Document:

Exhibit 4.1

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
(AND THE COMMON STOCK ISSUABLE PURSUANT TO SUCH SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND NEITHER THESE SECURITIES NOR THE COMMON STOCK ISSUABLE PURSUANT THERETO MAY BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED TO ANY PERSON OTHER THAN THE ISSUER OF THESE SECURITIES IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN APPLICABLE
EXEMPTION THEREUNDER, AS EVIDENCED BY AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS; PROVIDED THAT SUCH OPINION OF COUNSEL SHALL NOT BE REQUIRED IN THE CASE OF
A RESALE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT (“RULE 144”) IF SUCH RESALE IS NOT MADE BY AN “AFFILIATE”
(WITHIN THE MEANING OF RULE 144) OF THE ISSUER OF THESE SECURITIES.

 

MEDALIST
DIVERSIFIED REIT, INC.

 

Convertible
Debenture

 

	Principal Amount:      $[_____________]

Debenture Issuance Date: [_________] 

Debenture Number: MDRR-[1][2][3]

 

FOR VALUE RECEIVED,
MEDALIST DIVERSIFIED REIT, INC., a Maryland corporation (the "Company"), hereby promises to pay to the order
of YA II PN, Ltd., or its registered assigns (the "Holder") the amount set out above as the Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal") when
due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest Rate
from the date set out above as the Debenture Issuance Date (the "Issuance Date") until the same becomes due and
payable, whether upon an Interest Date (as defined below), the Maturity Date or acceleration, conversion, redemption or otherwise
(in each case in accordance with the terms hereof). This Convertible Debenture (including all debentures issued in exchange, transfer
or replacement hereof, this "Debenture") was originally issued pursuant to the Securities Purchase Agreement dated
[____________], 2020, 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 [________], 20211, as may be
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
5% (“Interest Rate”), which Interest Rate shall increase to an annual rate of 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)            Triggering
Event. If, any time after the Issuance Date, and from time to time thereafter, the daily VWAP is less than the Floor Price
for a period of 5 consecutive Trading Days (each such occurrence, a “Triggering Event”), then the Interest Rate
shall increase to an annual rate of 15%. The Interest Rate shall return to the rate set forth in Clause 1(b) if any time after
a Triggering Event the daily VWAP is greater than the Floor Price for a period of 5 consecutive Trading Days, unless a subsequent
Triggering Event occurs.

 

(2)            Early
Redemption. The Company shall have the right, but not the obligation, to redeem (“Optional Redemption”)
early a portion or all amounts outstanding under this Debenture as described in this Section; provided that (i) the
trading price of the Common Stock is less than the Fixed Conversion Price and (ii) the Company provides 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 Convertible Debentures
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 Convertible
Debentures. On the 11th Business Day after the Redemption Notice, the Company shall deliver to the Holder the Redemption Amount
with respect to the Principal amount redeemed after giving effect to conversions effected during the 10 Business Day period.

 

(3)            EVENTS
OF DEFAULT.

 

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

 

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

 

 

1 Inert date 12 months from the issuance date.

 

    2 

    

    

 

(ii)            The
Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of
the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the
Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect
relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company
any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty
one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the
Company or any subsidiary of the Company shall fail to pay, or shall state 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 material 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 cure a Conversion Failure by delivery of the required number of shares of Common Stock within five
(5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to any holder of the Debentures,
including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Debentures
into Common Stock in accordance with the provisions of the Debentures, other than pursuant to Section (5)(c);

 

(vii)            [RESERVED];

 

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

 

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

 

(b)            During
the time that any portion of this Debenture is outstanding, if any Event of Default has occurred and is continuing, the full unpaid
Principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration
shall become at the Holder's election, immediately due and payable in cash. 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 after (x) an Event of Default (provided that such Event of Default is continuing)
or (y) 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
the Company's Common Stock on the terms and conditions set forth in this Section (4).

 

(a)            Conversion
Right. Subject to the provisions of Section (4)(c), at any time or times on or after [the Issuance Date] [October 29,2020]2,
the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully
paid and nonassessable Common Stock in accordance with Section (4)(b), at the Conversion Rate (as defined below). Upon each
conversion and upon receipt of the appropriate notice from the Holder as set forth in Section (4)(b)(i) herein, the Company
shall issue the applicable shares of Common Stock to the Holder. 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”). No fraction of a share will be delivered 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 fraction of a shares, the Company shall round such fraction of a share 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 shares
upon conversion of any Conversion Amount.

