Document:

reac_ex41.htm

EXHIBIT 4.1
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
 
	Principal Amount: US$1,100,000.00 
	Issue Date: December 20, 2019

	Purchase Price: US$1,100,000.00
	 

 
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
 
FOR VALUE RECEIVED, REAC GROUP, INC., a Florida corporation (hereinafter called the “Borrower”) (Trading Symbol: REAC), hereby promises to pay to the order of AUCTUS FUND, LLC, a Delaware limited liability company, or registered assigns (the “Holder”) the sum of US$1,100,000.00 together with any interest as set forth herein, on December 20, 2020 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%) (the “Interest Rate”) per annum (provided, however, that all accrued interest under this Note shall be paid in cash at the end of each of the Company’s fiscal quarterly periods) from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein with the written consent of the Holder which may be withheld for any reason or for no reason. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) twenty-four percent (24%) per annum and (ii) the maximum amount permitted under law from the due date thereof until the same is paid (the “Default Interest”). Interest shall commence accruing on the date that the Note is funded by the Holder and shall be computed on the basis of a 360-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.00001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).
 
	 
	 
	
 
	 

 
This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof. 
 
This Note shall be a senior secured obligation of the Borrower, with priority over all existing and future Indebtedness (as defined below) of the Borrower as provided for herein. The obligations of the Borrower under this Note are secured pursuant to the terms of the security agreement of even date (the “Security Agreement”) by and among the Borrower and Holder, and such security interest includes but is not limited to all of the assets of the Borrower and its subsidiaries. So long as the Borrower shall have any obligation under this Note, the Borrower shall not (directly or indirectly through any subsidiary or affiliate) incur or suffer to exist or guarantee any Indebtedness that is senior to or pari passu with (in priority of payment and performance) the Borrower’s obligations hereunder. “Indebtedness” shall mean (a) all indebtedness of the Borrower for borrowed money or for the deferred purchase price of property or services, including any type of letters of credit, but not including deferred purchase price obligations in place as of the Issue Date and as disclosed in the SEC Documents or obligations to trade creditors incurred in the ordinary course of business, (b) all obligations of the Borrower evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money indebtedness hereafter incurred by the Borrower to finance the purchase of fixed or capital assets, including all capital lease obligations of the Borrower which do not exceed the purchase price of the assets funded, (d) all guarantee obligations of the Borrower in respect of obligations of the kind referred to in clauses (a) through (c) above that the Borrower would not be permitted to incur or enter into, and (e) all obligations of the kind referred to in clauses (a) through (d) above that the Borrower is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including accounts and contract rights) owned by the Borrower, whether or not the Borrower has assumed or become liable for the payment of such obligation.
 
	 
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The following terms shall also apply to this Note:
 
ARTICLE I. CONVERSION RIGHTS
 
1.1 Conversion Right. The Holder shall have the right from time to time, and at any time following the Issue Date, and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal, interest, penalties, and all other amounts under this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the Conversion Price (as defined below) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower or Borrower’s transfer agent by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, provided however, that the Borrower shall have the right to pay any or all interest in cash plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.
 
	 
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1.2 Conversion Price.
 
Calculation of Conversion Price. Subject to the adjustments described herein, the conversion price (the “Conversion Price”) shall equal the lesser of: (i) the lowest Trading Price (as defined below) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note, and (ii) the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (as defined herein) (representing a discount rate of 50%). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the lesser of: (i) the lowest trade price on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“Reporting Service”) designated by the Holder or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc., or (ii) the closing bid price on the OTC Pink, OTCQB or applicable trading market as reported by a Reporting Service designated by the Holder or, if the OTC Pink is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. To the extent the Conversion Price of the Borrower’s Common Stock closes below the par value per share, the Borrower will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Borrower agrees to honor all conversions submitted pending this adjustment. Furthermore, the Conversion Price may be adjusted downward if, within three (3) business days of the transmittal of the Notice of Conversion to the Borrower or Borrower’s transfer agent, the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion. If the shares of the Borrower’s Common Stock have not been delivered within three (3) business days to the Borrower or Borrower’s transfer agent, the Notice of Conversion may be rescinded. At any time after the Closing Date, if in the case that the Borrower’s Common Stock is not deliverable by DWAC (including if the Borrower’s transfer agent has a policy prohibiting or limiting delivery of shares of the Borrower’s Common Stock specified in a Notice of Conversion), an additional 10% discount will apply for all future conversions under all Notes. If in the case that the Borrower’s Common Stock is “chilled” for deposit into the DTC system and only eligible for clearing deposit, an additional 15% discount shall apply for all future conversions under all Notes while the “chill” is in effect. If in the case of both of the above, an additional cumulative 25% discount shall apply. Additionally, if the Borrower ceases to be a reporting company pursuant to the 1934 Act or if the Note cannot be converted into free trading shares after one hundred eighty-one (181) days from the Issue Date, an additional 15% discount will be attributed to the Conversion Price. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC Pink, OTCQB or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The Borrower shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. Holder shall be entitled to deduct $750.00 from the conversion amount in each Notice of Conversion to cover Holder’s deposit fees associated with each Notice of Conversion.
 
	 
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While this Note is outstanding, each time any 3rd party has the right to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise), including but not limited to under Section 3(a)(9) and Section 3(a)(10), at a discount to market greater than the Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then the H1older, in Holder’s sole discretion, may utilize such greater discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding. While this Note is outstanding, each time any 3rd party has a look back period greater than the look back period in effect under the Note at that time, including but not limited to under Section 3(a)(9) and Section 3(a)(10), then the Holder, in Holder’s sole discretion, may utilize such greater number of look back days until this Note is no longer outstanding. The Borrower shall give written notice to the Holder within one (1) business day of becoming aware of any event that could permit the Holder to make any adjustment described in the two immediately preceding sentences. 
 
(a) Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.
 
(b) Pro Rata Conversion; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Borrower shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 4.13.
 
(c) If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value of the Common Stock, then the Conversion Price hereunder shall equal such par value for such conversion and the Conversion Amount for such conversion shall be increased to include Additional Principal, where “Additional Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price not been subject to the minimum price set forth in this Section 1.2(c).
 
	 
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1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved seven times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section 3(d) of the Purchase Agreement. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than the initial Reserved Amount, regardless of any prior conversions.
 
If, at any time the Borrower does not maintain or replenish the Reserved Amount within three (3) business days of the request of the Holder, the principal amount of the Note shall increase by Five Thousand and No/100 United States Dollars ($5,000) (under Holder’s and Borrower’s expectation that any principal amount increase will tack back to the Issue Date) per occurrence.
 
1.4 Method of Conversion.
 
(a) Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower or Borrower’s transfer agent a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower. 
 
(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.
 
	 
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(c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
 
(d) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.
 
(e) Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 11:59 p.m., New York, New York time, on such date.
 
	 
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(f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its commercially reasonable best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system.
 
(g) DTC Eligibility & Market Loss. If the Borrower fails to maintain its status as “DTC Eligible” for any reason, or, if the Conversion Price is less than $0.10 at any time after January 20, 2020, the principal amount of the Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000) (under Holder’s and Borrower’s expectation that any principal amount increase will tack back to the Issue Date) and the Variable Conversion Price shall be redefined to mean thirty percent (30%) multiplied by the Market Price, subject to adjustment as provided in this Note.
 
(h) Failure to Deliver Common Stock Prior to Delivery Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock until the Borrower issues and delivers a certificate to the Holder or credit the Holder’s balance account with OTC for the number of shares of Common Stock to which the Holder is entitled upon such Holder’s conversion of any Conversion Amount (under Holder’s and Borrower’s expectation that any damages will tack back to the Issue Date).. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(h) are justified.
 
