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


 


	Principal
    Amount: $705,882.35	Issue
    Date: March 4, 2019
	Actual
    Amount of Purchase Price: $600,000.00	 


 


SENIOR
SECURED CONVERTIBLE PROMISSORY NOTE


 


FOR
VALUE RECEIVED, FOOTHILLS EXPLORATION, INC., a Delaware corporation (hereinafter called the “Borrower”
or the “Company”), hereby promises to pay to the order of FIRSTFIRE GLOBAL OPPORTUNITIES FUND LLC, a Delaware
limited liability company, or registered assigns (the “Holder”), in the form of lawful money of the United States
of America, the principal sum of $705,882.35, which amount is the $600,000.00 actual amount of the purchase price (the “Consideration”)
hereof plus an original issue discount in the amount of $105,882.35 (the “OID”) (subject to adjustment herein) (the
“Principal Amount”) and to pay interest on the unpaid Principal Amount hereof at the rate of ten percent (10%) (the
“Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or otherwise, as further provided herein. The maturity date shall be
September 1, 2019 (“Maturity Date”), and is the date upon which the principal sum, the OID, as well as any accrued
and unpaid interest and other fees, shall be due and payable. In addition to all other provisions in this Note, the Borrower shall
also make payments to the Holder according to the payment schedule detailed on Exhibit B, attached hereto and incorporated
herein.


 


It
is further acknowledged and agreed that the Principal Amount owed by Borrower under this Note shall be increased by the amount
of all expenses incurred by the Holder relating to the conversion of this Note into shares of Common Stock. All such expenses
shall be deemed added to the Principal Amount hereunder to the extent such expenses are paid by the Holder and shall be capped
at a maximum of $500 per conversion.


 


This
Note may not be prepaid or repaid in whole or in part except as otherwise explicitly set forth herein.


 


This
Note shall be a senior obligation of the Company, with priority over all future Indebtedness (as defined below) of the Company
as provided for herein.


 


Collateralization.
In addition, the obligations of the Company under this Note are secured pursuant to the terms of the security agreement of even
date (the “Security Agreement”) and other similar ancillary agreements by and among the Borrower, its Subsidiaries,
and the Holder, and such security interests include but are not limited to all of the assets of the Company and its Subsidiaries
(including but not limited to the oil and gas assets of the Company described in Exhibit C to this Note, attached hereto
and incorporated herein).


 


Interest
shall commence accruing on the date that the Note is fully funded with the Consideration and shall be computed on the basis of
a 365-day year and the actual number of days elapsed. Any Principal Amount or interest on this Note which is not paid when due
shall bear interest at the rate of the lesser of (i) fifteen percent (15%) per annum and (ii) the maximum amount permitted by
law from the due date thereof until the same is paid (“Default Interest”).


 




    	 	1	 



     


    

 


All
payments due hereunder (to the extent not converted into shares of common stock, $0.0001 par value per share, of the Borrower
(the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.
All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken
into account for purposes of determining the amount of interest due on such date.


 


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


 


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


 


The
following terms shall apply to this Note:


 


ARTICLE
I. CONVERSION RIGHTS


 


1.1
Conversion Right. The Holder shall have the right, at any time on or after the 180th calendar day after the Issue Date,
to convert all or any portion of the then outstanding and unpaid Principal Amount and interest (including any Default Interest)
into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital
stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified, at the Conversion
Price (as defined below) determined as provided herein (a “Conversion”); provided, however, that in
no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion
of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares
of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Note or the unexercised
or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (2) the number of Conversion Shares issuable upon the conversion of the portion of this Note
with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the then outstanding shares of Common Stock. For purposes of the proviso set forth in the
immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause
(1) of such proviso, provided, however, that the limitations on conversion may be waived by the Holder upon, at
the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation
shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice
of waiver). The number of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of
conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower
by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail
(or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 4:00 p.m., New York, New
York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect
to any conversion of this Note, the sum of (1) the Principal Amount of this Note to be converted in such conversion plus
(2) at the Holder’s option, accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the Conversion
Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding
clauses (1) and/or (2).


