Exhibit 4.1


 


NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


Original
Issue Date: ____, 2020


 


$_______
Principal


$_______
Purchase Price


$_______
Original Issue Discount


 


original
issue discount


Senior
SECURED Convertible PROMISSORY NOTE


 


THIS
ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued Original
Issue Discount Senior Convertible Promissory Notes issued at a 10% original issue discount by Innovative Payment Solutions, Inc.,
a Nevada corporation (the “Company”) (this note, the “Note” and, collectively with the other notes of
such series, the “Notes”).


 


FOR
VALUE RECEIVED, the Company promises to pay to Cavalry Fund I LP, or its permitted assigns (the “Holder”), the principal
sum of $______ on the date that is the 12 month anniversary of the Original Issue Date, or _______, 2021 (the “Maturity
Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest
to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions
hereof. This Note is subject to the following additional provisions:


 


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


 


“Alternate
Consideration” shall have the meaning set forth in Section 5(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 or (g) 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.


 






     


     


    

 


“Base
Conversion Price” shall have the meaning set forth in Section 5(b).


 


“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(e).


 


“Black
Scholes Value” means the value of the outstanding principal amount of this Note, plus all accrued and unpaid interest hereon
based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Maturity Date, (B) an expected volatility equal to the greater of 100% and the
100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement
of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the
price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental
Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental
Transaction and the Maturity Date.


 


“Buy-In”
shall have the meaning set forth in Section 4(c)(v).


 


“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
in excess of 50% of the voting securities of the Company (other than by means of conversion, exercise or exchange of the Notes
or the Warrants issued together with the Notes), (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 shareholders of the Company immediately
prior to such transaction own less than 50% 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, (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 (d) 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.


 


“Collateral
Agent” means the party appointed agent on behalf of all Purchasers in the Security Agreement dated same date of this Agreement
by and between the Company and the Collateral Agent.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant 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.


 


“Conversion”
shall have the meaning ascribed to such term in Section 4.


 


“Conversion
Date” shall have the meaning set forth in Section 4(a).


 


“Conversion
Price” shall have the meaning set forth in Section 4(b).


 


“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms
hereof.


 






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“Default
Conversion Price” shall have the meaning set forth in Section 4(b).


 


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


 


“Dilutive
Issuance” shall have the meaning set forth in Section 5(b).


 


“Dilutive
Issuance Notice” shall have the meaning set forth in Section 5(b).


 


“DWAC”
means the Deposit or Withdrawal at Custodian system at The Depository Trust Company.


 


“Event
of Default” shall have the meaning set forth in Section 7(a).


 


“Exchange
Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder.


 


“Exempt
Issuance” shall have the meaning set forth in the Purchase Agreement.


 


“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).


 


“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $125,000 due under leases required to
be capitalized in accordance with GAAP.


 


“Liens”
shall have the meaning set forth in the Purchase Agreement.


 


“Mandatory
Default Amount” means the sum of (a) (i) 140% of the aggregate of outstanding principal amount of this Note and the accrued
and unpaid interest thereon, including default interest, and (b) all other amounts, costs, expenses and liquidated damages due
in respect of this Note.


 


“Note
Register” shall have the meaning set forth in Section 3(c).


 


“Notice
of Conversion” shall have the meaning set forth in Section 4(a).


 


“Option
Value” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the “OV”
function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable
Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately
following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly
announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of (A) the Trading
Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock
Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent
if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation
shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive
documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately
following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B)
the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock
Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.


 






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


 


“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) senior secured non-convertible loans from traditional
commercials banks with interest per annum not to exceed 12% which will rank pari passu with the Notes issued to investors by the
Company; (c) capital lease obligations and purchase money indebtedness incurred in connection with the acquisition of machinery
and equipment as long as such capital leases and indebtedness are approved in advance by the Collateral Agent and (d) the Indebtedness
set forth on Schedule 3.1(aa) 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) through (c) thereunder, and Liens set forth on
Schedule 3.1(aa) to the Purchase Agreement.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 30, 2020, among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.


