Document:

ex_346524.htm

Exhibit 10.1

 

Puma Biotechnology, Inc.

Non-Employee Director Compensation Program

 

(Effective April 27, 2022)

 

Non-employee members of the board of directors (the “Board”) of Puma Biotechnology, Inc. (the “Company”) shall be eligible to receive cash and equity compensation as set forth in this Non-Employee Director Compensation Program (this “Program”). The cash and equity compensation described in this Program shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any subsidiary of the Company (each, a “Non-Employee Director”) who may be eligible to receive such cash or equity compensation. This Program shall become effective as of the date set forth above.

 

Cash Compensation

 

	
			Board Service

				 
	
			Annual Retainer:

				
			$50,000

			
	 	 
	
			Committee Service

				 
	
			Audit Committee:

				 
	
			Chair Annual Retainer:

				
			$20,000

			
	
			Committee Member (Non-Chair) Retainer:

				
			$10,000

			
	
			Compensation Committee:

				 
	
			Chair Annual Retainer:

				
			$15,000

			
	
			Committee Member (Non-Chair) Retainer:

				
			$7,500

			
	
			Nominating and Corporate Governance Committee:

				 
	
			Chair Annual Retainer:

				
			$10,000

			
	
			Committee Member (Non-Chair) Retainer:

				
			$5,000

			
	
			Research and Development Committee; Commercial Committee:

				 
	
			Chair Annual Retainer:

				
			$15,000

			
	
			Committee Member (Non-Chair) Retainer:

				
			$7,500

			

 

 

 

 

Board Service and Committee Service Annual Retainers will be paid or granted (as applicable) quarterly at the beginning of the applicable calendar quarter. In the event that a Non-Employee Director is initially elected or appointed to serve on the Board (the date of any such initial election or appointment, such Non-Employee Director’s “Start Date”) on any date other than the first day of a calendar quarter, such Non-Employee Director shall receive, within 30 days following such Non-Employee Director’s Start Date, a prorated portion of the Board Service Annual Retainer and a prorated portion of each applicable Committee Service Annual Retainer, payable to such Non-Employee Director with respect to such quarter.

 

Equity Compensation

 

Non-Employee Directors shall be granted the equity awards described below. The awards described below shall be granted under and shall be subject to the terms and provisions of the Company’s 2011 Incentive Award Plan, as may be amended from time to time (the “Plan”). Capitalized terms not otherwise defined below shall have the meanings ascribed to them in the Plan.

 

	
			Initial Option Grant:

				
			Each Non-Employee Director who is initially elected or appointed to serve on the Board is hereby granted an Option with a value of $700,000 (the “Initial Grant”), with the number of Shares subject to the Initial Grant to be determined by dividing the value by the Black-Scholes valuation as of the grant date using a trailing 30-calendar day average closing price for the Company’s common stock through and including the applicable grant date; provided, that, the number of Shares subject to the Initial Grant will not exceed 100,000 Shares.

			 

			The Initial Grant is hereby granted on the date on which such Non-Employee Director is initially elected or appointed to serve on the Board (the “Election Date”), and shall vest with respect to one-third (1/3rd) of the Shares subject thereto on the first anniversary of the applicable Election Date, and with respect to an additional 1/36th of the Shares subject thereto on each monthly anniversary thereafter, subject to continued service through the applicable vesting date. Each Initial Grant shall have an exercise price per Share equal to the Fair Market Value of a Share on the applicable Election Date.

			
	 	 
	
			Annual RSU Grant:

				
			Each Non-Employee Director who is serving on the Board as of the date of any annual shareholder meeting on or after the effective date of this Program and will continue to serve as a Non-Employee Director immediately following such meeting, shall hereby be granted a Restricted Stock Unit award with a value of $300,000 (the “Annual Grant”), with the number of Shares subject to the Annual Grant to be determined by dividing the value by the trailing 30-calendar day average closing price for the Company’s common stock through and including the applicable grant date; provided, that, the number of Shares subject to the Annual Grant will not exceed 27,000 Shares.

			 

			Each Annual Grant will vest in full on the earlier of the one-year anniversary of the date of grant and the date of the annual shareholder meeting following the date of grant, subject to continued service.