 




    	 	2	 



     


    

 


1.2
Conversion Price.


 


(a)
Calculation of Conversion Price. The per share conversion price into which Principal Amount and interest (including any
Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the “Conversion Price”)
shall be equal to $0.50 (the “Fixed Conversion Price”), provided, further, that if the Note is not satisfied
in full before the Maturity Date, then at any time on or after the Maturity Date, the Conversion Price shall equal the lower of
(i) the Fixed Conversion Price or (ii) 50% multiplied by the lowest closing price of the Common Stock during the twenty (20) consecutive
Trading Day period immediately preceding the Trading Day that the Company receives a Notice of Conversion (the “Alternate
Conversion Price”); and provided, further, however, and notwithstanding the above calculation of the Alternate Conversion
Price or any other calculation of Conversion Price pursuant to this Section 1.2, if the lowest traded price of the Common Stock
is less than the Conversion Price on the date following the Conversion Date (the “Free Trading Share Receipt Date”)
on which the Holder actually receives from the Company or its transfer agent Conversion Shares issuable pursuant to this Section
1 which are immediately upon receipt unrestricted and freely tradable by the Holder either by way of (A) registration under the
1933 Act or (B) pursuant to Rule 144 under the 1933 Act (or a successor rule) (“Rule 144”), Rule 144A under the 1933
Act (or a successor rule) (“Rule 144A”) or Regulation S under the 1933 Act (or a successor rule) (“Regulation
S”), then the Conversion Price shall be deemed to have been retroactively adjusted, as of the Conversion Date, to a price
equal to 75% multiplied by the lowest closing price of the Common Stock on the Free Trading Shares Receipt Date (the “Free
Trading Shares Receipt Date Conversion Price”), and the Company shall, on the Trading Day following the Free Trading Share
Receipt Date, issue to the Holder additional shares of unrestricted, freely tradable Common Stock equal to the difference between
(Y) the number of Conversion Shares receivable upon conversion of the applicable Conversion Amount at the Conversion Price and
(Z) the number of Conversion Shares receivable upon conversion of the applicable Conversion Amount at the Free Trading Shares
Receipt Date Conversion Price (subject to the beneficial ownership limitations contained in Section 1.1, such that the additional
shares shall be issued in tranches if required to comply with such beneficial ownership limitations); and provided, further,
however, and notwithstanding the above calculation of the Conversion Price, if, prior to the repayment or conversion of this
Note, in the event the Borrower consummates a registered or unregistered primary offering of its securities for capital raising
purposes (a “Primary Offering”), the Holder shall have the right, in its discretion, to (x) demand repayment in full
of an amount equal to any outstanding Principal Amount and interest (including Default Interest, if applicable) under this Note
as of the closing date of the Primary Offering. or (y) convert any outstanding Principal Amount and interest (including any Default
Interest, if applicable) under this Note into Common Stock at the closing of such Primary Offering at a Conversion Price equal
to the Fixed Conversion Price. The Borrower shall provide the Holder no less than ten (10) business days’ notice of the
anticipated closing of a Primary Offering and an opportunity to exercise its conversion rights in connection therewith.


 


(b)
Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the
event the Borrower (i) makes a public announcement that it intends to be acquired by, consolidate or merge with any other corporation
or entity (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged)
or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the
Borrower) publicly announces a tender offer to purchase 50% or more of the Common Stock (or any other takeover scheme) (any such
transaction referred to in clause (i) or (ii) being referred to herein as a “Change in Control” and the date of the
announcement referred to in clause (i) or (ii) is being referred to herein as the “Announcement Date”), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price and (y) a 25% discount to the Acquisition Price (as defined below).
From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in Section
1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed
Change in Control for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the
Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly
announces the termination or abandonment of the proposed Change in Control which caused this Section 1.2(b) to become operative.
For purposes hereof, “Acquisition Price” shall mean a price per share of Common Stock derived by dividing (x) the
total consideration (in cash, equity, earn-out or similar payments or otherwise) paid or to be paid to the Borrower or its shareholders
in the Change in Control transaction by (y) the number of authorized shares of Common Stock outstanding as of the business day
prior to the Announcement Date.


