Document:

EXHIBIT 4.03

 

FORBEARANCE
AGREEMENT

 

This
Forbearance Agreement (this "Agreement")
is entered into as of August 11, 2017 by and between St. George Investments LLC, a Utah limited liability company ("Investor"),
Mountain High Acquisitions Corp., a Colorado corporation ("Company").
Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Note (defined
below).

 

A.            
Company previously sold and issued to Investor that certain Secured Convertible Promissory Note dated June 30,
2017 in the original principal amount of $346,000.00 (the "Note")
pursuant to that certain Securities Purchase Agreement dated June 30, 2017 by and between Investor and Company (the
"Purchase Agreement," and together with the Note and
all other documents entered into in conjunction therewith, the "Transaction
Documents").

 

B.            
Pursuant to Section 4(vi) of the Purchase Agreement , Company agreed that it would not have at any given time any Variable
Security Holder (as defined in the Purchase Agreement), excluding Investor, without Investor's prior written consent (the "Variable
Security Holder Covenant").

 

C.           
Nevertheless, on July 25, 2017, Company breached the Variable Security Holder
Covenant when it issued that certain Convertible Promissory Note in the original principal amount of $63,000.00 to Power Up Lending
Group, LTD.,  a Virginia corporation (the "Default").

 

D.            
As a result of the Default, Investor has the right to, among other things,
accelerate the Maturity Date of the Note, cause the interest rate on the Note to increase from 10% per annum to 22% per annum
(the "Interest Rate Increase"),
and cause the Outstanding Balance of the Note to be increased via Investor's
application of the Default Effect (the "Balance Increase").

 

E.            
No new or additional consideration is being provided in connection with this
Agreement other than the modification of terms as provided herein .

 

F.            
Investor has agreed, subject to the terms,
conditions and understandings expressed in this Agreement, to refrain and forbear temporarily from exercising and enforcing
remedies against Company for the Default as provided in this Agreement.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged , the parties agree
as follows:

 

1.            
Recitals and Definitions . Each of the parties hereto acknowledges and agrees that the recitals set forth above
in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

2.            
Forbearance. Subject to the terms, conditions and understandings contained
in this Agreement , Investor hereby agrees to refrain and forbear from bringing any action to collect under the Note (including
without limitation the Interest Rate Increase and the Balance Increase) with respect to the Default (the "Forbearance").
For the avoidance of doubt, the Forbearance shall only apply to the Default and not to any Events of Default (as defined
in the Note) that may occur subsequent to the date hereof or any other Event of Default that occurred prior to the date
hereof .

 

3.            
Forbearance Fee. As a material inducement and partial consideration for Investor's agreement to enter into this
Agreement and grant the Forbearance, each of Company and Investor acknowledges and agrees that a forbearance fee in the amount
of $27,250.00 is hereby added to the Outstanding Balance of the Note (the "Forbearance
Fee") as of the date hereof. Company and Investor further agree that the Forbearance Fee shall be deemed to be
fully earned as of the date hereof, shall be nonrefundable under any circumstance, and that the Forbearance Fee will tack back
to the Purchase Price Date for Rule 144 purposes. Company and Investor further agree that the Forbearance Fee shall be included
as part of the Initial Tranche under the Note and that the entire amount of such Initial Tranche (as increased by the Forbearance
Fee) is a Conversion Eligible Tranche as of the Purchase Price Date. Finally, Company acknowledges that the Forbearance Fee is
not deemed to be an application of the Default Effect under the Note and that, therefore, it shall not count against the number
of times the Default Effect may be applied thereunder.

