Document:

Exhibit 10.15

 

 

 

 

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

 

 

RED
CAT HOLDINGS, INC.

Convertible
Note

	Issuance Date: ______________, 2020	Original Principal Amount:$________
	 	 
	 	 

 

FOR VALUE RECEIVED,
RED CAT HOLDINGS, INC., a Nevada corporation (the "Company"), hereby promises to pay to or his
registered assign (the "Holder"), the amount set out above as the Original Principal Amount when due, whether
upon the Maturity Date (as defined below), acceleration or otherwise (in each case in accordance with the terms hereof) and to
pay interest ("Interest") on the outstanding Principal Amount at the Interest Rate (as defined below) from the
date set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, upon the
Maturity Date, acceleration or conversion (in each case in accordance with the terms hereof).

(1)
GENERAL TERMS

(a)
Payment of Principal. The "Maturity Date" shall be two years from the Issuance Date, unless an Event
of Default (as defined below) shall have occurred and be continuing.

(b)
Interest. Interest shall accrue at a rate of 12% (“Interest Rate”) per annum and shall be applied
to the outstanding Original Principal Amount. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein)
to the Holder or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers
of Notes in cash, or in shares of common stock of the Company (the “Common Stock”) at the Conversion Price (as
defined below).

(c)
Security. This Note shall not be secured by any collateral or any assets pledged to the Holder.

(i)
Prepayment. Notwithstanding anything contained herein to the contrary, the Company shall have the right to prepay
all or any portion of the outstanding Principal Amount and accrued interest thereon, without penalty or premium, upon no less than
ten business days’ prior notice to the Holder provided that (i) such amount must be paid in cash on the next business
day following such 10 business day notice period, and (ii) the Holder may still convert this Note pursuant to the terms hereof
at all times until such prepayment amount has been received in full.

(2)
TERMS OF FUTURE FINANCINGS. 

(a)
So long as this Note is outstanding, upon any issuance by the Company of any security, or an amendment to a security that
was issued before the date hereof, with any term that the Holder reasonably believes is more favorable to the holder of such security
or with a term in favor of the holder of such security that the Holder reasonably believes was not similarly provided to the Holder,
(I) the Company shall notify the Holder of such additional or more favorable term within one (1) business day of the issuance
and/or amendment (as applicable) of the respective security, and (ii) such term, at Holder’s option, shall become a part
of this Note regardless of whether the Company has complied with the notification provision of this section. The types of terms
contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms
addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, and original issue discounts. Notwithstanding
the foregoing, the issuance of any security which is an Exempt Issuance (as defined below) shall not entitle to the Holder to such
more favorable term.

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

(i)
"Conversion Amount" means the portion of the Original Principal Amount and interest to be converted.

(ii)
"Conversion Price" shall be the lower of (a) $1.00, if the conversion herein occurs prior a Qualified Offering,
or (b) a 25% discount of the price per share of Common Stock offered in the Qualified Offering, if the conversion herein occurs
simultaneous with the Qualified Offering.

(iii)
“Exempt Issuance” shall mean the issuance of (a) shares of Common Stock or options to employees, officers
or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Shares issued hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Agreement, unless an amendment thereto effects or changes
the conversion price thereof or provides the holder thereof with a term which is more favorable than the term on effect as of the
date hereof (in which case such amendment would not be considered an Exempt Issuance), and (c) securities issued pursuant to acquisitions
or strategic transactions approved by the Board of Directors of the Company.

(iv)
“Qualified Offering” shall mean an offering of Common Stock (and other securities potentially) resulting
in the listing for trading of the Common Stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

(v)
“VWAP” means the thirty (30) day volume weighted average of the closing price of a share of Common Stock
as listed or quoted on the market in which the shares of the Company are then traded or listed.

(a) Optional
Conversion. The Holder may, in its sole discretion, determine to convert all or part of the outstanding Principal Amount due
hereunder and any accrued interest thereon into fully paid and nonassessable shares of Common Stock at the Conversion Price. The
number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal
to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share
of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer
agent fees, legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of shares
of the Company’s Common Stock to the Holder arising out of or relating to the conversion of this Note; provided, however,
that the Holder shall pay any transfer taxes.