 


“SEC”
means the Securities and Exchange Commission.


 


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


 


“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).


 


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


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“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 Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
the NYSE American, or any market of the OTC Markets, Inc. (or any successors to any of the foregoing).


 


“Transaction
Documents” means the Note, the Purchase Agreement, the Warrant, the Registration Rights Agreement, and the Security Agreement.


 






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“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)) (or a similar organization or agency succeeding
to its functions of reporting prices), (b) if no volume weighted average price of the Common Stock is reported for the Trading
Market, the most recent bid price per share of the Common Stock so reported, or (c) 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 of the
outstanding principal amount of the Notes then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.


 


Section
2. Interest/Prepayment.


 


(a) Interest.
Interest shall accrue to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate
of 10% per annum, calculated on the basis of a 360-day year and shall accrue daily commencing on the Original Issue Date until
payment in full of the outstanding principal (or conversion to the extent applicable), together with all accrued and unpaid interest,
liquidated damages and other amounts which may become due hereunder, has been made. During the existence of an Event of Default,
interest shall accrue at the lesser of (i) the rate of 18% per annum, or (ii) the maximum amount permitted by law (the lesser
of clause (i) or (ii), the “Default Interest Rate”). Once an Event of Default is cured, the interest rate shall return
to 10%.


 


(b) Prepayment.
The Note may be prepaid: (i) from Original Issuance Date until and through the day that falls on the third month anniversary of
the Original Issue Date (the “3 Month Anniversary”) at an amount equal to 100% of the aggregate of the outstanding
principal balance of the Note and accrued and unpaid interest, (ii) after the 3 Month Anniversary until and through the day that
falls on the six month anniversary of the Original Issue Date (the “6 Month Anniversary) at an amount equal to 115% of the
aggregate of the outstanding principal balance of the Note and accrued and unpaid interest, and (iii) after the 6 Month Anniversary
at an amount equal to 125% of the aggregate of the outstanding principal balance of the Note and accrued and unpaid interest.
The Company shall provide at least 20 days’ prior written notice to the Holder, during which time the Holder may convert
the Note in whole or in part.


 


Section
3. Registration of Transfers and Exchanges.


 


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


 


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


 






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Section
4. Conversion.


 


(a) Conversion.
After the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, at
any time, and from time to time, into Conversion Shares at the option of the Holder. The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such
date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall
be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To
effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire
principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall
have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The
Holder and the Company shall maintain records showing the principal amount(s) converted in each conversion, the date of each conversion,
and the Conversion Price in effect at the time of each conversion. The Company may deliver an objection to any Notice of Conversion
within two Trading Days of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error. 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 may be less than the amount stated on the face hereof. 


 


(b)  Conversion
Price. The “Conversion Price” shall be $0.035 per share (as adjusted for stock splits, stock combinations and
similar events). If an Event of Default has occurred, regardless of whether such Event of Default has been cured or remains ongoing,
this Note shall be convertible at 65% of the lowest closing price of the Common Stock as reported on the Trading Market during
the 10 consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery
of the applicable Notice of Conversion (the “Default Conversion Price”). All such Conversion Price determinations
are to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction
that proportionately decreases or increases the Common Stock.


 


(c) Mechanics
of Conversion or Prepayment.


 


(i) Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by
(y) the Conversion Price in effect at the time of such conversion.


 


(ii) Delivery
of Certificate Upon Conversion. Not later than two Trading Days after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder any certificate or certificates required to be delivered by
the Company under this Section 4(c) which shall be free of restrictive legends and trading restrictions except as provided by
the Securities Act (other than those which may then be required by the Purchase Agreement) and such shares shall be delivered
electronically through the Depository Trust Company or another established clearing corporation performing similar functions.


 


(iii) Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or
as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such Conversion Shares, to rescind such conversion, in which event the Company
shall promptly return to the Holder any original Note delivered to the Company.


