on March 31 of each
calendar year thereafter commencing with 2020; the period beginning on and including April 1 and ending on June 30 of each calendar
year thereafter commencing with 2020; the period beginning on and including July 1 and ending on September 30 of each calendar
year thereafter commencing with 2020; and the period beginning on and including October 1 and ending on December 31 of each calendar
year thereafter commencing with 2020.


 


(p)        
“Interest Rate” means eight-percent (8%) per annum.


 


(q)        
“Maturity Date” shall mean November 18, 2022; provided, however,
that the Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default
shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the
failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation
of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice
is delivered prior to the Maturity Date; provided, further, that if a Holder elects to convert some or all of this
Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity
Date shall automatically be extended until such time as such provision shall not limit the conversion of this Note.


 


(r)         
“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.


 


(s)        
“Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market,
or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization
as of the date of consummation of the Fundamental Transaction.


 


(t)        
“Permitted Indebtedness” means (i) total Indebtedness of the Company and
the Subsidiaries outstanding as of the date hereof, exclusive of Indebtedness evidenced by this Note and the Other Notes; provided,
however, that such Indebtedness shall be made expressly subordinate in right of payment to the Indebtedness evidenced by
the Notes, as reflected in a written agreement acceptable to the Required Holders and approved by the Required Holders in writing,
and which Indebtedness does not provide at any time for (A) the payment, prepayment, repayment, repurchase or defeasance, directly
or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (B)
total interest and fees at a rate in excess of the Interest Rate; (ii) equipment leases and purchase money obligations of the Company
and the Subsidiaries not to exceed $500,000 in the aggregate outstanding at any time; (iii) Indebtedness evidenced by this Note
and the Other Notes; (iv) surety bonds required by the Company, or any of its Subsidiaries, to obtain regulatory permits, licenses
or insurance as part of conducting its business; and (iv) any other Indebtedness deemed “Permitted Indebtedness” hereunder
by the unanimous vote of all members of the Board.


 


 


 






    
	 	20	 




     


    

 


(u)        
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is
not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens
and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent
or that are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held
by the Company or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the
purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment,
(v) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described
in clauses (i) and (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi)
leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s business, not
interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (vii) Liens in favor
of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation
of goods, (viii) Liens securing the Company’s obligations under the Notes, (ix) any Lien securing Permitted Senior Indebtedness,
and (x) any other Liens deemed “Permitted Liens” hereunder by the unanimous vote of all members of the Board.


 


(v)        
“Permitted Senior Indebtedness” means the Indebtedness described in clauses
(ii) and (iv) of Permitted Indebtedness.


 


(w)       
“Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or
agency thereof.


 


(x)         
“Principal Market” means the Over-the-Counter Bulletin Board.


 


(y)        
“Redemption Notices” means, collectively, the Event of Default Redemption
Notice and the Fundamental Transaction Redemption Notice, and each of the foregoing, individually, a “Redemption Notice.”


 


(z)         
“Redemption Premium” means 120%.


 


(aa)      
“Redemption Prices” means, collectively, the Event of Default Redemption
Price and the Fundamental Transaction Redemption Price, and each of the foregoing, individually, a “Redemption Price.”


 


(bb)     
“Required Holders” means the holders of Notes representing at least sixty
percent (60%) of the aggregate principal amount of the Notes then outstanding.


 


(cc)      
“SEC” means the United States Securities and Exchange Commission.


 


(dd)     
“Securities Purchase Agreement” means that certain securities purchase
agreement, dated on or around the date hereof, by and among the Company and the initial holders of the Notes pursuant to which
the Company issued the Notes and Warrants.


 


(ee)       “Subsidiaries” means, collectively, Cannabis Business Solutions Inc., Leafceuticals
Inc., Freedom Leaf International Inc., Leafceuticals Europe, SL, FL—Accuvape, LLC, Tierra Science Global, LLC, ECS Labs LLC,
B&B Labs, LLC, and Texas Wellness Center, LLC; each of the foregoing, individually, a “Subsidiary.”


 


 


 






    
	 	21	 




     


    

 


(ff)       
“Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder,
the Parent Entity) with which such Fundamental Transaction shall have been entered into.


 


(gg)     
“Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not
include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that
the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or
market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00
p.m., New York time).