 

 

2 Use October 29, 2020 if closing occurs on or before
October 28, 2020

 

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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) $[______]3
(the “Fixed Conversion Price”), or (ii) 88% 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”),
but not lower than the Floor 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 Common Stock on any date (a "Conversion Date"), the Holder
shall (A) transmit by email, 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 Business Day following the date of receipt of a Conversion
Notice, Instrument of Transfer, and Letter of Transmittal (the "Share Delivery Date"), the Company shall
cause the issuance of the underlying Common and (X) if legends are not required to be placed on the stock certificates and
provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities
Transfer Program, instruct the Depositary Bank to 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 and Custodian system or (Y) if
the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, instruct the Depositary Bank to
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 shares of Common Stock issuable upon a conversion of this Debenture shall
be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion
Notice.

 

(ii)            Company's
Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of an email copy of a Conversion
Notice the Company shall fail to issue the underlying Common Stock and cause the issuance 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, then such action will constitute a "Conversion Failure.” Notwithstanding
the foregoing, the Company’s failure to issue the underlying Common Stock pursuant to Sections 4(c)(i)-(ii), shall not constitute
a Conversion Failure.

 

 

3 Insert price equal to 100% of the closing price
on the last Trading Day prior to the Issuance Date of each closing.

 

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(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 otherwise receive Common Stock hereunder
to the extent that after giving effect to such conversion or receipt of such Common Stock, 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 Common Stock outstanding immediately after giving effect to such conversion. Since
the Holder will not be obligated to report to the Company the number of Common Stock it may hold at the time of a conversion hereunder,
unless the conversion at issue would result in the issuance of Common Stock representing beneficial ownership in excess of 4.99%
of the then outstanding Common Stock without regard to any other Common Stock which may be beneficially owned by the Holder or
an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this
Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained
in this Section applies, the determination of which portion of the Principal amount of this Debenture is convertible shall
be the responsibility and obligation of the Holder, provided however, upon the request of the Company, the Holder shall report
its holdings in shares of Common Stock to the Company. If the Holder has delivered a Conversion Notice for a Principal amount of
this Debenture that would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder
of this fact and shall honor the conversion for the maximum Principal amount permitted to be converted on such Conversion Date
in accordance with Section 3(a) and any Principal amount tendered for conversion in excess of the permitted amount hereunder
shall remain outstanding under this Debenture. The Holder (but only as to itself and not to any other Holder) may elect to increase
the beneficial ownership limitation set forth herein from 4.99% to 9.8% upon not less than 65 days prior notice to the Company.
Other Holders shall be unaffected by any such election.

 

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(ii)            Principal
Market Limitation. Notwithstanding anything in this Agreement to the contrary, the Company shall not issue any Common Stock
pursuant to the transactions contemplated hereby or any other Transaction Documents if the issuance of such Common Stock would
exceed the aggregate number of shares of Common Stock that the Company may issue in this transaction in compliance with the Company’s
obligations under the rules or regulations of Nasdaq Stock Market LLC (the “Nasdaq”) (the number of shares
which may be issued without violating such rules and regulations is 949,119 (which is 19.99% of 4,747,968 outstanding shares
of Common Stock) and shall be referred to as the “Exchange Cap”), except that such limitation shall not apply
in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the
Nasdaq for issuances of shares in excess of such amount or (B) obtains a written opinion from counsel to the Company that
it may follow its home country practice, and therefore, such approval is not required, which opinion shall be reasonably satisfactory
to the Buyers. The Exchange Cap shall be appropriately adjusted for any stock dividend, stock split, reverse stock split or similar
transaction.

 

(iii)            Sales
Limitations. The Holder shall not sell such number of shares of Common Stock in any calendar month (being the 1st
of the month through the last day of the same month) that would result in gross proceeds received by the Holder in excess of the
greater of (a) 30% of the dollar trading volume of the Common Stock during such calendar month, of (b) $500,000. This
limitation shall not apply (i) at any time after the occurrence of an Event of Default, and (ii) with respect to any
sales of shares of Common Stock at prices greater than or equal to the Fixed Conversion Price. This limitation may be waived with
the consent of the Company.

 

(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 notice that such minimum number of Underlying Shares is not so reserved, the Company shall
promptly reserve a sufficient number of shares to comply with such requirement.