			

 

 

 

 

Miscellaneous

 

Each Initial Grant shall be an Option and shall have a maximum term of ten years from the applicable date of grant. All applicable terms of the Plan apply to this Program as if fully set forth herein, and all grants of awards are hereby subject in all respect to the terms of the Plan. The grant of any award under this Program shall be made solely by and subject to the terms set forth in a written Award Agreement in a form approved by the Board and duly executed by an executive officer of the Company.

 

Non-Employee Director Award Limit

 

Notwithstanding any provision to the contrary in this Program, the sum of any cash compensation and the grant date fair value (determined as of the date of the grant under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all awards granted under this Program shall be subject to any limitations imposed under the Plan or any other applicable agreement, program, policy or plan.

 

Amendment, Modification and Termination

 

This Program may be amended, modified or terminated by the Board in the future at its sole discretion. No Non-Employee Director shall have any rights hereunder, except with respect to any awards actually granted pursuant to the Program.Exhibit
4.8

 

EXECUTION
VERSION

 

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

 

KONA
GOLD BEVERAGE, INC.

 

Secured
Convertible Debenture

 

Principal
Amount: $500,000.00

Original
Issue Discount: 4%

Debenture
Issuance Date: May 3, 2022

Debenture
Number: KGKG 5 1-1

 

FOR
VALUE RECEIVED, KONA GOLD BEVERAGE, INC., a Delaware corporation (the “Company”), hereby promises to pay to the
order of YA II PN, Ltd., or its registered assigns (the “Holder”), the amount set out above as the Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due,
whether upon the Maturity Date (as defined below), acceleration, redemption, or otherwise (in each case in accordance with the terms
hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate from the date
set out above as the Debenture Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether
upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This
Convertible Debenture (including all debentures issued in exchange, transfer, or replacement hereof; this “Debenture”)
was originally issued pursuant to the Securities Purchase Agreement dated May 3, 2022, as amended (the “Securities Purchase
Agreement”) between the Company and the Buyers listed on the Schedule of Buyers attached thereto. Certain capitalized terms
used herein are defined in Section (14).

 

(1) GENERAL
TERMS

 

(a) Maturity
Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued
and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Debenture. The “Maturity Date”
shall be May 3, 2023, as may be extended at the option of the Holder. Other than as specifically permitted by this Debenture, the Company
may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest.

 

    	 

     

    

 

(b) Interest
Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal to 6% (the
“Interest Rate”), which Interest Rate shall increase to an annual rate equal to 15% for so long as any Event of Default
remains uncured. Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted
by applicable law.

 

(c) Original
Issue Discount. The Original Principal Amount of this Debenture shall have an original issue discount of 4% (the “OID”)
that the Holder shall be entitled to deduct from the gross proceeds of the original Principal Amount when this Debenture was issued.

 

(d) Security
and Guaranty. This Debenture is secured by (i) a security interest in all of the assets of the Company and of each of the Company’s
subsidiaries pursuant to the Security Agreement by and among the Company, its wholly owned subsidiaries and the Investor, dated the date
hereof (the “Security Agreement”) and (ii) the Intellectual Property Security Agreement by and among the Investor,
the Company, and the Company’s subsidiaries referenced therein, dated the date hereof (the “IP Security Agreement”),
and is subject to a global guarantee pursuant to the Global Guaranty Agreement by and among the Investor and each of the Company’s
wholly owned subsidiaries, dated the date hereof, (the “Guaranty”; and, collectively, with the Security Agreement
and the IP Security Agreement shall be collectively referred to as the “Security Documents”).

 

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

 

(3) EVENTS
OF DEFAULT.

 

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

 

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

 

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

 

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

 

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

 

(v) The
Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section (14)) unless, in
connection with such Change of Control Transaction, this Debenture is retired;

 

(vi) the
Company’s (A) failure to deliver the required number of shares of Common Stock to the Holder within two (2) Trading Days after
the applicable Delivery Date or (B) notice, written or oral, to any holder of the Debenture, including by way of public announcement,
at any time, of its intention not to comply with a request for conversion of any Debenture into shares of Common Stock that is tendered
in accordance with the provisions of this Debenture, other than pursuant to Section 5(c);

 

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(vii) The
Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined in Section (4)(b)(ii)) within five
(5) Business Days after such payment is due;

 

(viii) The
Company shall fail to observe or perform any other material covenant, agreement, or warranty contained in, or otherwise commits any material
breach or default of any provision of this Debenture (except as may be covered by Section (3)(a)(i) through (3)(a)(ix) hereof) or any
Transaction Document (as defined in Section (14)) that is not cured within the time prescribed.