 


(hh)     
“VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such
security, then on the principal securities exchange or securities market on which such security is then traded) during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume
at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York
time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported
for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of
any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP
of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 21. All such determinations shall be appropriately adjusted for any share dividend, share split
or other similar transaction during such period.


 


(ii)        
“Warrants” has the meaning ascribed to such term in the Securities Purchase
Agreement, and shall include all warrants issued in exchange therefor or replacement thereof.


 


27.          
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with
the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day
after any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or any of
its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence
of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its Subsidiaries.


 


[signature page follows]


 


 


 


 


 


 






    
	 	22	 




     


    

 


 


IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date set forth above.


 


 


	 	Freedom
    Leaf Inc.
	 	 
	 	 
	 	By:  /s/ Carlos Frias          
	 	Name:Carlos Frias
	 	Title:CEO


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    
	 	23	 




     


    

 


Each of the undersigned,
being the Subsidiaries named in the Securities Purchase Agreement, hereby absolutely and unconditionally guarantees the payment
and performance by the Company of all of its obligations under the foregoing Convertible Note. This is a guaranty of payment and
performance (and not merely of collection), and the Holder may proceed directly against the undersigned without any requirement
to first proceed or obtain any judgment against or exhaust any remedies with respect to the Company. This guaranty shall in no
manner be affected or impaired by (a) any amendment, modification, waiver, consent, compromise or other indulgence granted to the
Company under or in respect of this Note or any related agreement, (b) any failure by the Holder to insist upon strict performance
or observance by the Company of any of the terms of this Note or any related agreement, (c) any forbearance by the Holder, (d)
any bankruptcy, insolvency, receivership, reorganization, liquidation or other such proceeding relating to the Company, or (e)
any relief of the Company from any of its obligations as aforesaid by operation of law, in equity or otherwise. This guaranty shall
be subject in all cases to any defenses (other than defenses based upon or arising out of any bankruptcy, insolvency or reorganization
of the Company) available to the Company had the Holder proceeded directly against the Company rather than pursuant to this guaranty.


 





	 	Cannabis Business Solutions inc.
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	Leafceuticals Inc.
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	Freedom Leaf International Inc.
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	Leafceuticals
Europe, SL
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	FL—ACCUVAPE,
LLC
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager
	 	 
	 	Tierra Science Global, LLC
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager



 


 


 


 


 


 


 


 


 






    
	 	24	 




     


    

 


	 	ECS Labs LLC
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager
	 	 
	 	B&B
Labs, LLC
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager
	 	 
	 	Texas
Wellness Center, LLC
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager



 











 











 


 


 


 


 


 


 


 


 


 


 


 






    
	 	25	 




     


    

 


EXHIBIT I



FREEDOM LEAF INC.


CONVERSION NOTICE


 


Reference is made to the Convertible Note
(the “Note”) issued to the undersigned by Freedom Leaf Inc. (the “Company”). In accordance
with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note
indicated below into shares of Common Stock, par value $.001 per share (the “Common Stock”), of the Company,
as of the date specified below.


 


	Date of Conversion:	 
	 	 
	Aggregate Conversion Amount to be converted:	 
	 	 
	Please confirm the following information:
	 
	Conversion Price:	 
	 	 
	Number of shares of Common Stock to be issued:	 
	 	 
	Please issue the Common Stock into which the Note is being converted in the following name and to the following address:
	 
	Issue to:	 
	 	 
	 	 
	 	 
	Facsimile Number:	 
	 	 
	Authorization:	 
	 	 
	By:	 
	 	 
	Title:	 
	 	 
	Dated:	 
	 	 
	Account Number:	 
	  (if electronic book entry transfer)	 
	 	 
	Transaction Code Number:	 
	  (if electronic book entry transfer)	 
	 	 	 	 	 	 	 	 	 	 	 	 


 


 


 


 



    
	 	26	 




     


    

 


ACKNOWLEDGMENT


 


The Company hereby
acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _____________, 2019, from the Company and acknowledged and agreed
to by ________________________.


 


 


	 	Freedom Leaf Inc.
	 	 
	 	 
	 	By:                                                                                       
	 	Name:
	 	Title:


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    
	 	27