 

4.             Ratification
of the Note. The Note, as
amended by this Agreement , shall be and remains in full force and effect in accordance with its terms, and is hereby
ratified and confirmed in all respects. Company acknowledges and agrees that the Conversion Eligible Outstanding Balance of
the Note as of the date hereof, including the application of the Forbearance Fee, is $210,119.61. Company acknowledges that
it is unconditionally obligated to pay the Conversion Eligible Outstanding Balance and represents that such obligation is not
subject to any defenses, rights of offset or counterclaims. No forbearance or waiver other than as expressly set forth herein
may be implied by this Agreement. Except as expressly set forth herein, the execution, delivery, and performance of this
Agreement shall not operate as a waiver of, or as an amendment to, any right, power or remedy of Investor under the Note or
the Transaction Documents, as in effect prior to the date hereof.

 

5.            
Failure to Comply. Company understands that the Forbearance
shall terminate immediately upon any Event of Default after the date hereof (or any Event of Default other than the Default
that occurred prior to the date hereof), and that in such case, Investor may seek all
recourse available to it under the terms of the Note , this Agreement, any other Transaction Document, or applicable law. For
the avoidance of any doubt, the termination of the Forbearance pursuant to this Section shall not terminate, limit or modify any
other provision of this Agreement (including without limitation Section 3 hereof).

6.            
Representations, Warranties and Agreements. In order to induce Investor to enter into this Agreement, Company ,
for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents , warrants and agrees as follows:

 

(a)          
Company has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants
contained herein, all of which have been duly authorized by all proper and necessary action. No consent, approval, filing or registration
with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of
any of the obligations of Company hereunder.

 

(b)           Any
Event of Default which may have occurred under the Note has not been, is
not hereby, and shall not be deemed to
be waived by Investor, expressly,
impliedly, through course of conduct or otherwise except upon full satisfaction of Company's obligations under this
Agreement. The agreement of Investor to refrain and forbear from exercising any rights and remedies by reason of any existing
default or any future default shall not constitute a waiver of, consent to, or condoning of, any other future default. For
the avoidance of any doubt, the Forbearance described herein only applies to the Default, and shall not constitute a waiver
or forbearance of any other rights or remedies available to Investor with respect to any other Events of Default under the
Note or other breach of the Transaction Documents by Company.

 

(c)          
All understandings, representations, warranties and recitals contained or expressed in this Agreement are true, accurate,
complete, and correct in all respects; and no such understanding, representation,
warranty, or recital fails or omits to state or otherwise disclose any material fact or information necessary to prevent such
understanding,  representation, warranty, or recital from being misleading. Company acknowledges and agrees that Investor has
been induced in part to enter into this Agreement based upon Investor's justifiable reliance on the truth, accuracy, and completeness
of all understandings, representations, warranties, and recitals contained in this Agreement. There is no fact known to Company
or which should be known to Company which Company has not disclosed to Investor on or prior to the date hereof which would or
could materially and adversely affect the understandings of Investor expressed in this Agreement or any representation, warranty,
or recital contained in this Agreement.

 

(d)          
Except as expressly set forth in this Agreement, Company acknowledges and agrees that neither the execution and delivery
of this Agreement nor any of the terms, provisions, covenants, or agreements contained in this Agreement shall in any manner release,
impair, lessen, modify, waive, or otherwise affect the liability and obligations of
Company under the terms of the Note or any of the other Transaction Documents.

 

(e)          
Company has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims , actions
or causes of action of any kind or nature whatsoever against Investor, directly or indirectly, arising out of, based upon, or
in any manner connected with, the transactions contemplated hereby, whether known or unknown, which occurred, existed, was taken,
permitted, or begun prior to the execution of this Agreement and occurred, existed, was taken, permitted or begun in
accordance with, pursuant to, or by virtue of any of the terms or conditions of the Transaction Documents. To the extent
any such defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes
of action exist or existed, such defenses, rights, claims, counterclaims, actions and causes of action are hereby waived, discharged
and released. Company hereby acknowledges and agrees that the execution of this Agreement by Investor shall not constitute an
acknowledgment of or admission by Investor of the existence of any claims or of liability for any matter or precedent upon which
any claim or liability may be asserted.