 

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

 

(b) During
the time that any portion of this Debenture is outstanding, if any Event of Default has occurred and is continuing, the full unpaid Principal
amount of this Debenture, together with Interest and other amounts owing in respect thereof, to the date of acceleration shall become
at the Holder’s election, immediately due and payable in cash. Furthermore, in addition to any other remedies, the Holder shall
have the right (but not the obligation) to convert this Debenture (subject to the beneficial ownership limitations set out in Section
(4)(c)) at any time (x) after an Event of Default (provided that such Event of Default has not been cured, during the applicable cure
period, if any, and is continuing) at the Conversion Price or (y) on the Maturity Date at the Conversion Price. The Holder need not provide,
and the Company hereby waives, any presentment, demand, protest, or other notice of any kind (other than required notice of conversion)
and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

(4) CONVERSION
OF DEBENTURE.This Debenture shall be convertible into shares of the Company’s Common Stock, on the terms and
conditions set forth in this Section (4).

 

(a) Conversion
Right. Subject to the limitations of Section (4)(c), at any time or times on or after the Issuance Date, the Holder shall be entitled
to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of
Common Stock in accordance with Section (4)(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable
upon conversion of any Conversion Amount pursuant to this Section (4)(a) shall be determined by dividing (x) such Conversion Amount by
(y) the Conversion Price (the “Conversion Rate”). The Company shall not issue any fraction of a share of Common Stock
upon any conversion. All calculations under this Section (4) shall be rounded to the nearest $0.0001. If the issuance would result in
the issuance of a fractional share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest
whole share. The Company shall pay any and all transfer, stamp, and similar taxes that may be payable with respect to the issuance and
delivery of Common Stock upon conversion of any Conversion Amount.

 

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

 

(ii) “Conversion
Price” means, as of any Conversion Date (as defined below) or other date of determination the lower of (i) $0.03 (the “Fixed
Conversion Price”) or (ii) 80% of the lowest daily VWAP during the 10 consecutive Trading Days immediately preceding the Conversion
Date or other date of determination (the “Variable Conversion Price”). The Conversion Price shall be adjusted from
time to time pursuant to the other terms and conditions of this Debenture.

 

(b) Mechanics
of Conversion.

 

(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the
Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a
copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company and (B) if required by Section (4)(b)(iii), surrender this Debenture to a nationally recognized overnight delivery service
for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture
in the case of its loss, theft or destruction). On or before the third (3rd) Trading Day following the date of receipt of
a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be placed on
certificates of Common Stock and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”)
Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled
to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y)
if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as
specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of
Common Stock to which the Holder shall be entitled, which certificates shall not bear any restrictive legends unless required pursuant
to rules and regulations of the Commission. If this Debenture is physically surrendered for conversion and the outstanding Principal
of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable
and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder
a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common
Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of
Common Stock upon the transmission of a Conversion Notice.

 

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

 

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

 

(c) Limitations
on Conversions.

 

(i) Beneficial
Ownership. The Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock hereunder
if, after giving effect to such conversion or receipt of such Shares, the Holder, together with any affiliate thereof, would beneficially
own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the
number of shares of Common Stock outstanding immediately after having giving effect to such conversion or receipt of shares as payment
of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the
time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 4.99%
of the then-outstanding shares of Common Stock without regard to any other shares that may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section
will limit any particular conversion hereunder and, if the Holder determines that the limitation contained in this Section applies, the
determination of which portion of the Principal amount of this Debenture is convertible shall be the responsibility and obligation of
the Holder. If the Holder has delivered a Conversion Notice for a Principal amount that, without regard to any other shares that the
Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company
shall notify the Holder of this fact and shall honor the conversion for the maximum Principal amount permitted to be converted on such
Conversion Date in accordance with Section (4)(a) and, any Principal amount tendered for conversion in excess of the permitted amount
hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself
and not to any other Holder) upon not less than 65 days’ prior written notice to the Company. Other Holders shall be unaffected
by any such waiver.

 

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(d) Other
Provisions.

 

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

 

(ii) All
calculations under this Section (4) shall be rounded to the nearest $0.0001 or whole share.

