Document:

Execution
Copy

 

CONVERTIBLE
NOTE

 

NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 

 

XFIT
BRANDS, INC.

 

Convertible
Note

 

	Issuance
    Date: September 21, 2017	Original
    Principal Amount: U.S. $100,000.00

 

FOR
VALUE RECEIVED, XFIT BRANDS, INC., a Nevada corporation (the “Company”), hereby promises to pay
to the order of Innovative Capital, LLC or its registered assigns (“Holder”) the amount set out above as the Original
Principal Amount (as reduced pursuant to the terms hereof pursuant to conversion or otherwise, the “Principal”)
when due, whether upon the Maturity Date (as defined below), acceleration or otherwise (in each case in accordance with the terms
hereof) and to pay interest (“Interest”) on any outstanding Principal (as defined below) at the applicable
Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion or otherwise (in each case
in accordance with the terms hereof). This Convertible Note (this “Note”, including all Convertible
Notes issued in exchange, transfer or replacement hereof, collectively, the “Notes”) was initially issued
pursuant to the Note Purchase Agreement (as defined below) on the Closing Date (as defined below) as part of an offering of U.S.
$300,000.00 of Notes which shall rank pari passu. Certain capitalized terms used herein are defined in Section 21.

 

1.
PAYMENTS OF PRINCIPAL. Unless converted as provided in Section 3, on the Maturity Date, the Company shall pay to the Holder
an amount in in cash representing all outstanding Principal, a premium of $133,000.00 and accrued and unpaid Interest. Other than
as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, or accrued and unpaid
Interest.

 

    	 

    	 

    

 

2.
INTEREST; INTEREST RATE.

 

(a)
Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve
30-day months and shall be payable in cash on the Maturity Date.

 

(b)
Prior to the payment of Interest on the Maturity Date or any applicable Conversion Date, Interest on this Note shall accrue at
the Interest Rate and be payable by way of inclusion of the Interest in the Conversion Amount on the Maturity Date in accordance
with Section 3 if the Holder elects to convert this Note and in cash otherwise.

 

3.
CONVERSION OF NOTES. (a) Provided that the Holder provides the Company with notice of an election to convert at least thirty
days prior to to Maturity, this Note shall be convertible into validly issued, fully paid and non-assessable Common Shares (as
defined below), on the terms and conditions set forth in this Section 3. At Maturity, the outstanding and unpaid Conversion Amount
(as defined below) of this Note shall be converted into validly issued, fully paid and non-assessable Common Shares, at the Conversion
Rate (as defined below). The Company shall not issue any fraction of a Common Share upon any conversion. If the issuance would
result in the issuance of a fraction of a Common Share, the Company shall round such fraction of a Common Share up to the nearest
whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to
the issuance and delivery of Common Shares upon conversion of any Conversion Amount.

 

(b)
Conversion Rate. The number of Common Shares issuable upon conversion of any Conversion Amount pursuant to Section 3(a)
shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).

 

(i)
“Conversion Amount” means the portion of the Principal to be converted or otherwise with respect to
which this determination is being made, plus all accrued and unpaid Interest with respect to such portion of the Principal amount
with respect to such portion of such Principal and such Interest, but the premium reflected in Section 1 shall not be included
in the Conversion Amount.

 

(ii)
“Conversion Price” means, as of any Conversion Date or other date of determination, U.S. $0.03.

 

4.
RIGHTS UPON EVENT OF DEFAULT.

 

Event
of Default. Each of the following events shall constitute an “Event of Default”:

 

(i)
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted
by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not
be dismissed within thirty (30) days of their initiation;

 

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(ii)
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance
of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other
similar action under federal, state or foreign law;

 

(iii)
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of
a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt
or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;

 

(iv)
a final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment
which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount
set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which
written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or
an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity
within thirty (30) days of the issuance of such judgment;

 

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(v)
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable
grace period, any payment with respect to any Indebtedness in excess of $100,000 due to any third party (other than, with respect
to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by
proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with
GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $100,000, which
breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii)
suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result
in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default
would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities,
properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or
in the aggregate; or

 

(vi)
other than as specifically set forth in another clause of this Section 4, the Company or any Subsidiary breaches any representation,
warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other
term or condition that is curable, only if such breach remains uncured for a period of three (3) consecutive Trading Days;

 

Then,
or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option
of the Holder and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without
presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly
waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or
any other rights or remedies afforded by law. Without limiting the foregoing, upon an Event of Default at the election of the
Holder the Company shall transfer its free-weight business to a designee of the Holder.