(b)
Mandatory Conversion. Simultaneous with the consummation of a Qualified Offering, the outstanding Principal Amount
due hereunder and all accrued interest hereon shall automatically be converted into fully paid and nonassessable shares of Common
Stock at the Conversion Price. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant
to this Section 3(b) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall
not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction
of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The
Company shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred or charged
in connection with the issuance of shares of the Company’s Common Stock to the Holder arising out of or relating to the conversion
of this Note; provided, however, that the Holder shall pay any transfer taxes.

(c)
Conversion Notice.

(i)
To convert any portion of this Note into shares of Common Stock on any date (a "Conversion Date") pursuant
to Section 3(a), the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 5:30 p.m.,
Pacific Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion
Notice") to the Company. On or before the tenth business day following the date of receipt of a Conversion Notice (the
"Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common
Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided
that the transfer agent for the Company is participating in the Depository Trust Company's ("DTC") Fast Automated
Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the
Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if a restrictive
legend is required to be placed on the certificates of Common Stock, issue and deliver to the address as specified in the Conversion
Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which
the Holder shall be entitled, with a restrictive legend imposed thereon.

(ii)
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A)
the full Conversion Amount represented by this Note is being converted at the option of the Holder 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 Note
upon physical surrender of this Note. 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 Note upon conversion.

(d)
Limitations on Conversions or Trading.

(i)
Beneficial Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the
right to convert any portion of this Note or receive shares of Common Stock as payment of interest hereunder to the extent that
after giving effect to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would
beneficially own (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect
to such conversion or receipt of shares as payment of interest. Since the Holder will not be obligated to report to the Company
the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result
in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any
other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation
to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal
amount of this Note is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion
Notice for a principal amount of this Note that, without regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact
and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance
with Section 3(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding
under this Note. The provisions of this Section may be waived by Holder upon written notification to the Company.

(e)   Dilutive
Issuance. If the Company, at any time while this Note is outstanding, issues, sells or grants (or has issued, sold or
granted as of the issue date, as the case may be) any option to purchase, or sells or grants any right to reprice, or
otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant of any option to
purchase or other disposition), any Common Stock or other securities convertible into, exercisable
for, or that otherwise entitle any person or entity the right to acquire, shares of Common
Stock,
in each or any case at an effective price per share that is lower
than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances,
collectively, a “Dilutive Issuance”) (it being agreed that if the holder of the Common Stock or other
securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating
conversion, or exchange prices or otherwise, due to warrants, options or rights per share which are
issued in connection with such issuance, be entitled to receive shares of Common Stock at an
effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less
than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced, at the option
of the Holder, to a price equal to the Base Conversion Price. If the Company enters into a variable rate transaction the
Company shall be deemed to have issued Common Stock pursuant to this provision at the lowest possible price per
share at which such securities could be issued in connection with such variable rate transaction. Such adjustment shall be
made whenever such Common Stock or other securities are issued. Notwithstanding the foregoing, no adjustment will be made
under this Section 3(e) in respect of an Exempt Issuance. In the event of an issuance of securities involving multiple
tranches or closings, any adjustment pursuant to this Section 3(e) shall be calculated as if all such securities were issued
at the initial closing.

(f)
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 Note.

(ii)
All calculations under this Section 3 shall be rounded off to the nearest $0.001.

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

(4)
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 the then outstanding Original Principal Amount or Interest when
and as due under this Note;

(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 business 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 61 business 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 shall default in any of its obligations under this Note;

(iv)
That upon any event of default (as defined herein) after the Issue Date, the Conversion Price shall equal the lower of (I)
the VWAP, if the conversion herein occurs prior a Qualified Offering, or (ii) sixty percent (65%) multiplied by the lowest closing
price of the Common Stock during the twenty (20) consecutive trading day period immediately preceding the date of the respective
conversion (the “Alternate Conversion Price”);

(v)
The Company (I) fails to issue Conversion Shares to the Holder (or announces or threatens in writing that it will not honor
its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this
Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by
this Note, (iii) reserve the reserved amount at all times, or (iii) the Company directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by
this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent
from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any Conversion Shares issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note
(or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph)
and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall
not be rescinded in writing) for two (2) Trading Days after the Holder shall have delivered a Notice of Conversion. It is an obligation
of the Company to remain current in its obligations to its transfer agent. It shall be an Event of Default of this Note, if a conversion
of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of
the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced
funds shall be paid by the Company to the Holder within forty-eight (48) hours of a demand from the Holder;