 

(f)           
Company hereby acknowledges that it has freely and voluntarily entered into this Agreement after an adequate opportunity
and sufficient period of time to review, analyze, and discuss (i) all terms and conditions of this Agreement, (ii) any and all
other documents executed and delivered in connection with the transactions contemplated by this Agreement, and (iii)
all factual and legal matters relevant to this Agreement and/or any and all such other documents, with counsel freely and
independently selected by Company (or had the opportunity to be represented by counsel). Company further acknowledges and agrees
that it has actively and with full understanding participated in the negotiation of this Agreement and all other documents executed
and delivered in connection with this Agreement after consultation and review with its counsel (or had the opportunity to be represented
by counsel), that all of the terms and conditions of this Agreement and the other documents
executed and delivered in connection with this Agreement have been negotiated at arm's length, and that this Agreement and all
such other documents have been negotiated, prepared, and executed without fraud, duress, undue influence, or coercion of any kind
or nature whatsoever having been exerted by or imposed upon any party by any other party.
No provision of this Agreement or such other documents shall be construed against or interpreted to the disadvantage of
any party by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured,
dictated, or drafted such provision.

 

(g)          
There are no proceedings or investigations
pending or threatened before any court or arbitrator or before or by, any governmental, administrative,
or judicial authority or agency, or arbitrator, against Company.

 

(h)          
There is no statute, regulation, rule, order or judgment and no provision of
any mortgage, indenture, contract or other agreement binding on Company, which would prohibit or cause a default under or in any
way prevent the execution, delivery, performance , compliance or observance of any of the terms and conditions of this Agreement
and/or any of the other documents executed and delivered in connection with this Agreement.

 

(i)
Company is solvent as of the date of this Agreement , and
none of the terms or provisions of this Agreement shall have the effect of rendering Company insolvent. The terms and provisions
of this Agreement and all other instruments and agreements entered into in connection herewith are being given for full and fair
consideration and exchange of value.

 

 9.            
Headings. The headings contained in this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this Agreement.

 

10.         
Arbitration. By its execution of this Agreement , each
party agrees to be bound by the Arbitration Provisions (as defined in the Purchase Agreement) set forth as an exhibit to
the Purchase Agreement and the parties agree to submit all Claims arising under this Agreement or any Transaction Document or
other agreement between the parties and their affiliates to binding arbitration pursuant to the Arbitration Provisions.

 

11.         
Governing Law; Venue. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Utah without regard to the principles
of conflict of laws. Each party consents to and expressly agrees that the exclusive venue for arbitration of any
dispute arising out of or relating to this Agreement or any Transaction Document or the relationship of the parties or
their affiliates shall be in Salt Lake County, Utah. Without modifying the parties
obligations to resolve disputes hereunder or under any Transaction Document pursuant to the Arbitration Provisions, each
party hereto submits to the exclusive jurisdiction of any state or federal court sitting in Salt Lake County, Utah in
any proceeding arising out of or relating to this Agreement and agrees that all Claims (as defined in the Purchase Agreement)
in respect of the proceeding may only be heard and determined in any
such court and hereby expressly submits to the exclusive personal jurisdiction and venue of such court for the purposes hereof
and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereto hereby
irrevocably consents to the service of process of any of the aforementioned courts in any such proceeding by the mailing of copies
thereof by registered or certified mail , postage prepaid, to its address as set forth
in the Purchase Agreement,
such service to become effective ten (10) days after such mailing.
COMPANY
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 AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

12.         
Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and
constitute the same instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original
signatures for all purposes.

 

13.         
Attorneys ' Fees. In the event of any arbitration or action at law or in equity to enforce or interpret the terms
of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all
purposes and shall therefore be entitled to an additional award of the full amount of the attorneys' fees and expenses paid by
such prevailing party in connection with the arbitration, litigation and/or dispute without reduction or apportionment based upon
the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator's
or a court's power to award fees and expenses for frivolous or bad faith pleading.

