Document:

Exhibit 10.2

 

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

 

	Principal Amount: $600,000.00	Issue Date: July 8, 2022
	Actual Amount of Purchase Price: $540,000.00	 

 

PROMISSORY NOTE

 

FOR VALUE
RECEIVED, 1847 HOLDINGS LLC, a Delaware limited liability company (hereinafter called the “Borrower” or the “Company”)
(Trading Symbol: EFSH), hereby promises to pay to the order of MAST HILL FUND, L.P., a Delaware limited partnership, or registered
assigns (the “Holder”), in the form of lawful money of the United States of America, the principal sum of $600,000.00 (the
“Principal Amount”) (subject to adjustment herein), which amount is the $540,000.00 actual amount of the purchase price hereof
plus an original issue discount in the amount of $60,000.00 (the “OID”), and to pay interest on the unpaid Principal Amount
hereof at the rate of twelve percent (12%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”)
until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise, as further provided herein.
The maturity date shall be twelve (12) months from the Issue Date (the “Maturity Date”), and is the date upon which the Principal
Amount (which includes the OID) and any accrued and unpaid interest and other fees, shall be due and payable.

 

Any Principal
Amount or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) sixteen percent (16%)
per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid (“Default Interest”).
Interest and Default Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.

 

All payments
due hereunder (to the extent not converted into common shares of the Borrower (the “Common Shares”) in accordance with the
terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder
shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed
to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day.

 

Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement, dated
as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”). As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of
New York, New York are authorized or required by law or executive order to remain closed. As used herein, the term “Trading Day”
means any day that Common Shares are listed for trading or quotation on the Principal Market (as defined in the Purchase Agreement), provided,
however, that if the Common Shares are not then listed or quoted on any Principal Market, then any calendar day.

 

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

 

     

     

    

 

The following terms shall also apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1 Conversion Right.
The Holder shall have the right, on any calendar day, at any time on or following the date that an Event of Default (as defined in the
Note) occurs under the Note, to convert all or any portion of the then outstanding and unpaid Principal Amount and interest (including
any Default Interest) into fully paid and non-assessable Common Shares, as such Common Shares exist on the Issue Date, or any shares
of capital stock or other securities of the Borrower into which such Common Shares shall hereafter be changed or reclassified, at the
Conversion Price (as defined below) determined as provided herein (a “Conversion”); provided, however, that notwithstanding
anything to the contrary contained herein, the a Holder shall not have the right to convert any portion of this Note, pursuant to Section
1 or otherwise, to the extent that after giving effect to such issuance after conversion as set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s affiliates (the “Affiliates”), and any other Persons (as defined below) acting
as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number
of Common Shares beneficially owned by the Holder and Attribution Parties shall include the number of Common Shares issuable upon conversion
of this Note with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable
upon (i) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its Affiliates or
Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any
of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1.1, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith.
In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1.1, in determining the number of outstanding
Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic
or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent
written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request
of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of Common Shares then outstanding.
In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Note, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of
outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of the Common
Shares outstanding at the time of the respective calculation hereunder. “Person” and “Persons” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity
and any governmental entity or any department or agency thereof. The limitations contained in this paragraph shall apply to a successor
holder of this Note. The number of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion,
in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower or Borrower’s
transfer agent by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or
e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent
before 11:59 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount”
means, with respect to any conversion of this Note, the sum of (1) the Principal Amount of this Note to be converted in such conversion
plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the
Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately
preceding clauses (1) and/or (2).

 

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 1.2 Conversion Price.

 

(a) Calculation
of Conversion Price. The per share conversion price into which Principal Amount and interest (including any Default Interest) under
this Note shall be convertible into Common Shares hereunder (the “Conversion Price”) shall equal $1.30, subject to adjustment
as provided in this Note. If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value
of the Common Shares, if such Common Shares then have a par value, then at the sole discretion of the Holder, the Conversion Price hereunder
may equal such par value for such conversion and the Conversion Amount for such conversion may be increased to include Additional Principal,
where “Additional Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to
cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued
had the Conversion Price not been adjusted by the Holder to the par value price. Holder shall be entitled to deduct $1,750.00 from the
conversion amount in each Notice of Conversion to cover Holder’s fees associated with each Notice of Conversion. All such Conversion
Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination, rights offerings, reclassification
or similar transaction that proportionately decreases or increases the Common Shares. If the Company, at any time while this Note is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions payable in Common Shares on Common Shares or any Common Share
Equivalents (as defined in this Note), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including
by way of a reverse stock split) outstanding Common Shares into a smaller number of shares or (iv) issues, in the event of a reclassification
of the Common Shares, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which
the numerator shall be the number of Common Shares (excluding any treasury shares of the Company) outstanding immediately before such
event, and of which the denominator shall be the number of Common Shares outstanding immediately after such event. Any adjustment made
pursuant to the immediately preceding sentence shall become effective immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification. “Common Share Equivalents” means any securities of the Company or the Company’s subsidiaries
which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred stock,
right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles
the holder thereof to receive, Common Shares.

 

1.3 Authorized
and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, the Borrower will reserve from
its authorized and unissued Common Shares a sufficient number of shares, free from preemptive rights, to provide for the issuance of a
number of Conversion Shares equal to the greater of: (a) 923,077 Common Shares (subject to equitable adjustments for stock splits, stock
combinations, recapitalizations or similar transactions) or (b) the sum of (i) the number of Conversion Shares issuable upon the full
conversion of this Note (assuming no payment of Principal Amount or interest) at the time of such calculation (taking into consideration
any adjustments to the Conversion Price as provided in this Note) multiplied by (ii) two (2) (the “Reserved Amount”).
The Borrower represents that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The
Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Conversion Shares or instructions
to have the Conversion Shares issued as contemplated by Section 1.4(f) hereof, and (ii) agrees that its issuance of this Note shall constitute
full authority to its officers and agents who are charged with the duty of executing stock certificates or cause the Company to electronically
issue Common Shares to execute and issue the necessary certificates for the Conversion Shares or cause the Conversion Shares to be issued
as contemplated by Section 1.4(f) hereof in accordance with the terms and conditions of this Note.

