Exhibit
10.2


 


Original
Issue Date: April 1, 2020


 


10.0%
SECURED CONVERTIBLE DEBENTURE


DUE
APRIL 1, 2022


 


THIS
10.0% SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 10.0% Secured Convertible Debentures
of Amergent Hospitality Group, Inc., a Delaware corporation (the “Company”), having its principal place of
business at 7621 Little Ave, Suite 414, Charlotte, NC 28226, designated as its 10.0% Secured Convertible Debenture due April 1,
2022 (this debenture, the “Debenture” and, collectively with the other debentures of such series, the “Debentures”).


 


FOR
VALUE RECEIVED, the Company promises to pay to Oz Rey, LLC or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of Four Million Dollars ($4,037,889.00) on April 1, 2022 (the “Maturity
Date”) and to pay interest to the Holder on the aggregate then outstanding principal amount of this Debenture in accordance
with the provisions hereof. The Maturity Date may be extended, at the sole option of the Holder for a two-year period. At the
election of the Holder, the Maturity Date may be extended for additional two-year periods, provided that in no event shall the
Maturity Date be extended beyond 10 years from the Original Issue Date. This Debenture is subject to the following additional
provisions:


 


Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized
terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall
have the following meanings:


 


“Alternate
Consideration” shall have the meaning set forth in Section 6(e).


 


“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company
or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company
or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or
proceeding is entered, (d) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or
any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the
Company or any Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company
or any Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or
any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of
the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.


 




    	 		 



     


    

 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


 


“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of a majority of the voting securities of the Company, (b) the Company merges into or consolidates with any other Person, or any
Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less a majority of the aggregate voting power of the Company or the successor entity
of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than a majority of the aggregate voting power of the acquiring entity
immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members
of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on
the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination
to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof),
or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any
of the events set forth in clauses (a) through (d) above.


 


“Common
Stock” means the common stock of the Company.


 


“Common
Stock Equivalent” means any securities of the Company entitling the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.


 


“Debenture
Register” shall have the meaning set forth in Section 2(b).


 


“EBITDA”
shall equal the Company’s consolidated net income as shown on the Company’s Form 10-K or 10-Q for the applicable period
(excluding extraordinary gains or losses) before provision for interest expense, taxes, depreciation and amortization.


 


“Event
of Default” shall have the meaning set forth in Section 9(a).


 




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“Fixed
Conversion Price” shall initially be $0.10 per share of Common Stock, subject to adjustment as provided for herein.


 


“Fundamental
Transaction” shall have the meaning set forth in Section 4.


 


“Interest
Payment Date” shall have the meaning set forth in Section 2(a).


 


“Lien”
means a mortgage, deed of trust, pledge, hypothecation, assignment, security interest, encumbrance, lien or other security interest
or security agreement of any kind or nature whatsoever.


 


“Late
Fees” shall have the meaning set forth in Section 2(c).


 


“New
York Courts” shall have the meaning set forth in Section 10(d).


 


“Notice
of Conversion” means a notice in the form of Attachment A.


 


“Original
Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence such Debentures.


 


“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures and (b) the Indebtedness existing on the Original
Issue Date and set forth on Schedule 3.1(aa) attached to the Purchase Agreement.


 


“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and
other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the
management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the
ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and
which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable
future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred in connection with Permitted
Indebtedness under clauses (a) and (b).


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of April 1, 2020 among the Company, Chanticleer Holdings,
Inc. and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 




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“Successor
Entity” shall have the meaning set forth in Section 5(e).


 


“Trading
Day” means a day on which the principal market or exchange, on which the Common Stock is listed or quoted for trading,
is open (e.g. the Nasdaq Capital Market, the NYSE AMEX Equities Exchange, the New York Stock Exchange, the OTC Bulletin Board,
OTCQX, OTCQB or the Pink Sheets as operated by OTC Markets Group, Inc., etc.).