 

(iii) The
Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely
for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free
from preemptive rights or any other actual, contingent purchase rights of persons other than the Holder, not less than such number of
shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions set forth herein) upon the conversion
of the outstanding Principal and payment of Interest hereunder. The Company covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly and validly authorized, issued, and fully paid and nonassessable.

 

(iv) Nothing
herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (3) herein for
the Company’s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein
and such Holder shall have the right to pursue all remedies available to it at law or in equity, including, without limitation, a decree
of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise
of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.

 

(5) ADJUSTMENTS
TO THE FIXED CONVERSION PRICE.

 

(a) Adjustment
of Fixed Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues
or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common
Stock deemed to have been issued or sold by the Company in connection with an issuance of Excluded Securities, for a consideration per
share (the “New Issuance Price”) less than a price equal to the Fixed Conversion Price in effect immediately prior
to such issue or sale (such price the “Applicable Price”) (the foregoing, a “Dilutive Issuance”),
then immediately after such Dilutive Issuance the Fixed Conversion Price then in effect shall be reduced (and in no event increased)
to a Fixed Conversion Price equal to the quotient obtained by dividing:

 

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	 	(X)	the
    sum of (A) the product obtained by multiplying the number of shares of Common Stock issued and outstanding immediately prior
    to such issuance or sale (or deemed issuance or sale) by the Fixed Conversion Price then in effect plus (B) the aggregate
    consideration, if any, received by the Company upon such issuance or sale (or deemed issuance or sale); by
	 	 	 
	 	(Y)	the
    sum of (A) the number of shares of Common Stock outstanding immediately prior to such issuance or sale (or deemed issuance or sale)
    plus (B) the aggregate number of shares of Common Stock issued or sold (or deemed issued or sold) by the Company in such issuance
    or sale (or deemed issuance or sale).

 

For
purposes of determining the adjusted Fixed Conversion Price under this Section 5(a), the following shall be applicable:

 

(i) Issuance
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable
upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section, the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option” shall be equal
to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common
Stock upon the grant or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible
Securities issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance
of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such
Common Stock upon conversion or exchange or exercise of such Convertible Securities.

 

(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share
for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the “lowest price per
share for which one share of Common Stock is issuable upon such conversion or exchange or exercise” shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon
the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further
adjustment of the Fixed Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange
or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of the Fixed Conversion Price had been or are to be made pursuant to other provisions of this Section, no
further adjustment of the Fixed Conversion Price shall be made by reason of such issue or sale.

 

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(iii) Change
in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible
into or exchangeable or exercisable for Common Stock changes at any time, the Fixed Conversion Price in effect at the time of such change
shall be adjusted to the Conversion Price that would have been in effect at such time had such Options or Convertible Securities provided
for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the Issuance
Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change.
No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

(iv) Calculation
of Consideration Received. If any Common Stock, Options, or convertible securities are issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor will be deemed to be the gross amount received by the Company therefor, less placement
agent fees, brokerage commissions, finder’s fees, or the like. If any Common Stock, Options or Convertible Securities are issued
or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair
value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received
by the Company will be the Closing Bid Price of such securities on the date of receipt thereof. If any Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity,
the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value
of such consideration will be determined within five (5) Business Days after the 10th day following the Valuation Event by
an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed
binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne jointly by the Company and
the Holder.

 

(v) Integrated
Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which any specific consideration or no specific consideration is allocated to such Options by the parties
thereto, (1) the per-share value of the shares of Common Stock included in such integrated transaction shall be the sole determinate
as to whether the Fixed Conversion Price is to be adjusted in accordance with the provisions of Section 5(a), above, (2) if no shares
of Common Stock are included in such integrated transaction, but shares of the Company’s preferred stock are included in such integrated
transaction, then the per-share conversion price of shares of that preferred stock shall be the sole determinate as to whether the Fixed
Conversion Price is to be adjusted in accordance with the provisions of Section 5(a), above, and (3) if no shares of Common Stock and
no shares of the Company’s preferred stock are included in such integrated transaction, but debt convertible into shares of Common
Stock (whether directly or through an intermediate step, e.g., an initial conversion of that debt into shares of the Company’s
preferred stock that, thereafter, could be converted into shares of Common Stock), then the per-share conversion price of shares of such
debt shall be the sole determinate as to whether the Fixed Conversion Price is to be adjusted in accordance with the provisions of Section
5(a), above; provided, however, that, if the exercise price of the Option is less than the Fixed Conversion Price (after
having taken into account any adjustments thereto in accordance with the provisions of (1), (2), or (3), immediately above), then the
Option exercise price shall be utilized in connection with the Fixed Conversion Price adjustment provisions of Section 5(a), above.