 

 1.4 Method of Conversion.

 

(a) Mechanics
of Conversion. This Note may be converted by the Holder in whole or in part, on any calendar day, at any time on or following the
date that an Event of Default occurs under the Note by submitting to the Borrower or Borrower’s transfer agent a Notice of Conversion
(by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New
York time). Any Notice of Conversion submitted after 11:59 p.m., New York, New York time, shall be deemed to have been delivered and received
on the next Trading Day.

 

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

 

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

 

(d) Delivery
of Common Shares Upon Conversion. Upon receipt by the Borrower or Borrower’s transfer agent from the Holder of a facsimile transmission
or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates
for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof) within
two (2) Trading Days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid Principal
Amount and interest (including any Default Interest) under this Note, surrender of this Note). If the Company shall fail for any reason
or for no reason to issue to the Holder on or prior to the Deadline a certificate for the number of Conversion Shares or to which the
Holder is entitled hereunder and register such Conversion Shares on the Company’s share register or to credit the Holder’s
balance account with DTC (as defined below) for such number of Conversion Shares to which the Holder is entitled upon the Holder’s
conversion of this Note (a “Conversion Failure”), then, in addition to all other remedies available to the Holder, (i) the
Company shall pay in cash to the Holder on each day after the Deadline and during such Conversion Failure an amount equal to 1.0% of the
product of (A) the sum of the number of Conversion Shares not issued to the Holder on or prior to the Deadline and to which the Holder
is entitled and (B) the closing sale price of the Common Shares on the Trading Day immediately preceding the last possible date which
the Company could have issued such Conversion Shares to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon written
notice to the Company, may void all or any portion of such Notice of Conversion; provided that the voiding of all or any portion of a
Notice of Conversion shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such
notice. In addition to the foregoing, if on or prior to the Deadline the Company shall fail to issue and deliver a certificate to the
Holder and register such Conversion Shares on the Company’s share register or credit the Holder’s balance account with DTC
for the number of Conversion Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s
obligation pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
Common Shares to deliver in satisfaction of a sale by the Holder of Common Shares issuable upon such exercise that the Holder anticipated
receiving from the Company, then the Company shall, within two (2) Trading 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 reasonable and customary out-of-pocket expenses, if any) for the Common Shares so purchased (the “Buy-In Price”),
at which point the Company’s obligation to deliver such certificate (and to issue such Conversion Shares) or credit such Holder’s
balance account with DTC for such Conversion Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Conversion Shares or credit such Holder’s balance account with DTC 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 Common Shares, times (B)
the closing sales price of the Common Shares on the date of exercise. Nothing shall limit the Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver certificates representing the Conversion Shares (or to electronically
deliver such Conversion Shares) upon the conversion of this Note as required pursuant to the terms hereof.

 

(e) Obligation
of Borrower to Deliver Common Shares. At the time that the Holder submits the Notice of Conversion to the Borrower or Borrower’s
transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon such conversion, the outstanding
Principal Amount and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall be reduced to reflect
such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of
this Note being so converted shall forthwith terminate except the right to receive the Common Shares or other securities, cash or other
assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s
obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares
as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any
action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the
Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection
with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of
Conversion is sent to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time, on such date.

 

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(f) Delivery
of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the Conversion Shares issuable
upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance with the provisions contained in Section
1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Conversion
Shares issuable upon conversion hereof to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system.

 

1.5 Concerning
the Shares. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are
sold pursuant to an effective registration statement under the 1933 Act or (ii) the Borrower or its transfer agent shall have been furnished
with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the Purchase Agreement)) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are
sold or transferred pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption, or (iv) such shares are transferred
to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance
with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase
Agreement (and subject to the removal provisions set forth below), until such time as the Conversion Shares have been registered under
the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction
as to the number of securities as of a particular date that can then be immediately sold, each certificate for the Conversion Shares that
has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement
or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

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

 

The legend
set forth above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion Shares without
such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by electronic delivery by
crediting the account of such holder’s broker with DTC, if, unless otherwise required by applicable state securities laws: (a) such
Conversion Shares are registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold
pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as
of a particular date that can then be immediately sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as contemplated
by and in accordance with Section 4(m) of the Purchase Agreement) to the effect that a public sale or transfer of such Conversion Shares
may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected.
The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. The Holder agrees
to sell all Conversion Shares, including those represented by a certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.

 

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 1.6 Effect of Certain Events.

 

(a) Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the
assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined
below) or Persons when the Borrower is not the survivor shall either: (i) result in the acceleration of all amounts due under this Note
pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction
an amount equal to the total outstanding amount under the Note at such time or (ii) be treated pursuant to Section 1.6(b) hereof. “Person”
shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

 

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

 

(c) [Reserved].

 

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

 