(i) Rescindment of a Notice of Conversion. If (i) the Borrower fails to respond to Holder within one (1) business day from the Conversion Date confirming the details of Notice of Conversion, (ii) the Borrower fails to provide any of the shares of the Borrower’s Common Stock requested in the Notice of Conversion within three (3) business days from the date of receipt of the Note of Conversion, (iii) the Holder is unable to procure a legal opinion required to have the shares of the Borrower’s Common Stock issued unrestricted and/or deposited to sell for any reason related to the Borrower’s standing, (iv) the Holder is unable to deposit the shares of the Borrower’s Common Stock requested in the Notice of Conversion for any reason related to the Borrower’s standing, (v) at any time after a missed Deadline, at the Holder’s sole discretion, or (vi) if OTC Markets changes the Borrower’s designation to ‘Limited Information’ (Yield), ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull & Crossbones), ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign) or other trading restriction on the day of or any day after the Conversion Date, the Holder maintains the option and sole discretion to rescind the Notice of Conversion (“Rescindment”) with a “Notice of Rescindment.”
 
	 
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1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or other applicable exemption or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:
 
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
 
The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be reasonably accepted by the Borrower so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Borrower does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.
 
	 
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1.6 Effect of Certain Events.
 
(a) Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
 
(b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
 
	 
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(c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
 
(d) Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, except for shares of Common Stock issued directly to vendors or suppliers of the Borrower in satisfaction of amounts owed to such vendors or suppliers (provided, however, that such vendors or suppliers shall not have an arrangement to transfer, sell or assign such shares of Common Stock prior to the issuance of such shares), any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.
 
The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.
 
	 
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Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.
 
(e) Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
 
(f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment 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 Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.
 
	 
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1.7 [Intentionally Omitted].
 
1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert this Note.
 
1.9 Prepayment. Provided that an Event of Default has not occurred under this Note and the Holder provides written consent to the Borrower with respect to the Borrower’s prepayment of this Note at the time of such prepayment, the Borrower may prepay the amounts outstanding hereunder pursuant to the following terms and conditions and subject to the terms of this Note:
 
(a) At any time during the period beginning on the Issue Date and ending on the last Trading Day immediately preceding the Maturity Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note and subject to the Holder’s written consent at the time of such prepayment, to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note plus (y) Default Interest, if any. 
 
1.10 Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses by physical mail and shall state: (1) that the Borrower is requesting to prepay the Note, and (2) the date of the requested prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. If the Holder provides written consent of such prepayment, then on the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment amount to or upon the order of the Holder as specified by the Holder in writing to the Borrower. If the Borrower delivers an Optional Prepayment Notice which has been consented to in writing by the Holder, and Borrower fails to pay the applicable prepayment amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to request a prepayment pursuant to Section 1.9.
 
	 
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ARTICLE II. CERTAIN COVENANTS
 
2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.
 
2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.
 
2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors financial institutions or other lenders incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.
 
2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets shall be conditioned on a specified use of the proceeds towards the repayment of this Note.
 
2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.
 
	 
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2.6 Section 3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) of the Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(l0) of the Securities Act (a “3(a)(l0) Transaction”). In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(l0) Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand Dollars $15,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.
 
2.7 Preservation of Existence, etc. The Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.
 
2.8 Non-circumvention. The Borrower hereby covenants and agrees that the Borrower will not, by amendment of its Certificate or Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action as may be required to protect the rights of the Holder.
 
2.9 Repayment from Proceeds. While any portion of this Note is outstanding, if the Company receives cash proceeds from any source or series of related or unrelated sources, including but not limited to, from payments from customers, the issuance of equity or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line of credit of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of Borrower’s receipt of such proceeds, inform the Holder of such receipt, following which the Holder shall have the right in its sole discretion to require the Borrower to immediately apply all or any portion of such proceeds to repay all or any portion of the outstanding amounts owed under this Note. Failure of the Borrower to comply with this provision shall constitute an Event of Default. In the event that such proceeds are received by the Holder prior to the Maturity Date, the required prepayment shall be subject to the terms of Section 1.9 herein.
 
ARTICLE III. EVENTS OF DEFAULT
 
If any of the following events of default (each, an “Event of Default”) shall occur:
 
3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.
 
	 
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3.2 Conversion and the Shares. The Borrower (i) fails to issue shares of Common Stock 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 shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iii) 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 shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iv) 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 shares of Common Stock 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 three (3) business days after the Holder shall have delivered a Notice of Conversion, (v) fails to remain current in its obligations to its transfer agent, (vi) causes a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent, (vii) fails to repay Holder, within forty eight (48) hours of a demand from the Holder, any amount of funds advanced by Holder to Borrower’s transfer agent in order to process a conversion, (viii) fails to reserve sufficient amount of shares of common stock to satisfy the Reserved Amount at all times, (ix) fails to provide a Rule 144 opinion letter from the Borrower’s legal counsel to the Holder, covering the Holder’s resale into the public market of the respective conversion shares under this Note, within two (2) business days of the Holder’s submission of a Notice of Conversion to the Borrower (provided that the Holder must request the opinion from the Borrower at the time that Holder submits the respective Notice of Conversion and the date of the respective Notice of Conversion must be on or after the date which is six (6) months after the date that the Holder funded the Purchase Price under this Note), and/or (x) an exemption under Rule 144 is unavailable for the Holder’s deposit into Holder’s brokerage account and resale into the public market of any of the conversion shares under this Note at any time after the date which is six (6) months after the date that the Holder funded the Purchase Price under this Note. 
 
3.3 Failure to Deliver Transaction Expense Amount. The Borrower fails to deliver the Transaction Expense Amount (as defined in the Purchase Agreement) to the Holder within three (3) business days of the date such amount is due.
 
3.4 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.
 
3.5 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
 
	 
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3.6 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors or commence proceedings for its dissolution, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed for the Borrower or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment.
 
3.7 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
 
3.8 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower, or the Borrower admits in writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable or the Borrower admits in writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for bankruptcy relief, all under international, federal or state laws as applicable.
 
3.9 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National Market, Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange.
 
3.10 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including but not limited to becoming delinquent in its filings); and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
 
3.11 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
 
3.12 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
 
3.13 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future), or any disposition or conveyance of any material asset of the Borrower.
 
	 
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3.14 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, 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. 
 
3.15 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.
 
3.16 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
 
3.17 Cessation of Trading. Any cessation of trading of the Common Stock on at least one of the OTC Pink, OTCQB, Nasdaq National Market, Nasdaq Small Cap Market, New York Stock Exchange, NYSE MKT, or an equivalent replacement exchange, and such cessation of trading shall continue for a period of five consecutive (5) Trading Days.
 
3.18 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements (as defined herein), after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder (and any affiliate of the Holder) or any other third party, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the agreements and instruments defined as the Documents. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.
 
3.19 Bid Price. The Borrower shall lose the “bid” price for its Common Stock ($0.0001 on the “Ask” with zero market makers on the “Bid” per Level 2) and/or a market (including the OTC Pink, OTCQB or an equivalent replacement exchange).
 
3.20 OTC Markets Designation. OTC Markets changes the Borrower’s designation to ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull and Crossbones), or ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign).
 
	 
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3.21 Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.
 
3.22 Unavailability of Rule 144. If, at any time on or after the date which is six (6) months after the Issue Date, the Holder is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Holder’s brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s conversion of any portion of the Note into free trading shares of the Borrower’s Common Stock pursuant to Rule 144, and (ii) thereupon deposit such shares into the Holder’s brokerage account.
 
3.23 Delisting or Suspension of Trading of Common Stock. If, at any time on or after the Issue Date, the Borrower’s Common Stock (i) is suspended from trading, (ii) halted from trading, and/or (iii) fails to be quoted or listed (as applicable) on any level of the OTC Markets, any tier of the NASDAQ Stock Market, the New York Stock Exchange, or the NYSE American.
 
3.24 Failure to Register. The Borrower fails to (1) file a registration statement covering the Holder’s resale at prevailing market prices (and not fixed prices) of all of the Common Stock (the “Registration Statement”) underlying the Note and Common Stock underlying the Warrants (as defined in the Purchase Agreement) (the “Warrants”) within sixty (60) calendar days following the Issue Date, (ii) cause the Registration Statement to become effective within one hundred twenty (120) calendar days following the Issue Date, (iii) cause the Registration Statement to remain effective until the Note is extinguished in full and the Warrants are exercised in full, (iv) comply with the registration rights agreement between the Borrower and Holder entered into in connection with the issuance of this Note, and/or (v) immediately amend the Registration Statement or file a new Registration Statement (and cause such Registration Statement to become immediately effective) if there are no longer sufficient shares registered under the initial Registration Statement for the Holder’s resale at prevailing market prices (and not fixed prices) of all of the Common Stock underlying the Note and Common Stock underlying the Warrants.
 