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the
New York Stock Exchange (or any successors to any of the foregoing).


 


“Conversion
Price” means the lower of (a) the Fixed Conversion Price and (b) the VWAP for the Common Stock on the 10 Trading Days
immediately prior to delivery of the Conversion Notice.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the holders of a majority in principal amount of the Debentures then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.


 


Section
2. Interest.


 


a)
Payment of Interest in Cash. The Company shall pay interest to the Holder on the aggregate then outstanding principal amount
of this Debenture in cash at the rate of 10.0% per annum, payable quarterly on January 1, April 1, July 1 and October 1, beginning
on the first such date after the Original Issue Date, and on the Maturity Date (each such date, an “Interest Payment
Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding
Business Day).


 




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b)
Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day
periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest
hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration
and transfers of this Debenture (the “Debenture Register”).


 


c)
Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal
to the lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall
accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.


 


d)
Prepayment. Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount
of this Debenture without the prior written consent of the Holder. If the Maturity Date is extended as provided herein, the Debenture
will be prepayable commencing the second anniversary of the Original Issue Date upon 15 days’ written notice to the Holder.


 


Section
3. Registration of Transfers and Exchanges.


 


a)
Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.


 


b)
Investment Representations. This Debenture has been issued subject to certain investment representations of the original
Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement
and applicable federal and state securities laws and regulations.


 


c)
Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and
any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture
is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.


 




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Section
4. Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share 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 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 or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, the Company shall
cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Debenture and the other Transaction Documents (as defined
in the Purchase Agreement) in accordance with the provisions of this Section 4 pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange for this Debenture a security of the
Successor Entity evidenced by a written instrument substantially similar in form and substance to this Debenture, and which is
reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such 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 Debenture 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
Debenture and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.


 


Section
5. Conversion.


 


a)
Conversion of Outstanding Balance. Beginning on the Original Issue Date and until this Debenture is no longer outstanding,
this Debenture shall be convertible, in whole or in part, into fully paid and nonassessable shares of Common Stock (“Conversion
Shares”) at the option of the Holder, upon delivery of a Notice of Conversion to the Company, at the Conversion Price.
The number of Conversion Shares into which the Debenture may be converted shall be determined by dividing the aggregate principal
amount together with all accrued interest to the date of conversion by the Conversion Price.


 


b)
Conversions. The Holder shall effect any conversions under this section by delivering to the Company a fully completed
Notice of Conversion. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture
to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so
converted. Conversions hereunder shall have the effect of lowering the outstanding amount of this Debenture in an amount equal
to the applicable conversion. The Holder and the Company shall maintain records showing the amount(s) converted and the date of
such conversion(s). The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted amount of this Debenture
may be less than the amount stated on the face hereof.


 




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c)
Mechanics of Conversion.


 


i.
Delivery of Conversion Shares Upon Conversion. Conversion Shares purchased hereunder shall be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Conversion Shares to
or resale of the Conversion Shares by the Holder or (B) the Conversion Shares are eligible for resale by the Holder without volume
or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of Conversion Shares to which the Holder is entitled
pursuant to such conversion to the address specified by the Holder in the Notice of Conversion by the date that is the earlier
of (i) three (3) Trading Days after the delivery to the Company of the Notice of Conversion and (ii) the number of Trading Days
comprising the Standard Settlement Period after the delivery to the Company of the Notice of Conversion (such date, the “Conversion
Share Delivery Date”). Upon delivery of the Notice of Conversion, the Holder shall be deemed for all corporate purposes
to have become the holder of record of the Conversion Shares with respect to which this Debenture has been converted, irrespective
of the date of delivery of the Conversion Shares. If the Company fails for any reason to deliver to the Holder the Conversion
Shares subject to a Notice of Conversion by the Conversion Share Delivery Date, the Company shall pay to the Holder, in cash,
as liquidated damages and not as a penalty, for each $1,000 of Conversion Shares subject to such conversion (based on the VWAP
of the Common Stock on the date of the applicable Notice of Conversion), $10 per Trading Day (increasing to $20 per Trading Day
on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Conversion Share Delivery
Date until such Conversion Shares are delivered or Holder rescinds such conversion. If qualified, the Company agrees to maintain
a transfer agent that is a participant in the FAST program so long as this Debenture remains outstanding and exercisable. As used
herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading
Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the
Notice of Conversion.