 

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

 

(iii)            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 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.

 

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(5)            Adjustments
to Conversion Price

 

(a)            Adjustment
of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues
or sells any shares of Common Stock or Convertible 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 to an amount equal to the New Issuance Price. For the purposes hereof, 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. No further adjustment of the 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.

 

(b)            Adjustment
of Conversion Price upon Subdivision or Combination of shares 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 its Common Stock or any
other equity or equity equivalent securities payable in shares which results in an increase in the number of outstanding shares
of Common Stock, (b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, (c) combine
(including by way of reverse share split) outstanding shares of Common Stock into a smaller number of shares of Common Stock, or
(d) issue additional shares of Common Stock by reclassification of shares of Common Stock or any shares of capital stock of
the Company, then each of the Fixed Conversion Price and the Floor 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 (c) of this Section. 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)            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).

 

(d)            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 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 the 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.

 

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

 

(f)            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 (3)(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 shares of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled
upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock
into which such aggregate Principal amount of this Debenture could have been converted immediately prior to such merger, consolidation
or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue
to the Holder a convertible Debenture with a Principal amount equal to the aggregate Principal amount of this Debenture then held
by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Debenture
shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all
of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures
were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock
or convertible Debentures shall be based upon the amount of securities, cash and property that each Ordinary Share would receive
in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.
The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to
receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.
This provision shall similarly apply to successive such events.

 

(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 will forthwith
issue 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.

 

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(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.

 

(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 (6)(a) or
Section (6)(c), the Principal designated by the Holder which, when added to the Principal represented by the other new Debentures
issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior
to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which
is the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and
(v) shall represent accrued and unpaid Interest from the Issuance Date.

 

(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 email 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:	
        MEDALIST DIVERSIFIED REIT, INC.

         

	 	
        Three James Center

        1051 E. Cary Street, Suite 601

        Richmond, VA 23219

         

        Telephone:  804-344-4435

Attention:  Thomas E. Messier

E-Mail:  tmessier@medalistprop.com 

 

    10 

    

    

 

	With Copy to:	Kaplan Voekler Cunningham & Frank PLC

        1401 E. Cary Street

        Richmond, VA 23219

         

        Attention: Thomas Voekler

        Telephone: 804-823-4001

        Email: tvoekler@kv-legal.com. 

 

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

        1012 Springfield Avenue

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

 

or at such other address and/or email 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 email service provider containing the
time, date, recipient email 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 their subsidiaries not to, without the consent of the Holder, (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.

 

    11 

    

    

 

(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 which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding
or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

 

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

 

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

 

    12 

    

    

 

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

 

(a)            "Applicable
Price" shall have the meaning set forth in Section 5(a).

 

(b)            "Bloomberg"
means Bloomberg Financial Markets.

 

(c)            “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.

 

(d)            “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) which is not approved by a majority of those individuals
who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors
who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of
the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events
set forth above in (a), (b) or (c). No transfer to a wholly-owned subsidiary shall be deemed a Change of Control Transaction
under this provision.

 

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

 

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

 

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

 

(h)            “Common
Stock” means the Company's shares of common stock, par value $0.01 par value per share, and any capital stock into which
such shares shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(i)            "Dilutive
Issuance" shall have the meaning set forth in Section 5(a).

 

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

 

    13 

    

    

 

(k)            “Floor
Price” means $[______]4 per share.

 

(l)            “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 are effectively converted into or exchanged for other securities, cash or property.

 

(m)            “New
Issuance Price” shall have the meaning set forth in Section 5(a).

 

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

 

(o)            “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.

 

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

 

(q)            “Primary
Market” means the Nasdaq Capital Market and any successor to any of the foregoing markets or exchanges.

 

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

 

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

 

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

 

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

 

 

4 Insert price equal to 25% of the Fixed Conversion
Price.

 

    14 

    

    

 

(v)            “Underlying
Shares” means the Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

 

(w)            “Underlying
Shares Registration Statement” means a registration statement meeting the requirements set forth in the Registration
Rights Agreement, covering among other things the resale of the underlying Common Stock, and naming the Holder as a “selling
stockholder” thereunder.

 

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

 

[Signature Page Follows]

 

    15 

    

    

 

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

 

	 	COMPANY:
	 	MEDALIST DIVERSIFIED REIT, INC.
	 	   