 

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5.
RIGHTS UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.

 

(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes
in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions
of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder
prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes,
and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose
Common Shares are quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the
provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company
under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of the Company’s Common Shares (or other securities, cash, assets or other property (except such items
still issuable under under this Note, which shall continue to be receivable thereafter) issuable upon the conversion or redemption
of the Notes prior to such Fundamental Transaction, such shares of the publicly traded Common Shares (or their equivalent) of
the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of
such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction, as adjusted in accordance
with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written
notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note.

 

(b)
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 Common Shares are entitled to receive securities or other assets with
respect to or in exchange for Common Shares (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in addition to
the Common Shares receivable upon such conversion, such securities or other assets to which the Holder would have been entitled
with respect to such Common Shares had such Common Shares 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 Note) or (ii) in lieu of the Common
Shares otherwise receivable upon such conversion, such securities or other assets received by the holders of Common Shares in
connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had
this Note initially been issued with conversion rights for the form of such consideration (as opposed to Common Shares) 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 satisfactory to the Holder.

 

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(c)
The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events
and shall be applied without regard to any limitations on the conversion of this Note.

 

6.
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

(a)
Adjustment of Conversion Price upon Subdivision or Combination of Common Shares. Without limiting any provision of Section
5, if the Company at any time on or after the Closing Date subdivides (by any stock split, stock dividend, stock combination,
recapitalization or other similar transaction) one or more classes of its outstanding Common Shares into a greater number of shares,
the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision
of Section 5, if the Company at any time on or after the Closing Date combines (by any stock split, stock dividend, stock combination,
recapitalization or other similar transaction) one or more classes of its outstanding Common Shares into a smaller number of shares,
the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant
to this Section 6(a) shall become effective immediately after the effective date of such subdivision or combination. If any event
requiring an adjustment under this Section 6(a) occurs during the period that a Conversion Price is calculated hereunder, then
the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

 

(b)
Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are
not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the
type contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect
the rights of the Holder, provided that no such adjustment pursuant to this Section 6(b) will increase the Conversion Price as
otherwise determined pursuant to this Section 6, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be borne by the Company.

 

7.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation,
Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of
this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required
to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any Common Shares receivable upon conversion of this Note above the Conversion Price then in effect,
(ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Common Shares upon the conversion of this Note, and (iii) shall, so long as any of the Notes are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued Common Shares, solely for the purpose
of effecting the conversion of the Notes, the maximum number of Common Shares as shall from time to time be necessary to effect
the conversion of the Notes then outstanding (without regard to any limitations on conversion).

 

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8.
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including,
without limitation, the Nevada Revised Statutes) and as expressly provided in this Note.

 

9.
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment
to this Note.

 

10.
TRANSFER. This Note and any Common Shares issued upon conversion of this Note may not be offered, sold, assigned or transferred
by the Holder without the consent of the Company, subject only to the provisions of the Note Purchase Agreement.

 

11.
REISSUANCE OF THIS NOTE.

 

(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 11(d)), registered as the
Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 11(d)) to the Holder representing the outstanding Principal
not being transferred.

 

(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below
shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance with Section 11(d)) representing the outstanding
Principal.

 

(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Note or Notes (in accordance with Section 11(d) and in principal amounts of at least
$1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion
of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new
Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 11(a) or Section 11(c), the Principal designated
by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest of this Note, from the Issuance
Date.

 

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12.
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall
be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law
or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this
Note (including, without limitation, compliance with Section 6).

 

13.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the
Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The
Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that
the purchase price paid for this Note was less than the original Principal amount hereof.

 

14.
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form
part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall
have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to
in writing by the Holder.

 

15.
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.

 

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16.
NOTICES; CURRENCY; PAYMENTS.

 

(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Note Purchase Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Shares, or (B) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to
or in conjunction with such notice being provided to the Holder.

 

(b)
Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”),
and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the
U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and
agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final
date of such period of time).

 

(c)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn
on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to
the Company in writing, provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall
instead be due on the next succeeding day which is a Business Day.

 

17.
CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full,
this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

18.
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note
and the Note Purchase Agreement.

 

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19.
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING
OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

20.
MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or
other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid
or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Company to the Holder and thus refunded to the Company.