3.24 Failure to Uplist. The Borrower’s Common Stock is not quoted or listed (as applicable) on the OTCQX, any tier of the NASDAQ Stock Market, the New York Stock Exchange, or the NYSE American at all times after March 20, 2020.
 
	 
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UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, 3.22, AND/OR 3.24 OF THIS NOTE, THE NOTE SHALL BECOME IMMEDIATELY AND AUTOMATICALLY DUE AND PAYABLE WITHOUT DEMAND, PRESENTMENT, OR NOTICE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN) MULTIPLIED BY (Z) TWO (2). Upon the occurrence of any Event of Default specified in Sections 3.1, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16. 3.17, 3.18, 3.19, 3.20, 3.21, 3.23, and/or 3.24, the Note shall become immediately and automatically due and payable without demand, presentment or notice and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) at the option of the Holder, the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Trading Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, 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. Further, if a breach of Sections 3.9, 3.10 and/or 3.19 occurs or is continuing after the six (6) month anniversary of this Note, then the principal amount of the Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000) (under Holder’s and Borrower’s expectation that any principal amount increase will tack back to the Issue Date) and the Holder shall be entitled to use the lowest Trading Price during the delinquency period as a base price for the conversion with the Variable Conversion Price shall be redefined to mean forty percent (40%) multiplied by the Market Price, subject to adjustment as provided in this Note. For example, if the lowest Trading Price during the delinquency period is $0.50 per share and the conversion discount is 50%, then the Holder may elect to convert future conversions at $0.25 per share. If this Note is not paid at Maturity Date, then the outstanding principal due under this Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000).
 
The Holder shall have the right at any time after an Event of Default occurs under this Note to require the Borrower, to immediately issue, in lieu of the Default Amount and/or Default Sum, the number of shares of Common Stock of the Borrower equal to the Default Amount and/or Default Sum divided by the Conversion Price then in effect, pursuant to the terms of this Note (including but not limited to any beneficial ownership limitations contained herein). This requirement by the Borrower shall automatically apply upon the occurrence of an Event of Default without the need for any party to give any notice or take any other action.
 
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Borrower for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
 
	 
	20
	
 
	 

 
ARTICLE IV. MISCELLANEOUS
 
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
 
4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, electronic mail, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by electronic mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: 
 
If to the Borrower, to:
 
REAC Group, Inc.
8878 Covenant Avenue, Suite 209
Pittsburgh, PA 15237
Attn: Robert DeAngelis
E-mail: info@reacgroupinc.com
 
If to the Holder:
 
Auctus Fund, LLC
545 Boylston Street, 2nd Floor
Boston, MA 02116
Attn: Lou Posner 
Facsimile: (617) 532-6420
 
	 
	21
	
 
	 

 
With a copy to (which copy shall not constitute notice):
 
Chad Friend, Esq., LL.M.
Anthony L.G., PLLC
625 N. Flagler Drive, Suite 600
West Palm Beach, FL 33401
E-mail: CFriend@AnthonyPLLC.com
 
4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.
 
4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Neither the Borrower nor the Holder shall assign this Note or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Holder may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder or to any of its “affiliates”, as that term is defined under the 1934 Act, without the consent of the Borrower. Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.
 
4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.
 
4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts located in the Commonwealth of Massachusetts or federal courts located in the Commonwealth of Massachusetts. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. 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 Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this 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 other manner permitted by law.
 
	 
	22
	
 
	 

 
4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.
 
4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
 
4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9 including, but not limited to, name changes, recapitalizations, etc. as soon as possible under law.
 
	 
	23
	
 
	 

 
4.10 Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest permitted under applicable law. The Borrower covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Borrower from paying all or a portion of the principal or interest on this Note.
 
4.11 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required. No provision of this Note shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
 
4.12 Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
 
4.13 Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Default Sum, Closing or Maturity Date, the closing bid price, or fair market value (as the case may be) or the arithmetic calculation of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or the Holder shall submit the disputed determinations or arithmetic calculations via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute to the Borrower or the Holder or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Borrower are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder, then the Borrower shall, within two (2) Business Days, submit via facsimile (a) the disputed determination of the Conversion Price, the closing bid price, the or fair market value (as the case may be) to an independent, reputable investment bank selected by the Borrower and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Default Sum to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower shall cause at its expense the investment bank or the accountant to perform the determinations or calculations and notify the Borrower and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation shall be binding upon all parties absent demonstrable error.
 
	 
	24
	
 
	 

 
4.14 Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder. 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, original issue discounts, stock sale price, private placement price per share, and warrant coverage.
 
4.15 Piggyback Registration Rights. The Borrower shall include on each registration statement that the Borrower files with SEC all shares issuable upon conversion of this Note and exercise of the Warrant (as defined in the Purchase Agreement). The Borrower’s failure to comply with this Section 4.15 shall result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand and No/100 United States Dollars ($15,000), being immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note. 
 
4.16 Future Raises; Repayment from Proceeds. The Borrower shall not consummate any capital raising transactions (including but not limited to from the issuance of debt and/or equity securities) during the initial sixty (60) days after the Issue Date. Until the Note is satisfied in full, if the Borrower receives cash proceeds from any source or series of related or unrelated sources, including but not limited to, from the issuance of equity and/or debt securities, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line of credit of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of Borrower’s receipt of such proceeds, inform the Holder of such receipt, following which the Holder shall have the right in its sole discretion to require the Borrower to immediately apply all or any portion of such proceeds to repay all or any portion of this Note. Failure of the Borrower to comply with this provision shall constitute an Event of Default under Section 3.4 of the Note. In the event that such proceeds are received by the Holder prior to the Maturity Date, the required prepayment shall be subject to the terms of Section 1.9 herein.
  
[signature page follows]
 

	 
	25
	
 
	 

 
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer as of the date first above written.
 
  	 	REAC GROUP, INC.	
	 	 	 	 
		By:		
	 
	Name:
	Robert DeAngelis	 
	 	Title:	Chief Executive Officer	 

 
	 
	26
	
 
	 

 
EXHIBIT A
NOTICE OF CONVERSION 
 
The undersigned hereby elects to convert $_________________principal amount of the Note (defined below) together with $________________ of accrued and unpaid interest thereto, totaling $_____________ into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of REAC Group, Inc., a Florida corporation (the “Borrower”), according to the conditions of the senior secured convertible promissory note of the Borrower dated as of December 20, 2019 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any. 
 
Box Checked as to applicable instructions:
 
	 
	 ̈
	The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal At Custodian system (“DWAC Transfer”).

	 
	 
	 

	 
	 
	Name of DTC Prime Broker: 
Account Number: 

	 
	 
	 

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

	 
	 
	 

	 
	 
	Name: [NAME]
Address: [ADDRESS]

	 
	 
	 

	 
	 
	Date of Conversion:                                                        _____________
Applicable Conversion Price:                                        $____________
Number of Shares of Common Stock to be Issued 
Pursuant to Conversion of the Notes:                     ______________
Amount of Principal Balance Due remaining
Under the Note after this conversion:                      ______________
Accrued and unpaid interest remaining:                       ______________

	 
	 
	 

	 
	 
	[HOLDER]

	 
	 
	 

	 
	 
	By:_____________________________
Name: [NAME]
Title: [TITLE]
Date: [DATE]Exhibit 10.1

 

FATHOM VENTURES, INC.