 


(iv) Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof, are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such Conversion Shares. In the event the Holder of this Note shall elect
to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that
the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other
reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this
Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in accordance with
Section 4.1(e) of the Purchase Agreement. The exercise of any such rights shall not prohibit the Holder from seeking to collect
damages under this Note, the Purchase Agreement or under applicable law.


 






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(v) 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 for any reason to deliver to the Holder such Conversion Shares by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm 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 was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the Company shall have the remedies provided for in accordance
with Section 4.1 of the Purchase Agreement. Nothing herein or therein 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 Conversion Shares upon conversion of this Note as required
pursuant to the terms hereof.


 


(vi) Reservation
of Conversion Shares. The Company covenants that it will reserve and keep available out of its authorized and unissued shares
of Common Stock for the purpose of issuances upon conversion of this Note (and other purposes further detailed in the Purchase
Agreement), free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the
other holders of the Notes), not less than the amount of shares designated in Section 4.9 of the Purchase Agreement. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully
paid and nonassessable.


 


(vii) Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. 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.


 


(viii) Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge to the Holder
hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates.
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.


 


(ix) Attorneys’
Fees etc. The Company shall (A) pay the reasonable fees of the law firm of the Holder’s choice (in an amount not to
exceed $500 per opinion) in connection with the conversion of the Note, (B) cause its attorneys to promptly provide any reliance
opinion to the Transfer Agent, and (C) pay the Holder the sums required under Section 2(c)(iv).


 






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(d)  Holder’s
Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to
convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice
of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder
or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). 
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise
analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned
by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible
(in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note
is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to
be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder
together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers
a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this Section 4(d) and the
Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following:
(i) the Company’s most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting
forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. 
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial
Ownership Limitation provisions of this Section 4(d) to 9.99% of the number of shares of Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder. In all events,
the provisions of this Section 4(d) shall continue to apply. Any such increase or decrease will not be effective until the 61st
day after such notice is delivered to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions
of this Section 4(d) solely with respect to the Holder’s Note at any time, which decrease shall be effectively immediately
upon delivery of notice to the Company. The Beneficial Ownership Limitation provisions of this Section 4(d) shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct any portion which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this Section 4(d) shall apply
to a successor holder of this Note.


 


Section
5. Certain Adjustments.


 


(a) Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents,
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification
of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) 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 5(a) shall become effective immediately after the record date for
the determination of shareholders 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.


 






    8


     


    

 


(b) Subsequent
Equity Sales. At any time, for so long as the Note or any amounts accrued and payable thereunder remain outstanding, the Company
or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise
disposes of or issues (or announces any sale, grant or any option to purchase or other disposition),, any Common Stock or Common
Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the
Conversion Price then in effect (such lower price, the “Base Conversion Price” and each such issuance or announcement
a “Dilutive Issuance”), then the Conversion Price shall be immediately reduced to equal the Base Conversion Price.
Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.


 


(2) If
any Common Stock Equivalent is amended or adjusted, and such price as so amended shall be less than the Conversion Price in effect
at the time of such amendment or adjustment, then the Conversion Price shall be adjusted upon each such issuance or amendment
as provided in this Section 5(b). In case any Common Stock Equivalent is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to
have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated
transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the
Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less
(II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued
or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the
Company therefor. If any shares of Common Stock or Common Stock Equivalents are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be
the average VWAP of such public traded securities for the ten days prior to the date of receipt. If any shares of Common Stock
or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the
case may be.


 


(3) If
the holder of Common Stock or Common Stock Equivalents outstanding on the Original Issue Date or issued after the Original Issuance
Date 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 then in
effect, such issuance shall be deemed to have occurred for less than the Conversion Price on such date and such issuance shall
be deemed to be a Dilutive Issuance.


 


(4) 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 conversion price at which such securities
may be converted or exercised under the terms of such Variable Rate Transaction.


 


(5) The
Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive
Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice
of Conversion.


