Document:

GULFSLOPE ENERGY, INC. - 8-K 

 

Exhibit
10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of June 21, 2019, is between GULFSLOPE ENERGY, INC.,
a company incorporated under the laws of the State of Delaware, with headquarters located at 1331
Lamar Street, Suite 1665, Houston, Texas 77010 (the “Company”), and each of the investors listed on the
Schedule of Buyers attached hereto (individually, a “Buyer” and collectively the “Buyers”).

 

WITNESSETH

 

WHEREAS, the
Company and each Buyer desire to enter into this transaction for the Company to sell and the Buyers to purchase the Convertible
Debentures (as defined below) pursuant to an exemption from registration pursuant to Section 4(2) and/or Rule 506 of Regulation
D (“Regulation D”) as promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “Securities Act”);

 

WHEREAS, the
parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase up to $3,000,000 of convertible debentures in the form attached hereto as “Exhibit
A” (the “Convertible Debentures”), which shall be convertible into shares of the Company’s common
stock, par value $0.001 (the “Common Stock”) (as converted, the “Conversion Shares”), of
which $2,100,000 shall be purchased upon the signing this Agreement (the “First Closing”), $400,000 shall be
purchased upon the filing of a Registration Statement with the U.S. Securities and Exchange Commission registering the resale of
the Conversion Shares by the Buyers (the “Second Closing”), and $500,000 shall be purchased on or about the
date the Registration Statement has first been declared effective by the SEC (the “Third Closing”) (individually
referred to as a “Closing” collectively referred to as the “Closings”), for a total purchase
price of up to $3,000,000 (the “Purchase Price”) in the respective amounts set forth opposite each Buyer(s)
name on Schedule I (the “Subscription Amount”);

 

WHEREAS, at
the First Closing, the Company will issue to the Buyer warrants (the “Warrants”) to purchase an aggregate of
50.0 million shares (the “Warrant Shares”) of the Company’s Common Stock at an exercise price of $0.06
per share. Such Warrants will expire on the fifth (5th) anniversary after issuance;

 

WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement
(the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide certain registration
rights under the Securities Act and the rules and regulations promulgated there under, and applicable state securities laws;

 

WHEREAS, the
Convertible Debentures, the Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”

 

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AGREEMENT

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

		1.	PURCHASE AND SALE OF CONVERTIBLE DEBENTURES AND WARRANTS.

 

(a)       Purchase
of Convertible Debentures. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company
at each Closing Convertible Debentures in amounts corresponding with the Subscription Amount set forth opposite each Buyer’s
name on Schedule of Buyers attached as Schedule I hereto. Solely with respect to the Third Closing, in the event that the number
of Conversion Shares registered for resale by a Buyer on the Registration Statement multiplied by the average volume weighted
average price of the Common Stock on the Principal Market during the five (5) consecutive Trading Days immediately prior to the
effective date of the Registration Statement is less than three (3.0) times the sum of the aggregate face value of Convertible
Debentures purchased by the Buyer at the First Closing which remains outstanding, and the aggregate face value of the Convertible
Debentures to be issued to the Buyer at the Third Closing (such event shall be referred to as a “Coverage Failure”),
then the amount of Convertible Debentures to be issued and sold at the Third Closing to such Buyer shall automatically be reduced
to the lowest amount which would not result in a Coverage Failure. For the avoidance of doubt, no adjustment shall be made to
any Convertible Debentures previously issued at the First Closing and the Second Closing as a result in a Coverage Failure.

 

(b)       Purchase
of Warrants. At the First Closing, the Company shall issue the Warrants to the Buyer.

 

(c)       Closing
Dates. Each Closing of the purchase of Convertible Debentures by the Buyers shall occur at the offices Yorkville
Advisors Global, LP, 1012 Springfield Avenue, Mountainside, NJ 07092. The date and time of each Closing shall be as follows:
(i) the First Closing shall be 10:00 a.m., New York time, by the fifth (5th) Business Day on which the conditions to the
Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the
Company and each Buyer) (the “First Closing Date”), (ii) the Second Closing shall be 10:00 a.m., New York time,
by the fifth (5th) Business Day after the date on which the Registration Statement is filed by the Company with the SEC,
provided the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is
mutually agreed to by the Company and each Buyer) (the “Second Closing Date”), and (iii) the Third Closing
shall be 10:00 a.m., New York time, by the fifth (5th) Business Day after the Registration Statement is first
declared effective by the SEC, provided the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or
waived (or such other date as is mutually agreed to by the Company and each Buyer) (the “Third Closing Date” and
collectively referred to as the “Closing Dates”). Notwithstanding anything herein to the contrary, the
purchase and sale of Convertible Debentures at the Third Closing shall be at the option of the Company. As used herein
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by law to remain closed.

 

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(d)       Form
of Payment; Deliveries. Subject to the satisfaction of the terms and conditions of this Agreement, on each Closing Date,
(i) the Buyers shall deliver in cash to the Company such aggregate proceeds for the Convertible Debentures to be issued and sold
to such Buyer at such Closing, minus the fees to be paid directly from the proceeds of such Closing as set forth herein, and (ii)
the Company shall deliver to each Buyer, Convertible Debentures which such Buyer is purchasing at such Closing in amounts indicated
opposite such Buyer’s name on Schedule I, duly executed on behalf of the Company.

 

		2.	BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of each
Closing Date:

 

(a)       Investment
Purpose. The Buyer is acquiring the Securities for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the
Securities Act; provided, however, that by making the representations herein, such Buyer reserves the right to dispose of the
Securities at any time in accordance with or pursuant to an effective registration statement covering such Securities or an available
exemption under the Securities Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Securities.

 

(b)       Accredited
Investor Status. The Buyer is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation
D.

 

(c)       Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.

 

(d)       Information.
The Buyer and its advisors (and his or, its counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information he deemed material to making an informed investment decision
regarding his purchase of the Securities, which have been requested by such Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or
affect such Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below.
The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer has sought such
accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

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(e)       Transfer
or Resale. The Buyer understands that: (i) the Securities have not been registered under the Securities Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer
shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities
to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements,
or (C) such Buyer provides the Company with reasonable assurances (in the form of seller and broker representation letters) that
such Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the Securities Act, as amended (or
a successor rule thereto) (collectively, “Rule 144”), in each case following the applicable holding period
set forth therein; and (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms
of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may
require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder.