 

    	9

     

    

 

(vi) Treasury
Shares. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account
of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock.

 

(vii) Record
Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options, or Convertible Securities or (B) to subscribe for or purchase Common Stock, Options,
or Convertible Securities, then such record date will be deemed to be the record date as set forth in notice to stockholders for the
issuance or sale of the Common Stock deemed to be issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the case may be.

 

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

 

(c) Purchase
Rights. If at any time the Company grants, issues, or sells any Options, Convertible Securities, or rights to purchase stock, warrants,
securities, or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture
(without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on
which a record is taken for the grant, issuance, or sale of such Purchase Rights, or, if no such record is taken, the date as of which
the record holders of Common Stock are to be determined for the grant, issue, or sale of such Purchase Rights.

 

    	10

     

    

 

(d) Other
Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights, phantom stock rights, or other rights with equity features),
then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of
the Holder under this Debenture; provided, that no such adjustment will increase the Conversion Price as otherwise determined
pursuant to this Section 5.

 

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

 

(f) Whenever
the Fixed Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth
the Fixed Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

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

 

    	11

     

    

 

(6) REISSUANCE
OF THIS DEBENTURE.

 

(a) Transfer.
If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company shall forthwith
prepare and deliver upon the order of the Holder a new Debenture (in accordance with Section (6)(d)), registered in the name of the registered
transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest
thereof) and, if less than the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section (6)(d))
to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture,
acknowledge and agree that, by reason of the provisions of Section (4)(b)(iii) following conversion or redemption of any portion of this
Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

 

(b) Lost,
Stolen, or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Debenture, and, in the case of loss, theft, or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company
shall execute and deliver to the Holder a new Debenture (in accordance with Section (6)(d)) representing the outstanding Principal.

 

(c) Debenture
Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Debenture or Debentures (in accordance with Section (6)(d)) representing in the aggregate the outstanding
Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principal as is designated by
the Holder at the time of such surrender.

 

    	12

     

    

 

(d) Issuance
of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture
(i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining
outstanding (or in the case of a new Debenture being issued pursuant to Section 5(6)(a) or Section 5(6)(c), the Principal designated
by the Holder that, when added to the Principal represented by the other new Debentures issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall
have an issuance date, as indicated on the face of such new Debenture, which is the same as the Issuance Date of this Debenture, (iv)
shall have the same rights and conditions as this Debenture, and (v) shall represent accrued and unpaid Interest from the Issuance Date.

 

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

 

	If
    to the Company, to:	 	Kona
    Gold Beverage, Inc.
	 	 	746
                                            North Drive STE A

    Melbourne,
    FL 32934

    Attn:
    Robert Clark

	 	 	Telephone:
    844-714-2224
	 	 	E-mail:
    robert@konagoldhemp.com
	 	 	 
	With
                                            a mandatory copy to:

    (which
    shall not constitute

    Notice)

     

     
	 	Clark
                                            Hill LLP

    555
    South Flower Street – 24th Floor

    Los
    Angeles, CA 90071

    Attention:
    Randolf Katz

    Telephone:
    213-714-5310

    E-mail:
    rkatz@clarkhill.com

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

    1012
    Springfield Avenue

	 	 	Mountainside,
    NJ 07092
	 	 	Attention:
    Mark Angelo
	 	 	Telephone:
    201-985-8300
	 	 	E-mail:
    Legal@yorkvilleadvisors.com
	 	 	 
	With
    a mandatory copy to:	 	David
    Gonzalez, Esq
	(which
    shall not constitute notice)	 	1012
    Springfield Avenue
		 	Mountainside,
    NJ 07092
	 	 	Telephone:
    201-536-5109
		 	E-mail: dgonzalez@yorkvilleadvsors.com

 

    	13

     

    

 

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

 

(8) Except
as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute
and unconditional, to pay the Principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate, and
in the coin or currency herein prescribed. This Debenture is a direct obligation of the Company. As long as this Debenture is outstanding,
the Company shall not and shall cause its subsidiaries not to, without the consent of the Holder (which consent shall not be unreasonably
withheld, delayed, denied, or conditioned), (i) amend its Certificate of Incorporation, Bylaws, or other charter documents so as to adversely
affect any rights of the Holder; (ii) repay, repurchase, or offer to repay, repurchase, or otherwise acquire shares of its Common Stock
or other equity securities; or (iii) enter into any agreement with respect to any of the foregoing.