 




    	 	3	 



     


    

 


1.3
Authorized and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, the Borrower
will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide
for the issuance of a number of Conversion Shares equal to the greater of: (a) 6,600,000 shares of Common Stock or (b) the sum
of (i) the number of Conversion Shares issuable upon the full conversion of this Note (assuming no payment of Principal Amount
or interest) as of any issue date (taking into consideration any adjustments to the Conversion Price pursuant to Section 2 hereof
or otherwise) multiplied by (ii) two and a half (2.5) (the “Reserved Amount”). In the event that the Borrower
shall be unable to reserve the entirety of the Reserved Amount (the “Reserve Amount Failure”), the Borrower shall
promptly take all actions necessary to increase its authorized share capital to accommodate the Reserved Amount (the “Authorized
Share Increase”), including without limitation, all board of directors actions and approvals and promptly (but no less than
60 days following the calling and holding a special meeting of its shareholders no more than 60 days following the Reserve Amount
Failure to seek approval of the Authorized Share Increase via the solicitation of proxies. Notwithstanding the foregoing, in no
event shall the Reserved Amount be lower than the initial Reserved Amount, regardless of any prior conversions. The Borrower represents
that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. In addition, if the
Borrower shall issue any securities or make any change to its capital structure which would change the number of Conversion Shares
into which this Note shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper
provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive
rights, for conversion of this Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue
certificates for the Conversion Shares or instructions to have the Conversion Shares issued as contemplated by Section 1.4(f)
hereof, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged
with the duty of executing stock certificates or cause the Company to electronically issue shares of Common Stock to execute and
issue the necessary certificates for the Conversion Shares or cause the Conversion Shares to be issued as contemplated by Section
1.4(f) hereof in accordance with the terms and conditions of this Note.


 


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


 


1.4
Method of Conversion.


 


(a)
Mechanics of Conversion. This Note may be converted by the Holder in whole or in part, on any Trading Day, at any time
on or after the Maturity Date, by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 4:00 p.m., New York, New York time). Any Notice of Conversion
submitted after 4:00 p.m., New York, New York time, shall be deemed to have been delivered and received on the next Trading Day.


 


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


 


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


 




    	 	4	 



     


    

 


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


 


(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Conversion Shares issuable upon such conversion, the outstanding Principal Amount
and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall be reduced to reflect such
conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion
of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash
or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein,
the Borrower’s obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery
of the Conversion Shares as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence
of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of
any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation
of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise
limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice
of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New
York, New York time, on such date.


 




    	 	5	 



     


    

 


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


 


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


 


“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED
IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A OR REGULATION S 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.”


 


The
legend set forth above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion
Shares without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by
electronic delivery by crediting the account of such holder’s broker with DTC, if, unless otherwise required by applicable
state securities laws: (a) such Conversion Shares are registered for sale under an effective registration statement filed under
the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A or Regulation S without any restriction as to the number
of securities as of a particular date that can then be immediately sold, or (b) the Company or the Holder provides the Legal Counsel
Opinion (as contemplated by and in accordance with Section 4(m) of the Purchase Agreement) to the effect that a public sale or
transfer of such Conversion Shares may be made without registration under the 1933 Act, which opinion shall be accepted by the
Company so that the sale or transfer is effected. The Company shall be responsible for the fees of its transfer agent and all
DTC fees associated with any such issuance. The Holder agrees to sell all Conversion Shares, including those represented by a
certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
In the event that the Company does not accept the opinion of counsel provided by the Holder with respect to the transfer of Conversion
Shares pursuant to an exemption from registration, such as Rule 144, Rule 144A or Regulation S, at the Deadline, notwithstanding
that the conditions of Rule 144, Rule 144A or Regulation S, as applicable, have been met, it will be considered an Event of Default
under this Note.


 




    	 	6	 



     


    

 


1.6
Effect of Certain Events.


 


(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any
other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of
Default pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such
transaction an amount equal to the Default Amount (defined in Section 3.21) or (ii) be treated pursuant to Section 1.6(b) hereof.
“Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other
entity or organization.