 

(f)       Legends.
The Buyer agrees to the imprinting, so long as its required by this Section 2(f), of a restrictive legend on the Securities in
substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE [AND THOSE SECURITIES INTO WHICH THEY ARE CONVERTIBLE] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES [AND THOSE SECURITIES INTO WHICH THEY ARE CONVERTIBLE] HAVE BEEN ACQUIRED
SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS.

 

Certificates evidencing the
Conversion Shares and Warrant Shares shall not contain any legend (including the legend set forth above), (i) following any
sale of such Conversion Shares and Warrant Shares pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144, or (ii) if such legend is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the SEC). The Buyer agrees that the removal of restrictive
legend from certificates representing Securities as set forth in this Section 3(f) is predicated upon the Company’s
reliance that the buyer will sell any Securities pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.

 

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(g)       Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

(h)       Authorization,
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with its terms,
except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

(i)       No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which
such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Buyer to perform its obligations hereunder.

 

(j)       Certain
Trading Activities. The Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding
with the Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as
defined below) involving the Company’s securities) during the period commencing as of the time that the Buyer first contacted
the Company or the Company’s agents regarding the specific investment in the Company contemplated by this Agreement and
ending immediately prior to the execution of this Agreement by such Buyer.

 

(k)       Trading
Information. Upon the Company’s request, the Buyer agrees to provide the Company with trading reports setting forth
the number and average sales prices of Conversion Shares and Warrant Shares sold the Buyer during the prior trading week.

 

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		3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as set forth
under the corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof and to qualify
any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes the representations
and warranties set forth below to The Buyer:

 

(a)       Organization
and Qualification. The Company and each of its Subsidiaries are entities duly formed, validly existing and in good standing
under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties
and to carry on their business as now being conducted and as presently proposed to be conducted. The Company and each of its Subsidiaries
is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As
used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof) or condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements
or instruments to be entered into by the Company in connection herewith or therewith or (iii) the authority or ability of the
Company to perform any of its obligations under any of the Transaction Documents (as defined below). “Subsidiaries”
means any Person in which the Company, directly or indirectly, owns a majority of the outstanding capital stock having voting
power or holds a majority of the equity or similar interest of such Person, and each of the foregoing, is individually referred
to herein as a “Subsidiary”.

 

(b)       Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the
Convertible Debentures and the Warrants, the reservation for issuance and issuance of the Conversion Shares issuable upon
conversion of the Convertible Debentures and the Warrant Shares issuable upon the exercise of the Warrants), have been duly
authorized by the Company’s board of directors and no further filing, consent or authorization is required by the
Company, its board of directors or its stockholders or other governmental body (except such governmental filings and
authorizations as are contemplated under the Registration Rights Agreement). This Agreement has been, and the other
Transaction Documents to which the Company is a party will be prior to the Closing, duly executed and delivered by the
Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities law. “Transaction Documents” means,
collectively, this Agreement, the Registration Rights Agreement, the Convertible Debentures, and each of the other agreements
and instruments entered into by the Company or delivered by the Company in connection with the transactions contemplated
hereby and thereby, as may be amended from time to time.

 

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(c)       Issuance
of Securities. The issuance of the Convertible Debentures, the Warrants, Conversion Shares and the Warrant Shares are duly
authorized and, upon issuance and payment in accordance with the terms of the Transaction Documents, the Convertible Debentures,
the Warrants, Conversion Shares and the Warrant Shares, when issued in accordance with the terms hereof and thereof shall be validly
issued, fully paid and non-assessable and free from all preemptive or similar rights, and all mortgages, defects, claims, liens,
pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances arising by or through
the Company (collectively “Liens”) with respect to the issuance thereof. As of the First Closing, the Company
shall have reserved from its duly authorized capital stock (i) the Warrant Shares and (ii) not less than 300% of the maximum number
of shares of Common Stock issuable upon conversion of all Convertible Debentures to be issued hereunder (assuming for purposes
hereof that (x) such Convertible Debentures are convertible at the Conversion Price (as defined therein) as of the date of determination,
and (y) any such conversion shall not take into account any limitations on the conversion of the Convertible Debentures set forth
therein). Upon issuance or conversion in accordance with the Convertible Debentures and the Warrants, the holders of Conversion
Shares and Warrant Shares shall be entitled to all rights accorded to a holder of Common Stock.

 

(d)       
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Convertible
Debentures, the Warrants, Conversion Shares and the Warrant Shares, and the reservation for issuance of the Conversion Shares
and the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below), Bylaws (as defined
below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents
of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries,
(ii) except to the extent waived, conflict with, or constitute a default under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal
and state securities laws and regulations, the securities laws of the jurisdictions of the Company’s incorporation or in
which it or its subsidiaries operate and the rules and regulations of the OTC QB (the “Principal Market”) and
including all applicable laws, rules and regulations of the State of Delaware) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of (ii) and
(iii) for any conflict, default, right or violation that would not reasonably be expected to result in a Material Adverse Effect.

 

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(e)       Consents.
The Company is not required to obtain any material consent from, authorization or order of, or make any filing or registration
with (other than any filings as may be required by any federal or state securities agencies and any filings as may be required
by the Principal Market), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each
case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the
Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on
or prior to each Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which
might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has
no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable
future. The Company has notified the Principal Market of the issuance of all of the Securities hereunder, which does not require
obtaining the approval of the stockholders of the Company or any other Person or Governmental Entity, and the Principal Market
has completed its review of the related Listing of Additional Share form. “Governmental Entity” means any nation,
state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal,
foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch,
department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising,
or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power
of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government
or a public international organization or any of the foregoing.

 

(f)       Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) to its knowledge,
an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively,
“Rule 144”)) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges
that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer
or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby
and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer
that the Company’s decision to enter into the Transaction Documents to which it is a party has been based solely on the
independent evaluation by the Company and its representatives.