 

14.         
No Reliance. Company acknowledges and agrees that neither Investor nor any of its officers, directors, members,
managers, equity holders, representatives or agents has made any representations or warranties to Company or any of its agents,
representatives, officers,
directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and,
in making its decision to enter into the transactions contemplated by this
Agreement, Company is not relying on any representation , warranty, covenant or promise of Investor or its officers, directors,
members, managers, equity holders, agents or representatives other than as set forth
in this Agreement.

 

15.         
Severability. If any part of this Agreement
is construed to be in violation of any law, such part shall be modified to
achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force
and effect.

 

16.         
Entire Agreement. This Agreement, together with the Transaction Documents,
and all other documents referred to herein, supersedes all other prior oral or written
agreements between Company, Investor, its affiliates and persons acting on its behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither Investor nor Company makes any representation
, warranty , covenant or undertaking with respect to such matters.

 

17.         
Amendments. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties. No provision
of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

 

18.         
Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This
Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor hereunder may
be assigned by Investor to a third party, including its financing sources, in whole or in part. Company may not assign this Agreement
or any of its obligations herein without the prior written consent of Investor.

 

19.         
Continuing
Enforceability; Conflict Between Documents.  Except as otherwise modified by this Agreement, the Note and each of the other
Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions.
This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Investor and Company.
If there is any conflict between the terms of this Agreement, on the one hand, and the Note or any other Transaction Document,
on the other hand, the terms of this Agreement shall prevail.

 

20.          
Time of Essence. Time
is of the essence with respect to each and every provision of this Agreement.

 

21.          
Notices. Unless otherwise
specifically provided for herein, all
notices, demands or requests required or permitted under this Agreement to be given to Company or Investor shall be given as set
forth in the "Notices"section of the Purchase Agreement.

 

22.          
Further Assurances. Each
party shall do and perform or cause to be done and performed , all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
set forth above.EXHIBIT 4.04

 

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
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. 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: $73,500.00	 Issue
Date: June 15, 2017
	Purchase Price: $73,500.00	 

 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, MOUNTAIN HIGH ACQUISITIONS CORP., a Colorado
corporation (hereinafter called the “Borrower”), hereby promises to pay to
the order of POWER UP LENDING GROUP LTD., a Virginia corporation, or registered assigns (the “Holder”)
the sum of $73,500.00 together
with any interest as set forth
herein, on March 20, 2018 (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
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. Any amount of principal or interest on this Note which is not
paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same
is paid (“Default Interest”).
Interest shall commence accruing on the date that the Note
is fully paid and shall be computed on
the basis of a 365-day year and the actual
number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.0001 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. 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.

 

The following
terms shall 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 during the period beginning on the
date which is one hundred eighty (180) days following the date
of this Note 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), each in respect of the remaining outstanding principal
amount of this Note to convert
all or any part of the outstanding
and unpaid principal amount of 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 (the
“Conversion Price”) 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 beneficial
ownership limitations on conversion as
set forth in the section may NOT be
waived by the Holder.
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 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 before
6:00 p.m., New York, New York time on such
conversion date (the “Conversion Date”); however, if the Notice of Conversion
is sent after 6:00pm, New York, New York time the Conversion Date shall be the
next business day. 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, 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 1.4 hereof.

 

1.2               Conversion
Price. The conversion price (the
“Conversion Price”) shall equal the Variable Conversion Price (as defined
herein) (subject to equitable adjustments 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 61% multiplied by the Market Price (as defined herein) (representing
a discount rate of 39%).
“Market Price” means the average of the
lowest one (1) Trading Prices (as defined below) for the Common Stock during the
fifteen (15) 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 closing bid price on the OTCQB, OTCQX, Pink Sheets electronic
quotation system or applicable
trading market (the “OTC”) as reported by a reliable reporting
service (“Reporting Service”) designated by the Holder
(i.e. Bloomberg) or, if the OTC 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”. 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, or on the principal securities exchange or other securities
market on which the Common Stock is then being traded.