 


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


 


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


 


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


 




    	 	7	 



     


    

 


(e)
Dilutive Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells
or grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants
any right to reprice, or otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant
or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for, or otherwise
entitle any person or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of this
Note, and any convertible notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective
price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such
issuances, collectively, a “Dilutive Issuance”) (it being agreed that if the holder of the Common Stock or other securities
so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance
shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion
Price shall be reduced, at the option of the Holder, to a price equal the Base Conversion Price. If the Company enters into a
Variable Rate Transaction, despite the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued
Common Stock or Common Stock Equivalents at the lowest possible price per share at which such securities could be issued in connection
with such Variable Rate Transaction. Such adjustment shall be made whenever such Common Stock or other securities are issued.
Notwithstanding the foregoing, no adjustment will be made under this Section 1.6(e) in respect of an Exempt Issuance. In the event
of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall be
calculated as if all such securities were issued at the initial closing.


 


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


 


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


 


1.7
[Intentionally Omitted].


 


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


 




    	 	8	 



     


    

 


1.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time prior to or as of (but not following)
the earlier of the (i) the first Conversion Date for the respective tranche hereunder and (ii) Maturity Date for the respective
tranche hereunder, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice
to the Holder of the Note, to prepay the outstanding Principal Amount and interest (including any Default Interest) then due under
this Note, in whole or in part, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”),
the Borrower shall make payment of the amounts designated below to or upon the order of the Holder as specified by the Holder
in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its
right to prepay the Note at any time prior to the Maturity Date, the Borrower shall make payment to the Holder of an amount in
cash equal to the sum of: (w) 105% multiplied by the Principal Amount then outstanding plus (x) accrued and unpaid interest
on the Principal Amount to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in
clauses (w) and (x).


 


1.10
Repayment from Proceeds. While any portion of the outstanding Principal Amount and interest (including Default Interest)
under this Note are due and owing, if the Company receives cash proceeds from any source or series of related or unrelated sources,
including but not limited to, the issuance of equity or debt, the conversion of outstanding warrants of the Borrower, the issuance
of securities pursuant to an equity line of credit of the Borrower or the sale of assets, the Borrower shall, at its sole discretion,
apply all or any portion of such proceeds to repay all or any portion of the outstanding Principal Amount and interest (including
any Default Interest) then due under this Note. In the event that such proceeds are received by the Holder prior to the Maturity
Date, the required prepayment shall be subject to the terms of Section 1.9 herein.


 


ARTICLE
II. RANKING AND CERTAIN COVENANTS


 


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


 


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


 




    	 	9	 



     


    

 


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


 


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


 


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


 


2.6
Advances and Loans; Affiliate Transactions. So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, lend money, give credit, make advances to or enter into any transaction
with any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries
and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the Issue Date and which the
Borrower has informed Holder in writing prior to the Issue Date, or (b) in regard to transactions with unaffiliated third parties,
made in the ordinary course of business. So long as the Borrower shall have any obligation under this Note, the Borrower shall
not, without the Holder’s written consent, repay any affiliate (as defined in Rule 144) of the Borrower in connection with
any indebtedness or accrued amounts owed to any such party.


 


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


 


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


 


2.9
No circumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate or
Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action
as may be required to protect the rights of the Holder.


 




    	 	10	 



     


    

 


2.10
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, and, in the case of loss, theft or destruction, of any indemnification undertaking
by the Holder to the Company in customary 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.


 


ARTICLE
III. EVENTS OF DEFAULT


 


It
shall be considered an event of default if any of the following events listed in this Article III (each, an “Event of Default”)
shall occur:


 


3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due
on this Note, whether at maturity, upon acceleration or otherwise, or fails to fully comply with Section 1.10 of this Note.


 


3.2
Conversion and the Shares. The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in
writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, (iii) reserve the Reserved Amount at all times, or (iii) the Borrower directs
its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically
or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays,
and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any Conversion Shares issued to the Holder upon conversion of or otherwise pursuant to this Note
as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the
obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or
threat not to honor its obligations shall not be rescinded in writing) for two (2) Trading Days after the Holder shall have delivered
a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall
be an Event of Default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by
the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer
agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48)
hours of a demand from the Holder.