 

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

 

(10) This
Debenture shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts
of laws thereof. Each of the parties consents to the jurisdiction of the Supreme Court of the State of New York located in the City of
New York, Borough of Manhattan, and the U.S. District Court for the Southern District of New York in connection with any dispute arising
under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

 

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

 

    	14

     

    

 

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

 

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

 

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

 

(a) “Bloomberg”
means Bloomberg Financial Markets.

 

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

 

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

 

    	15

     

    

 

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

 

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

 

(f) “Convertible
Securities” means any stock or securities directly or indirectly convertible into or exercisable or exchangeable for Common
Stock.

 

(g) “Common
Stock” means the common stock, par value $0.00001, of the Company and stock of any other class into which such shares may hereafter
be changed or reclassified.

 

(h) “Equity
Conditions” means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks
prior to the applicable date of determination and ending on and including the applicable date of determination (the “Equity
Conditions Measuring Period”), all applicable shares of Common Stock to be issued in connection with the event requiring determination
shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities
laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market
and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market
been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then-effective minimum listing
maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered
Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section (4)(b) hereof; (iv) any applicable
shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section
(4)(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not
have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event
of Default; and (vi) the Company shall have no knowledge of any fact that would cause any applicable shares of Common Stock to be issued
in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration
under any applicable federal or state securities laws.

 

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

 

(j) “Excluded
Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan, (b) the
shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture or other Debentures issued by the
Company to the Holder, and (c) the shares of Common Stock issued or deemed to be issued by the Company upon exercise of warrants initially
granted by the Company to the Holder;

 

    	16

     

    

 

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

 

(l) “Options”
means any rights, warrants, or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

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

 

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

 

(o) “Primary
Market” means any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Market, the Nasdaq Global Select Market,
the Nasdaq Capital Market, or the OTC Markets Group Inc.’s Pink® Open Market, OTCQB® Venture Market
or OTCQX® Best Market, and any successor to any of the foregoing markets or exchanges.

 

(p) “Redemption
Premium” means, 15% of the Principal amount being redeemed.

 

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

 

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

 

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

 

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

 

(u) “VWAP”
means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported
by Bloomberg, LP through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg, LP, the average of the highest closing Bid Price and the lowest Closing Ask
price of any of the market makers for such security as reported by OTC Markets Group Inc.

 

[Signature
Page Follows]

 

    	17

     

    

 

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

 

	 	COMPANY:
	 	KONA
    GOLD BEVERAGE, INC.
	 	 
	 	By:	
	 	Name: 	Robert
    Clark
	 	Title:	CEO

 

    	 

     

    

 

EXHIBIT
I

CONVERSION
NOTICE

 

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

 

TO:
KONA GOLD BEVERAGE, INC.

 

Via
E-mail:

 

The
undersigned hereby irrevocably elects to convert that portion of the outstanding and unpaid Conversion Amount of Debenture No. KGKG
5 1-1 into Shares of Common Stock of KONA GOLD BEVERAGE, INC., according to the conditions stated therein, as of the Conversion
Date written below.

 

	Conversion
    Date:	 
	Principal
    Amount to be Converted:	 
	Accrued
    Interest to be Converted:	 
	Total
    Conversion Amount to be converted:	 
	Fixed
    Conversion Price: 	 
	Variable
    Conversion Price:	 
	Applicable
    Conversion Price:	 
	Number
    of shares of Common Stock to be issued:	 

 

	Please
    issue the shares of Common Stock in the following name and deliver them to the following account:
	Issue
    to:	 
	Broker
    DTC Participant Code:	 
	Account
    Number:	 
	 	 
	Authorized
    Signature:	 
	Name:	 
	Title:

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