 

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(g)       No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would cause this offering of the Securities to require approval of stockholders of the Company under any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system
on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their
affiliates nor any Person acting on their behalf will take any action or steps that would cause the offering of any of the Securities
to be integrated with other offerings of securities of the Company.

 

(h)       Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares will increase in certain circumstances.
The Company further acknowledges its obligation to issue the Conversion Shares upon conversion of the Convertible Debentures and
Warrant Shares upon exercise of the Warrants in accordance with this Agreement, the Convertible Debentures and the Warrants is,
absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders
of the Company.

 

(i)       Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if
any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill
(including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover
provision under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the
Securities.

 

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(j)        SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all
reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”)
(all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the
“SEC Documents”). The Company has delivered or has made available to the Buyers or their respective
representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their
respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments which will not be material, either individually or in the aggregate). The Company is not currently
contemplating amending or restating any of the financial statements (including, without limitation, any notes or any letter
of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial
Statements”), nor has the Company been informed by its independent accountants that they recommend that the Company
amend or restate any of the Financial Statements. The Company has engaged BDO US, LLP to audit the consolidated financial
results for the Company and its subsidiaries.

 

(k)       Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K,
there has been no Material Adverse Effect, nor any event or occurrence specifically affecting the Company or its Subsidiaries
that would be reasonably expected to result in a Material Adverse Effect. Since the date of the Company’s most recent audited
financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends,
(ii) sold any material assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any
material capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company
nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge that any of
their respective creditors intend to initiate involuntary bankruptcy proceedings.

 

(l)       [Reserved].

 

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(m)       Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term under
its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of
preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Articles of Incorporation or certificate of incorporation or
bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any
of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for violations which
would not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of
any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Principal Market
in the foreseeable future. During the one year prior to the date hereof, (i) the Common Stock has been listed or designated
for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal
Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Stock from the Principal Market, which has not been publicly disclosed. The Company
and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the failure to possess such certificates,
authorizations or permits would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment,
injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such
effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse
Effect on the Company or any of its Subsidiaries.

 

(n)       Foreign
Corrupt Practices. Neither the Company nor any of its Subsidiaries nor any director, officer, agent, employee, nor any other
person acting for or on behalf of the Company or any of its Subsidiaries (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official
capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually
and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose, in violation of applicable law, of: (i) (A) influencing any
act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit
to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or (ii) assisting the Company or its Subsidiaries in obtaining
or retaining business for or with, or directing business to, the Company or its Subsidiaries.

 

    11 

     

    

 

(o)       Equity
Capitalization.

 

(i)       Definitions:

 

(A)       “Common
Stock” means (x) the Company’s shares of common stock, par value $0.001 per share, and (y) any capital stock into
which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(ii)       Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 1,500,000,000
shares of Common Stock, of which 1,090,266,844 are issued and outstanding (of which issued and outstanding 2,750,000 are reserved
for issuance) and (B) 50,000,000 shares of preferred stock, of which none are outstanding.

 

(iii)       Valid
Issuance; Available Shares. All of such outstanding shares are duly authorized and have been validly issued and are fully
paid and nonassessable.

 

(iv)       Existing
Securities; Obligations. Except as disclosed in the SEC Documents or as set forth on a schedule hereto: (A) none of the
Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar
rights or Liens arising by or through the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional
shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements
or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities
under the 1933 Act (except pursuant to this Agreement); (D) there are no outstanding securities or instruments of the Company
or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or
any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will
be triggered by the issuance of the Securities; and (G) neither the Company nor any Subsidiary has any stock appreciation
rights or “phantom stock” plans or agreements or any similar plan or agreement.

 

(v)       Organizational
Documents. The Company has furnished to the Buyers or filed on EDGAR true, correct and complete copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all
convertible securities and the material rights of the holders thereof in respect thereto.

 

    12 

     

    

 

(p)       Litigation.
Except as disclosed in the SEC Documents, there is no action, suit, arbitration, proceeding, inquiry or investigation before or
by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any
of the Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in
their capacities as such, which would reasonably be expected to result in a Material Adverse Effect. Without limitation of the
foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by
the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is the subject of any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity that would reasonably be expected to result in a Material Adverse Effect.

 

(q)       Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

 

(r)       Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, taken any action designed to cause or to result in the stabilization or manipulation of the
price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities.

 

(s)       Registration
Eligibility. The Company is eligible to register the resale of the Conversion Shares and the Warrant Shares by the Buyers
using Form S-1 promulgated under the 1933 Act.

 

(t)       [Reserved].

 

(u)       Money
Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited
to, the laws, regulations and Executive Orders and sanctions programs (“Sanctions Programs”) administered
by the U.S. Office of Foreign Assets Control (“OFAC”), including, without limitation, (i) Executive Order
13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and any regulations contained in 31 CFR, Subtitle B,
Chapter V.

 

    13 

     

    

 

(v)       Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents
or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information
concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement
and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided or made available to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries, taken as a whole, is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Buyer
makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically
set forth in Section 2.

 

(w)       No
General Solicitation. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection
with the offer or sale of the Securities.

 

(x)       Private
Placement. Assuming the accuracy of the Buyers’ representations and warranties set forth in Section 2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Buyers as contemplated hereby.
The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Primary Market.

 

		4.	COVENANTS.

 

(a)       Reporting
Status. For the period beginning on the date hereof, and ending sixty days after the date on which all the Debentures and Warrants
are no longer outstanding (the “Reporting Period”), the Company shall use its best efforts to file on a timely
basis all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer
require or otherwise permit such termination.

 

(b)       Use
of Proceeds. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions
contemplated herein to repay any loans to any executives or employees of the Company. Neither the Company nor any Subsidiary
will, directly or indirectly, use the proceeds of the transactions contemplated herein, or lend, contribute, facilitate or
otherwise make available such proceeds to any Person (i) to fund, either directly or indirectly, any activities or business
of or with any Person that is identified on the list of Specially Designated Nationals and Blocker Persons maintained by
OFAC, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions
Programs, or (ii) in any other manner that will result in a violation of Sanctions Programs.