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(e) Dilutive
Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells or grants (or has
issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants any right to reprice, or
otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or
other disposition), any Common Shares or other securities convertible into, exercisable for, or otherwise entitle any person or entity
the right to acquire, Common Shares (including, without limitation, upon conversion of this Note, and any convertible notes or warrants
outstanding as of or following the Issue Date), in each or any case at an effective price per share that is lower than the then Conversion
Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”)
(it being agreed that if the holder of the Common Shares or other securities so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive Common Shares at an effective price per share that
is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of
the Dilutive Issuance), then the Conversion Price shall be reduced, at the option of the Holder, to a price equal to the Base Conversion
Price. Such adjustment shall be made whenever such Common Shares or other securities are issued. By way of example, and for the avoidance
of doubt, if the Company issues a convertible promissory note (including but not limited to a Variable Rate Transaction), and the holder
of such convertible promissory note has the right to convert it into Common Shares at an effective price per share that is lower than
the then Conversion Price (including but not limited to a conversion price with a discount that varies with the trading prices of or quotations
for the Common Shares), then the Holder has the right to reduce the Conversion Price to such Base Conversion Price (including but not
limited to a conversion price with a discount that varies with the trading prices of or quotations for the Common Shares) in perpetuity
regardless of whether the holder of such convertible promissory note ever effectuated a conversion at the Base Conversion Price. In the
event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall be calculated
as if all such securities were issued at the initial closing. Notwithstanding the foregoing, this Section 1.6(e) shall not apply to the
Excluded Transactions unless an Event of Default has occurred under Section 3.19 of this Note, provided, further, that if an Event of
Default occurs under Section 3.19 of this Note then the Holder shall at all times thereafter be entitled to utilize any Dilutive Issuance
(including a Dilutive Issuance under any of the Excluded Transactions) that has occurred or occurs on or after the Issue Date of this
Note. “Excluded Transactions” means transactions involving the issuance of the following securities of the Company: (i) the
Common Shares to be sold in the Company’s contemplated public offering (Registration Statement No. 333-259011 (the “Registration
Statement”)), as well as the warrants issuable to the underwriters in connection therewith (including the Common Shares issuable
upon the exercise of such warrants), (ii) the issuance by the Company of Common Shares upon the exercise of an outstanding stock option
or warrant or the conversion of a security outstanding on the date hereof, (iii) any issuance of securities disclosed in the Registration
Statement, (iv) an offering of up to $50 million of senior convertible preferred shares in a private placement offering, and the underlying
Common Shares issuable upon conversion of such securities, (v) the issuance of securities issued as part of the purchase price in connection
with acquisitions or strategic transactions approved a majority of the disinterested directors of the Company, or securities issued in
financing transactions, the primary purpose of which is to finance acquisitions or strategic transactions approved a majority of the disinterested
directors of the Company, (vi) Common Shares, options or convertible securities issued to banks, equipment lessors or other financial
institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction, approved
by a majority of the disinterested directors of the Company, but shall not include a transaction in which the Company is primarily issuing
such securities primarily for the purpose of raising capital or to a person or an entity whose primary business is investing in securities,
(vii) Common Shares, options or convertible securities issued to in connection with the provision of goods or services pursuant to transactions
approved by a majority of the disinterested directors of the Company, but shall not include a transaction in which the Company is primarily
issuing such securities primarily for the purpose of raising capital or to a person or an entity whose primary business is investing in
securities, (viii) Common Shares, options or convertible securities issued in connection with sponsored research, collaboration, technology
license, development, investor or public relations, marketing or other similar agreements or strategic partnerships approved a majority
of the disinterested directors of the Company, but shall not include a transaction in which the Company is primarily issuing such securities
primarily for the purpose of raising capital or to a person or an entity whose primary business is investing in securities, (ix) the issuance
by the Company of any Common Shares or standard options to purchase Common Shares to directors, officers, employees or consultants of
the Company or its subsidiaries in their capacity as such pursuant to an equity incentive plan approved by a majority of the disinterested
directors of the Company, (x) the issuance of securities pursuant to any other arrangements that are in place or disclosed in SEC Documents
prior to the date of this Agreement, or (xi) a Buyout Transaction (as defined below). “Buyout Transaction” shall mean any
transaction if the Note is fully repaid and extinguished within two (2) business days after the Company’s execution of the transaction
documents for the respective transaction.

 

(f) Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in Section 1.6 of this Note, the Borrower shall, at its expense and within two (2) calendar days after the occurrence of each respective
adjustment or readjustment of the Conversion Price, compute such adjustment or readjustment and prepare and furnish to the Holder a certificate
setting forth (i) the Conversion Price in effect at such time based upon the Dilutive Issuance, (ii) the number of Common Shares and the
amount, if any, of other securities or property which at the time would be received upon conversion of the Note, (iii) the detailed facts
upon which such adjustment or readjustment is based, and (iv) copies of the documentation (including but not limited to relevant transaction
documents) that evidences the adjustment or readjustment. In addition, the Borrower shall, within two (2) calendar days after each written
request from the Holder, furnish to such Holder a like certificate setting forth (i) the Conversion Price in effect at such time based
upon the Dilutive Issuance, (ii) the number of Common Shares and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment or readjustment is based, and (iv)
copies of the documentation (including but not limited to relevant transaction documents) that evidences the adjustment or readjustment.
For the avoidance of doubt, each adjustment or readjustment of the Conversion Price as a result of the events described in Section 1.6
of this Note shall occur without any action by the Holder and regardless of whether the Borrower complied with the notification provisions
in Section 1.6 of this Note.

 

    7

     

    

 

1.7 [Intentionally
Omitted].

 

1.8 Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the Conversion Shares covered thereby (other than the Conversion
Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into Common Shares and (ii) the Holder’s rights as a Holder of such converted
portion of this Note shall cease and terminate, excepting only the right to receive certificates for such Common Shares and to any remedies
provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms
of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all Common Shares prior to the tenth (10th)
business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless
the Holder otherwise elects to retain its status as a holder of Common Shares by so notifying the Borrower) the Holder shall regain the
rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable,
return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of
this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure
to convert this Note.

 

1.9 Prepayment.
At any time prior to the date that an Event of Default occurs under this Note, the Borrower shall have the right, exercisable on three
(3) Trading Days prior written notice to the Holder of the Note, to prepay the outstanding Principal Amount and interest then due under
this Note in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall
be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be three (3) Trading Days from the date of the Optional Prepayment Notice (the “Optional
Prepayment Date”). On the Optional Prepayment Date, the Borrower shall make payment of the amounts designated below to or upon the
order of the Holder as specified by the Holder in writing to the Borrower. If the Borrower exercises its right to prepay the Note in accordance
with this Section 1.9, the Borrower shall make payment to the Holder of an amount in cash equal to the sum of: (w) 100% multiplied by
the Principal Amount then outstanding plus (x) accrued and unpaid interest on the Principal Amount to the Optional Prepayment Date
plus (y) $750.00 to reimburse Holder for administrative fees.