 

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 six times the number
of shares that would be issuable upon full conversion of the
Note (assuming that the 4.99% limitation set forth
in Section 1.1 is not in effect)(based on the
respective Conversion Price of the Note
(as defined in Section 1.2) in effect
from time to time, initially 8,752,431)(the “Reserved Amount”). The Reserved Amount
shall be increased (or decreased with the written consent of the
Holder) from time to time in accordance with
the Borrower’s obligations hereunder. 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 Note. 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.

 

If,
at any time the
Borrower does not maintain the Reserved Amount
it will be considered an Event of Default under Section 3.2 of the Note.

 

		1.4	Method of Conversion.

 

(a)               
Mechanics of Conversion.
As set forth in Section 1.1 hereof, from time to time,
and at any time during the period beginning on the date which is one hundred
eighty (180) days following the date of this
Note and ending on the later of: (i)
the Maturity Date and (ii) the date
of payment of the Default Amount, 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 a Notice
of Conversion (by facsimile, e-mail or other
reasonable means of communication dispatched on the
Conversion Date prior to 6:00 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 (upon payment in full
of any amounts owed hereunder).

 

(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.

 

(c)                 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. 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 hereunder, 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.

 

(d)               
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 set forth herein, the Borrower shall
use its 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 Agent Commission (“DWAC”) system.

 

(e)                Failure
to Deliver Common Stock Prior to
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 due to action and/or inaction of the Borrower, 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 (the “Fail
to Deliver Fee”); provided; however that the Fail
to Deliver Fee shall not be due if the failure
is a result of a third party (i.e.,
transfer agent; and not the
result of any failure to pay such
transfer agent) despite the best efforts of the Borrower to effect
delivery of such Common Stock. 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(e) are justified.

 

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 (such as Rule 144 or a successor rule) (“Rule
144”); or (iii) 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).

 

Any
restrictive legend on certificates representing shares of Common
Stock issuable upon conversion of this
Note shall be removed and the Borrower shall issue to the Holder a new certificate
therefore free of any transfer legend if the Borrower or its
transfer agent shall have received an
opinion of counsel from Holder’s counsel, in form,
substance and scope customary for opinions of counsel
in comparable transactions, to the effect that (i) a public sale or transfer
of such Common Stock may be made without registration under the Act, which opinion shall
be accepted by the Company 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 an exemption from registration.
In the event that the Company does
not reasonably accept the opinion of counsel
provided by the Holder with respect to the transfer of Securities
pursuant to an exemption from registration (such as Rule 144), at the Deadline, it will be considered an Event of Default
pursuant to Section 3.2 of the Note.

 

		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 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). “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 Note,
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, ten (10) days
prior written notice (but in any event at least five (5) 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 Note. The above
provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share
exchanges.

 

(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.

 

1.7              
Prepayment. Notwithstanding anything to the
contrary contained in this Note, at any time during the periods set forth on the
table immediately following this paragraph (the “Prepayment Periods”),
the Borrower shall have the right, exercisable
on not more than three (3) Trading Days prior written notice
to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest),
in full, in accordance with this Section 1.7. Any notice of prepayment
hereunder (an “Optional Prepayment Notice”) shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that
the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment
which shall be not more than three (3)
Trading Days from the date of the Optional
Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment
Date”), the Borrower shall make payment of the Optional Prepayment Amount (as
defined below) to Holder, or upon the direction of the
Holder as specified by the
Holder in a writing to the
Borrower (which direction shall to be sent to Borrower by the Holder at least
one (1) business day prior to the Optional
Prepayment Date). If the Borrower exercises its right to prepay
the Note, the Borrower shall make payment to
the Holder of an
amount in cash equal to the percentage (“Prepayment Percentage”) as set
forth in the table immediately following this paragraph opposite the applicable Prepayment Period, 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 to the Optional Prepayment Date plus (y) Default
Interest, if any, on the amounts referred
to in clauses (w) and (x) plus (z) any amounts owed to the
Holder pursuant to Section 1.4 hereof (the “Optional
Prepayment Amount”). If the Borrower delivers an Optional Prepayment Notice
and fails to pay
the Optional 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 prepay the Note pursuant to this Section 1.7.