(vi)
 The Company shall fail to maintain the listing of the Common Stock on at least one of the Over the Counter Bulletin
Board, the OTCQB Market, any level of the OTC Markets, or any level of the Nasdaq Stock Market or the New York Stock Exchange (including
the NYSE American);

(vii)
At any time after the Issue Date, the Borrower shall fail to comply with the reporting requirements of the 1934 Act and/or
the Borrower shall cease to be subject to the reporting requirements of the 1934 Act;

(viii)
The failure by the Company to maintain any material intellectual property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the future);

(ix)
The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior
to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison
to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this
Note or the Purchase Agreement;

(x)
In the event that the Company proposes to replace its transfer agent and the Company fails to provide, prior to the effective
date of such replacement, a fully executed irrevocable transfer agent letter (including but not limited to a provision to irrevocably
reserve shares of Common Stock in the reserved amount) signed by the successor transfer agent and the Company;

(xi)
The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC’s services, such as limiting
a DTC participant’s ability to make a deposit or withdrawal of the security at DTC) on any of the Borrower’s securities;

(xii)
In addition to the Event of Default in this section, the Common Stock is otherwise not eligible for trading through the
DTC’s Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs; and

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

(b)
Upon notice by Holder and during the continuation of any Event of Default specified in this section, this Note shall become
immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount
(the “Default Amount”) equal to the principal amount then outstanding plus accrued interest (including any default
interest) through the date of full repayment multiplied by 130%. Holder may, in its sole discretion, determine to accept payment
part in Common Stock and part in cash. Upon an uncured Event of Default, all amounts payable hereunder shall immediately become
due and payable, all without demand, presentment or notice, all of which hereby are expressly waived by the Company, together with
all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise
all other rights and remedies available at law or in equity, including, without limitation, those set forth herein.

(5)
REISSUANCE OF THIS NOTE.

(a)
Assignability. This Note will be binding upon the Company and its successors and will inure to the benefit of the
Holder and its successors and assigns and may be assigned by the Holder with prior written consent of the Company, which consent
shall not be unreasonably withheld.

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

(6)
APPLICABLE LAW AND VENUE. This Note shall be governed by and interpreted in accordance with the laws of the State
of Nevada without regard to the principles of conflict of laws. The parties further agree that any action between them shall be
heard exclusively in federal or state court sitting in the Douglas County, Nevada, and expressly consent to the jurisdiction and
venue of the Supreme Court of Nevada, sitting in Douglas County for the adjudication of any civil action asserted pursuant to this
paragraph. The Company and the Holder waive trial by jury. Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection with this Note by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law.

(7)
WAIVER. Any waiver by the Holder of a breach of any provision of this Note 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 Note. The failure of the Holder
to insist upon strict adherence to any term of this Note 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 Note. Any waiver must be in
writing.

 

[Remainder of Page Intentionally Omitted;
Signature Page Follows]

 

 

    	 	 	 

     

    

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

 

 

Red Cat Holdings, Inc.    

 

 

By: _______________________________

Jeffrey M. Thompson

President and Chief Executive Officer

    	 	 	 

     

    

EXHIBIT A

 

 

NOTICE OF CONVERSION

 

 

 

Red Cat Holdings, Inc.

1607 Ponce De Leon Avenue

Suite 407

San Juan, Puerto Rico 00909

Attn: Jeffrey M. Thompson, President

 

 

  

 

 

 

The undersigned
hereby elects to convert [all] [a portion] of the $ [  ]Convertible Note issued to ____________ on __________, 2020
into shares of Common Stock of Red Cat Holdings, Inc. according to the conditions set forth in such Note as of the date
written below.

 

 

By accepting this notice of conversion, you are acknowledging that the number of shares to be delivered represents less than 10% (ten percent) of the common stock outstanding.  If the number of shares to be delivered represents more than 9.99% of the common stock outstanding, this conversion notice shall immediately automatically extinguish and the Holder must be immediately notified.