 

1.10 Repayment
from Proceeds. If, at any time prior to the full repayment or full conversion of all amounts owed under this Note, the Company receives
cash proceeds of more than $1,000,000.00 (the “Minimum Threshold”) in the aggregate (for the avoidance of doubt, each time
that the Company receives cash proceeds from any source or series of related or unrelated sources on or after the Issue Date (except with
respect to this Note), such amount shall be aggregated together for purposes of calculating the Minimum Threshold) from any source or
series of related or unrelated sources, including but not limited to, the issuance of equity or debt, the exercise of outstanding warrants
of the Borrower, the issuance of securities pursuant to an Equity Line of Credit (as defined in this Note) of the Borrower or the sale
of assets outside of the ordinary course of business, the Borrower shall, within three (3) business days of Borrower’s receipt of
such proceeds, inform the Holder of or publicly disclose such receipt, following which the Holder shall have the right in its sole discretion
to require the Borrower to immediately apply up to 50% of such proceeds after the Minimum Threshold to repay all or any portion of the
outstanding Principal Amount and interest (including any Default Interest) then due under this Note. “Equity Line of Credit”
shall mean any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the
right to “put” its Common Shares to the investor or underwriter over an agreed period of time and at an agreed price or price
formula (such Common Shares must be registered pursuant to a registration statement of the Company for the investor’s or underwriter’s
resale). Notwithstanding the foregoing, payments from customers shall be excluded from this Section 1.10.

 

    8

     

    

 

ARTICLE II. RANKING AND
CERTAIN COVENANTS

 

2.1 Ranking
and Security. This Note shall have priority over all unsecured indebtedness of the Borrower.

 

2.2 Other
Indebtedness. So long as the Borrower shall have any obligation under this Note, the Borrower shall not incur or suffer to exist or
guarantee any unsecured indebtedness that is senior to (in priority of payment and performance) the Borrower’s obligations hereunder.

 

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

 

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

 

2.5 Sale
of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written
consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent
by the Holder to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition. For the avoidance
of doubt, the Borrower is an acquisition holding company and the parties agree that the ordinary course of business of the Borrower includes
the acquisition and disposition of subsidiaries and material portions of the assets of subsidiaries.

 

2.6 Advances
and Loans; Affiliate Transactions. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, lend money, give credit, make advances to or enter into any transaction with any person, firm, joint
venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except
loans, credits or advances (a) in existence or committed on the Issue Date and which the Borrower has informed Holder in writing prior
to the Issue Date or which are disclosed in the SEC Documents (as defined in the Purchase Agreement), (b) in regard to transactions with
unaffiliated third parties, made in the ordinary course of business or (c) in regard to transactions with unaffiliated third parties,
not in excess of $100,000. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, repay any affiliate (as defined in Rule 144) of the Borrower in connection with any indebtedness or accrued amounts owed
to any such party.

 

2.7 3(a)(10)
Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement structured in accordance
with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10) Transaction”).
In the event that the Borrower does enter into, or makes any issuance of Common Shares related to a 3(a)(10) Transaction while this note
is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than $25,000, will
be assessed and will become immediately due and payable to the Holder at its election in the form of a cash payment or added to the balance
of this Note (under Holder’s and Borrower’s expectation that this amount will tack back to the Issue Date).

 

2.8 Preservation
of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, (a) change the nature of its business; (b) sell, divest, change the structure of any material assets
other than in the ordinary course of business; (c) enter into a Variable Rate Transaction unless it is an Exempt Transaction (as defined
in the Note); or (d) enter into any merchant cash advance transactions. In addition, so long as the Borrower shall have any obligation
under this Note, the Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum
assets) to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such qualification necessary.

 

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

 

    9

     

    

 

2.10 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, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary 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.

 

ARTICLE III. EVENTS OF
DEFAULT

 

It shall be considered an event of
default if any of the following events listed in this Article III (each, an “Event of Default”) shall occur:

 

3.1 Failure
to Pay Principal or Interest. The Borrower fails to pay, within two (2) business days following the due date thereof, the Principal
Amount hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise, or fails to fully comply
with Section 1.10 of this Note.

 

3.2 Conversion
and the Shares. The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing that it will
not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of
this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note,
(iii) fails to reserve the Reserved Amount at all times, (iv) the Borrower directs its transfer agent not to transfer or delays, impairs,
and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for the Conversion
Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove
(or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend
(or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat
that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written
announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for two (2) Trading Days after the Holder
shall have delivered a Notice of Conversion, and/or (v) fails to remain current in its obligations to its transfer agent (including but
not limited to payment obligations to its transfer agent). It shall be an Event of Default of this Note, if a conversion of this Note
is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder
advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be added to the
principal balance of the Note.

 

3.3 Breach
of Agreements and Covenants. The Borrower breaches any covenant, agreement, or other term or condition contained in the Purchase Agreement,
this Note, Irrevocable Transfer Agent Instructions, Warrant, or in any agreement, statement or certificate given in writing pursuant hereto
or in connection herewith or therewith and such failure shall not have been remedied or waived within fifteen (15) calendar days after
the earlier of (x) an officer of Borrower becomes aware of such failure or (y) receipt by the Borrower of notice from the Holder of such
failure

 

3.4 Breach
of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement, this Note, Irrevocable
Transfer Agent Instructions, Warrant, or in any agreement, statement or certificate given in writing pursuant hereto or in connection
herewith or therewith shall be false or misleading in any material respect when made.

 

3.5 Receiver
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or
trustee shall otherwise be appointed.

 

3.6 Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of
its property or other assets for more than $500,000, and shall remain unvacated, unbonded or unstayed for a period of sixty (60) days
unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

    10

     

    

 

3.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

 

3.8 Failure
to Comply with the 1934 Act. At any time after the Issue Date, the Borrower shall fail to comply with the reporting requirements of
the 1934 Act and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act for ten consecutive trading days.

 

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

 

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

 

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

 

3.12 Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from
two years prior to the Issue Date of this Note and until this Note is no longer outstanding.

 

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

 

3.14 Cross-Default.
The declaration of an event of default by any lender or other extender of credit to the Company under any notes, loans, agreements or
other instruments of the Company evidencing any indebtedness of the Company (including those filed as exhibits to or described in the
Company’s filings with the SEC), after the passage of all applicable notice and cure or grace periods.

 

3.15 Variable
Rate Transactions. The Borrower consummates a Variable Rate Transaction at any time on or after the Issue Date other than a Variable
Rate Transaction that is an Exempt Transaction (as defined in the Note).

 

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

 

3.17 Unavailability
of Rule 144. If, at any time on or after the date that is six (6) calendar months after the Issue Date, the Holder is unable to (i)
obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Holder’s brokerage
firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s conversion of any
portion of the Note into free trading shares of the Borrower’s Common Shares pursuant to Rule 144, and/or (ii) thereupon deposit
such shares into the Holder’s brokerage account.