 


ii. Delivery
of New Debentures Upon Conversion. If this Debenture shall have been converted in part, the Company shall, at the request
of a Holder and upon surrender of this Debenture, at the time of delivery of the Conversion Shares, deliver to the Holder a
new Debenture evidencing the principal outstanding and the rights of the Holder to acquire Conversion Shares called for by
this Debenture, which new Debenture shall in all other respects be identical with this Debenture.


 


iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Conversion Shares pursuant to
Section 5(c)(i) by the Conversion Share Delivery Date, then the Holder will have the right to rescind such
conversion.


 




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iv. Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Conversion Shares in accordance
with the provisions of Section 5(c)(i) above pursuant to a conversion on or before the Conversion Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder
of the Conversion Shares which the Holder anticipated receiving upon such conversion (a “Buy-In”), then
the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Conversion Shares that the Company was required to deliver to the Holder in connection with the
conversion at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Debenture and equivalent number of Conversion Shares for
which such conversion was not honored (in which case such conversion shall be deemed rescinded) or deliver to the Holder the
number of shares of Common Stock that would have been issued had the Company timely complied with its conversion and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a
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 shares of Common Stock upon conversion of the Debenture as required pursuant to the terms hereof.


 


v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the
conversion of this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon
such conversion, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an
amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.


 




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vi. Charges,
Taxes and Expenses. Issuance of Conversion Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Conversion Shares, all of which taxes and expenses shall
be paid by the Company, and such Conversion Shares shall be issued in the name of the Holder or in such name or names as may
be directed by the Holder; provided, however, that in the event that Conversion Shares are to be issued in a name other than
the name of the Holder, this Debenture when surrendered for conversion shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.


 


vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely conversion
of this Debenture, pursuant to the terms hereof.


 


Section
6. Certain Adjustments.


 


a) Stock
Dividends and Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon conversion of this Debenture), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company,
then in each case the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made
pursuant to this Section 6(a) shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case
of a subdivision, combination or re- classification.


 


 b) Anti-Dilution Protection.




 


(i) Sale
at less than Fixed Conversion Price. If the Company shall at any time or from time to time, issue, sell or otherwise
dispose of any additional shares of Common Stock (including shares owned or held by or for the account of the Company),
however designated (other than shares of Common Stock excepted from the provisions of this Section 6(b) by subsection (v) or
otherwise covered by Sections 6(a), 6(c) or 6(d)) without consideration or for a net consideration per share less than the
Fixed Conversion Price in effect immediately prior to such issuance, then, and in each such case: the Fixed Conversion Price
shall be lowered to the price (but in no event below $.0001 per share) determined by dividing (i) an amount equal to the sum
of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the then
existing Fixed Conversion Price, and (y) the consideration, if any, received by the Corporation upon such issue or sale, by
(ii) the sum of the total number of shares of Common Stock outstanding immediately prior to such issue or sale plus the
number of shares of Common Stock so issued and sold.


 




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(ii) Sale
at less than VWAP. If the Company shall at any time or from time to time, issue, sell or otherwise dispose of any
additional shares of Common Stock (including shares owned or held by or for the account of the Company), however designated
(other than shares of Common Stock excepted from the provisions of this Section 6(b) by subsection (v) or otherwise covered
by Sections 6(a), 6(c) or 6(d)) for a net consideration per share more than the Fixed Conversion Price but less than the VWAP
for the five Trading Days immediately prior to such issuance, then, and in each such case: the Fixed Conversion Price shall
be lowered to the price determined by multiplying the Fixed Conversion Price by a fraction determined by dividing (i) an
amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the VWAP for the five Trading Days immediately prior to such issuance, and (y) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) (x) the total number of shares of Common Stock outstanding
immediately prior to such issue or sale plus the number of shares of Common Stock so issued and sold multiplied by (y) the
VWAP for the five Trading Days immediately prior to such issuance.