 

 

 

 

 

 

Date of Conversion: _____________________

Conversion Amount: _____________________

Conversion Price: _______________________

Shares to be Delivered: __________________

 

 

EIN:

 

 

By:________________________________

Name:

Title:Exhibit 10.16

No. 2020-__

RED CAT
HOLDINGS, INC.

COMMON STOCK PURCHASE WARRANT

THE WARRANT REPRESENTED BY THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IS SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE
COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT.

WARRANT CERTIFICATE

THIS WARRANT CERTIFICATE (the
"Warrant Certificate") certifies that for value received, _______________ (the
"Holder"), is the owner of this warrant (the "Warrant"), which entitles the Holder to
purchase at any time on or before the Expiration Date (as defined below) sixty-six thousand six hundred _______ (_____)
shares (the "Warrant Shares") of fully paid non-assessable shares of the common stock (the "Common
Stock") of RED CAT HOLDINGS, INC., a Nevada corporation (the "Company"), at a purchase price per
Warrant Share of One Dollar and Fifty Cents ($1.50) (the "Purchase Price"), in lawful money of the United
States of America by bank or certified check, subject to adjustment as hereinafter provided. This Warrant Certificate is
issued in connection with the closing of a financing transaction with the Holder in accordance with, and as required by, the
terms of that certain Securities Purchase Agreement dated the date hereof by and between the Company and the Holder.

 

 

 1. WARRANT; PURCHASE PRICE.

 

Notwithstanding anything
to the contrary in this Agreement, in the event of a Qualified Offering (as defined below), the Purchase Price shall be the lower
of (i) $1.50, or (ii) 25% discount of the price per share of Common Stock offered in the Qualified Offering. A “Qualified
Offering” shall mean an offering of Common Stock (and other securities potentially) resulting in the listing for trading
of the Common Stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market
or the New York Stock Exchange (or any successors to any of the foregoing).

2. EXERCISE;
EXPIRATION DATE.

(a) This
Warrant is exercisable, at the option of the Holder, at any time after the date of issuance and on or before the Expiration Date
(as defined below) by delivering to the Company written notice of exercise (the "Exercise Notice"), stating the
number of Warrant Shares to be purchased thereby, accompanied by bank or certified check payable to the order of the Company for
the Warrant Shares being purchased. Within ten (10) business days of the Company's receipt of the Exercise Notice accompanied by
the consideration for the Warrant Shares being purchased, the Company shall instruct its transfer agent to issue and deliver to
the Holder a certificate representing the Warrant Shares being purchased. In the case of exercise for less than all of the Warrant
Shares represented by this Warrant Certificate, the Company shall cancel this Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate for the balance of such Warrant Shares.

(b)
Expiration. The term "Expiration Date" shall mean 5:00 p.m., Pacific time, on the fifth (5th)
anniversary of the date set forth in the signature block of this Warrant or if such date in the State of Nevada shall be a holiday
or a day on which banks are authorized to close, then 5:00 p.m., Pacific time, the next following day which in the State of Nevada
is not a holiday or a day on which banks are authorized to close.

3. 
RESTRICTIONS ON TRANSFER.

(a) 
Restrictions. This Warrant and the Warrant Shares issuable upon exercise of this Warrant may not be assigned, transferred,
sold, or otherwise disposed of unless (i) there is in effect a registration statement under the Act covering such sale, transfer,
or other disposition or (ii) the Holder furnishes to the Company an opinion of counsel, reasonably acceptable to counsel for the
Company, to the effect that the proposed sale, transfer, or other disposition may be effected without registration under the Act,
as well as such other documentation incident to such sale, transfer, or other disposition as the Company's counsel shall reasonably
request.

(b) 
Legend. Any Warrant Shares issued upon the exercise of this Warrant shall bear substantially the following legend:

“The
shares represented by this certificate have not been registered under the Securities Act of 1933, as amended. The shares have been
acquired for investment and may not be offered, sold or otherwise transferred in the absence of an effective registration statement
and with respect to the shares or an exemption from the registration requirements of said act that is then applicable to the shares,
as to which a prior opinion of counsel acceptable to the issuer or transfer agent may be required.”

4. 
RESERVATION OF SHARES.

The Company covenants
that it will at all time reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon
exercise of this Warrant, such number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. The
Company covenants that all shares of Common Stock which shall be issuable upon exercise of this Warrant shall be duly and validly
issued and fully paid and non-assessable and free from all taxes, liens, and charges with respect to the issue thereof.