 

    14 

     

    

 

(c)       Listing.
To the extent applicable, the Company shall promptly secure the listing or designation for quotation (as the case may be) of all
of the Underlying Securities (as defined below) upon each national securities exchange and automated quotation system, if any,
upon which the Common Stock is then listed or designated for quotation (as the case may be, each an “Eligible Market”),
subject to official notice of issuance, and shall use reasonable efforts to maintain such listing or designation for quotation
(as the case may be) of all Underlying Securities from time to time issuable under the terms of the Transaction Documents on such
Eligible Market for the Reporting Period. Neither the Company nor any of its Subsidiaries shall take any action which could be
reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market during the Reporting Period.
The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c). “Underlying
Securities” means the (i) the Conversion Shares and the Warrant Shares, and (ii) any common stock of the Company issued
or issuable with respect to the Conversion Shares or the Warrant Shares, including, without limitation, (1) as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company
into which the shares of Common Stock are converted or exchanged without regard to any limitations on conversion of the Convertible
Debentures or the exercise of the Warrants.

 

(d)       Fees.
The Company shall pay to YA Global II SPV, LLC, an affiliate of the lead Buyer (the “Subsidiary Fund”), a commitment
fee (the “Commitment Fee”) equal to 5% of the Purchase Price of each Closing and a one-time due diligence and
structuring fee of $10,000, of which $2,000 was previously received. Each Commitment Fee due and payable at each Closing shall
be deducted from the gross proceeds of each Closing. The unpaid balance of due diligence and structuring fee shall be deducted
from the gross proceeds of the First Closing. The Company authorizes each Buyer to deduct any fees due hereunder from the gross
process of the purchase of any Convertible Debentures.

 

(e)       Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that,
subject to compliance with applicable federal and state securities laws, the Securities may be pledged by an Investor in connection
with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The Company hereby
agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge
of the Securities to such pledgee by a Buyer.

 

    15 

     

    

 

(f)       Disclosure
of Transactions and Other Material Information. On or before 9:30 a.m., New York time, on the fourth (4th) Business Day
after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of
the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the
material Transaction Documents (including, without limitation, this Agreement (including all attachments, the “8-K
Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public
information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In
addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality
or similar obligations with respect to the transactions contemplated by the Transaction Documents under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall
terminate. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the
Company or any of its Subsidiaries from and after the date hereof except pursuant a specific request by such Buyer.

 

(g)       Reservation
of Shares. So long as any of the Convertible Debentures remain outstanding, the Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, no less than 300% of the maximum number of shares of Common
Stock issuable upon conversion of all the Convertible Debentures then outstanding (assuming for purposes hereof that (x) the Convertible
Debentures are convertible at the Conversion Price then in effect, and (y) any such conversion shall not take into account any
limitations on the conversion of the Convertible Debentures) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(g) be reduced other than proportionally
in connection with any conversion and/or redemption, or reverse stock split. If at any time the number of shares of Common Stock
authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special
meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents,
in the case of an insufficient number of authorized shares, and recommending that stockholders vote in favor of an increase in
such authorized number of shares sufficient to meet the Required Reserved Amount.

 

(h)       Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect.

 

(i)       No
Short Sales. The Buyer hereby agrees that it shall not directly or indirectly, engage in any Short Sales involving the
Company’s securities during the period commencing on the date hereof and ending when no Convertible Debentures remain
outstanding. “Short Sales” means all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the 1934 Act (as defined below), whether or not against the box, and forward sale contracts, options,
puts, calls, “put equivalent positions” (as defined in Rule 16a-1(h) under the 1934 Act) and similar
arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

 

    16 

     

    

 

(j)       No
Repayment of Loans. The Company and its Subsidiaries shall not repay any outstanding loans to John Seitz for so long as any
Debentures remain outstanding.

 

		5.	REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)       Register.
The Company shall maintain at its principal executive offices or with the Transfer Agent (or at such other office or agency of
the Company as it may designate by notice to each holder of Securities), a register for the Convertible Debentures in which the
Company shall record the name and address of the Person in whose name the Convertible Debentures have been issued (including the
name and address of each transferee), the amount of Convertible Debentures and Warrants held by such Person, and the number of
Conversion Shares issuable upon conversion of the Convertible Debentures and Warrant Shares issuable upon exercise of the Warrants
held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of
any Buyer or its legal representatives.

 

(b)       Transfer
Restrictions. The Securities may only be disposed of in compliance with state and federal securities laws. In connection with
any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate
of a Buyer or in connection with a pledge as contemplated herein, the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of
such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights and obligations of a Buyer under this Agreement.

 

		6.	CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of
the Company hereunder to issue and sell the Convertible Debentures to each Buyer at each Closing is subject to the satisfaction,
at or before each Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice
thereof:

 

(a)       Such
Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

 

(b)       Such
Buyer shall have received the opinion of counsel to the Company dated as of the First Closing Date, in an agreed upon form.

 

    17 

     

    

 

(c)       Such
Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(d)) for the Convertible Debentures being purchased by such Buyer at the Closing by wire transfer
of immediately available funds in accordance with the Closing Statement.

 

(d)       The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as
of each Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to such Closing Date.

 

		7.	CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

The obligation of each Buyer hereunder
to purchase its Convertible Debentures at each Closing is subject to the satisfaction, at or before each Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer
at any time in its sole discretion by providing the Company with prior written notice thereof:

 

(a)       The
Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company
shall have duly executed and delivered to such Buyer such aggregate amount of Convertible Debentures as is set forth opposite such
Buyer’s name in column (b) of the Schedule of Buyers for each Closing.

 

(b)       [Reserved].

 

(c)       The
Company shall have delivered to each Buyer copies of its and each Subsidiaries certified copies of its charter, as well as any
shareholder or operating agreements by or among the shareholders or members of any of the Company’s Subsidiaries.