 

2017 STOCK PLAN

 

1.            Purpose.
This Fathom Ventures, Inc. 2017 Stock Plan (the “Plan”) is intended to provide incentives:

 

(a)          to
employees, directors, contractors, and consultants of Fathom Ventures, Inc. (the “Company”) and its Affiliates
(as defined below) by providing them with bonus awards of Series B Common Stock of the Company (“Stock Bonuses”);

 

(b)          to
employees, directors, contractors, and consultants of the Company and its Affiliates by providing them with opportunities to make
direct purchases of Series B Common Stock of the Company (“Purchase Rights”);

 

(c)          to
employees, directors, contractors, and consultants of the Company and its Affiliates by providing them with opportunities to purchase
Series B Common Stock of the Company pursuant to options granted hereunder that do not qualify as “incentive stock options”
under Section 422 of the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”)
(“Nonstatutory Stock Options” or “NSOs”);

 

(d)          to
employees of the Company, its parent (if any), or any of its present or future subsidiaries (collectively, “Related
Corporations”), by providing them with opportunities to purchase Series B Common Stock (as defined below) of the
Company pursuant to options granted hereunder that qualify as “incentive stock options” (“Incentive Stock
Options” or “ISOs”) under Section 422 of the Code.

 

Both ISOs and NSOs are referred to hereafter
as “Options”, and Options, Stock Bonuses and Purchase Rights are referred to hereafter collectively as
 “Stock Rights.” As used herein, the terms “parent” and “subsidiary” mean “parent
corporation” and “subsidiary corporation,” respectively, as those terms are defined in Section 424 of the Code.
An “Affiliate” of the Company means a corporation, limited liability company, or other business entity
that, directly or indirectly, through one or more intermediaries or otherwise, controls, is controlled by, or is under common control
with the Company, where “control” means the ability to direct management or policies through the ownership of voting
securities, by contract or otherwise. The term “Affiliate” specifically includes, but is not limited to, to Fathom
Realty Holdings, LLC.

 

2.            Administration
of the Plan.

 

(a)          The
Plan shall be administered by (i) the Board of Directors of the Company (the “Board”), or (ii) a committee
consisting of directors or other persons appointed by the Board (the “Committee”). The appointment of
the members of, and the delegation of powers to, the Committee by the Board shall be consistent with applicable federal and state
laws and regulations (collectively, the “Applicable Laws”). Once appointed, the Committee shall continue
to serve in its designated capacity until otherwise directed by the Board. From time to time, the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the Committee and thereafter directly administer the Plan,
all to the extent permitted by the Applicable Laws.

 

    	- 1 -

     

    

 

(b)          Subject
to ratification of the grant or authorization of each Stock Right by the Board (if so required by an Applicable Law), and subject
to the terms of the Plan, the Committee shall have the authority, in its discretion, to:

 

(i)          determine
the employees of the Company and Related Corporations (from among the class of employees eligible under Section 3 to receive ISOs)
to whom ISOs may be granted, and to determine (from among the classes of individuals and entities eligible under Section 3 to receive
NSOs, Stock Bonuses and Purchase Rights) to whom NSOs, Stock Bonuses and Purchase Rights may be granted;

 

(ii)         determine
the time or times at which Options, Stock Bonuses or Purchase Rights may be granted (which may be based on performance criteria);

 

(iii)        determine
the number of shares of Series B Common Stock subject to any Stock Right granted by the Committee;

 

(iv)        determine
the option price of shares subject to each Option, which price shall not be less than the minimum price specified in Section 6
hereof, as appropriate, and the purchase price of shares subject to each Purchase Right and to determine the form of consideration
to be paid to the Company for exercise of such Option or purchase of shares with respect to a Purchase Right;

 

(v)         determine
whether each Option granted shall be an ISO or NSO;

 

(vi)        determine
(subject to Section 7) the time or times when each Option shall become exercisable and the duration of the exercise period;

 

(vii)       determine
whether restrictions such as repurchase options are to be imposed on shares subject to Options, Stock Bonuses and Purchase Rights
and the nature of such restrictions, if any;

 

(viii)      approve
forms of agreement for use under the Plan;

 

(ix)         determine
the Fair Market Value (as defined in Section 6(d) below) of a Stock Right or the Series B Common Stock underlying a Stock Right;

 

(x)          accelerate
vesting of any Stock Right or waive any forfeiture restrictions, or waive any other limitation or restriction with respect to a
Stock Right;

 

(xi)         reduce
the exercise price of any Stock Right if the Fair Market Value of the Series B Common Stock covered by such Stock Right shall have
declined since the date the Stock Right was granted;

 

    	- 2 -

     

    

 

(xii)        institute
a program whereby outstanding Options can be surrendered in exchange for Options with a lower exercise price;

 

(xiii)       modify
or amend each Stock Right, including the discretionary authority to extend the post-termination exercisability period of Stock
Rights longer than is otherwise provided for by terms of the Plan or the Stock Right;

 

(xiv)      construe
and interpret the Plan and Stock Rights granted hereunder;

 

(xv)       prescribe
and rescind rules and regulations relating to the Plan;

 

(xvi)      to
approve addenda pursuant to Section 24 below or to grant Stock Rights to, or to modify the terms of, any outstanding agreement
related to any Stock Right held by grantees who are foreign nationals or employed outside of the United States with such terms
and conditions as the Committee deems necessary or appropriate to accommodate differences in local law, tax policy or custom which
deviate from the terms and conditions set forth in this Plan to the extent necessary or appropriate to accommodate such differences;
and

 

(xvii)     make
all other determinations necessary or advisable for the administration of the Plan.

 

The interpretation and construction by the
Committee of any provisions of the Plan or of any Stock Right granted under it shall be final unless otherwise determined by the
Board. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect
to the Plan or any Stock Right granted under it.

 

(c)          The
Committee may select one of its members as its chairman, and shall hold meetings at such times and places as it may determine.
Acts by a majority of the Committee, approved in person at a meeting or in writing, shall be the valid acts of the Committee.

 

(d)          All
references in this Plan to the Committee shall mean the Board if no Committee has been appointed.

 

(e)          Those
provisions of the Plan that make express reference to “Rule 16b-3” shall apply to the Company only at such time as
the Company’s Series B Common Stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and then only to such persons as are required to file reports under Section 16(a) of the Exchange Act (a “Reporting
Person”).

 

(f)           To
the extent that Stock Rights are to be qualified as “performance-based” compensation within the meaning of Section
162(m) of the Code, the Plan shall be administered by a committee consisting of two or more “outside directors” as
determined under Section 162(m) of the Code.

 

    	- 3 -

     

    

 

3.            Eligible
Employees and Others.

 

(a)          Eligibility.
ISOs may be granted to any employee of the Company or any Related Corporation. Those officers of the Company who are not employees
may not be granted ISOs under the Plan. NSOs, Stock Bonuses and Purchase Rights may be granted to any director, employee, contractor,
or consultant of the Company or any Affiliate of the Company. Granting of any Stock Right to any individual or entity shall neither
entitle that individual or entity to, nor disqualify him, her, or it from, participation in any other grant of Stock Rights.

 

(b)          Special
Rule for Grant of Stock Rights to Reporting Persons. The selection of a director or an officer who is a Reporting Person (as
the terms “director” and “officer” are defined for purposes of Rule 16b-3) as a recipient of a Stock Right,
the timing of the Stock Right grant, the exercise price, if any, of the Stock Right and the number of shares subject to the Stock
Right shall be determined either (i) by the Board, or (ii) by a committee of the Board that is composed solely of two or more Non-Employee
Directors having full authority to act in the matter. For the purposes of the Plan, a director shall be deemed to be a “Non-Employee
Director” only if such person is defined as such under Rule 16b-3(b)(3), as interpreted from time to time.

 

(c)          Annual
Limitation for Employees. To the extent the Company is subject to Section 162(m) of the Code, no employee shall be eligible
to be granted during any calendar year Stock Rights covering more than eighty percent (80%) of the total shares of Series B Common
Stock authorized for issuance under the Plan as set forth in Section 4.