	 	By:	                  
	 	Name:
	 	Title:

 

     

     

    

 

EXHIBIT I

CONVERSION NOTICE

 

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

 

TO: MEDALIST DIVERSIFIED REIT, INC.

 

Via Email:

 

The undersigned hereby
irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Debenture No. MDRR-[1] into
shares of Common Stock of MEDALIST DIVERSIFIED REIT, 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 Common Stock in the following name and to the following address:
	[__________________]

 

	Authorized Signature:	
	Name:	
	Title:	
	Broker DTC Participant Code:	
	Account Number:Exhibit 10.1

 

EXECUTION
VERSION

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of October 27, 2020, is between MEDALIST DIVERSIFIED
REIT, INC., a company incorporated under the laws of Maryland, with principal executive offices located at Three James
Center, 1051 E. Cary Street, Suite 601, Richmond, VA 23219 (the “Company”), and each of the investors listed
on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively the “Buyers”).

 

WITNESSETH

 

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

 

WHEREAS, the
parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase up to $5,000,000 of convertible debentures in the form attached hereto
as “Exhibit A” (the “Convertible Debentures”), which shall be convertible into the Company’s
Common Stock, $0.01 par value per share (“Common Stock” and the Common Stock issued upon conversion of the Convertible
Debentures, the “Conversion Shares”), of which $1,500,000 shall be purchased upon the signing this Agreement
(the “First Closing”), $2,000,000 shall be purchased upon the filing of a Registration Statement with the U.S.
Securities and Exchange Commission registering the resale of the Conversion Shares by the Buyers and satisfaction of other conditions
(the “Second Closing”), and $1,500,000 shall be purchased on or about the date the Registration Statement has
first been declared effective by the SEC (the “Third Closing”) (individually referred to as a “Closing”
collectively referred to as the “Closings”), in the respective amounts set forth opposite each Buyer(s) name
on Schedule I (the “Subscription Amount”) for a purchase price equal to 95% of the Subscription Amount (the
 “Purchase Price”);

 

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

 

WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the Company is delivering Irrevocable Transfer Agent Instructions (the “Irrevocable
Transfer Agent Instructions”) to its transfer agent; and

 

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

 

     

     

    

 

AGREEMENT

 

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

 

		1.	PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

 

(a)            Purchase
of Convertible Debentures. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the
Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company at each
Closing Convertible Debentures with principal amount corresponding with the Subscription Amount set forth opposite each Buyer’s
name on Schedule of Buyers attached as Schedule I hereto.

 

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

 

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

 

    
		2

     

    

 

(d)            Maximum
Shares. Notwithstanding anything in this Agreement to the contrary, the Company shall not issue any Common Shares pursuant
to the transactions contemplated hereby or any other Transaction Documents (including the Conversion Shares) if the issuance of
such shares of Common Stock would exceed the aggregate number of shares of Common Stock that the Company may issue in this transaction
in compliance with the Company’s obligations under the rules or regulations of Nasdaq Stock Market LLC (the “Nasdaq”)
(the number of shares which may be issued without violating such rules and regulations is 949,119 (which is 19.99% of 4,747,968
outstanding shares of Common Stock) and shall be referred to as the “Exchange Cap”), except that such limitation
shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of
the Nasdaq for issuances of shares in excess of such amount or (B) obtains a written opinion from counsel to the Company that
it may follow its home country practice, and therefore, such approval is not required, which opinion shall be reasonably satisfactory
to the Buyers. The Exchange Cap shall be appropriately adjusted for any stock dividend, stock split, reverse stock split or similar
transaction.

 

		2.	BUYER’S REPRESENTATIONS AND WARRANTIES.

 

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

 

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

 

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

 

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

 

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

 

    
		3

     

    

 

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

 

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

 

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

 

    
		4

     

    

 

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

 

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

 

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

 

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

 

(j)            Certain
Trading Activities. The Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding
with the Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as
defined below) involving the Company's securities) during the period commencing as of the time that the Buyer first contacted the
Company or the Company's agents regarding the specific investment in the Company contemplated by this Agreement and ending immediately
prior to the execution of this Agreement by such Buyer. The Buyer hereby agrees that it shall not directly or indirectly, engage
in any Short Sales involving the Company’s securities during the period commencing on the date hereof and ending when no
Convertible Debentures remain outstanding. "Short Sales" means all "short sales" as defined in Rule 200
promulgated under Regulation SHO under the 1934 Act (as defined below). The Buyer is aware that Short Sales and other hedging activities
may be subject to applicable federal and state securities laws, rules and regulations and the Buyer acknowledges that the
responsibility of compliance with any such federal or state securities laws, rules and regulations is solely the responsibility
of the Buyer.