 

(d)       Each
and every representation and warranty of the Company shall be true and correct in all material respects (other than representations
and warranties qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of each
Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to
each Closing Date, as set forth in section 3 and 4.

 

(e)       [Reserved].

 

(f)       The
Common Stock, to the extent applicable (A) shall be designated for quotation or listed (as applicable) on the Principal
Market and (B) shall not have been suspended, as of each Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of each Closing Date,
either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the
Principal Market.

 

    18 

     

    

 

(g)       The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities, including without limitation, those required by the Principal Market, if any.

 

(h)       No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.

 

(i)       Since
the date of execution of this Agreement, no event or series of events shall have occurred that has resulted in or would reasonably
be expected to result in a Material Adverse Effect.

 

(j)       [Reserved].

 

(k)       Such
Buyer shall have received a letter, duly executed by an officer of the Company, setting forth the wire amounts of each Buyer and
the wire transfer instructions of the Company (the “Closing Statement”).

 

(l)       From
the date hereof to the applicable Closing Date, (i) trading in the Common Stock shall not have been suspended by the SEC or the
Principal Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), (ii) the closing price of the Common Stock on each such day shall have been above the Floor Price
(as defined in the Convertible Debentures), and (iii) at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on the Principal Market, nor shall a banking moratorium have been declared either
by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of each Buyer, makes it impracticable or inadvisable to purchase the Securities
at the Closing.

 

(m)       [Reserved].

 

(n)       The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

 

(o)       Solely
with respect to the Second Closing, the Company shall have filed the Registration Statement with the SEC.

 

(p)       Solely
with respect to the Third Closing, the Registration Statement shall be effective.

 

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(q)       Solely
with respect to the Third Closing, the issuance and sale of the Convertible Debentures to the Buyer shall not cause a Coverage
Failure, and if the Third Closing shall cause a Coverage Failure then the amount of the Convertible Debentures to be issued and
sold at the Third Closing to such Buyer shall automatically be reduced to the lowest amount of Convertible Debentures which would
not result in a Coverage Failure.

 

		8.	TERMINATION.

 

In the
event that the First Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such
Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the
close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate
this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment
of the sale and purchase of the Convertible Debentures shall be applicable only to such Buyer providing such written notice, provided
further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the
expenses described herein. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of
any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

 

		9.	MISCELLANEOUS.

 

(a)       Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New Jersey, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of New Jersey or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New Jersey. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such 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 manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. EACH PARTY 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 UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

    20 

     

    

 

(b)       Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

(c)       Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found.

 

(d)       Entire
Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.

 

    21 

     

    

 

(e)       Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing by letter and e-mail and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered
personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and e-mail
addresses for such communications shall be:

 

	If to the Company, to:	GulfSlope Energy, Inc.
	 	
        1331 Lamar St., Suite 1665

        

        Houston, Texas 77010

        

        Telephone: (281) 918-4103

        Attention: John Malanga

        E-Mail: john.malanga@gulfslope.com

         

	With Copy to:	
        Mayer Brown LLP

        

        700 Louisiana St., Suite 3400

        

        Houston, Texas 77002

        

        Telephone: (713) 238-2684

        Attention: William T. Heller IV

        E-Mail: wheller@mayerbrown.com

        

	 	 
	If to a Buyer, to its address, e-mail address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
	 	 
	With copy to:	
        Troy J. Rillo, Esq.

        

        c/o Yorkville Advisors Global, LP

        

        1012 Springfield Avenue

        

        Mountainside, NJ 07092

        

        Email: legal@yorkvilleadvisors.com

        

	 	 

or to such other address,
e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission,
an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii)
above, respectively.

 

(f)       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns. Neither party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the
other party hereto.

 

    22 

     

    

 

(g)       Indemnification.

 

(i)       In
consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each of their stockholders, partners, members, officers,
directors, employees and any of the foregoing Persons’ agents or other representatives (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out
of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in any of the
Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in
any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any
Subsidiary) or which otherwise involves such Indemnitee, in each instance that arises out of or results from (A) the
execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (C)
any disclosure properly made by such Buyer pursuant to Section 4(f). To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable law.

 

(ii)       Promptly
after receipt by an Indemnitee under this Section 9(g) of notice of the commencement of any action or proceeding (including
any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Section 9(g), deliver to the Company a written notice of the
commencement thereof, and the Company shall have the right to participate in, and, to the extent the Company so desires, to
assume control of the defense thereof with counsel mutually reasonably satisfactory to the Company and the Indemnitee;
provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of such
counsel to be paid by the Company if: (A) the Company has agreed in writing to pay such fees and expenses; (B) the
Company shall have failed promptly to assume the defense of such Indemnified Liability and to employ counsel reasonably
satisfactory to such Indemnitee in any such Indemnified Liability; or (C) the named parties to any such Indemnified
Liability (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been
advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnitee and
the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at
the expense of the Company, then the Company shall not have the right to assume the defense thereof and such counsel shall be
at the expense of the Company), provided further, that in the case of clause (C) above the Company shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel for the Indemnitees. The Indemnitee shall
reasonably cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified
Liability by the Company and shall furnish to the Company all information reasonably available to the Indemnitee
which relates to such action or Indemnified Liability. The Company shall keep the Indemnitee reasonably apprised at all times
as to the status of the defense or any settlement negotiations with respect thereto. The Company shall not be liable for any
settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the Company
shall not unreasonably withhold, delay or condition its consent. The Company shall not, without the prior written consent of
the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in
respect to such Indemnified Liability or litigation, and such settlement shall not include any admission as to fault on the
part of the Indemnitee. Following indemnification as provided for hereunder, the Company shall be subrogated to all rights of
the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has
been made. The failure to deliver written notice to the Company within a reasonable time of the commencement of any such
action shall not relieve the Company of any liability to the Indemnitee under this Section 9(g), except to the extent that
the Company is materially and adversely prejudiced in its ability to defend such action.

 

    23 

     

    

 

(iii)       The
indemnification required by this Section 9(g) shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills supporting the Indemnified Liabilities are received by the Company.

 

(iv)       The
indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against
the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.