 


(iii) Definitions,
etc. For purposes of this Section 6: The issuance of any warrants, options or other subscription or purchase rights with
respect to shares of Common Stock and the issuance of any securities convertible into or exchangeable for such shares of
Common Stock (or the issuance of any warrants, options or any rights with respect to such convertible or exchangeable
securities) shall be deemed an issuance at such time of such Common Stock if the Net Consideration Per Share which may be
received by the Company for such Common Stock (as hereinafter determined) shall be less than the Fixed Conversion Price at
the time of such issuance or the VWAP for the five Trading Days immediately prior to such issuance and, except as hereinafter
provided, an adjustment in the Fixed Conversion Price shall be made upon each such issuance in the manner provided in
subsection (i). Any obligation, agreement or undertaking to issue warrants, options, or other subscription or purchase rights
at any time in the future shall be deemed to be an issuance at the time such obligation, agreement or undertaking is made or
arises. Except as otherwise provided herein, no adjustment of the Fixed Conversion Price shall be made under subsection (i)
upon the issuance of any shares of Common Stock which are issued pursuant to the exercise of any warrants, options or other
subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible
securities if any adjustment shall previously have been made upon the issuance of any such warrants, options or other rights
or upon the issuance of any convertible securities (or upon the issuance of any warrants, options or any rights therefor) as
above provided. Any adjustment of the Fixed Conversion Price with respect to this subsection (ii) which relates to warrants,
options or other subscription or purchase rights with respect to shares of Common Stock shall be disregarded if, as, and when
the respective warrant, option or other subscription or purchase rights expire or are cancelled without being converted, so
that the Fixed Conversion Price effective immediately upon such cancellation or expiration shall be equal to the Fixed
Conversion Price in effect at the time of the issuance of the expired or cancelled warrants, options or other subscriptions
or purchase rights, with such additional adjustments as would have been made to that Fixed Conversion Price had the expired
or cancelled warrants, options or other subscriptions or purchase rights not been issued. For purposes of this subsection
(ii), the “Net Consideration Per Share” which may be received by the Company shall be determined as
follows:


 


(A)
The “Net Consideration Per Share” shall mean the amount equal to the total amount of consideration, if
any, received by the Company for the issuance of such warrants, options, subscriptions, or other purchase rights or
convertible or exchangeable securities, plus the minimum amount of consideration, if any, payable to the Company upon
exercise or conversion thereof, divided by the aggregate number of shares of Common Stock that would be issued if all such
warrants, options, subscriptions, or other purchase rights or convertible or exchangeable securities were exercised,
exchanged or converted.


 


(B)
If the “Net Consideration Per Share” which may be received by the Company shall change (other than under or by
reason of provisions designed to protect against dilution), the Fixed Conversion Price in effect at the time of such event
shall forthwith be readjusted to the Fixed Conversion Price which would have been in effect at such time had such warrants,
options, subscriptions, or other purchase rights or convertible or exchangeable securities provided for such changed
“Net Consideration Per Share” at the time initially granted, issued or sold, but only if as a result of such
adjustment the Fixed Conversion Price then in effect hereunder is thereby reduced. If the “Net Consideration Per
Share” shall be reduced at any time under or by reason of provisions designed to protect against dilution, then in case
of the delivery of Common Stock upon the exercise or conversion of any such warrants, options, subscriptions, or other
purchase rights or convertible or exchangeable securities, the Fixed Conversion Price then in effect hereunder shall
forthwith be adjusted to such amount as would have obtained had such warrant, option, subscription, or other purchase right
or convertible or exchangeable security never been issued as to such Common Stock and had adjustments been made upon the
issuance of the Common Stock delivered as aforesaid, but only if as a result of such adjustment the Fixed Conversion Price
then in effect hereunder is thereby reduced.


