Document:

Exhibit 10.7

 

 

 

Master
Equipment Lease Agreement

 

 

 

This Master Equipment Lease
Agreement (this “Master Lease”) dated as of June 22, 2017 is made by and between FIFTH THIRD BANK, an Ohio banking
corporation (“Lessor”), and JETPAY PAYMENT SERVICES, FL, LLC, a limited liability company organized under the laws
of the State of Delaware and having a principal place of business at 3939 West Valley Drive, Center Valley, PA 18034 (“Lessee”).

 

TERMS AND CONDITIONS OF LEASE

 

1.           Lease.
Subject to the terms and conditions set forth herein, Lessor and Lessee shall execute and deliver Equipment Schedules pursuant
to this Master Lease (each, an “Equipment Schedule”) and pursuant to each Equipment Schedule Lessor shall lease to
Lessee the equipment and other property described on such Equipment Schedule (together with all parts, additions and accessories
incorporated therein, and software incorporated therein, the “Equipment”). Each Equipment Schedule will incorporate
by reference this Master Lease and will specify certain terms relating to the leasing of the Equipment (this Master Lease as incorporated
into each Equipment Schedule, a “Lease”). Each Equipment Schedule, together with this Master Lease, shall constitute
a separate and enforceable Lease. In the event that any term of any Equipment Schedule conflicts with or is inconsistent with any
term of this Master Lease, the terms of the Equipment Schedule shall govern. As used herein, the term “Item of Equipment”,
as it relates to any Equipment, shall have the meaning specified in the Equipment Schedule relating to such Equipment and if no
such meaning is specified therein, “Item of Equipment” shall mean the Equipment as a whole.

 

2.           Term.
With respect to any Item of Equipment, unless otherwise specified on an Equipment Schedule, the initial term of lease shall commence
on the earlier of (a) the date an Acceptance Certificate (as defined in Section 5) is executed with respect to such Item of
Equipment, and (b) unless the Lessee rejects such Item of Equipment in a written notice to Lessor, ten (10) days after delivery
of such Item of Equipment (the “Delivery and Acceptance Date”) and, unless earlier terminated as provided herein, shall
expire on the Expiration Date (as defined in the Equipment Schedule relating to such Item of Equipment); provided, however,
that the Base Lease Term or the then applicable Renewal Term shall be automatically extended for successive one month periods
until either (a) the end of the Notice Period (as defined below) or (b) Lessor demanding return of the Equipment. As used herein,
“Notice Period” shall mean the period ending on the latest of (i) the Expiration Date, (ii) one hundred eighty (180)
days after the delivery by Lessee of its final written notice of its election to purchase or return the Equipment or to determine
the Fair Market Value or Fair Market Rental Value, as applicable, in accordance with the options set forth in the Equipment Schedule
and (iii) one hundred eighty (180) days after the delivery by Lessee of its election to return the Equipment. Lessee shall pay
Basic Rent at the then current rate for each month during the automatic renewal term. As used herein, “Term” shall
mean, collectively, the period from the Delivery and Acceptance Date to the Expiration Date and all Renewal Terms (as defined in
the Equipment Schedule relating to such Equipment); provided, however, that this Master Lease shall be effective from and
after the date of execution hereof. All obligations of Lessee hereunder shall survive the expiration, cancellation or other termination
of the Term. Provided that no Default or Event of Default (each as defined in Section 16) has occurred and is continuing,
Lessor shall not interfere with Lessee’s quiet use and possession of the Equipment.

 

     

     

    

 

3.           Rent.
Lessee shall pay Lessor for the leasing of the Equipment hereunder the periodic rental payments (“Basic Rent”) on the
dates (each a “Rent Payment Date”) and in the amounts set forth in the Equipment Schedule. Basic Rent together with
all other additional amounts as may from time to time be payable under this Lease and the other Lease Documents (as defined in
Section 4) is referred to herein as “Rent”. Rent shall be due whether or not Lessee has received any notice that
such payments are due. All Rent shall be paid to Lessor at its address set forth in the Equipment Schedule, or as otherwise directed
by Lessor in writing. If any Rent is not paid when due (or within 10 days thereafter) Lessee shall pay to Lessor a late payment
fee equal to five percent (5%) of the amount of such Rent.

 

4.           Net
Lease. Each Lease shall constitute a non-cancelable net lease, it being the intention of the parties that all costs, expenses
and liability associated with the Equipment or its lease shall be borne by Lessee. Lessee’s obligation to pay Rent and otherwise
to perform its obligations under this Lease and each other document and agreement executed in connection with this Lease (together
with the Lease, collectively, the “Lease Documents”) shall be irrevocable, absolute and unconditional and shall not
be subject to defense, counterclaim, set-off, diminution, abatement or recoupment for any reason whatsoever, and Lessee waives
all rights to terminate or surrender this Lease for any reason except as expressly set forth in this Lease, including, without
limitation, defect in the Equipment or non-performance by Lessor. All Rent shall be paid without reduction or deduction whatsoever,
including any reduction or deduction for any Tax (as defined in Section 18).

 

5.           Acceptance.
Upon delivery of the Equipment, Lessee shall promptly inspect and test such Equipment and, if acceptable to Lessee, accept such
Equipment and deliver to Lessor a certificate of acceptance, in form and substance reasonably satisfactory to Lessor (“Acceptance
Certificate”). Lessee represents that it has selected both (a) the Equipment, and (b) the manufacturer, vendor or other supplier
of the Equipment (the “Supplier”) without assistance from Lessor and either is a party to, or has received a copy of,
each agreement and document by which Lessor acquired the Equipment or the right to possession and use of the Equipment (including
any documents or agreements with the Supplier (collectively, the “Supply Contract”)) prior to the Delivery and Acceptance
Date. Lessee hereby assumes the risks, burdens, and obligations to any manufacturer or vendor of any Item of Equipment on account
of nondelivery, nonacceptance or nonperformance of the Equipment.

 

6.           Disclaimer
of Warranties. THE EQUIPMENT IS BEING LEASED TO THE LESSEE BY THE LESSOR “AS IS, WHERE IS”. LESSOR DOES NOT MAKE,
HAS NOT MADE, SHALL NOT BE DEEMED TO MAKE OR HAVE MADE, AND EXPRESSLY DISCLAIMS TO LESSEE ANY WARRANTY OR REPRESENTATION, EITHER
EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH ANY LAW, RULE, SPECIFICATION, OR CONTRACT PERTAINING THERETO, QUALITY OF
MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT
INFRINGEMENT, OR TITLE, IT BEING AGREED THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE BY LESSEE. Lessee’s
execution and delivery of an Acceptance Certificate shall be conclusive evidence as between Lessor and Lessee that the Items of
Equipment referred to therein are acceptable for all purposes hereof.

 

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7.           Conditions
Precedent. The obligation of Lessor to purchase the Equipment and to lease the same to Lessee shall be subject to satisfaction
(or waiver by Lessor) of each of the following conditions, prior to the Delivery and Acceptance Date with respect to such Equipment:
(a) Lessor shall have received each of the following documents, in form and substance satisfactory to Lessor: (i) the Equipment
Schedule relating to such Equipment duly executed by Lessee; (ii) an Acceptance Certificate for each Item of Equipment duly executed
by Lessee; (iii) if requested by Lessor, an assignment of Lessee’s rights under the Supply Contract in form and substance
acceptable to Lessor and consent executed by Lessee and the Supplier; (iv) the original bills of sale evidencing chain of title
from the manufacturer or supplier to the Lessor relating to the Equipment to be leased hereunder; (v) a certificate of a member,
managing member or other responsible officer of Lessee dated the date of such Equipment Schedule certifying (A) the incumbency
of each of the members, managing members or other officers executing the applicable Lease Documents and, if such member or managing
member is a corporation or other entity, the incumbency of the individual officer executing such documents on behalf of the member
or managing member, (B) a copy of the articles of organization, operating agreement, and other applicable organizational documents
of Lessee and (C) copies of any other documents evidencing the authorization of the members, managing members or other responsible
officers on behalf of the Lessee to execute, deliver and perform this Lease and each other Lease Document; (vi) a certificate dated
the date of such Equipment Schedule of a member, managing member or other chief financial officer of Lessee certifying that, to
the best of Lessee’s knowledge, no Default or Event of Default has occurred and is continuing and no Event of Loss (as defined
in Section 11) has occurred with respect to any Equipment identified in such Equipment Schedule; (vii) if requested by Lessor,
an opinion of legal counsel to Lessee in form and substance satisfactory to Lessor; and (viii) such other documents or agreements
as may be required by the terms of the Equipment Schedule or as Lessor may reasonably request; (b) Lessor shall have the right
(by assignment or otherwise) to purchase the Equipment identified in the applicable Equipment Schedule for a price not to exceed
the Lessor’s Capitalized Cost (as identified in such Equipment Schedule) and on terms and conditions otherwise reasonably
satisfactory to the Lessor; (c) Lessor shall have received evidence of the filing of Uniform Commercial Code financing statements
or other records relating to such Equipment in form and substance satisfactory to Lessor in the jurisdiction in which Lessee is
a registered organization and such other jurisdiction as Lessor may reasonably request; (d) Lessor shall have received evidence
of insurance policies covering the Equipment which comply with the requirements of Section 10, hereof; (e) the representations
and warranties of the Lessee contained herein and in each of the Lease Documents shall be true and correct on and as of the Delivery
and Acceptance Date both with and without giving effect to the transactions contemplated by the applicable Lease; (f) no Default
or Event of Default shall have occurred and be continuing or result from the transactions contemplated by the Lease; and (g) Lessee
shall have paid the fees and reasonable out-of-pocket expenses of Lessor (including the fees and expenses of counsel to the Lessor
and any filing or recordation fees) incurred in connection with the negotiation, execution and delivery of the Equipment Schedule
and other Lease Documents relating thereto;