 

(h)       No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]

 

    24 

     

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.

 

	 	
        COMPANY:

        

	 	 
	 	GULFSLOPE ENERGY, INC.
	 	 
	 	By:	
	 	Name:	John N. Seitz

	 	Title:	Chief Executive Officer

 

[Signature Page to
Securities Purchase Agreement]

 

    25 

     

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.

 

	 	
        BUYER:

        

	 	 
	 	YA II PN, LTD. 
	 	 
	 	By:	 Yorkville Advisors Global, LP
	 	Its:	 Investment Manager
	 	 
	 	By:	Yorkville Advisors Global II, LLC
	 	Its:	General Partner
	 	 
	 	By:	 
	 	Name:	Matt Beckman

	 	Title:	Manager

 

    26 

     

    

 

EXHIBIT A

 

FORM OF CONVERTIBLE DEBENTURES

 

    27 

     

    

 

SCHEDULE OF BUYERS

 

	(a)	 	(b)	(c)
	Buyer 	 	Principal Amount

 of Convertible 

Debentures	Purchase Price 

(100% of Face 

Value)
	 	 	 	 
	YA II PN, Ltd.	 	 	 
	1012 Springfield Avenue	First Closing:	$2,100,000.00	$2,100,000.00
	Mountainside, NJ 07092	Second Closing	$400,000.00	$400,000.00
	Email: Legal@yorkvilleadvisors.com	Third Closing	$500,000.00	$500,000.00
	 	 	 
	 	Aggregate:	$3,000,000.00 	$3,000,000.00 
	 	 	 	 
	 	 	 
	Legal Representative’s Address and E-Mail Address	 
	Troy Rillo, Esq.	 	 	 
	1012 Springfield Avenue	 	 	 
	Mountainside, NJ 07092	 	 	 
	Email: Legal@yorkvilleadvisors.com	 	 

 

    28GULFSLOPE ENERGY, INC. - 8-K

 

Exhibit 10.2

 

NEITHER THIS DEBENTURE NOR THE SECURITIES
INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

GULFSLOPE
ENERGY, INC.

 

Convertible
Debenture

 

Principal Amount: $2,100,000

Debenture Issuance Date: June 21, 2019

Debenture Number: GSPE-1

 

FOR VALUE RECEIVED,
GULFSLOPE ENERGY, INC., a Delaware corporation (the “Company”), hereby promises to pay to the order of
YA II PN, Ltd., or its registered assigns (the “Holder”) the amount set out above as the Principal Amount (as
reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when
due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest
Rate from the date set out above as the Debenture Issuance Date (the “Issuance Date”) until the same becomes
due and payable, whether upon an Interest Date (as defined below), the Maturity Date or acceleration, conversion, redemption or
otherwise (in each case in accordance with the terms hereof). This Convertible Debenture (including all debentures issued in exchange,
transfer or replacement hereof, this “Debenture”) was originally issued pursuant to the Securities Purchase
Agreement dated June 21, 2019, (the “Securities Purchase Agreement”) between the Company and the Buyers listed
on the Schedule of Buyers attached thereto. Certain capitalized terms used herein are defined in Section 16 hereof.

 

(1)           
GENERAL TERMS

 

(a)           
Maturity Date. The “Maturity Date” shall be June 21, 2020, as may be extended at the option of
the Holder.

 

(b)           
Interest Rate and Payment of Interest. Interest shall accrue on the outstanding principal balance hereof at an annual
rate equal to 8% (“Interest Rate”), which Interest Rate shall be equal to 15% per year upon an Event of Default.
Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable
law.

 

    

    

    

 

(c)           
Redemption. The Company shall have the right, but not the obligation, to redeem (“Optional Redemption”)
a portion or all amounts outstanding under this Debenture prior to the Maturity Date as described in this Section; provided
that (i) the trading price of the Common Stock is less than the Fixed Conversion Price and (ii) the Company provides each Buyer
with at least 10 Business Days’ prior written notice (each, a “Redemption Notice”) of its desire to exercise
an Optional Redemption. Each Redemption Notice shall be irrevocable and shall specify the outstanding balance of the Convertible
Debentures to be redeemed and the applicable Redemption Premium. The “Redemption Amount” shall be equal to the
outstanding balance being redeemed by the Company, plus 20% (the “Redemption Premium”). After receipt of the
Redemption Notice, the Holder shall have 10 Business Days to elect to convert all or any portion of Convertible Debentures. On
the 11th Business Day after the Redemption Notice, the Company shall deliver to the Holder the Redemption Amount with respect to
the Principal amount redeemed after giving effect to conversions effected during the 10 Business Day period.

 

(2)           
EVENTS OF DEFAULT.

 

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

 

(i)           
the Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this
Debenture or any other Transaction Document within five (5) Business Days after such payment is due;

 

(ii)          
The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary
of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the
Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect
relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company
any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty
one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the
Company or any subsidiary of the Company shall fail to pay, or shall state in writing that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or the Company or any subsidiary of the Company shall convene a meeting of its
creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of
the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing;
or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the
foregoing;

 

    2

    

    

 

(iii)           The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage,
credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued,
or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring
arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists
or shall hereafter be created and such default is not cured or waived within five (5) Business Days;

 

(iv)          The Common Stock shall cease to be quoted or listed for trading, as applicable, on a Primary Market for a period of 10 consecutive
Trading Days;

 

(v)           The
Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 16) unless
in connection with such Change of Control Transaction this Debenture is retired;

 

(vi)          the Company’s (A) failure to cure a Conversion Failure by delivery of (I) the required number of shares of Common Stock
or (II) the Buy-In Price within five (5) Business Days after the applicable Conversion Failure or (B) written notice to any holder
of the Debentures, or notice by way of public announcement, at any time, of its intention not to comply with a request for conversion
of any Debentures into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than
pursuant to Section 4(c);

 

(vii)         The
Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within five (5) Business
Days after such payment is due;

 

(viii)        The Company shall fail to observe or perform any other material covenant, agreement or warranty contained in, or otherwise
commit any material breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii)
hereof) or any Transaction Document (as defined in Section 16) which is not cured within the time prescribed.