 




    	 	10	 



     


    

 


For
purposes of this Section 6(c), if a part or all of the consideration received by the Company in connection with the issuance of
shares of the Common Stock or the issuance of any of the securities described in this Section 6(c), consists of property other
than cash, such consideration shall be deemed to have the same value as shall be determined in good faith by the board of directors
of the Company, without deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the
Company in connection therewith.


 


(iv) Dilution
in Case of Other Securities. In case any securities other than shares of stock of the Company shall be issued or sold, or
shall become subject to issue upon the conversion or exchange of any shares of stock of the Company (or any other person
referred to in Section 4) or subscription, purchase or other acquisition pursuant to any rights or options granted by the
Company (or such other person), for a consideration per share such as to dilute the conversion rights evidenced by this
Debenture, the computations, adjustments and readjustments provided for in this Section (c) with respect to the Fixed
Conversion Price shall be made as nearly as possible in the manner so provided and applied to determine the amount of other
securities from time to time receivable on the conversion of the Debentures, so as to protect the holders of the Debentures
against the effect of such dilution.


 


(v) Certain
Issues of Common Stock. Anything herein to the contrary notwithstanding, the Company shall not be required to make any
adjustment to the Fixed Conversion Price in the case of:


 


(A)
the issuance of Common Stock pursuant to any security outstanding on the Original Issue Date, including Series 2 Preferred
Stock;


 


(B)
the issuance of Common Stock pursuant to any officers, directors, employees or consultants pursuant to an equity incentive
compensation plan approved by the Board of Directors.


 


c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 6(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
all record holders of any class of shares 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
Debenture 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 shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.


 




    	 	11	 



     


    

 


d) Pro
Rata Distributions. During such time as this Debenture is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock as a class, by way
of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution”), at any time after the issuance of this Debenture, then, in each
such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this
Debenture immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such
Distribution.


 


e) Fundamental
Transaction. If, at any time while this Debenture is outstanding, a Fundamental Transaction occurs, then, upon any
subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of
the Holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a
result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture is
convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion, the determination of the
Fixed Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Fixed Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. The
Company shall cause any Successor Entity to assume in writing all of the obligations of the Company under this Debenture and
the other Transaction Documents in accordance with the provisions of this Section 6(e) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Debenture a
security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this
Debenture which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent
entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture prior to such
Fundamental Transaction, and with an conversion price which applies the conversion price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the
purpose of protecting the economic value of this Debenture immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such
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 Debenture 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 Debenture and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein.


 




    	 	12	 



     


    

 


f) Calculations.
All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may
be. For purposes of this Section 6, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.


 


 g) Notice to Holder.




 


i. Adjustment
to Fixed Conversion Price. Whenever the Fixed Conversion Price is adjusted pursuant to any provision of this Section 6,
the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Fixed Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring such adjustment.


 


ii. Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is
a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the
Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it
shall appear upon the Debenture Register of the Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be
specified in such notice. The Holder shall remain entitled to conversion this Debenture during the period commencing on the
date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth
herein.