 

    
		5

     

    

 

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

 

(l)            OFAC.
Buyer represents that neither he, she, or it is either a subsidiary, affiliate, owner, shareholder, partner, member, indemnitor,
guarantor, or related person or entity that is: (a) a Sanctioned Person (as defined below); (b) has more than 15% of
its assets in Sanctioned Countries (as defined below); or (c) derives more than 15% of its operating income from investments
in, or transactions with Sanctioned Persons or Sanctioned Countries. For purposes of the foregoing, a “Sanctioned Person”
shall mean (a) a person named on the list of “specially designated nationals” or “blocked persons”
maintained by the U.S. Office of Foreign Assets Control (“OFAC”) at https://www.treasury.gov/resource-center/sanctions/sdn-list/pages/default.aspx,
or as otherwise published from time to time, or (b)(1) an agency of the government of a Sanctioned Country, (2) an organization
controlled by a Sanctioned Country, or (3) a person resident in a Sanctioned Country, to the extent subject to a sanctions
program administered by OFAC. A “Sanctioned Country” shall mean a country subject to a sanctions program identified
on the list maintained by OFAC and available at https://www.treasury.gov/resource-center/sanctions/programs/pages/programs.aspx,
or as otherwise published from time to time.

 

		3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

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

 

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

 

    
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(b)            Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under
this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Convertible Debentures,
the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Convertible Debentures), have
been duly authorized by the Company's board of directors and no further filing, consent or authorization is required by the Company,
its board of directors or other governmental body. This Agreement has been, and the other Transaction Documents to which the Company
is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights
to indemnification and to contribution may be limited by federal or state securities law. Notwithstanding any of the foregoing,
the Company does not have authority to issue an amount of Conversion Shares above the Exchange Cap until the Company obtains the
approval of its stockholders as required by the applicable rules of the Nasdaq for issuances of shares in excess of such amount.
 “Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement, the Convertible
Debentures, the Irrevocable Transfer Agent Instructions, and each of the other agreements and instruments entered into by the Company
or delivered by the Company in connection with the transactions contemplated hereby and thereby, as may be amended from time to
time.

 

(c)            Issuance
of Securities. The issuance of the Securities are duly authorized and, upon issuance and payment in accordance with the terms
of the Transaction Documents the Securities shall be validly issued, fully paid and non-assessable and free from all preemptive
or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. Upon issuance
or conversion in accordance with the Convertible Debentures, the Conversion Shares, when issued, will be validly issued, fully
paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock.

 

    
		7

     

    

 

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

 

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

 

    
		8

     

    

 

(f)            Acknowledgment
Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) to its knowledge, an "affiliate"
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”))
of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of
the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that
no Buyer (nor any affiliate of any Buyer) is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents
to each Buyer that the Company's decision to enter into the Transaction Documents to which it is a party has been based solely
on the independent evaluation by the Company and its representatives.

 

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

 

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

 

(i)            Application
of Takeover Protections; Rights Agreement. Except for Section 6.1 of the Charter, the Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including, without limitation, any distribution under a rights agreement), stockholder rights
plan or other similar anti-takeover provision under the Bylaws, Charter or other organizational documents or the laws of the jurisdiction
of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company's issuance of the Securities and any Buyer's ownership of the Securities.

 

    
		9

     

    

 

(j)            SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed
all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the
foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”).
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied
in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements,
to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either
individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that
are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board
which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf
of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation, information in the
disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary
in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The
Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any
notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial
Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or
restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP
and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate
any of the Financial Statements.

 

    
		10

     

    

 

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

 

(l)            No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is reasonably expected to exist or occur specific to the Company, any of its Subsidiaries or any of their respective
businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that
has not been publicly disclosed and would reasonably be expected to have a Material Adverse Effect.

 

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

 

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

 

(o)            Equity
Capitalization.

 

(i)            Authorized
and Outstanding Capital Stock. As of the date hereof, the Company has authority to issue 1,000,000,000 shares consisting of
(A) 750,000,000 shares of Common Stock, of which 4,747,968 are issued and outstanding, and (B)  250,000,000 shares of
preferred stock, $0.01 par value per share, of which 200,000 are issued and outstanding.