 

8.           Use
and Maintenance; Alterations.

 

(a)          Lessee
covenants and agrees that it: (i) shall use the Equipment solely in the conduct of its business, for the purpose, and in the manner,
for which the Equipment was designed; (ii) shall operate, maintain, service and repair the Equipment, and maintain all records
and other materials relating thereto, (A) in accordance and consistent with (1) the Supplier’s recommendations all maintenance
and operating manuals or service agreements, whenever furnished or entered into, including any subsequent amendments or replacements
thereof, issued by the Supplier or other service provider (including requiring all components, fuels and fluids installed in or
used on the Equipment to meet the standards specified by the Supplier from time to time), (2) the requirements of all applicable
insurance policies, (3) the Supply Contract, so as to preserve all of Lessee’s and Lessor’s rights thereunder, including
all rights to any warranties, indemnities or other rights or remedies, (4) all applicable laws, and (5) the prudent practice of
other similar companies in the same business as Lessee, but in any event, to no lesser standard than that employed by Lessee for
comparable equipment owned or leased by it; and (B) without limiting the foregoing, so as to cause the Equipment to be in good
repair and operating condition and in at least the same condition as when delivered to Lessee hereunder, except for ordinary wear
and tear resulting despite Lessee’s full compliance with the terms hereof; (iii) shall not discriminate against the Equipment
with respect to scheduling of maintenance, parts or service; (iv) shall not change the location of any Equipment as specified in
the Equipment Schedule without the prior written consent of Lessor; and (v) to the extent requested by Lessor, shall cause each
Item of the Equipment to be continually marked, in a plain and distinct manner, with the name of Lessor followed by the words “Owner
and Lessor,” or other appropriate words designated by Lessor on labels furnished by Lessor. If the location for any Equipment
specified in the Equipment Schedule is a facility leased by Lessee or owned by Lessee subject to one or more mortgage liens, upon
the request of Lessor, Lessee will obtain a real property waiver or waivers in form and substance satisfactory to Lessor from the
lessors or mortgagees of such facility.

 

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(b)          Lessee,
at its own cost and expense, will promptly replace all parts, appliances, systems, components, instruments and other equipment
(“Parts”) incorporated in, or installed on, the Equipment which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition,
in the ordinary course of maintenance, service repair, overhaul or testing, Lessee may remove any Parts, whether or not worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that
Lessee shall replace such Parts as promptly as practicable. All replacement Parts shall be free and clear of all Liens (as defined
in Section 8(c)) and shall be in as good an operating condition as, and shall have a value and utility at least equal to,
the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof.
Any replacement Part installed, or incorporated on, the Equipment shall be considered an accession to such Equipment and title
to such replacement Part shall immediately vest in Lessor without cost or expense to Lessor.

 

(c)          Lessee
will keep the Equipment and its interest therein free and clear of all liens, claims, mortgages, charges and encumbrances of any
type regardless of how arising (“Liens”) other than any Lien arising out of claims against Lessor not relating to the
lease of the Equipment to Lessee (“Permitted Liens”). Lessee will defend, at its own expense, Lessor’s title
to the Equipment from all such Liens. If any Lien shall attach to any item of Equipment, Lessee will provide written notification
to Lessor within five (5) days after Lessee receives notice of any such attachment stating the full particulars thereof and the
location of such Equipment on the date of such notification.

 

(d)          At
its sole option, Lessee may make any alteration, modification or attachment to the Equipment deemed appropriate by Lessee, provided
that such alteration, modification, attachment is of a type which is readily removable without damage to the Equipment does not
decrease the value, condition, utility or useful life of the Equipment or cause such Equipment to become “limited use property”
(as defined in Revenue Procedure 2001-28, 2001-19 I.R.B. 1156 or any successor publication or Treasury Regulation issued pursuant
to the Internal Revenue Code of 1986 (as amended, supplemented or modified from time to time, the “Code”)), a fixture
(as defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), or real property or affect the insurability
or impair any manufacturer’s warranty with respect to the Equipment. All alterations, modifications and attachments of whatsoever
kind or nature made to any item of Equipment that cannot be removed without damaging or reducing the functional capability, economic
value or insurability of the item of Equipment or impairing any manufacturer’s warranty shall only be made with the prior
written consent of the Lessor and shall be deemed to be part of the Equipment. Under no circumstance shall any alteration, modification
or attachment be subjected by Lessee to any encumbrance other than this Lease.

 

9.           Assignment
and Sublease. Lessee shall not sublease or otherwise relinquish possession of any Item of Equipment, or assign, transfer or
encumber its rights, interests or obligations hereunder or under any Equipment Schedule executed pursuant hereto unless expressly
permitted pursuant to the terms of the Equipment Schedule relating to such Equipment. No assignment, transfer or sublease, in any
event, shall relieve Lessee of, and Lessee shall remain primarily liable for, its obligations under each Lease Document.

 

10.         Insurance.

 

(a)          Lessee
shall provide, maintain and pay for insurance coverage with respect to the Equipment, insuring against, among other things, the
loss, theft, damage, or destruction of the Equipment, in an amount not less than the Stipulated Loss Value (as defined in the applicable
Equipment Schedule) of such Equipment at any time; and public liability and property damage with respect to the use or operation
of the Equipment, in the amounts set forth in the applicable Equipment Schedule. All insurance against loss shall name Lessor as
the sole loss payee and all liability insurance shall name Lessor and its Assignees (as defined in Section 20) and their subsidiaries
and affiliated companies, and their successors and assigns as additional insureds. All of such insurance shall be in form (including
all endorsements required by Lessor), and with companies, reasonably satisfactory to Lessor.

 

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(b)          All
policies of insurance required hereunder shall (i) provide that any cancellation, expiration, lapse, or material modification shall
not be effective as to the Lessor for a period of thirty (30) days after receipt by Lessor of written notice thereof; (ii) provide
that premiums may be paid by the Lessor, but without liability on the part of the Lessor for such premiums; (iii) be primary without
any right of set-off or right of contribution from any other insurance carried by the Lessor; (iv) contain breach of warranty provisions
providing that, in respect of the interests of the Lessor, the insurance shall not be invalidated by any action, inaction or breach
of warranty, declaration, or condition by the Lessee or any other person or by any fact or information known to Lessor; and (v)
waive any right of subrogation against Lessor. Prior to the Delivery and Acceptance Date for any Item of Equipment, and thereafter,
not less than 15 days prior to each renewal or replacement of such insurance, Lessee will deliver to Lessor certificates issued
by the insurance carriers thereunder evidencing the insurance required to be maintained pursuant to this Lease.

 

(c)          The
proceeds (if any) of the insurance maintained by Lessee that are received with respect to the loss or damage of any Equipment,
shall be applied and paid first, to Lessor for any amount then due and payable by Lessee under this Lease, second,
if an Event of Loss (as defined in Section 11) has occurred, to Lessor for the payment of Stipulated Loss Value or otherwise,
to Lessee for its reasonable, documented, out-of-pocket costs to repair or replace such item of Equipment pursuant to Section 11,
to the extent that such repairs or replacements were necessitated by the occurrence of the loss for which such proceeds were paid,
and third, to Lessee to reimburse Lessee for any Stipulated Loss Value actually paid to, and retained by Lessor. Proceeds
of any liability insurance shall promptly be paid to the party entitled thereto.

 

(d)          If
Lessee does not obtain, maintain or furnish to Lessor acceptable proof of the insurance coverage required by this Agreement, Lessor
shall be entitled, upon notice to Lessee, to procure such insurance, as Lessor shall deem appropriate in its discretion, at Lessee’s
sole cost and expense.