 

3.18 Delisting,
Suspension, or Quotation of Trading of Common Shares. If, at any time on or after the Issue Date, the Borrower’s Common Shares
(i) is suspended from trading, (ii) halted from trading, and/or (iii) fails to be quoted or listed (as applicable) on a Principal Market
for a period of ten consecutive trading days.

 

    11

     

    

 

3.19 Failure
to Pay an Amortization Payment. The Borrower fails to pay, within two (2) business days following the due date thereof, an Amortization
Payment (as defined in this Note) as provided in Section 4.17 of this Note.

 

3.20 Market Capitalization. The
Borrower fails to maintain a market capitalization of at least $5,000,000 on any Trading Day, which shall be calculated by multiplying
(i) the closing price of the Borrower’s Common Shares on the Trading Day immediately preceding the respective date of calculation
by (ii) the total shares of the Borrower’s Common Shares issued and outstanding on the Trading Day immediately preceding the respective
date of calculation.

 

3.21 Rights
and Remedies Upon an Event of Default. Upon the occurrence of any Event of Default specified in this Article III, this Note shall
become immediately due and payable, and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount
equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest) through the date of full repayment
multiplied by 115% (collectively the “Default Amount”), as well as all costs, including, without limitation, legal fees and
expenses, of collection, all without demand, presentment or notice, all of which hereby are expressly waived by the Borrower. Holder may,
in its sole discretion, determine to accept payment part in Common Shares and part in cash. For purposes of payments in Common Shares,
the conversion formula set forth in Section 1.2 shall apply as well as all other provisions of this Note. The Holder shall be entitled
to exercise all other rights and remedies available at law or in equity.

 

ARTICLE IV. MISCELLANEOUS

 

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

 

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

 

If to the Borrower, to:

 

1847 HOLDINGS LLC

590 Madison Avenue, 21st Floor

New York, NY 10022

Attention: Ellery Roberts

e-mail:

 

If to the Holder:

 

MAST HILL FUND, L.P.

48 Parker Road

Wellesley, MA 02482

e-mail:

 

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

 

4.4 Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors
and assigns. The Borrower shall not assign this Note or any rights or obligations hereunder without the prior written consent of the Holder.
The Holder may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private
transaction from the Holder or to any of its “affiliates”, as that term is defined under the 1934 Act, without the consent
of the Borrower. Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that
following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may
be less than the amount stated on the face hereof.

 

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

 

4.6 Governing
Law; Venue; Attorney’s Fees. This Note shall be governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the state courts
located in the Commonwealth of Massachusetts or federal courts located in the Commonwealth of Massachusetts. The Borrower hereby irrevocably
waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction
or venue or based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, 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 TRANSACTIONS
CONTEMPLATED HEREBY. Each party hereby irrevocably waives personal service of process and consents to process being served in any
suit, action or proceeding in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby
or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner
permitted by law. The prevailing party in any action or dispute brought in connection with this the Note or any other agreement, certificate,
instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s
fees and costs.

 

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

 

4.8 Purchase
Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement, and the documents entered
into in connection herewith and therewith.

 

4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Shares
unless and only to the extent that it converts this Note into Common Shares. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the
event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other
right, or for the purpose of determining shareholders who are entitled to vote in connection with any change in control or any proposed
liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior
to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief
statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The
Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.

 

    13

     

    

 

4.10 Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach
of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the
provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition
to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce
specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being
required.

 

4.11 Construction;
Headings. This Note shall be deemed to be jointly drafted by the Company and all 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.

 

4.12 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right or remedy under
this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided that the total liability
of the Company under this Note for payments which under the applicable law are in the nature of interest shall not exceed the maximum
lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any
rate of interest or default interest, or both of them, when aggregated with any other sums which under the applicable law in the nature
of interest that the Company may be obligated to pay under this Note exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by applicable law and applicable to this Note is increased or decreased by statute or any official governmental
action subsequent to the Issue Date, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this
Note from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to the Holder with respect to indebtedness evidenced by this Note, such
excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at the Holder’s election.

 

4.13 Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law (including any judicial
ruling), 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.

 

4.14 [Reserved].

 

4.15 Dispute
Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment amount or
Default Amount, Issue, Closing or Maturity Date, the closing bid price, or fair market value (as the case may be) or the arithmetic calculation
of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or the Holder shall submit the disputed
determinations or arithmetic calculations via facsimile (i) within one (1) Trading Day after receipt of the applicable notice giving rise
to such dispute to the Borrower or the Holder or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of
the circumstances giving rise to such dispute. If the Holder and the Borrower are unable to agree upon such determination or calculation
within one (1) Trading Day of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Borrower
or the Holder, then the Borrower shall, within one (1) Trading Day, submit (a) the disputed determination of the Conversion Price, the
closing bid price, the or fair market value (as the case may be) to an independent, reputable investment bank selected by the Borrower
and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower
shall cause at its expense the investment bank or the accountant to perform the determinations or calculations and notify the Borrower
and the Holder of the results no later than one (1) Trading Day from the time it receives such disputed determinations or calculations.
Such investment bank’s or accountant’s determination or calculation shall be binding upon all parties absent demonstrable
error.

 

    14

     

    

 

4.16 [Reserved].