 

4.            Stock.
The stock subject to Stock Rights shall be authorized but unissued shares of the Series B Common Stock of the Company, no par value
per share, or such shares of the Company’s capital stock into which such class of shares may be converted pursuant to any
reorganization, recapitalization, merger, consolidation or the like, or shares of Series B Common Stock reacquired by the Company
in any manner. The aggregate number of shares that may be issued pursuant to the Plan is 1,500,000 shares of Series B Common Stock,
which is the maximum number of shares that may be issued as ISOs under this Plan, subject to adjustment as provided herein. Any
such shares may be issued as ISOs, NSOs or Stock Bonuses, or to persons or entities making purchases pursuant to Purchase Rights,
so long as the number of shares so issued does not exceed such aggregate number, as adjusted. If any Option granted under the Plan
shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable
in whole or in part, or if the Company shall reacquire any shares issued pursuant to Stock Rights, the unpurchased shares subject
to such Options and any shares so reacquired by the Company shall again be available for grants of Stock Rights under the Plan.
Shares of Series B Common Stock which are withheld to pay the exercise price of an Option and/or any related withholding obligations
shall not be available for issuance under the Plan.

 

5.            Granting
of Stock Rights. Stock Rights may be granted under the Plan at any time after the Effective Date, as set forth in Section 16,
and prior to 10 years thereafter. The date of grant of a Stock Right under the Plan will be the date specified by the Committee
at the time it grants the Stock Right; provided, however, that such date shall not be prior to the date on which the Committee
acts.

 

    	- 4 -

     

    

 

6.            Minimum
Price; ISO Limitations.

 

(a)          The
price per share specified in the agreement relating to each NSO, Stock Bonus or Purchase Right granted under the Plan shall be
established by the Committee, taking into account any noncash consideration to be received by the Company from the recipient of
Stock Rights.

 

(b)          The
price per share specified in the agreement relating to each ISO granted under the Plan shall not be less than the Fair Market Value
per share of Series B Common Stock on the date of such grant. In the case of an ISO to be granted to an employee owning stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company or any Related Corporation, the price per
share specified in the agreement relating to such ISO shall not be less than 110% of the Fair Market Value per share of Series
B Common Stock on the date of the grant.

 

(c)          To
the extent that the aggregate Fair Market Value (determined at the time an ISO is granted) of Series B Common Stock for which ISOs
granted to any employee are exercisable for the first time by such employee during any calendar year (under all stock option plans
of the Company and any Related Corporation) exceeds $100,000 (or such higher value as permitted under Code Section 422 at the time
of determination) such Options will be treated as NSOs, provided that this Section shall have no force or effect to the extent
that its inclusion in the Plan is not necessary for Options issued as ISOs to qualify as ISOs pursuant to Section 422 of the Code.
The rule of this Section 6(c) shall be applied by taking Options in the order in which they were granted.

 

(d)          As
used herein, “Fair Market Value” means:

 

(i)          if
the Series B Common Stock is then traded on a national securities exchange, the closing sale price for such stock (or the closing
bid, if no sales were reported as quoted on such exchange or market) on the date of determination (or, if no closing sales price
or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported);

 

(ii)         if
the Series B Common Stock is regularly quoted on an automated quotation system but not reported on a national securities exchange,
the closing sale price or average of bid prices last quoted on that date by an established quotation service (or, if no such prices
were reported on that date, on the last date such prices were reported); or

 

(iii)        if
the Series B Common Stock is not traded on an established securities market (as defined in Treasury Regulation Section 1.897-1(m)),
the fair market value as determined by the Committee in good faith on such basis as it deems appropriate and applied consistently
with respect to the recipients of Stock Rights under the Plan.

 

    	- 5 -

     

    

 

7.            Option
Duration. Subject to earlier termination as provided in Sections 9 and 10, each Option shall expire on the date specified by
the Committee, but not more than:

 

(a)          10
years from the date of grant in the case of NSOs;

 

(b)          10
years from the date of grant in the case of ISOs generally; and

 

(c)          5
years from the date of grant in the case of ISOs granted to an employee owning stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Related Corporation.

 

Subject to earlier termination as provided
in Sections 9 and 10, the term of each ISO shall be the term set forth in the original instrument granting such ISO, except with
respect to any part of such ISO that is converted into an NSO pursuant to Section 18.

 

8.            Exercise
of Options. Subject to the provisions of Section 9 through Section 12 of the Plan, each Option granted under the Plan shall
be exercisable as follows:

 

(a)          the
Option shall either be fully exercisable on the date of grant or shall become exercisable thereafter in such installments as the
Committee may specify;

 

(b)          once
an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee;

 

(c)          each
Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares
with respect to which it is then exercisable;

 

(d)          the
Committee shall have the right to accelerate the date of exercise of any installment of any Option, irrespective of whether such
acceleration would cause the Option to exceed the annual vesting limitation contained in Section 422 of the Code, as described
in Section 6(c);

 

(e)          the
Committee may, but need not, include a provision in an agreement evidencing an Option whereby the grantee may elect at any time
during his/her Continuous Service to exercise any part or all of the Option prior to its vesting, and in such case any shares received
pursuant to such exercise of the unvested portion of the Option will be subject to a repurchase right in favor of the Company or
to any other restriction the Company determines to be appropriate.

 

9.            Effect
of Termination of Continuous Service. If a grantee ceases to provide Continuous Service (as defined below) to the Company and
all Affiliates other than (x) by reason of death or Disability as defined in Section 10, or (y) by reason of a termination for
 “Cause” as defined in this Section 9, then unless otherwise specified in the instrument granting such Stock Right,
the grantee shall have the continued right to exercise any Stock Right held by him or her, to the extent of the number of shares
with respect to which he or she could have exercised it on the date of termination until the Stock Right’s specified expiration
date; provided, however, in the event the grantee exercises any ISO after the date that is three months following the date of termination
of employment, such ISO will automatically be converted into an NSO subject to the terms of the Plan. In the event of a termination
for Cause (as defined below), the right of a grantee to exercise a Stock Right shall terminate as of the date of termination.

 

    	- 6 -

     

    

 

(a)          As
used herein, the term “Continuous Service” means the provision of services to the Company or an Affiliate
in any capacity of employee, director, contractor, or consultant that is not interrupted or terminated. A grantee’s Continuous
Service will be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which
the grantee provides services ceasing to be an Affiliate. Continuous Service shall not be considered interrupted in the case of
(i) any approved leave of absence (as described below), (ii) transfers among the Company, an Affiliate, or any successor in any
capacity of employee, director, contractor, or consultant, or (iii) any change in status as long as the individual remains in the
service of the Company or an Affiliate in any capacity of employee, director, contractor, or consultant (provided, however that
a change in status from an employee to contractor or consultant may cause an ISO to become an NSO under the Code). ISOs granted
under the Plan shall not be affected by any change of employment within or among the Company and its Affiliates, so long as the
optionee continues to be an employee of the Company or any Affiliate.

 

(b)          An
approved leave of absence for purposes of determining Continuous Service will include any bona fide leave of absence (such as those
attributable to illness, military obligations or other authorized personal leave) provided that the period of such leave does not
exceed six (6) months, or if longer, any period during which such grantee’s right to reemployment with the Company is guaranteed
by statute or by contract.

 

(c)          For
purposes of this Plan, and unless otherwise defined in the instrument granting a Stock Right, “Cause”
means:

 

(i)          if
a grantee has a then-effective employment agreement, consulting agreement, service agreement or other similar agreement with the
Company or any Affiliate that defines “Cause” or a like term, the meaning set forth in such agreement at the time of
the grantee’s termination of Continuous Service; or

 

(ii)         in
the absence of such an agreement or definition, the termination of a grantee’s Continuous Service for any of the following
reasons, as determined by the Committee: (A) the grantee’s breach of any fiduciary duty to the Company or any Affiliate;
(B) the grantee’s failure to follow the reasonable instructions of the Board or such grantee’s direct supervisor, which
breach, if curable, is not cured within ten (10) days after notice to such grantee or, if cured, recurs within one hundred eighty
(180) days; (C) the grantee’s willful misconduct, fraud, embezzlement, or acts of dishonesty relating to the Company or any
Affiliate; (D) the grantee’s material breach of any noncompetition, confidentiality or similar agreement with the Company
or an Affiliate, as determined under such agreement; (E) the grantee’s commission of a crime involving fraud, embezzlement,
theft, or other act constituting a felony; or (F) a grantee who is an employee, contractor, or consultant and who engages in acts
or omissions constituting gross negligence, misconduct or a willful violation of a Company or an Affiliate policy which is or is
reasonably expected to be materially injurious to the Company and/or an Affiliate.