 

11.         Risk
of Loss; Damage to Equipment.

 

(a)          Lessee
shall bear the entire risk of loss and damage to any and all Items of Equipment from any cause whatsoever, whether or not insured
against, during the Term until the Equipment is returned to Lessor in accordance with Section 14 hereof. No loss or damage
shall relieve Lessee of the obligation to pay Rent or of any other obligation under this Lease. An “Event of Loss”
shall be deemed to have occurred with respect to any Item of Equipment if such Item of Equipment or any material part thereof has
been lost, stolen, requisitioned or condemned by any governmental authority, damaged beyond repair or damaged in such a manner
that results in an insurance settlement on the basis of an actual or arranged total loss.

 

(b)          Upon
any loss or damage to any Item of Equipment not constituting an Event of Loss, Lessee will promptly, and in any event within thirty
(30) days of such loss or damage (or such longer period as Lessor shall determine in its sole discretion), place such Item of Equipment
in good condition and repair as required by the terms of this Lease. If an Event of Loss to any Item of Equipment has occurred,
Lessee shall immediately notify Lessor of same, and at the option of Lessor, Lessee shall: (i) not more than thirty (30) days following
such Event of Loss (or such longer period as Lessor shall determine in its sole discretion) replace such Item of Equipment with
replacement equipment (acceptable to Lessor) in as good condition and repair, and with the same value remaining useful economic
life and utility, as such replaced Item of Equipment immediately preceding the Event of Loss (assuming that such replaced Item
of Equipment was in the condition required by this Lease), which replacement equipment shall immediately, and without further act,
be deemed to constitute Items of Equipment and be fully subject to this Lease as if originally leased hereunder and shall be free
and clear of all Liens; or (ii) pay to Lessor on the next succeeding Rent Payment Date the sum of (A) all Rent due and owing hereunder
with respect to such Item of Equipment (at the time of such payment) including all Basic Rent payable on such Rent Payment Date
plus (B) the Stipulated Loss Value as of such Rent Payment Date with respect to such Item of Equipment. Upon Lessor’s receipt
of the payment required under subsection (ii) above, Lessee shall be entitled to Lessor’s interest in such Item of Equipment,
in its then condition and location, “as is” and “where is”, without any representations or warranties,
express or implied.

 

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12.         Financial,
Other Information and Notices.

 

(a)          All
the financial statement reporting requirements, and all financial covenants (the “Referenced Covenants”) stated in
that certain Credit Agreement between JETPAY PAYMENT SERVICES, FL, LLF as “Borrower” and FIFTH THIRD BANK as “Lender”
dated as of June ___, 2017, and as it may be amended, restated or otherwise modified from time to time (the “Credit Agreement”),
and related definitions of financial statement terms, shall be incorporated into this Master Lease by reference and shall apply
to this agreement as if fully stated herein. In the event the Credit Agreement is terminated or is no longer in effect, then the
Referenced Covenants in effect as of the last date prior to such termination or lapse of effectiveness shall continue to apply
to this Master Lease, and Lessee and Lessor shall, promptly upon Lessor’s request therefor, sign and deliver an amendment
to this Master Lease that sets forth such provisions and definitions directly (i.e. instead of incorporating them by reference).

 

(b)          Lessee
shall provide prompt written notice to Lessor (i) of any Event of Default, (ii) of any loss or material damage to any Item of Equipment
or any Event of Loss with respect to any Item of Equipment, and (iii) any existing or threatened investigation, claim or action
by any governmental authority known to Lessor which could reasonably be expected to materially and adversely affect the Equipment
or this Lease.

 

(c)          Lessee
shall furnish such other information as Lessor may reasonably request from time to time relating to the Equipment, this Lease or
the operation or condition of Lessee including, without limitation, such additional financial statements of the Lessee for such
periods as Lessor may request.

 

13.         Inspections.
Lessor may from time to time during Lessee’s normal business hours, inspect the Equipment and Lessee’s records with
respect thereto. Lessee shall cooperate with Lessor in scheduling such inspection and in making the Equipment available for inspection
by Lessor or its designee at a single location as reasonably specified by Lessee. Lessee will, upon reasonable request, provide
a report on the condition of the Equipment, a record of its maintenance and repair, a summary of all items suffering an Event of
Loss, a certificate of no Event of Default, or such other information or evidence of compliance with Lessee’s obligations
under the Lease as Lessor may reasonably request.

 

14.         Condition
Upon Return. At the expiration of the Term, unless Lessee has elected to purchase the Equipment in accordance with the terms
of the Equipment Schedule, Lessee shall promptly, at its own cost and expense: (a) perform any testing and repairs required to
place each Item of Equipment in the same condition and appearance as when received by Lessee (reasonable wear and tear excepted)
and in good working order for its originally intended purpose and eligible for manufacturer’s maintenance (if available),
free of all Lessee’s markings and free of all Liens other than Permitted Liens; (b) if de-installation, disassembly or crating
is required, cause such Items of Equipment to be de-installed, disassembled and crated by an authorized manufacturer’s representative
or such other service person as is reasonably satisfactory to Lessor; and (c) return such Items of Equipment in the condition and
in the manner specified in the Equipment Schedule (collectively, the “Return Condition”). The Equipment, as returned,
will include related maintenance logs, operating manuals, and other related materials. All operating manuals for the Equipment
must be returned to Lessor undamaged and containing all pages. If lost or destroyed, Lessee shall, at its own expense, provide
replacement operating manuals. Lessor may, but is not required to, inspect the Equipment prior to its return. If Lessor determines
that the Equipment does not conform to the Return Condition, Lessor will promptly notify Lessee of such determination specifying
the repairs or refurbishments needed to place the Equipment in the Return Condition. Lessor may, at its option, either require
Lessee to effect such repairs or itself effect such repairs. In either case, all costs associated with any repairs and inspections
will be paid by Lessee. Until Lessee has returned the Equipment in compliance with the requirements of this Lease, the Lease shall
continue in full force and effect and Lessee shall continue to pay Rent notwithstanding any expiration or termination of the Term
through and including the date on which the Equipment is accepted for return by Lessor as conforming with the Return Condition.

 

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15.         Lessee’s
Representations and Warranties. Lessee represents and warrants as of the date of execution and delivery of this Master Lease
and each Equipment Schedule as follows: (a) Lessee is a limited liability company organized under the laws of the State of Delaware,
having a principal place of business at 3939 West Valley Drive, Center Valley, Pennsylvania, 18034, duly organized, validly existing
under the laws of the jurisdiction of its organization with full power to enter into and to pay and perform its obligations under
the Equipment Schedule and this Lease as incorporated therein by reference, and is duly qualified or licensed in all other jurisdictions
where its failure to so qualify would reasonably be expected to materially and adversely affect the conduct of its business or
its ability to perform any of its obligations under or the enforceability of this Lease; (b) each Equipment Schedule, this Master
Lease and all other Lease Documents have been duly authorized, executed and delivered by Lessee, are valid, legal and binding obligations
of Lessee, are enforceable against Lessee in accordance with their terms and do not and will not contravene any provisions of or
constitute a default under Lessee’s organizational documents, any agreement to which it is a party or by which it or any
of its property is bound, or any applicable law, regulation, or order of any governmental authority; (c) Lessor’s right,
title and interest in and to the Equipment and the Rent therefrom will vest in Lessor upon Lessee’s acceptance of the Equipment
for lease hereunder and will not be affected or impaired by the terms of any agreement or instrument by which Lessee or any of
its property is bound; (d) no approval of, or filing with, any governmental authority or other person is required in connection
with Lessee’s entering into, or the payment or performance of its obligations under, this Lease and the other Lease Documents;
(e) there are no suits or proceedings pending or, to the knowledge of Lessee, threatened, before any court or governmental agency
against or affecting Lessee which would reasonably be expected to materially and adversely affect the conduct of its business or
its ability to perform any of its obligations under or the enforceability of this Lease; (f) the financial statements of Lessee
which have been delivered to Lessor have been prepared in accordance with generally accepted accounting principles consistently
applied, and fairly present Lessee’s financial condition and the results of its operations as of the date of and for the
period covered by such statements (subject to customary year-end adjustments), and since the date of such statements there has
been no material adverse change in such financial condition or operations; (g) Lessee’s full and correct legal name is set
forth on the signature page hereof and Lessee will not change its legal name or the location of its jurisdiction of organization
without giving to Lessor at least thirty (30) days prior written notice thereof; (h) the Equipment will always be used for business
or commercial, and not personal, purposes; (i) Lessee is not in default under any obligation for borrowed money, for the deferred
purchase price of property or any lease agreement which, either individually or in the aggregate, would reasonably be expected
to have a material adverse effect on the condition of its business or its ability to perform any of its obligations under or the
enforceability of this Lease; (j) under the laws of the jurisdiction(s) in which the Equipment is to be located, the Equipment
consists solely of personal property and not fixtures; and (k) Lessee is, and will remain, in full compliance with all laws and
regulations applicable to Lessee, except such non-compliance as would not reasonably be expected to have a material adverse effect
on the condition of its business or its ability to perform any of its obligations under or the enforceability of this Lease, including
without limitation, (i) ensuring that no person who owns a controlling interest in or otherwise controls Lessee is or shall be
(A) listed on the Specially Designated National and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”),
Department of the Treasury and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, executive order
or regulations or (B) a person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any
related enabling legislation or any other similar executive order and (ii) compliance with all applicable Bank Secrecy Act (“BSA”)
laws, regulations and government guidance on BSA compliance and on the prevention and detection of money laundering violations.