 


(6) The
provisions of this Section 5(b) shall apply each time a Dilutive Issuance occurs after the Original Issue Date for so long as
the Note or any amounts accrued and payable thereunder remain outstanding, but any adjustment of the Conversion Price pursuant
to this Section 5(b) shall be downward only.


 






    9


     


    

 


(7)
The provisions of this Section 5(b) shall not apply to Exempt Issuances.


 


(c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues
or sells any Common Stock, Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata
to the 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 Note (without regard to
any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) 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
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would
result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 


(d) Pro
Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other
distribution of its assets or rights or warrants to acquire its assets, or subscribe for or purchase any security other than Common
Stock, to holders of shares of Common Stock, 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 Note,
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
Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
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 (provided,
however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation subject to Section 13(d)
of the Exchange Act, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation with respect to the Company or any other publicly-traded corporation subject
to Section 13(d) of the Exchange Act).


 






    10


     


    

 


(e) Fundamental
Transaction. (1) If, at any time while this Note 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, (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, upon any subsequent conversion of this Note,
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 (without regard to any limitation on the conversion of this Note), 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 Note is convertible immediately prior to such Fundamental Transaction
(without regard to any limitation on the conversion of this Note). For purposes of any such conversion, the determination of the
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 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 Note following such Fundamental Transaction. The Company shall not effect a Fundamental Transaction unless
it gives the Holder at least 10 Trading Days prior notice together with sufficient details so the Holder can make an informed
decision as to whether it elects to accept the Alternative Consideration. If a public announcement of the Fundamental Transaction
has not been made, the notice to the Holder may not be given until the Company files a Form 8-K or other report disclosing the
Fundamental Transaction. (2) Notwithstanding anything to the contrary, provided that the Warrant Shares are not registered under
an effective registration statement in accordance with the Registration Rights Agreement, in the event of a Fundamental Transaction
that is (x) an all cash transaction, (y) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act,
or (z) a Fundamental Transaction involving a person or entity not traded on a national securities exchange or trading market (with
such exchange or market including, without limitation, the Nasdaq Global Select Trading Market, the Nasdaq Global Market, or the
Nasdaq Capital Market, the New York Stock Exchange, Inc., the NYSE American or any market operated by the OTC Markets, Inc.),
the Company or any Successor Entity (as defined below) shall, at the Holder’s option, concurrently with the consummation
of the Fundamental Transaction, purchase this Note from the Holder by paying to the Holder the higher of (i) an amount of cash
equal to the Black Scholes Value of the outstanding principal of this Note on the date of the consummation of such Fundamental
Transaction, or (ii) the product of (a) the number of Conversion Shares issuable upon full conversion of this Note (without regard
to any limitation on conversion of this Note) and (b) the positive difference between the cash per share paid in such Fundamental
Transaction minus the then in effect Conversion Price. (3) If Section 5(e)(1) and (2) are not applicable, 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 Note and the other Transaction Documents in accordance with
the provisions of this Section 5(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 Note a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Note which is convertible 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 Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a
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 Note
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 Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the Company herein. Notwithstanding anything in this Section 5(e), an
Exempt Issuance (as defined in the Purchase Agreement) shall not be deemed a Fundamental Transaction.


 






    11


     


    

 


(f) Calculations.
All calculations under this Section 5 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 5, 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 any treasury shares of the Company) issued and outstanding.


 


(g) Notice
to the Holder.


 


 (i) Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the 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
its Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock, (C)
the Company shall authorize the granting to all holders of its Common Stock of 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 shareholders of the Company shall be required
in connection with any reclassification of its 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 its 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 filed at each office
or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address
as it shall appear upon the Note Register, at least 5 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 its 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 its 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. To the extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company),
the Company or its successor shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. If the
Company does not simultaneously file the required Form 8-K, the Holder shall be entitled penalties in accordance with Section
4.6 of the Purchase Agreement The Holder shall remain entitled to convert this Note during the 20-day period commencing on the
date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth
herein.