 

    	- 7 -

     

    

 

(d)          NOTHING
IN THE PLAN SHALL BE DEEMED TO GIVE ANY GRANTEE OF ANY STOCK RIGHT THE RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE
COMPANY OR ANY AFFILIATE FOR ANY PERIOD OF TIME OR TO AFFECT THE AT-WILL NATURE OF ANY EMPLOYEE’S EMPLOYMENT.

 

10.          Death;
Disability.

 

(a)          If
a grantee’s Continuous Service ends by reason of death, or if a grantee dies within three months of the date his or her Continuous
Service ends, any Stock Right held by him or her may be exercised to the extent of the number of shares with respect to which he
or she could have exercised said Stock Right on the date of death, by his or her estate, personal representative or beneficiary
who has acquired the Stock Right by will or by the laws of descent and distribution (the “Successor Grantee”),
unless otherwise specified in the instrument granting such Stock Right, prior to the earlier of (i) one year after the date of
termination or (ii) the Stock Right’s specified expiration date, provided, however, that a Successor Grantee shall be entitled
to ISO treatment under Section 421 of the Code only if the deceased optionee would have been entitled to like treatment had he
or she exercised such Option on the date of his or her death; and provided further in the event the Successor Grantee exercises
an ISO after the date that is one year following the date of termination by reason of death, such ISO will automatically be converted
into a NSO subject to the terms of the Plan.

 

(b)          If
a grantee’s Continuous Service ends by reason of Disability, he or she shall continue to have the right to exercise any Stock
Right held by him or her on the date of termination until unless otherwise specified in the instrument granting such Stock Right,
the earlier of (i) one year after the date of termination or (ii) the Stock Right’s specified expiration date provided, however,
in the event the grantee exercises an ISO after the date that is one year following the date of termination by reason of Disability,
such ISO will automatically be converted into a NSO subject to the terms of the Plan. For the purposes of the Plan, the term “Disability”
means a “permanent and total disability” as defined in Section 22(e)(3) of the Code.

 

(c)          The
provisions of subsections (a) and (b) of this Section 10 regarding the exercise period of a Stock Right may be waived, extended
or further limited, in the discretion of the Committee, in an instrument granting a Stock Right that is not an ISO.

 

11.          Transferability
and Assignability of Stock Rights.

 

(a)          Except
for ISOs, which are governed by Section 11(b) below, no Stock Right is transferable by the grantee except (i) upon the approval
of the Committee, to the grantee’s family members, or (ii) by will or by the laws of descent and distribution. For purposes
of the Plan, a grantee’s “family members” shall be deemed to consist of his or her spouse, parents, children,
grandparents, grandchildren and any trusts created for the benefit of such individuals. A family member to whom any such Stock
Right has been transferred pursuant to this Section 11(a) shall be hereinafter referred to as a “Permitted Transferee.”
A Stock Right shall be transferred to a Permitted Transferee in accordance with the foregoing provisions, and subject to all the
provisions of the instrument evidencing such Stock Right and this Plan, by the execution by the grantee and the transferee of an
assignment in writing in such form approved by the Committee. The Company shall not be required to recognize the rights of a Permitted
Transferee until such time as it receives a copy of the assignment from the grantee.

 

    	- 8 -

     

    

 

(b)          No
ISO granted under this Plan shall be assignable or otherwise transferable by the optionee except by will or by the laws of descent
and distribution. An ISO may be exercised during the lifetime of the optionee only by the optionee.

 

12.          Terms
and Conditions of Stock Rights. Stock Rights shall be evidenced by instruments (which need not be identical) in such forms
as the Committee may from time to time approve. Such instruments shall conform to the terms and conditions set forth in Sections
6 through 11 hereof and may contain such other provisions as the Committee deems advisable that are not inconsistent with the Plan,
including restrictions (or other conditions deemed by the Committee to be in the best interests of the Company) applicable to the
exercise of Options or to shares of Series B Common Stock issuable upon exercise of Options or otherwise. If the Committee determines
to issue a NSO, it shall take whatever actions it deems necessary, under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO, provided however that in granting any NSO, the Committee may specify
that such NSO shall be subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may determine. The Committee may from time to time confer authority and responsibility on one or more
of its own members and/or one or more officers of the Company to execute and deliver such instruments. The proper officers of the
Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms
of such instruments.

 

13.          Adjustments.
Upon the occurrence of any of the following events, the rights of a recipient of a Stock Right granted hereunder shall be adjusted
as hereinafter provided, unless otherwise provided in the written agreement between the recipient and the Company relating to such
Stock Right.

 

(a)        Subject
to any action required under Applicable Laws by the holders of capital stock of the Company, (i) the number and class of shares
of Series B Common Stock or other stock or securities: (x) available for future grants of Stock Rights under Section 4 above and
(y) covered by each outstanding Stock Right, (ii) the exercise price per share of each such outstanding Option, and (iii) any repurchase
price per share applicable to shares issued pursuant to any Stock Right, shall be automatically proportionately adjusted in the
event of a stock split, reverse stock split, stock dividend, combination, consolidation, reclassification of Series B Common Stock
or subdivision of Series B Common Stock. In the event of any increase or decrease in the number of issued shares of Series B Common
Stock effected without receipt of consideration by the Company, a declaration of an extraordinary dividend with respect to Series
B Common Stock payable in a form other than Series B Common Stock in an amount that has a material effect on the Fair Market Value,
a recapitalization (including a recapitalization through a large nonrecurring cash dividend), a rights offering, a reorganization,
merger, a spin-off, split-up, change in corporate structure or a similar occurrence, the Committee shall make appropriate adjustments,
in its discretion, in one or more of (i) the numbers and class of capital stock or securities: (x) available for future grants
of Stock Rights under Section 4 above and (y) covered by each outstanding Stock Right, (ii) the exercise price per share of each
outstanding Option and (iii) any repurchase price per share applicable to the capital stock issued pursuant to any Stock Right,
and any such adjustment by the Committee shall be made in the Committee’s sole and absolute discretion and shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of stock subject to a Stock Right. If, by reason of a transaction described in this Section 13(a)
or an adjustment pursuant to this Section 13(a), an agreement governing a grantee’s Stock Right covers additional or different
shares of stock or securities, then such additional or different shares, and the Stock Right agreement in respect thereof, shall
be subject to all of the terms, conditions and restrictions which were applicable to the Stock Right prior to such adjustment.

 

    	- 9 -

     

    

 

(b)        If
the Company undergoes an Acquisition (as defined below), unless otherwise provided by the Committee, in its sole discretion, the
Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor
Board”) shall, as to outstanding Stock Rights, make appropriate provision for the continuation of such Stock Rights
by either assumption of such Stock Rights or by substitution of such Stock Rights with an equivalent award. If the Committee or
the Successor Board does not make appropriate provisions for the continuation of such Stock Rights by either assumption or substitution,
unless otherwise provided by the Committee in its sole discretion, Stock Rights shall become vested and fully and immediately exercisable
and all forfeiture restrictions shall be waived and all Stock Rights not exercised at the time of the closing of such Acquisition
shall terminate notwithstanding anything to the contrary herein. In the event such Stock Rights are so fully vested and become
immediately exercisable, the Committee may elect in its discretion in lieu of requiring the exercise of any Stock Rights prior
to termination, to cancel outstanding Stock Rights in exchange for cash payments for each outstanding Stock Right equal to the
product of (x) the positive difference, if any, of (i) the price per share of Series B Common Stock being paid in connection with
the Acquisition less (ii) the applicable purchase or exercise price per share of Series B Common Stock for such Stock Right and
(y) the number of shares of Series B Common Stock subject to such Stock Right. Any such cash payments shall be paid to the holders
of Stock Rights within thirty (30) days after the closing of the Acquisition (subject to any escrow or other holdback periods and
related reductions in amounts otherwise so payable applicable to all holders of Series B Common Stock) and shall be subject to
any applicable tax withholding requirements.