 

4.17 Amortization
Payments. In addition to all other payment obligations under this Note, Borrower shall also make the following amortization payments
(each an “Amortization Payment”) in cash to the Holder towards the repayment of amounts owed under this Note, as provided
in the following table:

 

	Payment
    Date:	 	Payment
    Amount:
	 	 	 
	10/6/2022	 	$60,000.00 plus accrued interest through October 6, 2022 (or, if, extended pursuant to Section 4.17(a) below, through November 7, 2022)
	11/7/2022	 	$60,000.00 plus accrued interest through November 7, 2022 (or, if extended pursuant to Section 4.17(b) below, through December 6, 2022)
	12/6/2022	 	$60,000.00
plus accrued interest through December 6, 2022 (or, if extended pursuant to Section 4.17(c) below, through January 6, 2023)
	1/6/2023	 	$60,000.00 plus accrued interest through January 6, 2023
	2/6/2023	 	$60,000.00 plus accrued interest through February 6, 2023
	3/6/2023	 	$60,000.00 plus accrued interest through March 6, 2023
	4/6/2023	 	$60,000.00 plus accrued interest through April 6, 2023
	5/5/2023	 	$60,000.00 plus accrued interest through May 5, 2023
	6/6/2023	 	$60,000.00 plus accrued interest through June 6, 2023
	7/6/2023	 	$60,000.00 plus accrued interest through July 6, 2023

 

(a) With
respect to the first Amortization Payment originally due on October 6, 2022 (the “First Amortization Payment”), the Company
may notify the Holder on or before October 6, 2022, that the Company is electing to extend the due date of the First Amortization Payment
to November 7, 2022 (the “First Amortization Payment Extension”) as further provided herein. If the Company exercises the
First Amortization Payment Extension, then the First Amortization Payment shall be due on November 7, 2022, and the Company shall pay
$6,000.00 plus 10% of the accrued interest through October 6, 2022 (the “First Amortization Payment Extension Fee”) to the
Holder on or before October 6, 2022. For the avoidance of doubt, the First Amortization Payment Extension shall not affect the due date
of any other Amortization Payment and the First Amortization Payment Extension Fee shall not reduce the amounts owed under the Note. The
Company shall not be permitted to exercise the First Amortization Payment Extension if an Event of Default occurs under the Note and is
continuing.

 

(b) With
respect to the second Amortization Payment originally due on November 7, 2022 (the “Second Amortization Payment”), the Company
may notify the Holder on or before November 7, 2022, that the Company is electing to extend the due date of the Second Amortization Payment
to December 6, 2022 (the “Second Amortization Payment Extension”) as further provided herein. If the Company exercises the
Second Amortization Payment Extension, then the Second Amortization Payment shall be due on December 6, 2022, and the Company shall pay
$6,000.00 plus 10% of the accrued interest through November 7, 2022 (the “Second Amortization Payment Extension Fee”) to the
Holder on or before November 7, 2022. For the avoidance of doubt, the Second Amortization Payment Extension shall not affect the due date
of any other Amortization Payment and the Second Amortization Payment Extension Fee shall not reduce the amounts owed under the Note.
The Company shall not be permitted to exercise the Second Amortization Payment Extension if an Event of Default occurs under the Note.

 

(c) With
respect to the third Amortization Payment originally due on December 6, 2022 (the “Third Amortization Payment”), the Company
may notify the Holder on or before December 6, 2022, that the Company is electing to extend the due date of the Third Amortization Payment
to January 6, 2023 (the “Third Amortization Payment Extension”) as further provided herein. If the Company exercises the Third
Amortization Payment Extension, then the Third Amortization Payment shall be due on January 6, 2023, and the Company shall pay $6,000.00
plus 10% of the accrued interest through December 6, 2022 (the “Third Amortization Payment Extension Fee”) to the Holder on
or before December 6, 2022. For the avoidance of doubt, the Third Amortization Payment Extension shall not affect the due date of any
other Amortization Payment and the Third Amortization Payment Extension Fee shall not reduce the amounts owed under the Note. The Company
shall not be permitted to exercise the Third Amortization Payment Extension if an Event of Default occurs under the Note.

 

[signature page follows]

 

    15

     

    

 

IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer on July 8, 2022.

 

	1847 HOLDINGS LLC	 
	 	 	 	 
	By: 	/s/ Ellery Roberts	 
	 	Name:  	Ellery Roberts	 
	 	Title: 	Chief Executive Officer	 

 

    16

     

    

 

EXHIBIT A -- NOTICE OF CONVERSION

 

The undersigned
hereby elects to convert $ ______________ principal amount of the Note (defined below) into that number of Common Shares to be issued pursuant
to the conversion of the Note (“Common Shares”) as set forth below, of 1847 HOLDINGS LLC, a Delaware limited liability
company (the “Borrower”), according to the conditions of the promissory note of the Borrower dated as of July 8, 2022 (the
“Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes,
if any.

 

Box Checked as to applicable instructions:

 

	☐	The Borrower shall electronically
transmit the Common Shares issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through
its Deposit Withdrawal Agent Commission system (“DWAC Transfer”). 

	 	 
	 	Name of DTC Prime Broker:
	 	 
	 	Account Number:

 

	☐	
    The undersigned hereby requests that the Borrower issue a
    certificate or certificates for the number of Common Shares set forth below (which numbers are based on the Holder’s
    calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment
    hereto:

 

	 	Date of Conversion:	 	 
	 	Applicable Conversion Price:	$	 
	 	Number of Common Shares to be

    Issued Pursuant to Conversion of the Note:
	  	 
	 	Amount of Principal Balance Due remaining

    Under the Note after this conversion:
	  	 

 

	 	By: 
	 	Name:
	 	Title:
	 	Date:EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of this 5th day of July, 2022 (the “Effective Date”), by and between Cine Top Culture Holdings Limited, a Cayman Islands company (the “Company”), and Yihong Pan (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions of the employment relationship between the Executive and the Company.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows:

 

1. EMPLOYMENT.

 

1.1 Agreement to Employ. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve, subject to the provisions of this Agreement, as an officer and employee of the Company.

 

1.2 Duties and Schedule. Executive shall serve as the Company’s Chief Executive Officer (“CEO”). The responsibilities of the Executive shall be subject to the bylaws of the Company and determined by the Board of Directors of the Company (the “Board”). The Executive shall report directly to the Board and shall have such responsibilities as designated by the Board of the Company to the extent that such responsibilities are not inconsistent with all applicable laws, regulations and rules. Executive shall devote his best efforts and all of his business time to his position with the Company.

 

2. TERM OF EMPLOYMENT. Unless Executive’s employment shall sooner terminate pursuant to Section 4, the Company shall employ Executive for a one-year term commencing on the Effective Date (the “Term”), which Term shall be renewable upon mutual agreement of the Company and the Executive, as approved by the Board.

 

3. COMPENSATION.

 

3.1 Salary. Executive’s salary during the Term shall be RMB120,000 per year (the “Salary”), payable monthly.

 

3.2 Bonus. At the sole discretion of the Board, or any committee duly designated by the Board and authorized to act thereto, the Executive shall be eligible for an annual cash bonus.