 

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

 

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

 

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

 

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

 

    
		13

     

    

 

(q)            Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. In accordance with the previous sentence, the Company currently maintains no insurance policies.
Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company
nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.

 

 

(r)            Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of
its Subsidiaries.

 

(s)            Shell
Company Status. The Company is not, band has never been, an issuer identified in, or subject to, Rule 144(i).

 

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

 

    
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(u)            Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosures provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf
of the Company or any of its Subsidiaries, taken as a whole, are true and correct as of the date on which such information was
so provided and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written
information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to
or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material
respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or
conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before
the date hereof or announcement by the Company but which has not been so publicly disclosed. All financial projections and forecasts
that have been prepared by or on behalf of the Company or any of its Subsidiaries and made available to the Buyers have been prepared
in good faith based upon reasonable assumptions and represented, at the time each such financial projection or forecast was delivered
to each Buyer, the Company's best estimate of future financial performance (it being recognized that such financial projections
or forecasts are not to be viewed as facts and that the actual results during the period or periods covered by any such financial
projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees that no Buyer
makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically
set forth in Section 2.

 

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

 

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

 

		4.	COVENANTS.

 

(a)            Reporting
Status. For the period beginning on the date hereof, and ending 6 months after the date on which all the Convertible Debentures
are no longer outstanding (the “Reporting Period”), the Company shall use its best efforts to file on a timely
basis all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination.

 

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

 

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

 

(d)            Fees.
The Company shall issue to YA II PN, Ltd. as the lead Buyer (the “YA II PN”), 50,000 shares of Common Stock
(the “Commitment Shares”) as commitment fee. The Commitment Shares shall be issuable to YA II PN at the First
Closing. The Company shall pay to YA Global II SPV, LLC, an affiliate of the lead Buyer (the “Subsidiary Fund”)
a one-time structuring and due diligence fee in the amount of $15,000, of which $5,000 was previously received. The unpaid balance
of time structuring and due diligence fee shall be deducted from the gross proceeds of the First Closing and paid to the Subsidiary
Fund. The Company authorizes YA II PN to deduct any fees due hereunder from the gross process of the purchase of any Convertible
Debentures.

 

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

 

    
		16

     

    

 

(f)            Disclosure
of Transactions and Other Material Information. On or before 9:30 a.m., New York time, on the first Business Day after the
date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this Agreement) (including all attachments, the “Current
Report”). From and after the filing of the Current Report, the Company shall have disclosed all material, non-public information
(if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
the filing of the Current Report, the Company acknowledges and agrees that any and all confidentiality or similar obligations with
respect to the transactions contemplated by the Transaction Documents under any agreement, whether written or oral, between the
Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand,
and any of the Buyers or any of their affiliates, on the other hand, shall terminate, provided however, the confidentiality agreement
contained in the Mutual Nondisclosure and Confidentiality Agreement entered into by and between the Company and Yorkville Advisors
Global, LP on October 19, 2020 shall expire automatically upon the earlier of (i) the effectiveness of the Registration
Statement, or (ii) April 15, 2021. The Company shall not, and the Company shall cause each of its Subsidiaries and each
of its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information
regarding the Company or any of its Subsidiaries from and after the date hereof without first obtaining the express prior written
consent of such Buyer (which may be granted or withheld in such Buyer's sole discretion).

 

(g)            Reservation
of Shares. So long as any of the Convertible Debentures remain outstanding, the Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock
issuable upon conversion of all Convertible Debentures then outstanding (assuming for purposes hereof that (x) the Convertible
Debentures are convertible at the Conversion Price then in effect, and (y) any such conversion shall not take into account
any limitations on the conversion set forth in Section 5(c) of the Convertible Debentures) (the “Required Reserve
Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(g) be
reduced other than proportionally in connection with any conversion and/or redemption, or reverse stock split. If at any time the
number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the
Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company's obligations pursuant
to the Transaction Documents, in the case of an insufficient number of authorized shares, recommending that stockholders vote in
favor of an increase in such authorized number of shares sufficient to meet the Required Reserved Amount.