 

(c)        As
used in this Plan, “Acquisition” means:

 

(i)          a
merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation,
limited liability company or other entity other than an Excluded Entity (as defined below);

 

(ii)         the
sale, transfer, or other disposition of all or substantially all of the assets of the Company, other than to an Excluded Entity;
or

 

    	- 10 -

     

    

 

(iii)        acquisition
in a single transaction or series of related transactions by any person or related group of persons (other than the Company or
by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
outstanding securities possessing all of the total combined voting power of the Company’s outstanding securities; provided,
however, that the Committee shall determine under this clause (iii) whether multiple transactions are related, and its determination
shall be final, binding and conclusive.

 

Notwithstanding the foregoing, a transaction
shall not constitute an “Acquisition” if its purpose is to (A) change the jurisdiction of the Company’s incorporation,
(B) create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s
securities immediately before such transaction, or (C) obtain funding for the Company in a financing that is approved by the Board.
An “Excluded Entity” means a corporation or other entity of which the holders of voting capital stock
of the Company outstanding immediately prior to such transaction are the direct or indirect holders of voting securities representing
at least a majority of the votes entitled to be cast by all of such corporation’s or other entity’s voting securities
outstanding immediately after such transaction.

 

(d)        In
the event of a transaction, including without limitation, a recapitalization or reorganization of the Company (other than a transaction
described in subsection (b) above) pursuant to which securities of the Company or of another corporation are issued with respect
to the outstanding shares of Series B Common Stock, an optionee or grantee upon exercising a Stock Right shall be entitled to receive
for the purchase price paid upon such exercise the securities he or she would have received if he or she had exercised the Stock
Right immediately prior to such recapitalization or reorganization.

 

(e)        In
the event of the proposed dissolution or liquidation of the Company, each Stock Right will terminate immediately prior to the consummation
of such proposed action or at such other time and subject to such other conditions as shall be determined by the Committee.

 

(f)         Except
as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of
shares subject to a Stock Right. No adjustments shall be made for dividends paid in cash or in property other than Series B Common
Stock of the Company.

 

(g)       No
fractional shares shall be issued under the Plan and any optionee who would otherwise be entitled to receive a fraction of a share
upon exercise of a Stock Right shall receive from the Company cash in lieu of such fractional shares in an amount equal to the
Fair Market Value of such fractional shares, as determined in the sole discretion of the Committee.

 

(h)       Upon
the happening of any of the foregoing events described in subsections (a), (b) or (d) above, the class and aggregate number of
shares set forth in Section 4 hereof that are subject to Stock Rights that previously have been or subsequently may be granted
under the Plan shall also be appropriately adjusted to reflect the events described. The Committee or the Successor Board shall
determine the specific adjustments to be made under this Section 13 and, subject to Section 2, its determination shall be conclusive.

 

    	- 11 -

     

    

 

14.          Means
of Exercising Stock Rights.

 

(a)          Except
as otherwise provided in this Plan or the instrument evidencing the Stock Right, a Stock Right (or any part or installment thereof)
shall be exercised by giving written notice to the Company at its principal office address to the attention of its President. Such
notice shall identify the Stock Right being exercised and specify the number of shares as to which such Stock Right is being exercised,
accompanied by full payment of the exercise price therefor, if any, payable as follows: (i) in United States dollars in cash or
by check, (ii) at the discretion of the Committee, through the delivery of already-owned shares of Series B Common Stock having
a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Stock Right and, in the case of such
already-owned shares of Series B Common Stock, having been owned by the participant for more than six months from the date of surrender,
or (iii) at the discretion of the Committee, by delivery of the grantee’s personal recourse note bearing interest payable
not less than annually at a market rate that is no less than 100% of the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, (iv) at the discretion of the Committee, through the surrender of shares of Series B Common Stock then issuable
upon exercise of the Stock Right having a Fair Market Value on the date of exercise equal to the aggregate price of the Stock Right,
(v) at the discretion of the Committee, delivery of a notice that the grantee has placed a market sell order with a broker with
respect to shares of Series B Common Stock then issuable upon exercise of the Stock Right and that the broker has been directed
to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Stock Right exercise price, provided
that payment of such proceeds is then made to the Company upon settlement of the sale, or (vi) at the discretion of the Committee,
by any combination of (i), (ii), (iii), (iv) and (v) or such other consideration and method of payment for the issuance of shares
to the extent permitted by Applicable Laws and the Plan. If the Committee exercises its discretion to permit payment of the exercise
price of a Stock Right by means of the methods set forth in clauses (ii), (iii) (iv), (v) or (vi) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the Stock Right in question and such exercise shall also be
governed by any terms set forth in the written agreement evidencing the grant of the Stock Right. The holder of a Stock Right shall
not have the rights of a stockholder with respect to the shares covered by the Stock Right until the date of issuance of a stock
certificate for such shares. Except as expressly provided above in Section 13 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock
certificate is issued.

 

(b)          The
Company shall not be required to issue or deliver any shares of Series B Common Stock upon the exercise of any Stock Right granted
hereunder or any portion thereof, prior to fulfillment of all of the following conditions to the satisfaction of the Committee:

 

(i)          the
admission of such shares to listing on all stock exchanges on which the Series B Common Stock is listed, if any;

 

(ii)         the
completion of any registration or other qualification of such shares which the Committee shall deem necessary or advisable under
any federal or state law or under the rulings or regulations of the United States Securities and Exchange Commission or any other
governmental regulatory body, or the determination by the Company, with the advice of legal counsel, that exemptions are available
from such registration and qualification;

 

    	- 12 -

     

    

 

(iii)        the
representation, in form acceptable to the Committee, at the time of any such exercise that the shares are being purchased only
for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any Applicable Laws;

 

(iv)        the
obtaining of any approval or other clearance from any federal or state governmental agency or body which the Committee shall determine
to be necessary or advisable;

 

(v)         if
required by the Committee in its discretion, the grantee’s execution of a joinder agreement (in form acceptable to the Committee)
such that the grantee becomes a party to any stockholders agreement, investor rights agreement, or similar agreement as may be
entered into from time to time by and among the Company and the holders of the Company’s stock; and

 

(vi)        the
lapse of such reasonable period of time following the exercise of the Stock Right as the Committee from time to time may establish
for reasons of administrative convenience.

 

(c)          Stock
certificates issued and delivered to grantees shall bear such restrictive legends as the Company shall deem necessary or advisable
pursuant to applicable federal and state securities laws.

 

(d)          As
an alternative to issuance of stock certificates, subject to any applicable rules or regulations, the Company may deliver to the
grantee evidence of book entry shares credited to the account of the grantee.

 

(e)          The
inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary for
the lawful issuance and sale of any Series B Common Stock pursuant to Stock Rights shall relieve the Company of any liability with
respect to the non-issuance or sale of the Series B Common Stock as to which such approval shall not have been obtained. The Company
shall, however, use its commercially reasonable efforts to obtain all such approvals.

 

15.          Surrender
of Stock Rights for Cash or Stock. The Committee may, in its sole and absolute discretion and subject to such terms and conditions
as it deems appropriate, accept the surrender by an optionee or grantee of a Stock Right granted to him under the Plan and authorize
payment in consideration therefor of an amount equal to the difference between the purchase price payable for the shares of Series
B Common Stock under the instrument granting the Option and the Fair Market Value of the shares subject to the Stock Right (determined
as of the date of such surrender of the Stock Right). Such payment shall be made in shares of Series B Common Stock valued at Fair
Market Value on the date of such surrender, or in cash, or partly in such shares of Series B Common Stock and partly in cash as
the Committee shall determine. The surrender shall be permitted only if the Committee determines that such surrender is consistent
with the purpose set forth in Section 1, and only to the extent that the Stock Right is exercisable under Section 8 on the date
of surrender. In no event shall an optionee or grantee surrender his Stock Right under this Section if the Fair Market Value of
the shares on the date of such surrender is less than the purchase price payable for the shares of Series B Common Stock subject
to the Stock Right. Any ISO surrendered pursuant to the provisions of this Section 15 shall be deemed to have been converted into
a NSO immediately prior to such surrender.