5. 
LOSS OR MUTILATION.

If the Holder loses
this Warrant, or if this Warrant is stolen, destroyed or mutilated, the Company shall issue an identical replacement Warrant upon
the Holder's delivery to the Company of a customary agreement to indemnify the Company for any losses resulting from the issuance
of the replacement Warrant.

6. 
PROVISIONS REGARDING ADJUSTMENTS TO STOCK.

(a)Stock
Dividends, Subdivisions, Combinations and Similar Events.The number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to reflect (that is, to provide the same after-conversion percentage ownership as if the following
event had not occurred) any (i) forward and reverse stock splits, stock dividends, and similar events which, while they change
the number of shares outstanding, do not change the relative ownership of the stockholders; and (ii) capital reorganizations, mergers,
and similar events which cause changes in the common stock into which a convertible security may be converted or for which a warrant
or option may be exercised.

(b) Certificate
as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Purchase Price, the Company, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder
a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment
is based. The Company shall, upon the written request at any time of the Holder, furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustments and readjustments, (ii) the Purchase Price at the time in effect for this
Warrant and (iii) the number of shares of Common Stock and the amount, if any, or other property which at the time would be received
upon the exercise of this Warrant.

(c)   
Notices of Record Date. In the event of any fixing by the Company of a record date for the holders of any class of
securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend)
or other distribution, any shares of Common Stock or other securities, or any right to subscribe for, purchase or otherwise acquire,
or any option for the purchase of, any shares of stock of any class or any other securities or property, or to receive any other
right, the Company shall mail to the Holder at least thirty (30) days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such dividend, distribution or rights, and the amount and character
of such dividend, distribution or right.

(d) Merger, Consolidation,
etc. In case of any capital reorganization or any reclassification of the capital stock of the Company or in case of the consolidation
or merger of the Company with another corporation (or in the case of any sale, transfer, or other disposition to another corporation
of all or substantially all the property, assets, business, and goodwill of the Company), the Holder of this Warrant shall thereafter
be entitled to purchase the kind and amount of shares of capital stock which this Warrant entitled the Holder to purchase immediately
prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, transfer, or other disposition;
and in any such case appropriate adjustments shall be made in the application of the provisions of this Section 6 with respect
to rights and interests thereafter of the Holder of this Warrant to the end that the provisions of this Section 6 shall thereafter
be applicable, as near as reasonably may be, in relation to any shares or other property thereafter purchasable upon the exercise
of this Warrant.

(e) Fractional
Shares. No certificate for fractional shares shall be issued upon the exercise of this Warrant, but in lieu thereof the Company
shall purchase any such fractional shares calculated to the nearest cent or round up the fraction to the next whole share.

(f) Rights
of the Holder. The Holder of this Warrant shall not be entitled to any rights of a shareholder of the Company in respect of
any Warrant Shares purchasable upon the exercise hereof until such Warrant Shares have been paid for in full and issued to it.
As soon as practicable after such exercise, the Company shall deliver a certificate or certificates for the number of full shares
of Common Stock issuable upon such exercise, to the person or persons entitled to receive the same.

7. RepResentations
and Warranties.

The Holder, by acceptance
of this Warrant, represents and warrants to, and covenants and agrees with, the Company as follows:

(a) The Warrant
is being acquired for the Holder's own account for investment and not with a view toward resale or distribution of any part thereof,
and the Holder has no present intention of selling, granting any participation in, or otherwise distributing the same.

(b) The Holder is
aware that the Warrant is not registered under the Act or any state securities or blue-sky laws and, as a result, substantial restrictions
exist with respect to the transferability of the Warrant and the Warrant Shares to be acquired upon exercise of the Warrant.

(c ) The Holder
is an accredited investor as defined in Rule 501(a) of Regulation D under the Act and is a sophisticated investor familiar with
the type of risks inherent in the acquisition of securities such as the Warrant, and its financial position is such that it can
afford to retain the Warrant and the Warrant Shares for an indefinite period of time without realizing any direct or indirect cash
return on this investment.