 

(ix)           any Event of Default (as defined in the Other Debentures) occurs with respect to any Other Debentures.

 

(b)           During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred and is continuing,
the full unpaid Principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date
of acceleration shall become at the Holder’s election, immediately due and payable in cash; provided that if the Event of
Default is due to the Company’s failure to timely issue Conversion Shares or Warrant Shares then the amount due upon acceleration
shall be 150% of the full unpaid Principal amount of this Debenture, plus accrued but unpaid interest. Furthermore, in addition
to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture (subject to the beneficial
ownership limitations set out in Section 3(d)(i)) at any time after an Event of Default (provided that such Event of Default is
continuing) at the Default Conversion Price. The Holder need not provide and the Company hereby waives any presentment, demand,
protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately enforce any and
all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded
and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event
of Default or impair any right consequent thereon.

 

    3

    

    

 

(3)          
CONVERSION OF DEBENTURE. This Debenture shall be convertible into shares of the Company’s Common Stock, on the
terms and conditions set forth in this Section 3.

 

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

 

(i)            “Conversion Amount” means the portion of the Principal and accrued Interest to be converted, redeemed
or otherwise with respect to which this determination is being made.

 

(b)          
“Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination
shall be the lesser of (i) $0.05 per share (the “Fixed Conversion Price”) or (ii) 80% of the lowest daily VWAP
price (as reported by Bloomberg, LP) for the 10 consecutive Trading Days immediately preceding the Conversion Date or other date
of determination. The Conversion Price shall be adjusted from time to time pursuant to the other terms and conditions of this Debenture.

 

    4

    

    

 

(c)           
Mechanics of Conversion.

 

(i)            Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such
date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company and (B) if required by Section 3(b)(iv), surrender this Debenture to a nationally recognized overnight delivery
service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to
this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt
of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be
placed on certificates of Common Stock and provided that the Transfer Agent is participating in the Depository Trust Company’s
(“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock
to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal
Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear
any restrictive legends unless required pursuant to federal or state securities laws and the rules and regulations of the Commission
or state securities authorities. If this Debenture is physically surrendered for conversion and the outstanding Principal of this
Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable
and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to
the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the
shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or
holders of such shares of Common Stock upon the transmission of a Conversion Notice.

 

(ii)           Company’s Failure to Timely Convert. If within three (3) Trading Days after the Company’s receipt of the facsimile
copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder’s conversion of any
Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an
open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable
upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall,
within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in
an amount equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket expenses, if any)
for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation
to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal
to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing
Bid Price on the Conversion Date.

 

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

 

    5

    

    

 

(d)  
Limitations on Conversions.

 

(i)           
Beneficial Ownership. The Holder shall not have the right to convert any portion of this Debenture or receive shares
of Common Stock hereunder to the extent that after giving effect to such conversion or receipt of such Shares, the Holder, together
with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the
rules promulgated thereunder) in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect
to such conversion or receipt of shares as payment of interest. Since the Holder will not be obligated to report to the Company
the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result
in the issuance of shares of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without regard to any
other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation
to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal
amount of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a
Conversion Notice for a principal amount of this Debenture that, without regard to any other shares that the Holder or its affiliates
may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder
of this fact and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date
in accordance with Section 3(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall
remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not
to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

 

(ii)           
So long as no Event of Default has occurred, then the Buyer agrees to limit conversions of among all Debentures to no more
than [$500,000] per calendar month at a Conversion Price below the Fixed Conversion Price. This limitation may be waived with the
consent of the Company.

 

(e)   
Other Provisions.

 

(i)           
The Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of
Common Stock issuable upon conversion of all outstanding amounts under this Debenture; and within three (3) Business Days following
the receipt by the Company of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall
promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

 

    6

    

    

 

(ii)          
All calculations under this Section 3 shall be rounded to the nearest $0.0001 or whole share.

 

(iii)         
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of
Common Stock solely for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each
as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder,
not less than such number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions
set forth herein) upon the conversion of the outstanding principal amount of this Debenture and payment of interest hereunder.
The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized,
issued and fully paid, nonassessable and, if the Underlying Shares Registration Statement has been declared effective under the
Securities Act, registered for public sale in accordance with such Underlying Shares Registration Statement.

 

(iv)         
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section
2 herein for the Company’s failure to deliver certificates representing shares of Common Stock upon conversion within the
period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or
provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant
to any other Section hereof or under applicable law.

 

(v)          
Conversion Costs. The Company agrees to reimburse the Holder for costs incurred for any legal opinions paid for by the Holder
in connection with sale of underlying shares of Common Stock (provided that the Company has first had the opportunity to obtain
such a legal opinion on behalf of the Holder). The Holder shall notify the Company of any such reasonable costs and expenses it
incurs that are referred to in this section from time to time and such reasonable amounts owed hereunder, not to exceed $650 for
any single legal opinion, and not to exceed $5,000 in the aggregate without the Company’s prior written approval, shall be
paid by the Company on the Maturity Date.

 

(4)  
Adjustments to Conversion Price

 

(a)   
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while
this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding
shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares
of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall
be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

    7

    

    

 

(b)  
[Reserved].

 

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

 

(d)  
Whenever the Conversion Price is adjusted pursuant to Section 4 hereof, the Company shall promptly mail to the Holder a
notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such
adjustment.

 

(e)  
In case of any (1) merger or consolidation of the Company or any subsidiary of the Company comprising a majority of the
Company’s assets with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half
of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights
under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities,
cash and property receivable by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be
entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common
Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger,
consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity
to issue to the Holder a convertible Debenture with a principal amount equal to the aggregate principal amount of this Debenture
then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible
Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled
to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this
Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred
stock or convertible Debentures shall be based upon the amount of securities, cash and property that each share of Common Stock
would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for
such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder
the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such
event. This provision shall similarly apply to successive such events.

 

    8

    

    

 

(5)           
REISSUANCE OF THIS DEBENTURE.