 

3.3 Vacation. Executive shall be entitled to 5 days of paid vacation per year. In the event that Executive remains employed by the Company for 3 years or more, Executive shall be entitled to 10 days of paid vacation.

 

3.4 Business Expenses. Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive; provided that they are incurred and approved in writing in accordance with the Company’s expense policy.

 

3.5 Benefits. During the Term, Executive shall be allowed to participate, on the same basis generally as other employees of the Company, in all general employee benefit plans and programs, including improvements or modifications of the same, which may exist as of the Effective Date or thereafter and which are made available by the Company to all or substantially all of its employees. Such benefits, plans, and programs may include, without limitation, any health, and dental insurance, if and when instituted. Any benefit plan currently existing or instituted by the Company after the Effective Date may be altered, change or discontinued by the Company at its sole discretion and at any time without obligation of any nature to Executive. Except as specifically provided herein, nothing in this Agreement is to be construed or interpreted to increase or alter in any way the rights, participation, coverage, or benefits under such benefit plans or programs to other than those provided to other employees pursuant to the terms and conditions of such benefit plans and programs.  

 

4. TERMINATION.

 

4.1 Death. This Agreement shall terminate immediately upon the death of Executive, and Executive’s estate or Executive’s legal representative, as the case may be, shall be entitled to Executive’s accrued and unpaid Salary as of the date of Executive’s death, plus all other compensation and benefits that were vested through the date of Executive’s death.

 

4.2 Disability. In the event of Executive’s Disability, this Agreement shall terminate and Executive shall be entitled to (a) accrued and unpaid Salary and vacation through the first date that a Disability is determined; and (b) all other compensation and benefits that were vested through the first date that a Disability has been determined. “Disability” means the good faith determination of the Board that Executive has become so physically or mentally incapacitated or disabled as to be unable to satisfactorily perform his duties hereunder for a period of ninety (90) consecutive calendar days or for one- hundred twenty (120) days in any three-hundred sixty (360) day period, such determination based upon a certificate as to such physical or mental disability issued by a licensed physician and/or psychiatrist (as the case may be) mutually agreed upon by Executive and the Company.

 

4.3 Termination by Company for Cause.  The Company may terminate the Executive for Cause and such termination shall take effect upon the receipt by Executive of the Notice of Termination. Upon the effective date of the termination for Cause, Executive shall be solely entitled to accrued and unpaid Salary through such effective date. “Cause” means: (i) engaging in any act, omission or misconduct that is injurious to the Company or an affiliate; (ii) gross negligence or willful misconduct in connection with the performance of duties; (iii) conviction of a criminal offense (other than minor traffic offenses); (iv) fraud, embezzlement or misappropriation of funds or property of the Company or an affiliate; (v) material breach of any term of any employment or other services, confidentiality, intellectual property or non-competition agreements, if any, between the Executive and the Company or an affiliate; (vi) the entry of an order duly issued by any regulatory agency (including federal, state and local regulatory agencies and self-regulatory bodies) having jurisdiction over the Company or an affiliate requiring the removal of the Executive from any office held with the Company or prohibiting the Executive from participating in the business or affairs of the Company or any affiliate; or (vii) the revocation or threatened revocation of any of the Company’s or an affiliate’s government licenses, permits or approvals, which is primarily due to the Executive’s action or inaction and such revocation or threatened revocation would be alleviated or mitigated in any material respect by the termination of the Executive’s employment or services with the Company or an affiliate.

 

4.4 Voluntary Termination by Executive. The Executive may voluntarily terminate his employment for any reason and such termination shall take effect 30 days after the receipt by Company of the Notice of Termination. Upon the effective date of such termination, Executive shall be entitled to (a) accrued and unpaid Salary and vacation through such termination date; and (b) all other compensation and benefits that were vested through such termination date.  In the event Executive is terminated without notice, it shall be deemed a termination by the Company for Cause.

 

4.5 Notice of Termination. Any termination of the employment by the Company or the Executive shall be communicated by a notice in accordance with Section 8.4 of this Agreement (the “Notice of Termination”).   Such notice shall (a) indicate the specific termination provision in this Agreement relied upon and (b) if the termination is for Cause, the date on which the Executive’s employment is to be terminated.

 

4.6 Severance. The Executive shall not be entitled to severance payments upon any termination provided in Section 4 herein.

 

5. EMPLOYEE’S REPRESENTATION. The Executive represents and warrants to the Company that: (a) he is subject to no contractual, fiduciary or other obligation which may affect the performance of his duties under this Agreement; (b) he has terminated, in accordance with their terms, any contractual obligation which may affect his performance under this Agreement; and (c) his employment with the Company will not require him to use or disclose proprietary or confidential information of any other person or entity.  

 

6. CONFIDENTIAL INFORMATION Except as permitted or directed by the Board of Directors of the Company in writing, during the time the Executive is employed by the Company or at any time thereafter, the Executive shall not use for his personal purposes nor divulge, furnish, or make accessible to anyone or use in any way (other than in the ordinary course of the business of the Company) any confidential or secret information or knowledge of the Company, whether developed by himself or by others. Such confidential and/or secret information encompassed by this Section 6 includes, but is not limited to, the Company’s customer and supplier lists, business plans, software, systems, and financial, marketing, and personnel information. The Executive agrees to refrain from any acts or omissions that would reduce the value of any confidential or secret knowledge or information to the Company, both during his employment hereunder and at any time after the termination of his employment. The Executive’s obligations of confidentiality under this Section 6 shall not apply to any knowledge or information that is now published publicly or that subsequently becomes generally publicly known, other than as a direct or indirect result of a breach of this Agreement by the Executive.

 

7. NON-COMPETITION: NON-SOLICITATION; INVENTIONS.

 

7.1 Non-Competition.  During the employment of the Executive under this Agreement and for a period of six (6) months after termination of such employment, the Executive shall not at any time compete on his own behalf, or on behalf of any other person or entity, with the Company or any of its affiliates within all territories in which the Company does business with respect to the business of the Company or any of its affiliates as such business shall be conducted on the date hereof or during the employment of the Executive under this Agreement. The ownership by the Executive of not more than 5% of a corporation, partnership or other enterprise shall not constitute a violation hereof.