 

	Prepayment Period	Prepayment Percentage
	1.The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date.	110%
	
        2.       The
        period beginning on the date which is thirty-one

        (31) days
        following the Issue Date and ending on the date
        which is sixty (60) days following the
        Issue Date.
	115%

 

	
        3.       The
        period beginning on the date which is sixty-one

        (61) days
        following the Issue Date and ending on the date
        which is ninety (90) days
        following the Issue Date.
	120%
	
        4.       The
        period beginning on the date
        that is ninety-one

        (91) day from
        the Issue Date and ending one hundred twenty (120) days following the Issue Date.
	125%
	5. The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date.	130%
	6. The period beginning on the date that is one hundred fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date.	135%

 

After
the expiration of one hundred eighty (180) days following the
Issue Date, the Borrower shall have no right
of prepayment.

 

ARTICLE
II. CERTAIN COVENANTS

 

2.1       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 may be conditioned on a specified
use of the proceeds of disposition.

 

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
and Interest. The Borrower fails to pay
the principal hereof or interest
thereon when due on this Note, whether at
maturity or upon acceleration and such breach
continues for a period of five (5) days
after written notice from the Holder.

 

3.2               Conversion
and the Shares. The Borrower 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, 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, the Borrower directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or issuing)
(electronically or in certificated
form) any certificate for 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, or fails to remove
(or directs its transfer agent not to remove or impairs, delays, and/or hinders
its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any
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.
It is an obligation of the Borrower to remain current
in its obligations to its transfer agent. It shall
be an event of default of this Note,
if a conversion of this Note is
delayed, hindered or frustrated due to
a balance owed by the Borrower to its
transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in
order to process a conversion, such advanced funds shall be paid by the Borrower
to the Holder within forty-eight (48) hours of a demand from
the Holder.

 

3.3              
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 twenty
(20) days after written notice thereof
to the Borrower from the Holder.

 

3.4              
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.

 

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

 

3.6              
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Borrower or any subsidiary of
the Borrower.

 

3.7              
Delisting of Common
Stock. The
Borrower shall fail to maintain the listing of the
Common Stock on at least one of
the OTC (which specifically includes the quotation platforms maintained by the OTC
Markets Group) or an
equivalent replacement exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock
Exchange.

 

3.8              
Failure to Comply with
the Exchange Act. The Borrower shall fail to comply with the reporting requirements
of the Exchange Act; and/or the Borrower shall
cease to be subject to the reporting requirements
of the Exchange Act.

 

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

 

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

 

3.11          
Financial Statement Restatement.Therestatementofanyfinancial
statements filed by the Borrower with
the SEC at any time after 180 days after the Issuance
Date for any date or period
until this Note is no longer
outstanding, if the result of such restatement would, by comparison to the
un-restated financial statement, have constituted a material
adverse effect on the rights of the Holder
with respect to this Note or the Purchase Agreement.

 

3.12          
 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.

 

3.13          
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, 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, including, without limitation,
promissory notes; provided, however, the term “Other
Agreements” shall not include the related
or companion documents to this Note.
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.