 


Section
6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of at least 50%
(which must include the Lead Investor’s consent) in principal amount of the then outstanding Notes 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;


 






    12


     


    

 


(c) amend
its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder, increases in authorized shares and stock splits shall not be deemed to materially
and adversely affects any rights of the Holder;


 


(d) purchase
or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents;


 


(e) repay,
or offer to repay, any Indebtedness other than the Note as provided in Section 2(c) or regularly scheduled principal payments
of Permitted Indebtedness, as such terms Indebtedness and Permitted Indebtedness are in effect as of the Original Issue Date,
provided that such payments other than on the Notes shall not be permitted if, at such time, or after giving effect to such payment,
any Event of Default exists or occurs or the Company is not be able to satisfy obligations owing to the Noteholders;


 


(f) pay
cash dividends or distributions 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 SEC
assuming that the Company is subject to the Securities Act or the Exchange Act, 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) issue
any equity securities of the Company other than pursuant to the provisions of the Purchase Agreement or an Exempt Issuance; or


 


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


 


Section
7. 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) principal and interest payment under any Note or any other Indebtedness, or (B) late fees, liquidated
damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion
Date, or the Maturity Date, or by acceleration or otherwise), which default, solely in the case of a default under clause (B)
above, is not cured within five Trading Days;


 


(ii) the
Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the Company
of its obligations to deliver Conversion Shares, which breach is addressed in clause (x) below) or any Transaction Document which
failure is not cured, if possible to cure, within the earlier to occur of 15 Trading Days after notice of such failure is sent
by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become aware of such failure;


 


(iii) except
for payment defaults covered under Section 7(a)(i), the Company shall breach, or a default or event of default (subject to any
grace or cure period provided in the applicable agreement, document or instrument) shall occur under, (A) any of the Transaction
Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated
(and not covered by any other clause of this Section 7) which default or event of default if not cured, if possible to cure, within
the earlier to occur of (i) 10 Trading Days after notice of such default sent by Holder or by any other holder to the Company
and (ii) five Trading Days after the Company has become aware of such default;


 






    13


     


    

 


(iv) any
representation or warranty made in this Note, any other Transaction Document, 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, which failure is not cured, if possible to cure, within
the earlier to occur of 10 Trading Days after notice of such failure is sent by the Holder or by any other Holder to the Company;


 


(v) the
Company or any Subsidiary shall be subject to a Bankruptcy Event;


 


(vi) the
Company or any Subsidiary shall: (A) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of
it or any of its properties; (B) admit in writing its inability to pay its debts as they mature; (C) make a general assignment
for the benefit of creditors; (D) be adjudicated as bankrupt or insolvent or be the subject of an order for relief under Title
11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute of any other jurisdiction or foreign country; or (E) file a voluntary petition in bankruptcy, or a petition or an answer
seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against
it in any proceeding under any such law, or (F) take or permit to be taken any action in furtherance of or for the purpose of
effecting any of the foregoing;


 


(vii) if
any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Subsidiary,
by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary,
or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part
of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of 60 days;


 


(viii) the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or
any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within 45 days after the date
thereof;


 


(ix) 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 30 days;


 


(x) any
Material Adverse Effect occurs;


 


(xi) any
provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease
to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested
by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having
jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary
shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document;


 


(xii) the
Company fails to use the proceeds in the manner as described in Section 4.7 of the Purchase Agreement;


 


(xiii) the
Company’s Common Stock is not listed or quoted for trading on a Trading Market which failure is not cured, if possible to
cure, within the earlier to occur of 10 Trading Days after notice of such failure is sent by the Holder or by any other Holder
to the Company or the transfer of shares of Common Stock through the Depository Trust Company System is no longer available or
is subject to a “chill” by the Depository Trust Company or any successor;


 






    14


     


    

 


(xiv) the
Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of 50% of
its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control
Transaction);


 


(xv) from
and after 90 days after the Original Issue Date, the Company fails to have authorized and reserved the amount of shares designated
in Section 4.9 of the Purchase Agreement (without regard to any limitations on conversion hereof, including without limitation,
the Beneficial Ownership Limitation);


 


(xvi) the
Company shall fail for any reason, except if caused by the action or inaction of the Holder to deliver Conversion Shares to the
Holder prior to the third Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time
notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions
of any Notes in accordance with the terms hereof; or


 


(xvii) the
Company fails to file with the SEC any required reports under Section 13 or 15(d) of the Exchange Act within the time required
(including any applicable extension period) by the rules and regulations thereunder.