 

21.
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

(a)
“1934 Act” means the United States Securities Exchange Act of 1934, as amended.

 

(b)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain closed.

 

(c)
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any
of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the Common Shares in which holders of the Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly
traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving
entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if
other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii)
pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or
any of its Subsidiaries.

 

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(d)
“Closing Date” shall have the meaning set forth in the Note Purchase Agreement, which date is the date
the Company initially issued the Note pursuant to the terms of the Note Purchase Agreement.

 

(e)
“Common Shares” means (i) the Company’s Common Shares, par value $0.0001 per share, and (ii) any
capital stock into which such Common Shares shall have been changed or any share capital resulting from a reclassification of
such Common Shares.

 

(f)
“Eligible Market” means the NASDAQ Global Market, the NASDAQ Global Select Market, the NASDAQ Capital
Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB Marketplace operated by OTC Markets
Group Inc. (or any successor to any of the foregoing) or the Principal Market.

 

(g)
“Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries
is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of
all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase,
tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination),
or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined
in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Voting Stock of the Company.

 

(h)
“GAAP” means United States generally accepted accounting principles, consistently applied.

 

    	11

    	 

    

 

(i)
“Indebtedness” means (i) all indebtedness for borrowed money or for the deferred purchase price of property
or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business) and all obligations
under leases which are or should be under GAAP, recorded as capital leases, in respect of which the Company is directly or contingently
liable as borrower, guarantor, endorser or otherwise, or in respect of which the Company otherwise assures a creditor against
loss, (ii) all obligations for borrowed money or for the deferred purchase price of a property or services secured by (or for
which the holder has an existing right, contingent or otherwise, to be secured by) any encumbrance upon property (including without
limitation accounts receivable and contract rights) owned by the Company, whether or not the Company has assumed or become liable
for the payment thereof and (iii) all other liabilities and obligations which would be classified in accordance with GAAP as liabilities
of the Company on a balance sheet.

 

(j)
“Interest Rate” means two percent (2.0%) per annum, as may be adjusted from time to time in accordance
with Section 2.

 

(k)
“Maturity Date” shall mean September 21, 2020; provided, however, the Maturity Date may be extended
at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing
or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event
of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the
event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity
Date.

 

(l)
“Note Purchase Agreement” means the agreement providing for the issuance of the Notes between the Company
and the initial Holder of the Notes.

 

(m)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person
and whose Common Shares or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one
such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.

 

(n)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(o)
“Principal Market” means the OTC QB (or any successor thereto).

 

(p)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.

 

(q)
“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations
adopted by the SEC.

 

(r)
“Subsidiaries” shall all corporations or other entities, if any, of which at least a majority of the
securities or other ownership interest having ordinary voting power for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company and/or any of its other Subsidiaries.

 

    	12

    	 

    

 

(s)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with
which such Fundamental Transaction shall have been entered into.

 

(t)
“Trading Day” means any day on which the Common Shares are traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the Common Shares, then on the principal securities exchange or securities
market on which the Common Shares are then traded, provided that “Trading Day” shall not include any
day on which the Common Shares are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common
Shares are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does
not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder.

 

(u)
“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which
the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board
of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital
stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

22.
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to the Company or its Subsidiaries.

 

[signature
page follows]

 

    	13

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.

 

	 	XFIT
    BRANDS, INC.
	 	By:	 
	 	Name:	J.
    Gregory Barrow
	 	Title:	Chief
    Executive OfficerPROMISSORY
NOTE

 

	$150,000.00	September
    7, 2017

 

FOR
VALUE RECEIVED, XFit Brands, Inc., a Nevada corporation (“Borrower”), hereby promises to pay to the order of
GCP, Inc., a Colorado corporation (hereinafter referred to, together with each subsequent holder hereof, as “Lender”),
in lawful money of the United States and in the principal sum of One Hundred Fifty Thousand and no/100 Dollars ($150,000.00),
or so much thereof as may be outstanding from time to time, together with all accrued and unpaid interest thereon, in the amounts,
at the times, in the manner and subject to the terms and conditions set forth in this Promissory Note (this “Note”).