 

    	- 13 -

     

    

 

16.          Effective
Date and Term of Plan. The Plan shall become effective at such time as it has been adopted by the Board (the “Effective
Date”). The Plan shall continue in effect for a term of ten (10) years from the Effective Date unless sooner terminated.
The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the
Plan is adopted by the Board. Such stockholder approval shall be obtained in the degree and manner required under the Applicable
Laws. Any ISO awarded or exercised before stockholder approval is obtained shall be subject to automatic conversion into an NSO,
without the consent of the grantee if such stockholder approval is not obtained within twelve (12) months after the date the Plan
is adopted by the Board.

 

17.          Amendment,
Suspension, or Termination of Plan.

 

(a)          The
Board may at any time amend, suspend or terminate the Plan in any respect, except that it may not, without the approval of the
stockholders obtained within twelve (12) months before or after the Board adopts a resolution authorizing any of the following
actions, do any of the following:

 

(i)          increase
the total number of shares that may be issued under the Plan (except by adjustment pursuant to Section 13);

 

(ii)         modify
the provisions of Section 3 regarding eligibility for grants of ISOs;

 

(iii)        modify
the provisions of Section 6(b) regarding the exercise price at which shares may be offered pursuant to ISOs (except by adjustment
pursuant to Section 13); or

 

(iv)        extend
the expiration date of the Plan.

 

(b)          Except
as provided in Section 13(b) and this Section 17, in no event may action of the Board or stockholders adversely alter or impair
the rights of a grantee, without his or her consent, under any Stock Right previously granted.

 

    	- 14 -

     

    

 

18.          Conversion
of ISOs into NSOs; Termination of ISOs. The Committee, with the consent of any optionee, may in its discretion take such actions
as may be necessary to convert an optionee’s ISOs (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into NSOs at any time prior to the expiration of such ISOs. These actions may include,
but not be limited to, accelerating the exercisability, extending the exercise period or reducing the exercise price of the appropriate
installments of optionee’s Options. At the time of such conversion, the Committee (with the consent of the optionee) may
impose these conditions on the exercise of the resulting NSOs as the Committee in its discretion may determine, provided that the
conditions shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such optionee’s ISOs converted into NSOs, and no conversion shall occur until and unless the Committee takes appropriate
action. The Committee, with the consent of the optionee, may also terminate any portion of any ISO that has not been exercised
at the time of termination.

 

19.          Withholding
of Taxes.

 

(a)          As
a condition of the grant, vesting, and/or exercise of any Stock Right under the Plan, the Company may require the grantee (or other
person holding or exercising such rights pursuant to the Plan and award agreement) to pay to the Company (or otherwise provide
for the full satisfaction of) an amount equal to the U.S. federal, state, local, or foreign tax withholding obligation of the Company
or any other required deduction or payments that may arise in connection with an award made pursuant to the Plan. The Company shall
not be required to issue any shares of Series B Common Stock under the Plan until such obligations have been satisfied.

 

(b)          At
the sole and absolute discretion of the Committee, the holder of Stock Rights may pay all or any part of the total obligation described
in Section 19(a) above by tendering already-owned shares of Series B Common Stock or by directing the Company to withhold shares
of Series B Common Stock otherwise to be transferred to the holder of such Stock Rights as a result of the exercise or receipt
thereof in an amount equal to the estimated amount of such obligation, provided that no more shares may be withheld than are necessary
to satisfy the holder’s actual obligation with respect to the grant, vesting, or exercise of Stock Rights. In such event,
the holder of Stock Rights must, however, notify the Committee of his or her desire to pay all or any part of the total estimated
federal and state income tax liability arising out of the grant, vesting, and/or exercise of any Stock Right by tendering already-owned
shares of Series B Common Stock or having shares of Series B Common Stock withheld prior to the date that the obligation is to
be determined. For purposes of this Section 19(b), shares of Series B Common Stock shall be valued at their Fair Market Value on
the date that the amount of the tax withholdings is to be determined.

 

20.          Notice
to Company of Disqualifying Disposition. Each employee who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition (as defined below) of any Series B Common Stock acquired pursuant to the exercise
of an ISO. A “Disqualifying Disposition” is any disposition (including any sale) of such Series B Common
Stock within either (a) two years after the date the employee was granted the ISO, or (b) one year after the date the employee
acquired Series B Common Stock by exercising the ISO. If the employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.

 

    	- 15 -

     

    

 

21.          Section
409A. To the maximum extent possible, it is intended that the Plan and all awards made hereunder are, and shall be, exempt
from or otherwise comply with the requirements of Section 409A of the Code, the regulations other guidance issued thereunder by
the United States Department of Treasury (whether issued before or after the Effective Date), and all state laws of similar effect
(collectively, “Section 409A”), and that the Plan and all award agreements made hereunder shall be interpreted
and applied by the Committee in a manner consistent with this intent in order to avoid the consequences Section 409A(a)(1) of the
Code. In the event that any (i) provision of the Plan or an award agreement hereunder, (ii) award, payment, or transaction hereunder,
or (iii) other action or arrangement contemplated by the provisions of the Plan is determined by the Committee to not be exempt
from or comply with the applicable requirements of Section 409A, the Committee shall have the authority to take such actions and
to make such changes to the Plan or an award agreement as the Committee deems necessary to comply with such requirements and/or
preserve the intended tax treatment of the benefits provided with respect to any affected award, without the consent of any grantee.
No payment that constitutes deferred compensation under Section 409A that would otherwise be made under the Plan or an award agreement
upon a termination of Continuous Service will be made or provided unless and until such termination is also a “separation
from service,” as determined in accordance with Section 409A. In no event whatsoever shall the Company be liable for any
additional tax, interest or penalties that may be imposed on a grantee by Section 409A or any damages for failing to comply with
Section 409A.

 

22.          Governing
Law; Construction. The validity and construction of the Plan and the instruments evidencing Stock Rights shall be governed
by the laws of the State of North Carolina. In construing this Plan, the singular shall include the plural and the masculine gender
shall include the feminine and neuter, unless the context otherwise requires.

 

23.          Lock-up
Agreement. Each recipient of securities pursuant to the Plan agrees that such recipient will not, without the prior written
consent of the managing underwriter, if any, during the period commencing on the date of the final prospectus relating to the registration
by the Company of shares of its Series B Common Stock or any other equity securities under the Securities Act of 1933, as amended
(the “Securities Act”), on a registration statement on Form S-1 or Form S-3 and ending on the date specified
by the Company and such managing underwriter (such period not to exceed one hundred eighty (180) days in the case of the Company’s
first firm commitment underwritten offering of its equity securities under the Securities Act (the “IPO”),
or ninety (90) days in the case of any registration other than the IPO, or such other period as may be requested by the Company
or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports, and
(2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or
NYSE Rule 472(f)(4), or any successor provisions or amendments thereto, (i) lend, offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Series B Common Stock or any securities convertible into
or exercisable or exchangeable (directly or indirectly) for Series B Common Stock (whether such shares or any such securities are
then owned by the recipient or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Series B Common Stock or other securities, in cash or otherwise.
The foregoing provisions of this Section 23 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting
agreement, or the transfer of any shares to or from any trust for the direct or indirect benefit of the grantee or the immediate
family of the grantee, provided that the transferee agrees to be bound in writing by the restrictions set forth herein, and provided
further that any such transfer shall not involve a disposition for value. The underwriters in connection with such registration
are intended third-party beneficiaries of this Section 23 and shall have the right, power and authority to enforce the provisions
hereof as though they were a party hereto. Each recipient of securities hereunder further agrees to execute such agreements as
may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 23 or
that are necessary to give further effect thereto.

 

    	- 16 -

     

    

 

In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the securities of each recipient of securities hereunder (and the shares or securities
of every other person subject to the foregoing restriction) until the end of such period.

 

24.          Addenda.
The Committee may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Stock
Rights to grantees, which Stock Rights may contain such terms and conditions as the Committee deems necessary or appropriate to
accommodate differences in local law, tax policy or custom, which may deviate from the terms and conditions set forth in this Plan.
The terms of any such addenda shall supersede the terms of the Plan to the extent necessary to accommodate such differences but
shall not otherwise affect the terms of the Plan as in effect for any other purpose.

 

    	- 17 -

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