 


(b) Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus 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 at the Mandatory Default Amount. Upon the payment in full of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by the Company. 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 Note until such time, if any, as the Holder
receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon.


 


(c) Interest
Rate Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured,
this Note shall accrue interest at an interest rate equal to the Default Interest Rate.


 


(d) Conversion
Price Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured,
this Note shall be convertible at the Default Conversion Price.


 


Section
8. Miscellaneous.


 


(a) No
Rights as Stockholder Until Conversion. This Note does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the conversion hereof other than as explicitly set forth in Section 5.


 


(b) Notices.
All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently
given if delivered to the addressees in person, by FedEx or similar receipted next day delivery, as follows:


 


	 	If
    to the Company:	Innovative
    Payment Solutions, Inc.
	 	 	19355
    Business Center Drive, #9
	 	 	Northridge,
    CA 91324
	 	 	Attention:
    Chief Executive Officer
	 	 
	 	with
    a copy to:	Gracin
    & Marlow, LLP
	 	(which
    shall not constitute	1825
    Corporate Blvd NW #110,
	 	notice)	Boca
    Raton, FL 33431
	 	 	Attention:
    Leslie Marlow, Esq.



 






    15


     


    

 


	 	If
    to Holder:	Cavalry
    Fund I LP
	 	 	61
    Kinderkamack Road
	 	 	Woodcliff
    Lake, New Jersey 07677
	 	 	Attention:
    Thomas Walsh




 


or
to such other address as any of them, by notice to the other may designate from time to time. Time shall be counted to, or from,
as the case may be, the date of delivery.


 


(c) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest and late fees, as applicable,
on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation
of the Company.


 


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


 


(e) Exclusive
Jurisdiction; Governing Law; Prevailing Party Attorneys’ Fees. All questions concerning the construction, validity,
enforcement and interpretation of this Note and venue shall be governed by and construed and enforced in accordance with Section
5.9 of the Purchase Agreement. If any party shall commence an Action or Proceeding to enforce or otherwise relating to this Note,
then, in addition to the other obligations of the Company elsewhere in this Note, the prevailing party in such action or proceeding
shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such Action or Proceeding.


 


(f) Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Note 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 Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note 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 Note on any
other occasion. Any waiver by the Company or the Holder must be in writing.


 


(g) Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note 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 Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, 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.


 






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(h) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note.  The
Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder and that the remedy at law for any such breach would 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 Note.


 


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


 


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


 \


(Signature
Pages Follow)


 







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


 


	 	Innovative
    Payment Solutions, Inc.
	 	 
	 	By:	 
	 	Name:	William
    Corbett
	 	Title:	Chief
    Executive Officer





  







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ANNEX
A


NOTICE
OF CONVERSION


 


The
undersigned hereby elects to convert principal under the Original Issue Discount Senior Convertible Note due June 30, 2021 of
Innovative Payment Solutions, Inc, a Nevada 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.


 


By
the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common
Stock does not exceed the amounts specified under Section 4(e) of this Note, as determined in accordance with Section 13(d) of
the Exchange Act.


 


The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with
any transfer of the aforesaid shares of Common Stock.


 


Conversion
calculations:


Date
to Effect Conversion:


 


Principal
Amount of Note to be Converted:


 


Number
of shares of Common Stock to be issued:


 


Signature:


 


Name:


 


	 	DWAC
    Instructions:	 
	 	 	 	 
	 	Broker
    No:	 	 
	 	Account
    No:	 	 




 


 


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