 

7.2 Non-Solicitation.  During the employment of the Executive under this Agreement and thereafter Executive shall not at any time (i) solicit or induce, on his own behalf or on behalf of any other person or entity, any employee of the Company or any of its affiliates to leave the employ of the Company or any of its affiliates; or (ii) solicit or induce, on his own behalf or on behalf of any other person or entity, any customer or Prospective Customer of the Company or any of their respective affiliates to reduce its business with the Company or any of its affiliates. For the purposes of this Agreement, “Prospective Customer” shall mean any individual, corporation, trust or other business entity which has either (a) entered into a nondisclosure agreement with the Company or any Company subsidiary or affiliate or (b) has within the preceding 12 months received a currently pending and not rejected written proposal in reasonable detail from the Company or any of the Company’s subsidiary or affiliate.

 

7.3 Inventions and Patents. The Company shall be entitled to the sole benefit and exclusive ownership of any inventions or improvements in products, processes, or other things that may be made or discovered by Executive while he is in the service of the Company, and all patents for the same. During the Term, Executive shall do all acts necessary or required by the Company to give effect to this section and, following the Term, Executive shall do all acts reasonably necessary or required by the Company to give effect to this section.  In all cases, the Company shall pay all costs and fees associated with such acts by Executive.

 

7.4 Return of Property.  The Executive agrees that all property in the Executive’s possession that he obtains or is assigned in the course of his employment with the Company, including, without limitation, all documents, reports, manuals, memoranda, customer lists, credit cards, keys, access cards, and all other property relating in any way to the business of the Company, is the exclusive property of the Company, even if the Executive authored, created, or assisted in authoring or creating such property. The Executive shall return to the Company all such property immediately upon termination of employment or at such earlier time as the Company may request.

 

7.5 Court Ordered Revisions. If any portion of this Section 7 is found by a court of competent jurisdiction to be invalid or unenforceable, but would be valid and enforceable if modified, this Section 7 shall apply with such modifications necessary to make this Section 7 valid and enforceable.  Any portion of this Section 7 not required to be so modified shall remain in full force and effect and not be affected thereby.

 

7.6 Specific Performance. The Executive acknowledges that the remedy at law for any breach of any of the provisions of Section 7 will be inadequate, and that the Company shall be entitled, in addition to any remedy at law or in equity, to preliminary and permanent injunctive relief and specific performance. 

 

8. MISCELLANEOUS.

 

8.1 Indemnification.  The Company and each of its subsidiaries shall, to the maximum extent provided under applicable law, indemnify and hold Executive harmless from and against any expenses, including reasonable attorney’s fees, judgments, fines, settlements and other legally permissible amounts (“Losses”), incurred in connection with any proceeding arising out of, or related to, Executive’s employment by the Company, other than any such Losses incurred as a result of Executive’s negligence or willful misconduct.  The Company shall, or shall cause a subsidiary thereof to, advance to Executive any expenses, including attorney’s fees and costs of settlement, incurred in defending any such proceeding to the maximum extent permitted by applicable law.  Such costs and expenses incurred by Executive in defense of any such proceeding shall be paid by the Company or applicable subsidiary in advance of the final disposition of such proceeding promptly upon receipt by the Company of (a) written request for payment; (b) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (c) an undertaking adequate under applicable law made by or on behalf of Executive to repay the amounts so advanced if it shall ultimately be determined pursuant to any non-appealable judgment or settlement that Executive is not entitled to be indemnified by the Company or any subsidiary thereof.  The Company will provide Executive with coverage under all directors and officers liability insurance policies that it has in effect during the Term, with no deductible to Executive.

 

 8.2 Applicable Law. Except as may be otherwise provided herein, this Agreement shall be governed by and construed in accordance with the laws of the Cayman Islands, applied without reference to principles of conflict of laws. Each party hereby irrevocably submits to the exclusive jurisdiction of the courts sitting in Cayman Islands.

 

8.3 Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors or legal representatives.

 

8.4 Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party, by an international mail courier, or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

Yihong Pan 

Suite 401, No. 381, Panyu Avenue North                                                                                                                                                        Nancun County, Panyu District                                                                                                                                                      Guangzhou City, China 511442

 

 

If to the Company:

Suite 401, No. 381, Panyu Avenue North                                                                                                                                                        Nancun County, Panyu District                                                                                                                                                      Guangzhou City, China 511442

Attn:  Board of Directors

 

Or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notices and communications shall be effective when delivered to the addressee.

 

8.5 Withholding. The Company may withhold from any amounts payable under the Agreement, such federal, state and local income, unemployment, social security and similar employment related taxes and similar employment related withholdings as shall be required to be withheld pursuant to any applicable law or regulation.

 

8.6 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement and any such provision which is not valid or enforceable in whole shall be enforced to the maximum extent permitted by law. 

 

8.7 Captions. The captions of this Agreement are not part of the provisions and shall have no force or effect.

 

8.8 Entire Agreement. This Agreement contains the entire agreement among the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties with respect thereto.

 

8.9 Survival. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement or the Executive’s employment hereunder to the extent necessary to the intended preservation of such rights and obligations.

 

8.10 Waiver. Either Party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

 

8.11 Successors.  This Agreement is personal to Executive and, without the prior express written consent of the Company, shall not be assignable by Executive. This Agreement shall inure to the benefit of and be enforceable by Executive’s estate, heirs, beneficiaries, and/or legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

8.12 Joint Efforts/Counterparts. Preparation of this Agreement shall be deemed to be the joint effort of the parties hereto and shall not be construed more severely against any party.  This Agreement may be signed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

 

8.13 Representation by Counsel.   Each Party hereby represents that it has had the opportunity to be represented by legal counsel of its choice in connection with the negotiation and execution of this Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

	EXECUTIVE:

	 

	CINE TOP CULTURE HOLDINGS LIMITED

 

	 

	 

	 

	/s/Yihong Pan

	 

	/s/Jianmin He

	Yihong Pan

	 

	Jianmin He

	 

	 

	Chief Financial Officer

 

 

5

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