 

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

 

    
		17

     

    

 

(i)            From
the date hereof until all the Convertible Debentures have been repaid, unless the holders of at least 75% in principal amount
of the then outstanding Convertible Debentures shall have given prior written consent, the Company shall not, and shall not permit
any of its subsidiaries (whether or not a subsidiary on the date hereof) to, directly or indirectly (i) other than Permitted
Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind,
including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom, (ii) other than Permitted Liens, enter into, create, incur, assume
or suffer to exist any lien, security interest, option or other charge or encumbrance (each, a “Lien”) of any
kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income
or profits therefrom, (iii) amend its charter documents, including, without limitation, its certificate of incorporation
and bylaws, in any manner that materially and adversely affects any rights of the holders of the Convertible Debentures, or (iv) enter
into, or drawdown on any variable rate equity financing facility (including in particular the issuance of any shares of Common
Stock at a variable price or any securities for which the conversion price or exercise price is variable, such as equity lines)
(“Variable Rate Instrument”).

 

“Permitted
Indebtedness” shall mean: (i) indebtedness evidenced by the Convertible Debentures; (ii) indebtedness described
on a Disclosure Schedule attached hereto; (iii) indebtedness incurred solely for the purpose of financing the acquisition
or lease of any equipment, including capital lease obligations with no recourse other than to such equipment; (iv) indebtedness
(A) the repayment of which has been subordinated to the payment of the Convertible Debentures on terms and conditions acceptable
to the Buyers, including with regard to interest payments and repayment of principal, (B) which does not mature or otherwise
require or permit redemption or repayment prior to or on the 91st day after the maturity date of any Convertible Debentures then
outstanding; and (C) which is not secured by any assets of the Company or its subsidiaries; (v) indebtedness associated
with acquiring new intellectual property assets and licenses, so long as the proceeds are going to the party(ies) from which the
Company is acquiring the assets, licenses, and other properties; (vi) any indebtedness (other than the indebtedness set out
in (i) – (v) above) incurred after the date hereof, provided that such indebtedness does not exceed $20,000 at
any given time; (vii) any indebtedness incurred in connection with the acquisition of real estate; (viii) any indebtedness
incurred in connection with the refinance of any existing debt associated with any real estate owned by the Company; (ix) any
indebtedness incurred in connection with the drawdown of an unsecured line of credit; and (x) any security issued in the form
of debt that is convertible into or exercisable or exchangeable for shares of Common Stock, other than a Variable Rate Instrument.

 

    
		18

     

    

 

“Permitted Liens”
shall mean (1) any security interest granted to the Buyers to secure the obligations under the Convertible Debentures, (2) any
prior security interest granted to the Buyers, (3) existing Liens disclosed by the Company on a Disclosure Schedule attached
hereto; (4) inchoate Liens for taxes, assessments or governmental charges or levies not yet due, as to which the grace period,
if any, related thereto has not yet expired, or being contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP; (5) Liens of carriers, materialmen, warehousemen, mechanics and landlords
and other similar Liens which secure amounts which are not yet overdue by more than 60 days or which are being contested in good
faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (6) licenses,
sublicenses, leases or subleases granted to other persons not materially interfering with the conduct of the business of the Company;
(7) Liens securing capitalized lease obligations and purchase money indebtedness incurred solely for the purpose of financing
an acquisition or lease; (8) easements, rights-of-way, restrictions, encroachments, municipal zoning ordinances and other
similar charges or encumbrances, and minor title deficiencies, in each case not securing debt and not materially interfering with
the conduct of the business of the Company and not materially detracting from the value of the property subject thereto; (9) Liens
arising out of the existence of judgments or awards which judgments or awards do not constitute an Event of Default; (10) Liens
incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance, pension liabilities
and social security benefits and Liens securing the performance of bids, tenders, leases and contracts in the ordinary course of
business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature (other than appeal bonds)
incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money); (11) Liens
in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) and contractual
set-off rights held by such banking institution and which are within the general parameters customary in the banking industry and
only burdening deposit accounts or other funds maintained with a creditor depository institution; (12) usual and customary set-off
rights in leases and other contracts; (13) escrows in connection with acquisitions and dispositions; (14) royalties and other rights
to revenue derived from the sale of the Company’s products that are granted in the ordinary course of business; and (15)
any security interest granted to a lender to secure indebtedness incurred in connection with the acquisition of real estate.

 

		5.	REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

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

 

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

 

    
		19

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)            The
Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company
shall have duly executed and delivered to such Buyer a Convertible Debenture with a principal amount corresponding to the Subscription
Amount set forth opposite such Buyer’s name on Schedule of Buyers attached as Schedule I for the Closing.