 


3.3
Breach of Agreements and Covenants. The Borrower breaches any material agreement, covenant or other material term or condition
contained in the Purchase Agreement, this Note, the Warrant described in the Purchase Agreement, the Irrevocable Transfer Agent
Instructions or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith.


 


3.4
Breach of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement,
this Note, the Warrant described in the Purchase Agreement, the Irrevocable Transfer Agent Instructions or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith or therewith shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase Agreement.


 


3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.


 


3.6
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 




    	 	11	 



     


    

 


3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.


 


3.8
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the Over
the Counter Bulletin Board, the OTCQB Market, any level of the OTC Markets, or any level of the Nasdaq Stock Market or the New
York Stock Exchange (including the NYSE MKT).


 


3.9
Failure to Comply with the 1934 Act. At any time within ten (10) business days after the Issue Date, the Borrower shall
fail to comply with the reporting requirements of the 1934 Act and/or the Borrower shall cease to be subject to the reporting
requirements of the 1934 Act. It shall be an Event of Default under this Section 3.9 if the Borrower shall file any Notification
of Late Filing on Form 12b-25 with the SEC.


 


3.10
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.


 


3.11
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.


 


3.12
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).


 


3.13
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.


 


3.14
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice
to the Holder.


 


3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.


 


3.16
DTC “Chill”. The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC’s
services, such as limiting a DTC participant’s ability to make a deposit or withdrawal of the security at DTC) on any of
the Borrower’s securities.


 


3.17
Illegality. Any court of competent jurisdiction issues an order declaring this Note, the Purchase Agreement or any material
provision hereunder or thereunder to be illegal.


 


3.18.
DWAC Eligibility. In addition to the Event of Default in Section 3.16, the Common Stock is otherwise not eligible for trading
through the DTC’s Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs.


 


3.19
Cross-Default. The declaration of an event of default by any lender or other extender of credit to the Company under any
notes, loans, agreements or other instruments of the Company evidencing any Indebtedness of the Company (including those filed
as exhibits to or described in the Company’s filings with the SEC), after the passage of all applicable notice and cure
or grace periods.


 




    	 	12	 



     


    

 


3.20
Variable Rate Transactions; Dilutive Issuances. The Borrower (i) issues shares of Common Stock (or convertible securities
or Purchase Rights) pursuant to an equity line of credit of the Company or otherwise in connection with a Variable Rate Transaction
(whether now existing or entered into in the future), (ii) adjusts downward the “floor price” at which shares of Common
Stock (or convertible securities or Purchase Rights) may be issued under an equity line of credit or otherwise in connection with
a Variable Rate Transaction (whether now existing or entered into in the future), or (iii) a Dilutive Issuance is triggered as
provided in this Note.


 


3.21
Rights and Remedies Upon an Event of Default. Upon the occurrence and during the continuation of any Event of Default specified
in this Article III, this Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount (the “Default Amount”) equal to the Principal Amount then outstanding plus
accrued interest (including any Default Interest) through the date of full repayment plus $75,000.00. Holder may, in its sole
discretion, determine to accept payment part in Common Stock and part in cash. For purposes of payments in Common Stock, the conversion
formula set forth in Section 1.2 shall apply. Upon an uncured Event of Default, all amounts payable hereunder shall immediately
become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived by the Borrower, together
with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise
all other rights and remedies available at law or in equity, including, without limitation, those set forth in Section 3.22 below.


 


ARTICLE
IV. MISCELLANEOUS


 


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


 


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


 


If
to the Borrower, to:


 


FOOTHILLS
EXPLORATION, INC.


10940
Wilshire Blvd., 23rd Floor


Los
Angeles, CA 90024


Attention:
B. P. Allaire


e-mail:
bpallaire@foothillspetro.com


 


With
a copy by e-mail only to (which copy shall not constitute notice):


 


CHARLES
ROBERT COX


Attorney
at Law


1432
S. Carson Avenue


Tulsa,
Oklahoma 74119


charlesrobertcox@gmail.com


 






    	 	13	 



     


    

 


If
to the Holder:


 


FIRSTFIRE
GLOBAL OPPORTUNITIES FUND LLC


1040
First Avenue, Suite 190


New
York, NY 10022


Attention:
Eli Fireman


e-mail:
eli@firstfirecapital.com


 


With
a copy by e-mail only to (which copy shall not constitute notice):


 


LEGAL
& COMPLIANCE, LLC


330
Clematis Street, Suite 217


West
Palm Beach, FL 33401


Attn:
Chad Friend, Esq., LL.M.


e-mail:
CFriend@LegalandCompliance.com


 


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


 


4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an “Accredited Investor” (as defined
in the Purchase Agreement). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral by Holder
in connection with a bona fide margin account or other lending arrangement.