 

Upon the
occurrence and during the continuation of any Event of Default
specified in Section 3.1 (solely with respect to failure to pay the
principal hereof or interest thereon
when due at the Maturity Date), the Note shall become immediately due and
payable and the Borrower shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to the
Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY
EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY
DUE AND PAYABLE AND THE
BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS
OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL
TO: (Y) THE DEFAULT SUM (AS
DEFINED HEREIN); MULTIPLIED BY (Z)
TWO (2). Upon the occurrence and during the continuation of any
Event of Default specified in Sections 3.1 (solely with respect to failure
to pay the principal hereof
or interest thereon when due on this Note
upon a Trading Market Prepayment Event pursuant
to Section 1.7 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13,
and/or 3.14 exercisable
through the delivery of written
notice to the Borrower by such
Holders (the “Default Notice”), and upon the occurrence of an Event of Default
specified the remaining sections of Articles III (other than failure to pay the principal
hereof or interest thereon at the Maturity Date specified in Section 3,1
hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to the
greater of (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)
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 Closing 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.

 

If
the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due and
payable, then the Holder shall have the right
at any time, so long as the Borrower remains in default (and so
long and to the extent that there are sufficient authorized shares), to require
the Borrower, upon written notice, to immediately
issue, in lieu of the Default Amount, the
number of shares of Common Stock of the Borrower
equal to the Default Amount divided by
the Conversion Price then in effect.

 

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, 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 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:

 

MOUNTAIN
HIGH ACQUISITIONS CORP.

6501 E.
Greenway Parkway #103-412

Scottsdale,
Arizona 85254

Attn: Alan
Smith, Chief Executive Officer Fax:

Email:
Alan.Smith@avidcap.com If to the Holder:

POWER
UP LENDING GROUP LTD.

111 Great
Neck Road, Suite 214 Great Neck, NY 11021

Attn: Curt
Kramer, Chief Executive Officer

e-mail:
info@poweruplending.com

 

With
a copy by fax only
to (which copy shall not constitute notice):

Naidich Wurman LLP 

111 Great
Neck Road, Suite 216 Great Neck, NY 11021

Attn:
Allison Naidich facsimile: 516-466-3555

e-mail: allison@nwlaw.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. Each transferee of this Note must be an “accredited
investor” (as defined in Rule 501(a) of the Securities and Exchange Commission).
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; and may be assigned by the
Holder without the consent of the Borrower.

 

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

 

4.6              
Governing Law. This Note shall
be governed by and
construed in accordance with the laws of the State of Virginia
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 of New York or in
the federal courts located in the state and county
of Nassau. 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 and Holder waive trial by
jury. 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 Note, any agreement or any
other document delivered in connection with this Note by
mailing a copy thereof via registered
or certified mail or overnight delivery (with
evidence of delivery) to such party at
the address in effect for notices
to it under this Note and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any
right to serve process in any other manner permitted by law.

 

4.7              
Purchase Agreement. By its acceptance of this
Note, each party agrees to be bound by the applicable terms of the Purchase
Agreement.

 

4.8              
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.

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly
authorized officer this on June 15,
2017

 

MOUNTAIN
HIGH ACQUISITIONS CORP.

 

 

By: _________________________________________

Alan
Smith 

Chief
Executive Officer

    	 	 	 

     

    

EXHIBIT
A -- NOTICE OF CONVERSION

 

 

The
undersigned hereby elects to convert $_________________ principal amount
of the Note (defined
below) 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 MOUNTAIN
HIGH ACQUISITIONS CORP., a Colorado corporation (the “Borrower”)
according to the conditions of the convertible
note of the Borrower dated as of June
15, 2017 (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 Agent Commission system (“DWAC Transfer”).

 

Name
of DTC Prime Broker: Account Number:

 

[ ]           The
undersigned hereby requests that the Borrower
issue a certificate or certificates for
the number of 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:

 

POWER
UP LENDING GROUP LTD.

111 Great
Neck Road, Suite 214 Great Neck, NY 11021
Attention: Certificate Delivery

e-mail:
info@poweruplendinggroup.com

 

	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:	 

 

POWER
UP LENDING GROUP LTD.

 

By: _______________________________

Name: Curt Kramer

Title: Chief
Executive Officer

Date: _____________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00276-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00276-of-00352.parquet"}]]