 

Lessee’s representations and warranties
shall survive termination or expiration of the Lease.

 

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16.         Events
of Default and Remedies.

 

(a)          Each
of the following events constitutes an “Event of Default” hereunder and any event that, with the passage of time or
the giving of notice, or both, would constitute an Event of Default shall constitute a “Default” hereunder: (i) Lessee
fails to pay any Rent when due under this Lease and such failure continues for a period of ten (10) days; (ii) any representation
or warranty made by Lessee in the Lease or in any other Lease Document shall at any time prove to have been incorrect in any material
respect as and when made; (iii) Lessee (A) fails to obtain and maintain the insurance coverage required herein; or (B) fails
to observe or perform any other covenant, condition or agreement under this Lease and, in the case of clause (B), such failure
continues unremedied for a period of fifteen (15) days; (iv) Lessee shall have consolidated with or merged with or into another
entity, or conveyed, sold or otherwise transferred all or substantially all of its assets or shall have failed to maintain its
corporate existence; (v) Lessee (A) ceases doing business as a going concern; (B) makes an assignment for the benefit of creditors
or admits in writing its inability to pay its debts as they mature or generally fails to pay its debts as they become due; (C)
initiates any voluntary bankruptcy, reorganization, insolvency or similar proceeding; (D) fails to obtain the discharge of any
bankruptcy, reorganization, insolvency or similar proceeding initiated against it by others within sixty (60) days of the date
such proceedings were initiated; (E) requests or consents to the appointment of a trustee, custodian or receiver or other officer
with similar powers for itself or a substantial part of its property; or (F) a trustee, custodian or receiver or other officer
with similar powers is appointed for itself or for a substantial part of its property; (vi) Lessee fails to return the Equipment
or fails to return the Equipment in the required condition at the expiration of the Term; (vii) a default shall have occurred and
be continuing under any contract, agreement or document between Lessee and any of its other creditors, (viii) a default shall have
occurred and be continuing under any contract, agreement or document between Lessee and Lessor or any affiliate of Lessor; (ix)
if Lessee’s obligations are guaranteed by any other party, an “Event of Default” (under and as defined in a Guaranty
executed by any such Guarantor) shall occur; or (x) the owners of the capital stock or other units of ownership on the date of
this Lease entitled to vote for the election of the board of directors of the Lessee or other similar governing body cease to own
or do not have the unencumbered right to vote in the aggregate at least fifty percent (50%) of such capital stock or other ownership
interest of Lessee.

 

(b)          Upon
the occurrence of an Event of Default, Lessor may exercise any one or more of the following remedies and any additional rights
and remedies permitted by law (none of which shall be exclusive) and shall be entitled to recover all its reasonable costs and
expenses including incidental and consequential damages (as described in Section 2A-530 of the Uniform Commercial Code) and attorneys’
fees in enforcing its rights and remedies:

 

(i)          Lessee
shall upon demand assemble or cause to be assembled any or all of the Equipment at a location designated by Lessor; and/or to return
promptly, at Lessee’s expense, any or all of the Equipment to Lessor at such location, in the condition and otherwise in
accordance with all of the terms of Section 14 hereof; and/or

 

(ii)         Lessor
may itself or by its agents enter upon the premises of Lessee or any other location where the Equipment is located and take possession
of and render unusable by Lessee any or all of the Equipment, wherever it may be located, without any court order or other process
of law and without liability for any damages occasioned by such taking of possession; and/or

 

(iii)        Sell,
re-lease or otherwise dispose of any or all of the Equipment, whether or not in Lessor’s possession, at public or private
sale with or without notice to Lessee, with the right of Lessor to purchase and apply the net proceeds of such disposition, after
deducting all costs of such disposition (including but not limited to costs of transportation, possession, storage, refurbishing,
advertising and brokers’ fees), to the obligations of Lessee under this Lease, with Lessee remaining liable for any deficiency
and with any excess being retained by Lessor, or retain any and all of the Equipment; and/or

 

(iv)        Cancel
such Equipment Schedule as to any or all of the Equipment; and/or

 

    	 	- 8 -	 

     

    

 

(v)         Proceed
by appropriate court action, either at law or in equity (including an action for specific performance), to enforce performance
by Lessee to recover damages associated with such Event of Default; or exercise any other right or remedy available to Lessor at
law or in equity; and/or

 

(vi)        By
offset, recoupment or other manner of application, apply any security deposit, monies held in deposit or other sums then held by
Lessor or any affiliate of Lessor, and with respect to which Lessee has an interest, against any obligations of Lessee arising
under this Lease or any other Lease Document, whether or not Lessee has pledged, assigned or granted a security interest to Lessor
in any or all such sums as collateral for said obligations.

 

(c)          In
addition to the foregoing, Lessee shall pay to Lessor on demand the sum of (i) any and all Rent which is then due or which has
accrued to the date of demand and (ii) at Lessor’s option (A) an amount equal to the Stipulated Loss Value (as set forth
in the related Equipment Schedule) as of the Rent Payment Date on or immediately preceding the date of demand for the Items of
Equipment as Lessor shall specify or (B) all Basic Rent and all other sums, including any tax indemnities becoming due as a result
of such Event of Default, for the Term (including any mandatory Renewal Term) and all amounts due upon the expiration of the Term
including any return fees and/or any amounts due with respect to the mandatory purchase of the Equipment becoming due under this
Lease from the date of demand to the Expiration Date for such Items of Equipment plus the assumed residual value of such Equipment
(as determined by Lessor). The Lessor and Lessee agree that Lessor shall be entitled to such amount as damages for loss of bargain
and not as a penalty and that such amount is reasonable in light of the anticipated harm to Lessor caused by an Event of Default.

 

(d)          If
Lessee pays the full amount referred to in Section 16(c) to Lessor prior to the termination of this Lease as it relates to such
Items of Equipment, title to the relevant Equipment shall immediately vest in Lessee without representation or warranty by Lessor.
If Lessee fails to pay such amount and Lessor subsequently sells, releases or otherwise disposes of such Items of Equipment, the
amount due from Lessee under Section 16(c) shall be reduced by an amount equal to (i) the actual cash proceeds received and retained
by Lessor upon any sale or disposition or (ii) if Lessor leases such Equipment by a lease agreement substantially similar to this
Lease, the present value of the rents (discounted at the Prime Rate as announced by Fifth Third Bank and in effect at the time
of demand plus 2.00%) payable under such subsequent Lease for the remaining Term of this Lease (without regard to any Renewal Terms
other than the then current Renewal Term (if applicable)), in each case, net of all costs and expenses incurred in connection with
such sale, disposition or lease including any incidental damages.

 

(e)          A
cancellation or termination hereunder shall occur only upon written notice by Lessor to Lessee, and only with respect to such Items
of Equipment as Lessor specifically elects to cancel or terminate by such notice. Except as to any such Items of Equipment with
respect to which there is a cancellation or termination, this Lease shall remain in full force and effect and Lessee shall be and
remain liable for the full performance of all its obligations under this Lease.

 

(f)           Lessee
shall indemnify, defend and hold Lessor harmless for any loss, personal injury (including death), or damage to property, suffered
by Lessor, its employees or any of its agents in connection with its entry onto the premises of Lessee or any third party hereunder,
except to the extent resulting from the gross negligence or willful misconduct of Lessor. Each of the rights and remedies of Lessor
hereunder and under the other Lease Documents is in addition to all of its other rights and remedies hereunder, under the other
Lease Documents and under applicable law and nothing in this Lease or any other Lease Document shall be construed as limiting any
such right or remedy. Lessor’s failure to exercise or delay in exercising any right, power or remedy available to Lessor
shall not constitute a waiver or otherwise affect or impair its rights to the future exercise of any such right, power or remedy.
Waiver by Lessor of any Event of Default shall not be a waiver by Lessor of any other or subsequent Events of Default.