 

(a)           
Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 5(d)), registered
in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along
with any accrued and unpaid interest thereof) and, if less then the entire outstanding Principal is being transferred, a new Debenture
(in accordance with Section 5(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any
assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 3(b)(iii) following
conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less
than the Principal stated on the face of this Debenture.

 

(b)           
Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any bonding
and indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section
5(d)) representing the outstanding Principal.

 

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

 

(d)           
Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this
Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of
such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 5(a)
or Section 5(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures
issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior
to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is
the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall
represent accrued and unpaid Interest from the Issuance Date.

 

    9

    

    

 

(6)          
NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms
hereof must be in writing by letter and e-mail and will be deemed to have been delivered: upon the later of (A) either (i) receipt,
when delivered personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified,
in each case, properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses
and email addresses for such communications shall be:

 

	
        If to the Company, to:

         
	GulfSlope Energy, Inc.

                                                                                1331 Lamar St., Suite 1665

                                                                                Houston, Texas 77010

                                                                                Telephone: (281) 918-4103
 Attention: John Malanga
 E-Mail: john.malanga@gulfslope.com 

	 	 
	With Copy to:	
        Mayer Brown LLP

        

        700 Louisiana St., Suite 3400

        

        Houston, Texas 77002

        

        Telephone: (713) 238-2684

        Attention: William T. Heller IV

        E-Mail: wheller@mayerbrown.com

        
	 
	 	 
	If to the Holder:	YA II PN, Ltd
	 	
        c/o Yorkville Advisors Global, LLC

        

        1012 Springfield Avenue

        

	 	Mountainside, NJ 07092
	 	Attention: Mark Angelo
	 	Telephone: 201-985-8300
	 	Email: Legal@yorkvilleadvisors.com

 

or at such other address
and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given
to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given
by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or
(iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

    10

    

    

 

(7)           
Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company,
which are absolute and unconditional, to pay the principal of, interest and other charges (if any) on, this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company. As long
as this Debenture is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder,
amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder.

 

(8)           
This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation,
the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the
terms hereof.

 

(9)           
[Reserved].

 

(10)         
This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving
effect to conflicts of laws thereof.

 

(11)         
If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly,
to the extent reasonably incurred and documented, all fees, costs and expenses, including, without limitation, reasonable attorneys’
fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those
incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s
rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding
or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies
of the Holder.

 

(12)         
Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist
upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in
writing.

 

(13)         
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable
laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted
rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture,
and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder,
but will suffer and permit the execution of every such as though no such law has been enacted.

 

    11

    

    

 

(14)         
Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.

 

(15)         
THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

 

(16)         
CERTAIN DEFINITIONS  For purposes of this Debenture, the following terms shall have the following meanings:

 

(a)          
“Bloomberg” means Bloomberg Financial Markets.

 

(b)          
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday
in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

 

(c)          
“Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective
control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess
of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder
or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes
hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company
(other than as due to the death or disability of a member of the board of directors) which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of
the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the
board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of
the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity,
or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any
of the events set forth above in (a), (b) or (c). No transfer to a wholly-owned subsidiary shall be deemed a Change of Control
Transaction under this provision.

 

    12

    

    

 

(d)          
“Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary
Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

 

(e)          
“Commission” means the Securities and Exchange Commission.

 

(f)           
“Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class
into which such shares may hereafter be changed or reclassified.

 

(g)          
“Default Conversion Price” means 60% of the lowest VWAP prices (as reported by Bloomberg, LP) during
the 20 consecutive Trading Days immediately preceding the applicable date of determination.

 

(h)          
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(i)           
“Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation
of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with
a wholly owned subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all
or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property

 

(j)           
“Other Debentures” means any other debentures issued pursuant to the Securities Purchase Agreement and
any other debentures, notes, or other instruments issued in exchange, replacement, or modification of the foregoing.

 

(k)           
“Person” means a corporation, an association, a partnership, organization, a business, an individual,
a government or political subdivision thereof or a governmental agency.

 

(l)           
“Primary Market” means any of the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Market, the
Nasdaq Global Select Market, or the OTC QB or OTC QX, and any successor to any of the foregoing markets or exchanges.

 

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

 

(n)          
“Trading Day” means a day on which the shares of Common Stock are quoted or traded on a Primary Market
on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are
not listed or quoted, then Trading Day shall mean a Business Day.

 

    13

    

    

 

(o)          
“Transaction Document(s)” shall mean this Debenture, along with the Securities Purchase Agreement, and
any other documents or agreements entered into in connection with the foregoing.

 

(p)          
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as
payment of interest in accordance with the terms hereof.

 

(q)          
“VWAP” means, for any security as of any date, the daily dollar volume-weighted average price for such
security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily
Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg.

 

[Signature Page Follows]

 

    14

    

    

 

IN WITNESS WHEREOF,
the Company has caused this Secured Convertible Debenture to be duly executed by a duly authorized officer as of the date set forth
above.

 

	 	COMPANY:
	 	GULFSLOPE ENERGY, INC.
	 		 
	 	By:	 
	 	Name:	John N. Seitz
	 	Title:	Chief Executive Officer
	 	 	 

 

[Signature Page to Convertible Debenture]

 

    

    

    

 

EXHIBIT I

CONVERSION NOTICE

 

(To be executed by the Holder in order
to Convert the Debenture)

 

TO: 

 

The undersigned hereby
irrevocably elects to convert $________________________ of the principal amount of Debenture No. GSPE-1 into Shares of Common Stock of GULFSLOPE ENERGY,
INC., according to the conditions stated therein, as of the Conversion Date written below.

 

	Conversion Date:	 
	Conversion Amount to be converted:	$	
	Conversion Price:	$	
	Number of shares of Common Stock to be issued:	 
	 	 	 
	 	 	
	 	 	 
	Please issue the shares of Common Stock in the following name and to the following address:
	Issue to:	 	
	 	 	 
	Authorized Signature:	
	Name:	
	Title:	
	Broker DTC Participant Code:	 	

                                                                               

	Account Number:

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