 




    	 	13	 



     


    

 


Section
7. Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of at least
67% in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall
not, and shall not permit any of the Subsidiaries to, directly or indirectly:


 


a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for
borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits therefrom;


 


b)
other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to
any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits
therefrom;


 


c)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that
materially and adversely affects any rights of the Holder;


 


d)
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its
Common Stock or Common Stock Equivalents other than as to repurchases of Common Stock or Common Stock Equivalents of
departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for
all officers and directors during the term of this Debenture;


 


e)
repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than regularly scheduled
principal and interest payments as such terms are in effect as of the Original Issue Date;


 




    	 	14	 



     


    

 


f)
pay cash dividends or distributions (other than in-kind dividends or distributions or dividends and distributions paid only
in Common Stock) on any equity securities of the Company;


 


g)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing
with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of
the disinterested directors of the Company (even if less than a quorum otherwise required for board approval);


 


h)
sell, lease or assign or agree to sell, lease or assign assets in excess of $25,000 per year outside the ordinary course of
business without prior consent the holders of at least 67% in principal amount of the then outstanding Debentures (which
consent shall not be unreasonably withheld, delayed or conditioned);


 


 i) enter into a Change of Control transaction;




 


j)
increase the number of shares of Common Stock issuable under the Management Incentive Plan;


 


k)
incur capital expenditures in excess of $50,000 per year without prior consent the holders of at least 67% in principal
amount of the then outstanding Debentures (which consent shall not be unreasonably withheld, delayed or
conditioned);


 


l)
hire or terminate executive management without prior consent the holders of at least 67% in principal amount of the then
outstanding Debentures (which consent shall not be unreasonably withheld, delayed or conditioned);


 


h)
enter into any agreement with respect to any of the foregoing.


 


Section
8. Affirmative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of at least
67% in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall:


 


a)
maintain a positive EBITDA;


 


b)
timely file all reports required by Section 12(g) or Section 15(d) of the Exchange Act;


 


c)
maintain positive net earnings;


 


d)
maintain a minimum market capitalization (based upon the number of shares of Common Stock outstanding and a 30-day VWAP) of
at least $5,500,000;


 


e)
use commercially reasonable efforts to list the Common Stock on the Nasdaq;


 




    	 	15	 



     


    

 


f)
cause the Common Stock to be included on the OTCQX or the OTCQB as soon as is practicable following the Closing and in any
event, cause such listing to occur within 90 days of the Closing.


 


Section
9. Events of Default.


 


a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such
event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court, or any order, rule or regulation of any administrative or governmental body):


 


i.
any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts
owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on the Maturity Date or by
acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above,
is not cured within 3 Trading Days;


 


ii.
the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures or in any
Transaction Document, which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days
after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the
Company has become or should have become aware of such failure;


 


iii.
a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or
instrument) shall occur under any of the Transaction Documents;


 


iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall
be untrue or incorrect in any material respect as of the date when made or deemed made;


 


v.
the Company or any significant Subsidiary shall be subject to a Bankruptcy Event;


 


vi.
the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement
that (a) involves an obligation greater than $150,000, whether such indebtedness now exists or shall hereafter be created,
and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise
become due and payable; or


 




    	 	16	 



     


    

 


vii.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of
their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall
remain unvacated, unbonded or unstayed for a period of 45 calendar days.


 


Notwithstanding
anything set forth herein to the contrary, an Event of Default is neither triggered nor accrues unless and until the Company receives
notice from holders of at least 67% in principal amount of the then outstanding Debentures declaring an Event of Default.


 


b) Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued
but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall
become, at the Holder’s election, immediately due and payable in cash. Commencing 5 days after the occurrence of any
Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall
accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In
connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any
presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.
Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have
all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section
9(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent
thereon.


 


Section
10. Miscellaneous


 


a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, shall be in writing and
delivered personally, by facsimile, by email, or sent by a nationally recognized overnight courier service, addressed to the
Company, at the address set forth above, or such other facsimile number, email address, or address as the Company may specify
for such purposes by notice to the Holder delivered in accordance with this Section 10(a). Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by
facsimile, by email, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile
number, email address or address of the Holder appearing on the books of the Company, or if no such facsimile number or email
or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the
Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
or email to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any
date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at
the facsimile number or email to the email address set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom
such notice is required to be given.


 




    	 	17	 



     


    

 


b) Absolute
Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as
applicable, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is
a direct debt obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein.