8. NO IMPAIRMENT.

The Company shall
not by any action including, without limitation, amending its certificate of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against
impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount payable therefore upon such exercise immediately prior
to such increase in par value, (b) take all such actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non assessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best
efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as
may be necessary to enable the Company to perform its obligations under this Warrant. Upon the request of Holder, the Company will
at any time during the period this Warrant is outstanding acknowledge in writing, in form satisfactory to Holder, the continuing
validity of this Warrant and the obligations of the Company hereunder.

9. REGISTRATION
RIGHTS.

If at any time after the
date hereof the Company shall determine to prepare and file with the Securities and Exchange Commission (the “Commission”)
a registration statement relating to an offering for its own account or the account of others under the Securities Act of 1933,
as amended, of any of its equity securities (other than a registration statement on Form S-4 or Form S-8), then the Company shall
send to the Holder written notice of such determination. Within ten (10) calendar days after receipt of such notice, the Holder
shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Shares such
Holder requests to be registered and prepare and file the Registration Statement with the Commission and shall use its commercially
reasonable efforts to have the registration statement declared effective by the Commission as soon as reasonably practicable.
All expenses incurred by the Company in complying with this provision, including, without limitation, all registration and filing
fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the Company, fees
and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky”
laws, fees of the NASD, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.”
All selling commissions applicable to the sale of Warrant Shares pursuant to this provision are called "Selling Expenses."
The Company will pay all Registration Expenses in connection with the registration statement under this section. Selling Expenses
in connection with each registration statement shall be borne by the Holder and will be apportioned among such Holders in proportion
to the number of Warrant Shares included therein for a Holder relative to all the securities included therein for all selling
holders, or as all Holders may agree.

 

10. SUPPLYING INFORMATION.

The Company shall
cooperate with Holder and each holder of Warrant Shares in supplying such information pertaining to the Company as may be reasonable
necessary for such Holder and each holder of Warrant Shares to complete and file any information reporting forms presently or hereafter
required by the Securities and Exchange Commission as a condition to the availability of an exemption from the Act for the sale
of Warrant Shares.

11 LIMITATION OF
LIABILITY.

No provision hereof,
in the absence of affirmative action by Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges
of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors of the Company.

12 MISCELLANEOUS.

(a) Transfer
Taxes; Expenses. The Holder shall pay any and all underwriters' discounts, brokerage fees, and transfer taxes, as may be applicable,
incident to the sale of this Warrant or the sale of the underlying shares issuable hereunder, and shall pay the fees and expenses
of any special attorneys or accountants retained by it.

(b)  Successors
and Assigns. Subject to compliance with the provisions of Section 3, this Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and the successors and assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable by any
such Holder.

(c) Notice. Any notice or other communication
required or permitted to be given to the Company shall be in writing and shall be delivered by certified mail with return receipt
or delivered in person against receipt, addressed to the Company at 1040 First Avenue, Suite 190, New York, NY 10022.

 

(d) Governing Law. This Warrant Certificate
shall be governed by, and construed in accordance with, the internal laws of the State of Nevada, without reference to the conflicts
of laws provisions thereof.

 

IN WITNESS WHEREOF,
the Company has caused this Warrant Certificate to be duly executed as of the date set forth below.

Red Cat Holdings, Inc.

 

 

By:   _______________________________

Jeffrey Thompson 

Chief Executive
Officer 

 

 

Issuance Date: ____________, 2020

    	 

    	 

    

RED CAT HOLDINGS, INC.

FORM OF EXERCISE OF WARRANT

No. 2020__

□
The undersigned hereby elects to exercise this Warrant as to _____________ shares of the Common Stock of Red Cat Holdings,
Inc., a Nevada corporation, covered thereby. Enclosed herewith is a bank or certified check in the amount of $_____________ payable
to the Company.

 

Delivery of exercise notice
requiring a payment by check must be by national courier (Fedex, UPS, etc.) to:

Red Cat Holdings,
Inc.

1607 Ponce De
Leon Avenue, Suite 407

San Juan, Puerto
Rico 00909

Attn: Jeffrey
Thompson

 

The shares should be sent to me at the
address provided below.

 

Date:_______________                   _________________________________________

(Signature)

 

Name (Printed):
______________________________

 

Address: __________________________________

 

__________________________________________

 

Social Security Number (for
individual holder) or Employer Identification Number (Tax ID) (for entity):

 

__________________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00315-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00315-of-00352.parquet"}]]