 


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


 


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


 


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


 




    	 	14	 



     


    

 


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


 


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


 


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


 


4.11
Construction; Headings. This Note shall be deemed to be jointly drafted by the 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.


 


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


 


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


 


4.14
Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then (i) the Borrower shall notify the Holder of such additional or
more favorable term within one (1) business day of the issuance of the respective security, and (ii) such term, at Holder’s
option, shall become a part of the transaction documents with the Holder (regardless of whether the Borrower complied with the
notification provision of this Section 4.14). The types of terms contained in another security that may be more favorable to the
holder of such security include, but are not limited to, terms addressing conversion discounts, prepayment rate, conversion lookback
periods, interest rates, and original issue discounts.


 


[signature
page follows]


 




    	 	15	 



     


    

 


IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on March 4, 2019.


 


FOOTHILLS
EXPLORATION, INC.


 


	By:	                                           	 
	Name: 	B.
    P. Allaire	 
	Title:	Chief
    Executive Officer	 


 




    	 	16	 



     


    

 


EXHIBIT
A — NOTICE OF CONVERSION


 


The
undersigned hereby elects to convert $______________ principal amount of the Note (defined below) into that number of shares of
Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of FOOTHILLS
EXPLORATION, INC., a Delaware corporation (the “Borrower”), according to the conditions of the Senior Convertible
Promissory Note of the Borrower dated as of March 4, 2019 (the “Note”), as of the date written below. No fee will
be charged to the Holder for any conversion, except for transfer taxes, if any.


 


Box
Checked as to applicable instructions:


 


		[  ]	The
    Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	 	 	 
	 	 	Name
    of DTC Prime Broker:
	 	 	Account
    Number:


 


		[  ]	The
    undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
    set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
    below or, if additional space is necessary, on an attachment hereto:
	 	 	 
	 	 	FIRSTFIRE
                                         GLOBAL OPPORTUNITIES FUND LLC

        1040
        First Avenue, Suite 190

        New
        York, NY 10022

        Attn:
        Eli Fireman

        e-mail:
        eli@firstfirecapital.com



 


	 	Date
    of Conversion:	 	 	 
	 	Applicable
    Conversion Price:	$	 	 
	 	Costs
    Incurred by the Undersigned to Convert the Note into Shares of Common Stock:	$	 	 
	 	Number
    of Shares of Common Stock to be Issued Pursuant to Conversion of the Note:	 	 	 
	 	Amount
    of Principal Balance Due remaining Under the Note after this conversion:	 	 	 


 


	 	By:	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	Date:	 	 


 




    	 	 	 



     


    


 


EXHIBIT
B – PAYMENT SCHEDULE


 


	Note
    Payment Schedule	 	 	 	 	 
	 	 	 	 	 	 
	April 1, 2019	 	$	20,000.00	 	 	 
	May 1, 2019	 	$	20,000.00	 	 	 
	June 1, 2019	 	$	20,000.00	 	 	 
	July 1, 2019	 	$	20,000.00	 	 	 
	August 1, 2019	 	$	20,000.00	 	 	 
	September 1, 2019	 	$	20,000.00	 	 	 
	September
    1, 2019	 	$	621,176.47	 	 	Unpaid Principal
    balance
	Total Payments Year
    1	 	$	741,176.47	 	 	 




 


	NOTE
    CALCULATIONS:	 	 	 	 	 
	 	 	 	 	 	 