 


c) Lost
or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and
deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution
for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, reasonably satisfactory to the Company.


 


d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be
governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party
hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state
and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), 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 such New York Courts, or
such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding 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 Debenture 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions
contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Debenture, then
the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.


 




    	 	18	 



     


    

 


e) Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure
of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not
be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any
other term of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.


 


f) Severability.
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in
effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all
other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion
of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully
do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.


 


g) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be
cumulative and in addition to all other remedies available under this Debenture 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 Debenture. 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 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 such breach or any such
threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The
Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to
confirm the Company’s compliance with the terms and conditions of this Debenture.


 




    	 	19	 



     


    

 


h) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day.


 


i) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to
limit or affect any of the provisions hereof.


 


j) Secured
Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and each
Subsidiary pursuant to the Security Agreement, dated as of April 1, 2020 between the Company, the Subsidiaries of the Company
and the Secured Parties (as defined therein).


 


k) No
Rights as Stockholder Until Conversion. This Debenture does not entitle the Holder to any voting rights, dividends or
other rights as a stockholder of the Company prior to the exercise hereof.


 


l) Authorized
Shares. The Company covenants that, during the period the Debenture is outstanding, it will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the issuance of the Conversion Shares upon the
exercise of any conversion rights under this Debenture. The Company further covenants that its issuance of this Debenture
shall constitute full authority to its officers who are charged with the duty of issuing the necessary Conversion Shares upon
the exercise of the conversion rights under this Debenture. The Company will take all such reasonable action as may be
necessary to assure that such Conversion Shares may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Conversion Shares which may be issued upon the exercise of the conversion rights represented by this Debenture will,
upon exercise of the conversion rights represented by this Debenture in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). Except and to the
extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, 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 Debenture, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Debenture against
impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any
Conversion Shares above the Conversion Price immediately prior to such increase in par value, (ii) take all such action as
may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Conversion Shares upon the exercise of this Debenture and (iii) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to
enable the Company to perform its obligations under this Debenture. Before taking any action which would result in an
adjustment in the number of Conversion Shares for which this Debenture is exercisable or in the Conversion Price, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.


 


*********************


 


(Signature
Pages Follow)


 




    	 	20	 



     


    

 


IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above
indicated.


 


COMPANY:


 


AMERGENT
HOSPITALITY GROUP


 


/s/Michael
d. Pruitt


 


Michael
D. Pruitt. Chief Executive Officer


 


(SIGNATURE
PAGE TO DEBENTURE]


 




    	 	21	 



     


    

 


ATTACHMENT
A NOTICE OF CONVERSION


 


The
undersigned hereby elects to convert amounts outstanding under the 10% Secured Convertible Debenture of Amergent Hospitality Group,
Inc., a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”),
of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in
the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and
is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will
be charged to the Holders for any conversion, except for such transfer taxes, if any.


 


	 	Date
    to Effect Conversion:	 	 
	 	(if
    not date is set, conversion date shall be the date this notice is received)	 
	 	 	 	 



 


	 	Amount
    of Debenture to be Converted:	$	 


 


	 	Signature:	 
	 	Name:	 
	 	Address:
    	 


 




    	 	22	 



     


    

 


EXHIBIT
B


 


ASSIGNMENT
FORM


 


(To
assign the foregoing Debenture, execute this form and supply required information. Do not use this form to purchase shares.)


 


FOR
VALUE RECEIVED, the foregoing Debenture and all rights evidenced thereby are hereby assigned to


 


	Name:	 
	 	(Please
    Print)
	 	 
	Address:	 
	 	(Please
    Print)
	 	 
	Phone
    Number:	 
	 	 
	Email
    Address:	 
	 	 
	Dated:	 
	_________
    __,	 
	________	 


 


	Holder’s
    Signature: 	 	 
	 	 	 
	Holder’s
    Address:	 	 


 






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