 

1.
Payment; Principal and Interest.

 

(a)
Principal and Interest Repayment. The
principal amount of this Note shall be payable, together with accrued and unpaid interest thereon, on June 30, 2018 (the “Maturity
Date”). The principal amount of this Note shall bear interest at a rate of [ten] percent (10%) per annum, which shall be
payable on the Maturity Date. Interest shall be calculated on the basis of a 365/366-day year for the actual number of days elapsed.

 

(b)
Limitations on Interest Rates. Notwithstanding
any provision in this Note to the contrary, the total liability for payments in the nature of interest shall not exceed the applicable
limits imposed by any applicable federal or state interest rate laws. If any payments
in the nature of interest, additional interest and other charges made hereunder are held to be in excess of the applicable limits
imposed by any applicable federal or state law, the amount held to be in excess shall be considered payment of principal under
this Note and the indebtedness evidenced hereby shall be reduced by such amount so that the total liability for payments in the
nature of interest, additional interest and other charges shall not exceed the applicable limits imposed by any applicable federal
or state interest rate laws.

 

2.
Advances. Advances under this Note shall be made in sufficient amounts to fund the principal amount hereof. All advances
by Lender to Borrower hereunder and all payments made on account of principal hereof shall be recorded by Lender, and prior to
any transfer thereof, endorsed by Lender on Exhibit A attached hereto, which is a part of this Note. The aggregate amount of principal
outstanding shall not at any time exceed the principal amount of this Note.

 

Lender
is authorized to record on appropriate records of Lender, in the form attached hereto as Exhibit A, the date and· the amount
of the advance made by Lender pursuant to this Note, each continuation thereof, and the date and amount of each payment or prepayment
of principal and interest thereof. Any such recordation shall constitute prima facie evidence of the accuracy of the information
so recorded; provided, however, that the failure of Lender to make any such recordation (or any error in such recordation) shall
not affect the obligations of Borrower hereunder.

 

3.
No Setoff. Each payment hereunder, whether for principal, interest or otherwise, shall be made without setoff, counterclaim,
defense, condition, or reservation of right.

 

    	 	 	 

    	 	 

    

 

4.
Prepayments. This Note may be prepaid in whole or in part at any time and from time to time without premium or penalty.
All money paid toward the satisfaction of this Note shall be applied first to the payment of accrued and unpaid interest and then
to the retirement of the principal.

 

5.
Default. Each of the following events shall be an “Event of Default” hereunder:

 

(a)
Borrower fails to pay timely any of the principal
and any accrued interest or other amounts due under this Note when the same becomes due and payable;

 

(b)
Borrower files any petition or action for relief
under any bankruptcy, reorganization, insolvency or moratorium law, or any other law for the relief of, or relating to, debtors,
now or hereafter in effect; applies for or consents to the appointment of a custodian, receiver, trustee, sequestrator, conservator
or similar official for Borrower or for a substantial part of Borrower’s assets; makes a general assignment for the benefit
of creditors; becomes unable to, or admits in writing its inability to, pay its debts generally as they come due; or takes any
corporate action in furtherance of any of the foregoing; and

 

(c)
An involuntary petition is filed against Borrower
(unless such petition is dismissed or discharged within sixty (60) days) under any bankruptcy statute now or hereafter in effect,
or a custodian, receiver, trustee, sequestrator, conservator, assignee for the benefit of creditors (or other similar official)
is appointed to take possession, custody or control of any property of Borrower.

 

Upon
the occurrence of an Event of Default hereunder, Lender shall notify Borrower of the occurrence of such Event of Default and if
Borrower does not cure the Event of Default within ten (10) days following the receipt of such notice, (i) all unpaid principal,
accrued interest and other amounts owing hereunder shall, at the option of Lender in the case of Sections 5(a), or automatically,
in the case of Sections 5(b) or (c) be immediately due and payable by Borrower, and (ii) Lender may proceed to protect
and enforce its right by suit in the specific performance of any covenant or agreement contained in this Note or in aid of the
exercise of any power granted in this Note or may proceed to enforce the payment of this Note or to enforce any other legal or
equitable rights as Lender may have, including exercising any right or remedies available to Lender under this Note. In addition,
any and all amounts (including principal, unpaid interest and reasonable costs and expenses of collection) outstanding hereunder
after a default shall bear interest from the date due until paid at a rate equal to the rate provided for in Section l(a)
plus two percent (2%) per annum. The rights and remedies of Lender under this Note shall be cumulative and not alternative.