 

(b)            Such
Buyer shall have received the opinion of counsel to the Company, dated as of the First Closing Date, in the form reasonably acceptable
to such Buyer.

 

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

 

    
		20

     

    

 

 

(d)            The
Company shall have delivered to such Buyer a certificate evidencing the incorporation and good standing of the Company as of a
date within ten (10) days of the Closing Date.

 

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

 

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

 

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

 

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

 

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

 

(j)            The
Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Conversion
Shares, if applicable.

 

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

 

(l)            From
the date hereof to the applicable Closing Date, (i) trading in the shares of Common Stock shall not have been suspended by
the SEC or the Principal Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension
shall be terminated prior to the Closing), (ii) the closing price of the Common Stock during each of the five (5) consecutive
Trading Days immediately prior to the applicable Closing Date shall be at least 120% of the Floor Price (as defined in the Convertible
Debentures), and (iii) at any time prior to the applicable Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on the Principal Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of each Buyer, makes it impracticable or inadvisable to purchase the Securities at the Closing.

 

    
		21

     

    

 

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

 

(n)            Solely
with respect to the Second Closing, the Company shall have filed the Registration Statement with the SEC in accordance with the
rules and regulations for the filing thereof.

 

(o)            Solely
with respect to the Second Closing and the Third Closing, the Company shall have obtained the approval of its stockholders as required
by the applicable rules of the Nasdaq for issuances of the maximum number of Conversion Shares issuable upon conversion of
the Convertible Debentures in excess of the Exchange Cap.

 

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

 

		8.	TERMINATION.

 

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

 

    
		22

     

    

 

		9.	MISCELLANEOUS.

 

(a)            Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company's obligations to such Buyer or to enforce a judgment or
other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

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

 

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

 

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

 

    
		23

     

    

 

(e)            Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing by letter and email 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:	MEDALIST DIVERSIFIED REIT INC.
	 	
        Three James Center

        1051 E. Cary Street, Suite 601

        Richmond, VA 23219

        Telephone:  804-344-4435

        Attention:  Thomas E. Messier

        E-Mail:  tmessier@medalistprop.com

         

	With Copy to:	
        Kaplan Voekler Cunningham & Frank PLC

        1401 E. Cary Street

        Richmond, VA 23219

        Attention: Thomas Voekler

        Telephone: 804-823-4001

        Email: tvoekler@kv-legal.com

	 	 
	If to a Buyer, to its address and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the Schedule of Buyers, 
	 	 
	 	 
	With copy to:	
        David Fine, Esq.

        c/o Yorkville Advisors Global, LP

        1012 Springfield Avenue

        Mountainside, NJ 07092

        Email: legal@yorkvilleadvisors.com

	 	 

 

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

 

    
		24

     

    

 

(f)            Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of any of the Convertible Debentures (but excluding any purchasers of Underlying Securities,
unless pursuant to a written assignment by such Buyer). The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyers. In connection with any transfer of any or all of its Securities, a Buyer
may assign all, or a portion, of its rights and obligations hereunder in connection with such Securities without the consent of
the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such transferred Securities.

 

(g)            Indemnification.

 

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

 

    
		25

     

    

 

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

 

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

 

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

 

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

 

    
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[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

 

    
		27

     

    

 

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

 

	 	COMPANY:  
	 	 
	 	MEDALIST DIVERSIFIED REIT INC.
	 	 
	 	By:	/s/ Thomas E. Messier
	 	Name:     Thomas E. Messier
	 	Title:      Chairman and Chief Executive Officer

 

    
		28

     

    

 

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

 

	 	BUYER:    
	 	 
	 	YA II PN, LTD. 
	 	 
	 	By:	   Yorkville Advisors Global, LP
	 	Its:	   Investment Manager
	 	 
	 	 	By:  Yorkville Advisors Global II, LLC
	 	 	Its:   General Partner
	 	 
	 	 	By:	 /s/ David Gonzalez
	 	 	Name:         David Gonzalez
	 	 	Title:           Member

 

    
		29

     

    

 

LIST OF EXHIBITS:

 

    
		30

     

    

 

EXHIBIT A

 

FORM OF CONVERTIBLE DEBENTURES

 

    
		31

     

    

 

SCHEDULE OF BUYERS

 

 

EXECUTION VERSION

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