 

    	 	- 9 -	 

     

    

 

17.         General
Indemnification. Lessee shall pay, and shall indemnify and hold Lessor, its directors, officers, agents, employees, successors
and assigns (each an “Indemnitee”) harmless on an after-tax basis from and against, any and all liabilities, causes
of action, claims, suits, penalties, damages, losses, costs or expenses (including attorneys’ fees), obligations, liabilities,
demands and judgments, and Liens, of any nature whatsoever (collectively, a “Liability”) arising out of or in any way
related to: (a) the Lease Documents, (b) the manufacture, purchase, ownership, title, selection, acceptance, rejection, possession,
lease, sublease, operation, use, maintenance, documenting, inspection, control, loss, damage, destruction, removal, storage, surrender,
sale, use, condition, delivery, nondelivery, return or other disposition of or any other matter relating to any Item of Equipment
or any part or portion thereof (including, in each case and without limitation, latent or other defects, whether or not discoverable,
any claim for patent, trademark or copyright infringement) and any and all Liabilities in any way relating to or arising out of
injury to persons, properties or the environment or any and all Liabilities based on strict liability in tort, negligence, breach
of warranties or violations of any regulatory law or requirement, (c) a failure to comply fully with applicable law and (d) Lessee’s
failure to perform any covenant, or Lessee’s breach of any representation or warranty, hereunder; provided, that the
foregoing indemnity shall not extend to the Liabilities to the extent resulting solely from the gross negligence or willful misconduct
of an Indemnitee.

 

18.         General
Tax Indemnification. Lessee shall pay when due and shall indemnify and hold each Indemnitee harmless from and against (on an
after-tax basis) any and all taxes, fees, withholdings, levies, imposts, duties, assessments and charges of any kind and nature
(“Taxes”) arising out of or related to this Lease or any other Lease Document (together with interest and penalties
thereon and including, without limitation, sales, use, gross receipts, personal property, real property, real estate excise, ad
valorem, business and occupational, value added, leasing, leasing use, documentary, stamp or other taxes imposed upon or against
any Indemnitee, Lessee or any Equipment by any governmental authority with respect to any Equipment or the manufacturing, ordering,
sale, purchase, shipment, delivery, acceptance or rejection, ownership, titling, registration, leasing, subleasing, possession,
use, operation, removal, return or other dispossession thereof or upon the rents, receipts or earnings arising therefrom or upon
or with respect to this Lease, whether payable at the inception of a Lease, during the Term thereof or at the expiration thereof,
excepting only all United States federal, state and local taxes based on or measured by Lessor’s net income). Whenever this
Lease or any other Lease Document terminates as to any Item of Equipment, Lessee shall, upon written request by Lessor, advance
to Lessor the amount estimated by Lessor to be the personal property or other taxes on such Item of Equipment which are not yet
payable, but for which Lessee is responsible. Lessor shall, at Lessee’s request, provide Lessee with Lessor’s method
of computation of any estimated taxes. Except as otherwise provided in the Equipment Schedule relating to any Equipment, upon receipt
of any tax bill relating to such Equipment from a relevant taxing authority, Lessor will pay the Tax identified on such tax bill.
Lessee will, on demand, (a) reimburse Lessor for the amount of such Tax paid to such taxing authority and (b) pay to Lessor a fee
(as identified by Lessor from time to time) relating to the administration of such payment.

 

19.         Ownership
and Security Interests.

 

(a)          Title
to the Equipment shall at all times remain in Lessor, and Lessee shall acquire no ownership, title, property, right, equity or
interest in the Equipment other than its leasehold interest solely as Lessee subject to all the terms and conditions hereof. This
Lease, is intended to be a “finance lease” solely for the purposes of Article 2A of the Uniform Commercial Code as
that term is defined in Article 2A of the Uniform Commercial Code. To the extent permitted by applicable law, Lessee (a) waives
any and all rights and remedies of Lessee under Sections 2A-508 through 2A-522 of the Uniform Commercial Code and (b) any rights
now or hereafter conferred by statute or otherwise to recover incidental or consequential damages from Lessor for any breach or
any other reason whatsoever. If, notwithstanding the express intent of the parties, a court of competent jurisdiction determines
that any Equipment Schedule is not a “finance lease”, the parties agree that in such event (i) (A) in order to secure
the prompt payment of Rent under and with respect to this Lease, and the performance and observance by Lessee of all the agreements,
covenants and provisions hereof (collectively, the “Obligations”), Lessee hereby grants to Lessor a first priority
security interest in all of Lessee’s right, title and interest in the following (whether now existing or hereafter created
and whether now owned or hereafter acquired): (1) the Equipment (including, without limitation, all inventory, equipment, fixtures
or other property comprising the same), and general intangibles relating thereto, (2) additions, attachments, accessories and accessions
thereto whether or not furnished by the Supplier of such Equipment, (3) all subleases (including the right to receive any payment
thereunder and the right to make any election or determination or give any consent or waiver thereunder), chattel paper, accounts,
security deposits and bills of sale relating thereto, (4) any and all substitutions, replacements or exchanges for any such Equipment
or other collateral, and (5) any and all products and proceeds of any collateral hereunder (including all insurance and requisition
proceeds) and all other payments of any kind with respect to the Equipment and other collateral in and against which a security
interest is granted hereunder and (B) Lessee agrees that with respect to the Equipment, in addition to all of the other rights
and remedies available to Lessor hereunder upon the occurrence of an Event of Default, Lessor shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code; and (ii) the original principal amount of the obligations hereunder
shall be an amount equal to the Lessor’s Capitalized Cost, and that such principal amount shall accrue interest at the lesser
of (x) the maximum lawful rate permitted by applicable law or (y) the implicit interest rate reflecting Lessor’s financial
assumptions at the time of the execution of the Lease (including any assumed residual value at the end of the Term as determined
by Lessor).

 

    	 	- 10 -	 

     

    

 

(b)          Lessee
hereby authorizes Lessor to file, solely at the expense of Lessee, any Uniform Commercial Code financing statements or other similar
documents that Lessor reasonably deems necessary or advisable to protect its interest. Lessee agrees promptly to execute and deliver
to Lessor such further documents or other assurances, and to take such further action, including obtaining landlord and mortgagee
waivers, as Lessor may from time to time reasonably request.

 

(c)          As
security for the payment as and when due of the Rent and all other obligations of Lessee to Lessor under this Lease, any promissory
note and any other documents relating thereto (and any renewals, extensions and modifications thereof) and under any other agreement
or instrument (as the same may be renewed, extended or modified and hereinafter collectively referred to as the “Lease Documents”),
both now in existence and hereafter created, together with any other obligation of Lessee to Lessor or its affiliates, and the
performance as and when due of all obligations of Lessee under the Lease Documents (as the same may be renewed, extended or modified),
Lessee hereby grants to Lessor (excluding any Assignee) a first priority security interest in Lessee’s right, title and interest
in all assets securing any of Lessee’s other obligations to Lessor (excluding any Assignee) or its affiliates.

 

20.         Assignment
by Lessor. Lessor may at any time assign, grant a security interest in, or otherwise dispose of (individually or collectively,
a “transfer”), all or any portion of its rights, title or interests in, to and under this Lease, any Equipment Schedule
or any Item of Equipment, together or separately, to one or more persons or entities (each, an “Assignee”). Upon any
such transfer, this Lease shall remain in full force and effect. If Lessee is given notice of any such transfer, it shall acknowledge
receipt thereof in writing and execute, or otherwise authenticate, such further instruments as may be reasonably requested by Assignee
with respect to such transfer, including without limitation, a consent certifying certain material facts and circumstances related
to this Lease and the Equipment. Unless otherwise expressly agreed by Assignee, Assignee shall not assume any of the obligations
of Lessor under this Lease. Upon written notice to Lessee of an assignment, Lessee agrees to pay the Rent with respect to the Items
of Equipment covered by such assignment to such Assignee in accordance with the instructions specified in such notice and Lessee
shall not assert against Assignee any defense, counterclaim or offset that Lessee may have against Lessor. All obligations and
liabilities of Lessee to Lessor under this Lease (including, without limitation, any schedules, exhibits, riders or other attachments
attached hereto or otherwise incorporated herein) are also hereby made for the express benefit of Assignee.

 

21.         Miscellaneous.

 

(a)          Lessee
shall pay all costs and expenses of Lessor, including, without limitation, reasonable attorneys’ and other professional fees,
the fees of any collection agencies and appraisers and all other costs and expenses related to any sale or re-lease of the Equipment
(including storage costs), costs incurred in perfecting any security interest or registering Lessor’s ownership, payment
of any obligations of Lessee required to be performed under this Lease (including without limitation, Taxes and assessments with
respect to any Equipment), incurred by Lessor in the preparation, negotiation and execution of this Lease or any amendment or supplement
hereto, enforcing any of the terms, conditions or provisions hereof and in protecting Lessor’s rights hereunder. If Lessee
fails to reimburse Lessor for any such costs and expenses within thirty (30) days of invoice, interest shall accrue at a rate equal
to the lesser of (a) eighteen percent (18%) per annum or (b) the maximum amount permitted under applicable law, on the unpaid balance
thereof.