	Coupon (annual)	 	 	10	%	 	 
	Principal Amount	 	$	705,882.35	 	 	 
	Funding Amount	 	$	600,000.00	 	 	 
	OID in $	 	$	105,882.35	 	 	 
	OID in %	 	 	15	%	 	 
	Total Interest	 	$	35,294.12	 	 	(6 months interest)
	Total Interest + OID	 	$	141,176.47	 	 	 



 




    	 	 	 



     


    


 


EXHIBIT
C – ASSET PACKAGE


 


WELL
LIST


 





 


SCHEDULE
OF LEASES


 




    	 	 	 



     


    


 


EXHIBIT
D – CASH MANAGEMENT AGREEMENT


 


Borrower
agrees to establish, and to maintain, until the Principal Amount of the Note and any interest due thereunder, is retired in full
(the “Retirement Date”), the cash management system described below:


 


1.
Borrower: (i) shall not (nor shall it permit any of its Subsidiaries to) open or maintain any deposit, checking, operating or
other bank account, or similar money handling account, with any bank or other financial institution except for those accounts
identified in Attachment I hereto (to include a petty cash account not to exceed $5,000 during any Fiscal Month, and a
payroll account not to exceed an amount equal to one regular payroll at any time); and (ii) shall close or permit to be closed
any of the accounts listed in Attachment I hereto, in each case without Holder’s prior written consent, and
then only after such Borrower has implemented agreements with such bank or financial institution and Holder acceptable to Holder.


 


2.
Commencing on the Issue Date and until the Retirement Date, Borrower shall cause to be deposited directly all payments received
for all natural gas and associated hydrocarbon liquids production from the 22 natural gas wells in the collateral package constituting
proceeds of or payments made in respect of any and all Collateral into lock boxes or lock box accounts in the name of Foothills
Production I, LLC, a special purpose vehicle and Wyoming limited liability company (collectively, the “Lock Box Account”)
set forth in paragraph 1 of Attachment I hereto.


 


3.
The Lock Box Account, and any distributions therefrom, shall be managed and directed by Charles Robert Cox, Attorney-at-Law and
President of Foothills Production I, LLC. Concurrent with monthly distributions made from the Lock Box Account, Mr. Cox shall
also provide Holder with a monthly statement from the natural gas gatherer.


 


4.
Lox Box Arrangements. On the Issue Date, (a) the lock box arrangements described herein shall immediately become operative,
and (b) amounts outstanding under the Note shall be reduced by the monthly distributions made from the Lock Box Account.


 


5.
Monthly Distributions. After each monthly production payment is received into the Lock Box Account from the natural gas
marketer, Mr. Cox shall immediately send a payment in the amount of Twenty Thousand U.S. Dollars and No. Cents ($20,000.00) by
wire transfer into Holder’s designated bank account. The remainder of that month’s net production payment received
shall be thereafter immediately distributed to Foothills Exploration, LLC, on a monthly basis until the Retirement Date, after
which time this Lock Box Arrangement shall immediately terminate. Borrower acknowledges that it shall have no right to gain access
to any of the monies in the Lock Box Account until after the Retirement Date.


 


6.
Upon the request of Holder, Borrower shall cause to be forwarded to Holder, on a monthly basis, evidence of the deposit of all
items of payment received by such Borrower into the Lock Box Accounts and copies of all such checks and other items, together
with a statement showing the application of those items relating to payments on Accounts to outstanding Accounts and a collection
report with regard thereto in form and substance satisfactory to Holder.


 




    	 	 	 



     


    


 


ATTACHMENT
I TO EXHIBIT D 


 


LIST
OF BANK ACCOUNTS 


 


1.
Lock Box Accounts


 


	Name
    and Address of Bank	 	Account
    No.	 	Routing
    Number
	 	 	 	 	 
	Bank
                                 of America, N.A. 
Account Name: Foothills Production I, LLC 
Account Address: 11111 Santa
                                 Monica Blvd.,

                                 Ste.
                                 1700, Los Angeles, CA 90025
	 	3251-1866-1621	 	ABA # (for ACH): 
121-000-358 
 
    
ABA # (for Wires): 026-009-593



 


2.
Petty Cash Account (not to exceed $5,000)


 


[The
Company does not have currently have a Petty Cash Account]


 


3.
Payroll Account (not to exceed one regular payroll)