 

6.
Waiver; Representations and Expenses. Borrower waives presentment, notice of dishonor, protest and notice of protest of
this Note and all other notices or demands in connection with the delivery, acceptance, performance, default or endorsement of
this Note, and shall pay out-of-pocket costs and expenses of collection when incurred by Lender, including, without limitation,
attorneys’ fees and expenses. No extension nor indulgence granted from time to time shall be construed as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of the rights of Lender herein.

 

7.
Governing Law. This Note, and disputes or controversies arising hereunder, and the rights and obligations of the parties
under this Note, shall be governed by, and construed and interpreted in accordance with, the law of the State of Colorado without
regard to conflicts of law principles.

 

    	 	 	 

    	 	 

    

 

8.
Headings. Section headings in this Note are included herein for convenience of reference only and shall not constitute
a part of this Note for any other purpose or given any substantive effect.

 

9.
Severability. Whenever possible, each provision of this Note shall be interpreted in such a manner as to be valid, legal
and enforceable under the applicable law of any jurisdiction. Without limiting the generality of the foregoing sentence, in case
any provision of this Note shall be invalid, illegal or unenforceable under the applicable law of any jurisdiction, the validity,
legality and enforceability of the remaining provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.

 

10.
Amendments and Waivers. No amendment, modification, forbearance or waiver of any provision of this Note shall be effective
unless the same shall be in writing and signed by Lender and Borrower.

 

11.
Notices. Except as otherwise provided herein, all notices, requests and demands to or upon a party to this Note to be effective
shall be in writing and shall be deemed validly given upon receipt thereof, whether by personal delivery, U.S. mail, overnight
courier, fax, e mail or other electronic communication or otherwise, in each case addressed as follows:

 

	 	If
    to Lender:	 
	 	 	 
	 	GCP,
    Inc.	 
	 	2944
    Zuni Street, Unit C	 
	 	Denver,
    CO 80211	 
	 	Attention:
    Greg Barrow	 
	 	Phone:
    (720) 200-4500	 
	 	 	 
	 	Email:
    jgb@generalcapitalpartners.com 	 
			 
	 	If
    to Borrower:	 
	 	 	 
	 	XFit
    Brands, Inc.	 
	 	25731
    Commercentre Drive.	 
	 	Lake
    Forest, California 92630	 
	 	Attention:
    Board of Directors	 
	 	Phone:
    (949) 916-9680	 
	 	 	 
	 	With
    copies (which shall not constitute notice) to: Joseph P. Galda, Esq.	 
	 	J.P.
    Galda & Co.	 
	 	1055
    Westlakes Dr., Suite 300 	 
	 	Berwyn,
    PA 19087	 
	 	Phone:
    (215) 815-1534	 
	 	Email:
    jpgalda@jpgaldaco.com	 

 

or
to such other address, fax number or email address as each party may designate for itself by like notice give in accordance with
this Section 11.

 

    	 	 	 

    	 	 

    

 

12.
Successors and Assigns. The provisions of this Note shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that Borrower may not assign or transfer any of its respective rights or obligations
under this Note without the consent of the Lender.

 

13.
Consent to Forum. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER OR BORROWER SHALL BE BROUGHT AND MAINTAINED
IN THE DISTRICT COURT OF LARIMER COUNTY, COLORADO. LENDER AND BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE
JURJSDICTION OF THE DJSTRICT COURT OF LARIMER COUNTY, COLORADO, FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. LENDER AND BORROWER FURTHER
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF COLORADO AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 11. LENDER AND BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

14.
Waiver of Jury Trial. LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER AND BORROWER.

 

    	 	 	 

    	 	 

    

 

IN
WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first written above.

 

	 	BORROWER
	 	 
	 	XFIT
    BRANDS, INC.
	 	 
	 	 
	 	Brent
    David Willis
	 	Chairman

 

[SIGNATURE
PAGE- GCP NOTE]

 

    	 	 	 

    	 	 

    

 

Exhibit
A to Promissory Note

Dated
September 8, 2017

 

Schedule
of Borrowings and Payments

 

	Borrowings
	Date	 	Amount	 
	 	 	 	 
	September 8, 2017	 	$	45,000.00	 
	 	 	 	 	 
	Total	 	$	45,000.00	 

 

Payments

 

	 	 	Amount
    of Principal	 	 	 	 
	Pate	 	Paid
    or Repaid	 	Unpaid
    Principal Balance	 	Notation
    Made

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