 

    	 	- 11 -	 

     

    

 

(b)          This
Lease shall be governed by and construed in accordance with the laws of the State of New York. Any judicial proceeding arising
out of or relating to this Lease may be brought in any court of competent jurisdiction in Hamilton County, Ohio or Hillsborough
County, Florida or the district court for the Middle District of Florida, and each of the parties hereto (i) accepts the nonexclusive
jurisdiction of such courts and any related appellate court and agrees to be bound by any judgment rendered by any such court in
connection with any such proceeding and (ii) waives any objection it may now or hereafter have as to the venue of any such proceeding
brought in such court or that such court is an inconvenient forum. EACH OF THE LESSEE AND LESSOR HEREBY WAIVES THE RIGHT TO TRIAL
BY JURY IN ANY LAWSUIT OR PROCEEDING ARISING OUT OF OR IN ANY WAY RELATING TO THIS LEASE, ANY EQUIPMENT SCHEDULE, OR ANY OTHER
LEASE DOCUMENT AND ANY ASSIGNMENT, SUBLEASE OR OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH.

 

(c)          All
notices delivered hereunder shall be in writing (including facsimile) and shall be delivered to the following addresses:

 

if to Lessee:

 

JetPay Payment Services, FL, LLC

3939 West Valley Drive

Center Valley, PA 18034

Attn: Gregory M. Krzemien

Facsimile: (610) 797-9520

 

if to Lessor:

 

Fifth Third Equipment Finance Company

38 Fountain Square Plaza

MD10904A

Cincinnati, Ohio 45263

Facsimile: (513) 534-6706

 

(d)          Lessee
acknowledges and agrees that time is of the essence with respect to its performance under the Lease Documents. Any failure of Lessor
to require strict performance by Lessee or any waiver by Lessor of any provision herein shall not be construed as a consent or
waiver of any provision of this Lease. This Lease shall be binding upon, and inure to the benefit of, the parties hereto, their
permitted successors and assigns.

 

(e)          This
Lease, together with all other Lease Documents, constitutes the entire understanding or agreement between Lessor and Lessee with
respect to the leasing of the Equipment, and supersedes all prior agreements, representations and understandings relating to the
subject matter hereof. Neither this Lease nor any other Lease Document may be amended except by a written instrument signed by
Lessor and Lessee.

 

(f)           This
Lease may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument.

 

(g)          Any
provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability shall not invalidate or render unenforceable such provision in any other jurisdiction. Captions are intended
for convenience or reference only, and shall not be construed to define, limit or describe the scope or intent of any provisions
hereof.

 

    	 	- 12 -	 

     

    

 

(h)          IN
THE EVENT THE LESSOR HEREUNDER IS FIFTH THIRD EQUIPMENT FINANCE COMPANY AND THE LESSEE OR GUARANTOR  MAINTAINS A PRINCIPLE
PLACE OF BUSINESS, OR IS INCORPORATED IN, EITHER THE STATE OF ALABAMA OR NEW YORK; OR THE PARTIES CONTRACTUALLY AGREE TO BE GOVERNED
BY NEW YORK LAW AND THEREBY SUBJECT THEMSELVES TO THE JURISDICTION OF THOSE STATE AND FEDERAL COURTS WITHIN THE STATE; OR THE EQUIPMENT
BEING FINANCED HEREUNDER IS LOCATED IN ALABAMA OR NEW YORK, THEN  LESSOR SHALL BE REFFERED TO BY ITS D/B/A  “FIFTH
THIRD EQUIPMENT FINANCE COMPANY, INC.”

 

IN WITNESS WHEREOF, Lessor
and Lessee have executed this Master Lease as of the day and year first above written.

 

	LESSOR:	 	LESSEE:
	 	 	 
	FIFTH THIRD BANK	 	JETPAY PAYMENT SERVICES, FL, LLC
	 	 	 	 	 
	By:	/s/ Laurel Sebree	 	By:	/s/ Gregory M. Krzemien
	Name:	Laurel Sebree	 	Name :	Gregory M. Krzemien
	Title:	Vice President	 	Title:	Chief Financial Officer

 

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

 

	Principal
    Amount: US$112,250.00	Issue
    Date: May 24, 2017
	Purchase
    Price: US$112,250.00	 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, SUNSTOCK, INC., a Delaware corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of AUCTUS FUND, LLC, a Delaware limited liability company, or registered assigns (the “Holder”)
the sum of US$112,250.00 together with any interest as set forth herein, on February 24, 2018 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%) (the “Interest Rate”)
per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set
forth herein with the written consent of the Holder which may be withheld for any reason or for no reason. Any amount of principal
or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) twenty four percent (24%)
per annum or (ii) the maximum amount allowed by law from the due date thereof until the same is paid (the “Default Interest”).
Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 360-day year
and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.0001 par
value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United
States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice
made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due
on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and,
in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the
city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein,
and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date
hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

    	 	 	 

    	 

    

 

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

 

The
following terms shall apply to this Note:

 

Article
I. CONVERSION RIGHTS

 

1.1
Conversion Right. The Holder shall have the right from time to time, and at any time following the Issue Date and ending
on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant
to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or
any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock,
as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such
Common Stock shall hereafter be changed or reclassified at the Conversion Price (as defined below) determined as provided herein
(a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion
of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security
of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations
13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however,
that the limitations on conversion may be waived by the Holder (up to a maximum of 9.99%) upon, at the election of the Holder,
not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply
until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number
of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount
(as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the
form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance
with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting
in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion
date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this
Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s
option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion
Date, provided however, that the Borrower shall have the right to pay any or all interest in cash plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4)
at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

    	 	2	 

    	 

    

 

1.2
Conversion Price.

 

Calculation
of Conversion Price. Subject to the adjustments described herein, the conversion price (the “Conversion Price”)
shall equal the lesser of (i) 55% multiplied by the average of the two (2) lowest Trading Prices (as defined below) (representing
a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior
to the date of this Note and (ii) the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any
subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).
The “Variable Conversion Price” shall mean 55% multiplied by the Market Price (as defined herein) (representing a
discount rate of 45%). “Market Price” means the average of the two (2) lowest Trading Prices for the Common Stock
during the twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading
Price” and “Trading Prices” means, for any security as of any date, the lesser of: (i) the lowest trade price
on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“Reporting Service”)
designated by the Holder or, if the OTC Pink is not the principal trading market for such security, the trading price of such
security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price
of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such
security that are listed in the “pink sheets” by the National Quotation Bureau, Inc., or (ii) the closing bid price
on the OTC Pink, OTCQB or applicable trading market as reported by a Reporting Service designated by the Holder or, if the OTC
Pink is not the principal trading market for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in
the “pink sheets” by the National Quotation Bureau, Inc. To the extent the Conversion Price of the Borrower’s
Common Stock closes below the par value per share, the Borrower will take all steps necessary to solicit the consent of the stockholders
to reduce the par value to the lowest value possible under law. The Borrower agrees to honor all conversions submitted pending
this adjustment. Furthermore, the Conversion Price may be adjusted downward if, within three (3) business days of the transmittal
of the Notice of Conversion to the Borrower, the Common Stock has a closing bid which is 5% or lower than that set forth in the
Notice of Conversion. If the shares of the Borrower’s Common Stock have not been delivered within three (3) business days
to the Borrower, the Notice of Conversion may be rescinded. At any time after the Closing Date, if in the case that the Borrower’s
Common Stock is not deliverable by DWAC (including if the Borrower’s transfer agent has a policy prohibiting or limiting
delivery of shares of the Borrower’s Common Stock specified in a Notice of Conversion), an additional 10% discount will
apply for all future conversions under all Notes. If in the case that the Borrower’s Common Stock is “chilled”
for deposit into the DTC system and only eligible for clearing deposit, an additional 15% discount shall apply for all future
conversions under all Notes while the “chill” is in effect. If in the case of both of the above, an additional cumulative
25% discount shall apply. Additionally, if the Company ceases to be a reporting company pursuant to the 1934 Act or if the Note
cannot be converted into free trading shares after one hundred eighty-one (181) days from the Issue Date, an additional 30% discount
will be attributed to the Conversion Price. If the Trading Price cannot be calculated for such security on such date in the manner
provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority
in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the
Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period
on the OTC Pink, OTCQB or on the principal securities exchange or other securities market on which the Common Stock is then being
traded. The Borrower shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance.
Holder shall be entitled to deduct $500.00 from the conversion amount in each Notice of Conversion to cover Holder’s deposit
fees associated with each Notice of Conversion.

 

    	 	3	 

    	 

    

 

While
this Note is outstanding, each time any 3rd party has the right to convert monies owed to that 3rd party
(or receive shares pursuant to a settlement or otherwise), including but not limited to under Section 3(a)(9) and Section 3(a)(10),
at a discount to market greater than the Conversion Price in effect at that time (prior to all other applicable adjustments in
the Note), then the H1older, in Holder’s sole discretion, may utilize such greater discount percentage (prior to all applicable
adjustments in this Note) until this Note is no longer outstanding. While this Note is outstanding, each time any 3rd
party has a look back period greater than the look back period in effect under the Note at that time, including but not limited
to under Section 3(a)(9) and Section 3(a)(10), then the Holder, in Holder’s sole discretion, may utilize such greater number
of look back days until this Note is no longer outstanding. The Borrower shall give written notice to the Holder within one (1)
business day of becoming aware of any event that could permit the Holder to make any adjustment described in the two immediately
preceding sentences.

 

(a)
Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the
event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than
a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces
a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement
referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price
shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion
Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which
a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination
or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

    	 	4	 

    	 

    

 

(b)
Pro Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder
in connection with a conversion of this Note, the Borrower shall issue to the Holder the number of shares of Common Stock not
in dispute and resolve such dispute in accordance with Section 4.13.

 

1.3
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all
times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the Note
(based on the Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”). The Reserved Amount
shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section 3(d) of the Purchase
Agreement. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.
In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number
of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at
the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized
and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has
irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and
(ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the
duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance
with the terms and conditions of this Note. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than
the initial Reserved Amount, regardless of any prior conversions.

 

If,
at any time the Borrower does not maintain or replenish the Reserved Amount within three (3) business days of the request of the
Holder, the principal amount of the Note shall increase by Five Thousand and No/100 United States Dollars ($5,000) (under Holder’s
and Borrower’s expectation that any principal amount increase will tack back to the Issue Date) per occurrence.

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other
reasonable means of communication dispatched on the Conversion Date prior to 5:00 p.m., New York, New York time) and (B) subject
to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

    	 	5	 

    	 

    

 

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

 

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

 

(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”)
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.

 

(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue
and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by
the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 5:00 p.m., New York, New York time,
on such date.

 

    	 	6	 

    	 

    

 

(f)
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained
in Section 1.1 and in this Section 1.4, the Borrower shall use its commercially reasonable best efforts to cause its transfer
agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s
Prime Broker with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system.

 

(g)
DTC Eligibility & Market Loss. If the Borrower fails to maintain its status as “DTC Eligible” for any reason,
or, if the Conversion Price is less than $0.05 at any time while this Note is outstanding, the principal amount of the Note shall
increase by Fifteen Thousand and No/100 United States Dollars ($15,000) (under Holder’s and Borrower’s expectation
that any principal amount increase will tack back to the Issue Date). In addition, the Variable Conversion Price shall be redefined
to mean forty percent (40%) multiplied by the Market Price, subject to adjustment as provided in this Note.

 

(h)
Failure to Deliver Common Stock Prior to Delivery Deadline. Without in any way limiting the Holder’s right to pursue
other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable
upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section
1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock until the Borrower issues and delivers a certificate
to the Holder or credit the Holder’s balance account with OTC for the number of shares of Common Stock to which the Holder
is entitled upon such Holder’s conversion of any Conversion Amount (under Holder’s and Borrower’s expectation
that any damages will tack back to the Issue Date).. Such cash amount shall be paid to Holder by the fifth day of the month following
the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month
following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall
accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common
Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder.
The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible
to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(h) are justified.

 

    	 	7	 

    	 

    

 

(i)
Rescindment of a Notice of Conversion. If (i) the Borrower fails to respond to Holder within one (1) business day from
the Conversion Date confirming the details of Notice of Conversion, (ii) the Borrower fails to provide any of the shares of the
Borrower’s Common Stock requested in the Notice of Conversion within three (3) business days from the date of receipt of
the Note of Conversion, (iii) the Holder is unable to procure a legal opinion required to have the shares of the Borrower’s
Common Stock issued unrestricted and/or deposited to sell for any reason related to the Borrower’s standing, (iv) the Holder
is unable to deposit the shares of the Borrower’s Common Stock requested in the Notice of Conversion for any reason related
to the Borrower’s standing, (v) at any time after a missed Deadline, at the Holder’s sole discretion, or (vi) if OTC
Markets changes the Borrower’s designation to ‘Limited Information’ (Yield), ‘No Information’ (Stop
Sign), ‘Caveat Emptor’ (Skull & Crossbones), ‘OTC’, ‘Other OTC’ or ‘Grey Market’
(Exclamation Mark Sign) or other trading restriction on the day of or any day after the Conversion Date, the Holder maintains
the option and sole discretion to rescind the Notice of Conversion (“Rescindment”) with a “Notice of Rescindment.”

 

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

 

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

 

    	 	8	 

    	 

    

 

The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be reasonably accepted by the Borrower so that the sale or transfer is
effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the
Borrower does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an
exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant
to Section 3.2 of the Note.

 

1.6
Effect of Certain Events.

 

(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or organization.

 

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

 

    	 	9	 

    	 

    

 

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

 

(d)
Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or
sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, except for shares of Common Stock issued
directly to vendors or suppliers of the Borrower in satisfaction of amounts owed to such vendors or suppliers (provided, however,
that such vendors or suppliers shall not have an arrangement to transfer, sell or assign such shares of Common Stock prior to
the issuance of such shares), any shares of Common Stock for no consideration or for a consideration per share (before deduction
of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion
Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”),
then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share
received by the Borrower in such Dilutive Issuance.

 

    	 	10	 

    	 

    

 

The
Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants,
rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to
purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”)
(such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”)
and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price
then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the
“price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i)
the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options,
plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options,
plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming
full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities
issuable upon exercise of such Options.

 

Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and
the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price
per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof
at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

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

 

    	 	11	 

    	 

    

 

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

 

1.7
[Intentionally Omitted].

 

1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a
Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for
such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because
of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect
to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a
holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect
to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the
Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted.
In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive
Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance
with Section 1.3) for the Borrower’s failure to convert this Note.

 

1.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay the amounts outstanding
hereunder pursuant to the following terms and conditions:

 

(a)
At any time during the period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue
Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder
of the Note to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount
in cash equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued
and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, if any.

 

    	 	12	 

    	 

    

 

(b)
At any time during the period beginning the day which is ninety one (91) days following the Issue Date and ending on the date
which is one hundred eighty (180) days following the Issue Date, the Borrower shall have the right, exercisable on not less than
three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest),
in full by making a payment to the Holder of an amount in cash equal to 140%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus
(y) Default Interest, if any.

 

(c)
After the expiration of one hundred eighty (180) days following the date of the Note, the Borrower shall have no right of prepayment.

 

1.10
Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note
at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date
of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date
fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment
amount to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day
prior to the Optional Prepayment Date. If the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable
prepayment amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower
shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Article
II. CERTAIN COVENANTS

 

2.1
Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution
(whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely
in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment
or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which
is approved by a majority of the Borrower’s disinterested directors.

 

2.2
Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall
not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such shares.

 

2.3
Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments
for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed
on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade
creditors financial institutions or other lenders incurred in the ordinary course of business or (c) borrowings, the proceeds
of which shall be used to repay this Note.

 

    	 	13	 

    	 

    

 

2.4
Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary
course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

2.5
Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation,
including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits
or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the
date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

 

2.6
Section 3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction
or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9)
of the Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(l0) of the Securities Act (a “3(a)(l0) Transaction”).
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(l0)
Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note,
but not less than Fifteen Thousand Dollars $15,000, will be assessed and will become immediately due and payable to the Holder
at its election in the form of cash payment or addition to the balance of this Note.

 

2.7
Preservation of Existence, etc. The Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant
Subsidiaries that have no or minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification
necessary.

 

2.8
Non-circumvention. The Borrower hereby covenants and agrees that the Borrower will not, by amendment of its Certificate
or Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action
as may be required to protect the rights of the Holder.

 

    	 	14	 

    	 

    

 

Article
III. EVENTS OF DEFAULT

 

If
any of the following events of default (each, an “Event of Default”) shall occur:

 

3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise.

 

3.2
Conversion and the Shares. The Borrower (i) fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder
in accordance with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, (iii) directs its transfer agent not to transfer or delays, impairs, and/or hinders
its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common
Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iv)
fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of
Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or
makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph)
and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall
not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion, (v) fails
to remain current in its obligations to its transfer agent, (vi) causes a conversion of this Note is delayed, hindered or frustrated
due to a balance owed by the Borrower to its transfer agent, (vii) fails to repay Holder, within forty eight (48) hours of a demand
from the Holder, any amount of funds advanced by Holder to Borrower’s transfer agent in order to process a conversion, and/or
(viii) fails to maintain the Reserved Amount.

 

3.3
Failure to Deliver Transaction Expense Amount. The Borrower fails to deliver the Transaction Expense Amount (as defined
in the Purchase Agreement) to the Holder within three (3) business days of the date such amount is due.

 

3.4
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of
ten (10) days after written notice thereof to the Borrower from the Holder.

 

3.5
Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase
Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of
time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

    	 	15	 

    	 

    

 

3.6
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors
or commence proceedings for its dissolution, or apply for or consent to the appointment of a receiver or trustee for it or for
a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed for the Borrower or
for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after
such appointment.

 

3.7
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.8
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower, or the Borrower admits in writing its inability to pay its debts generally as they mature, or have
filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable or the Borrower
admits in writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for
bankruptcy relief, all under international, federal or state laws as applicable.

 

3.9
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC
Pink, OTCQB, Nasdaq National Market, Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement
exchange

 

3.10
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act (including but not limited to becoming delinquent in its filings); and/or the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.

 

3.11
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.12
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.13
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future), or any disposition or conveyance of
any material asset of the Company.

 

3.14
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.

 

    	 	16	 

    	 

    

 

3.15
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice
to the Holder.

 

3.16
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

 

3.17
Cessation of Trading. Any cessation of trading of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National
Market, Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange, and such cessation
of trading shall continue for a period of five consecutive (5) Trading Days.

 

3.18
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements (as defined
herein), after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered
a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to
apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under
said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between,
among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder (and any affiliate of the Holder) or any other third
party, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include
the agreements and instruments defined as the Documents. Each of the loan transactions will be cross-defaulted with each other
loan transaction and with all other existing and future debt of Borrower to the Holder.

 

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

 

3.20
OTC Markets Designation. OTC Markets changes the Borrower’s designation to ‘No Information’ (Stop Sign),
‘Caveat Emptor’ (Skull and Crossbones), or ‘OTC’, ‘Other OTC’ or ‘Grey Market’
(Exclamation Mark Sign).

 

3.21
Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose,
or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material
non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.

 

    	 	17	 

    	 

    

 

Upon
the occurrence and during the continuation of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8,
3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16. 3.17, 3.18, 3.19, 3.20, and/or 3.21 exercisable through the delivery of written
notice to the Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified
the remaining sections of Article III, the Note shall become immediately due and payable and the Borrower shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to (i) 150% (except
with respect to SECTION 3.2, in which case 150% shall be replaced with 200%) times the sum of (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts
referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof
(the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x),
(y) and (z) shall collectively be known as the “Default Sum”) or (ii) at the option of the Holder, the “parity
value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable
upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately
preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable
Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case
such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Trading Price for the Common Stock during
the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment
Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all
without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation,
legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at
law or in equity. Further, if a breach of Sections 3.9, 3.10 and/or 3.19 occurs or is continuing after the six (6) month anniversary
of this Note, then the principal amount of the Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000)
(under Holder’s and Borrower’s expectation that any principal amount increase will tack back to the Issue Date) and
the Holder shall be entitled to use the lowest Trading Price during the delinquency period as a base price for the conversion
with the Variable Conversion Price shall be redefined to mean forty percent (40%) multiplied by the Market Price (at the option
of the Holder), subject to adjustment as provided in this Note. For example, if the lowest Trading Price during the delinquency
period is $0.01 per share and the conversion discount is 50%, then the Holder may elect to convert future conversions at $0.005
per share. If this Note is not paid at Maturity Date, then the outstanding principal due under this Note shall increase by Fifteen
Thousand and No/100 United States Dollars ($15,000).

 

    	 	18	 

    	 

    

 

If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect. This requirement by the Borrower shall automatically apply upon the occurrence of an Event of Default without the need
for any party to give any notice or take any other action.

 

If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Borrower for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

Article
IV. MISCELLANEOUS

 

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

 

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

 

If
to the Borrower, to:

 

Sunstock,
Inc.

111
Vista Creek Circle

Sacramento,
CA 95835

Attn:
Jason Chang

E-mail:
info@sunstockinc.com

 

With
a copy to (which copy shall not constitute notice):

 

Cassidy
& Associates

9454
Wilshire Boulevard

Beverly
Hills, CA 90212

E-mail:
Cassidylaw@aol.com

 

    	 	19	 

    	 

    

 

If
to the Holder:

 

Auctus
Fund, LLC

101
Arch Street, 20th Floor

Boston,
MA 02110

Attn:
Lou Posner

Facsimile:
(617) 532-6420

 

With
a copy to (which copy shall not constitute notice):

 

Chad
Friend, Esq., LL.M.

Legal
& Compliance, LLC

330
Clematis Street, Suite 217

West
Palm Beach, FL 33401

e-mail:
CFriend@LegalandCompliance.com

 

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

 

4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined
in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement. The Holder and any assignee, by acceptance
of this Note, acknowledge and agree that following conversion of a portion of this Note, the unpaid and unconverted principal
amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

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

 

    	 	20	 

    	 

    

 

4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state courts of Massachusetts or in the federal courts located in the Commonwealth of
Massachusetts. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY. The prevailing
party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any
provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document 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 Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.

 

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

 

4.8
Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase
Agreement.

 

4.9
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder
of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder
with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or
any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled
to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or
any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least
twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution,
right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other
event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the
Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section
4.9 including, but not limited to, name changes, recapitalizations, etc. as soon as possible under law.

 

    	 	21	 

    	 

    

 

4.10
Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law
governing usury, the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount
deemed interest permitted under applicable law. The Borrower covenants (to the extent that it may lawfully do so) that it will
not seek to claim or take advantage of any law that would prohibit or forgive the Borrower from paying all or a portion of the
principal or interest on this Note.

 

4.11
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required. No provision of this Note shall alter or impair the obligation
of the Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place,
and rate, and in the form, herein prescribed.

 

4.12
Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision hereof.

 

4.13
Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment
amount or Default Amount, Default Sum, Closing or Maturity Date, the closing bid price, or fair market value (as the case may
be) or the arithmetic calculation of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower
or the Holder shall submit the disputed determinations or arithmetic calculations via facsimile (i) within two (2) Business Days
after receipt of the applicable notice giving rise to such dispute to the Borrower or the Holder or (ii) if no notice gave rise
to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the
Borrower are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination
or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder, then the Borrower shall, within
two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, the closing bid price, the
or fair market value (as the case may be) to an independent, reputable investment bank selected by the Borrower and approved by
the Holder or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount or Default
Amount, Default Sum to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower.
The Borrower shall cause at its expense the investment bank or the accountant to perform the determinations or calculations and
notify the Borrower and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed
determinations or calculations. Such investment bank’s or accountant’s determination or calculation shall be binding
upon all parties absent demonstrable error.

 

    	 	22	 

    	 

    

 

4.14
Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder. The
types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited
to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts,
stock sale price, private placement price per share, and warrant coverage.

 

4.15
Piggyback Registration Rights. The Borrower shall include on the next registration statement the Borrower files with SEC
(or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion
of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but
not less than Fifteen Thousand and No/100 United States Dollars ($15,000), being immediately due and payable to the Holder at
its election in the form of cash payment or addition to the balance of this Note.

 

[signature
page follows]

 

    	 	23	 

    	 

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer as of the date first above
written.

 

	 	SUNSTOCK,
    INC.
	 	 	 
	 	By:	 
	 	Name: 
    	Jason
    Chang 
	 	Title:	Chief
    Executive Officer

 

    	 	24	 

    	 

    

 

EXHIBIT
A

NOTICE
OF CONVERSION 

 

The
undersigned hereby elects to convert $_________________principal amount of the Note (defined below) together with $________________
of accrued and unpaid interest thereto, totaling $_____________ into that number of shares
of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of
Sunstock, Inc., a Delaware corporation (the “Borrower”), according to the conditions of the convertible note of the
Borrower dated as of May 24, 2017 (the “Note”), as of the date written below. No fee will be charged to the Holder
for any conversion, except for transfer taxes, if any.

 

Box
Checked as to applicable instructions:

 

	 	[  ]	The
    Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal At Custodian system (“DWAC Transfer”).
	 	 	 
	 	 	Name
    of DTC Prime Broker: 
	 	 	Account
    Number: 
	 	 	 
	 	[  ]	The
    undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
    set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
    below or, if additional space is necessary, on an attachment hereto:
	 	 	 
	 	 	Name:
    [NAME]
	 	 	Address:
    [ADDRESS]

 

	Date of Conversion:	 	 		 
	Applicable Conversion Price:	 	$		 
	Number of Shares of Common Stock to be Issued Pursuant to Conversion of the Notes:	 	 		 
	Amount of Principal Balance Due remaining Under the Note after this conversion:	 	 		 
	Accrued and unpaid interest remaining:	 	 		 

	

 

	 	 	[HOLDER]

 

	By:	 	 
	Name: 	NAME]	 
	Title:	[TITLE]	 
	Date:	[DATE]	 

 

    	 	25

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