Document:

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 19339 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. 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: $110,000.00	Issue Date: September 19th. 2014
	 	 

 

12% CONVERTIBLE NOTE

FOR
VALUE RECEIVED, LABOR SMART, INC., a Nevada corporation ("Borrower" or "Company"), hereby promises to pay
to the order of Eastmore Capital, LLC, a Delaware limited liability company, or its registered assigns (the "Holder"),
on September 18th, 2015 (subject to extension as set forth below, the "Maturity Date"), the sum of $110,000.00 as set
forth herein, and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%) per annum (the "Interest
Rate") from the date of issuance hereof until this Note plus any and all accrued interest is paid in full. Interest shall
be computed on the basis of a 365-day year and the actual number of days elapsed. Any amount of principal or interest on this Note
which is not paid when due shall bear interest at the rate of twenty-four (24%) per annum from the due date thereof until the same
is paid ("Default Interest"). All payments due hereunder 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 it!
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 entered into by and between the Company and
Holder dated on or about the date hereof, pursuant to which this Note was originally issued (the "Purchase Agreement").
The Holder may, by written notice to the Borrower at least five (5)
days before the Maturity Date (as may have been previously extended), extend the Maturity
Date to up to one (1) year following the date of the original Maturity Date hereunder.

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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. 1Conversion Right. The Holder shall have
the right, in its sole and absolute

discretion,
at any time and from time to time to convert all or any part of the outstanding amount due 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 (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 4.9% 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 Regulation 13D-G thereunder, except as otherwise
provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the
Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Borrower, and the provisions of the
conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be
specified in such notice of waiver). 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 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, pjjj (2)
accrued and unpaid interest, if any, on such principal amount being converted at the interest rates provided in this Note to
the Conversion Date, jjj (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.

1.2.Conversion Price.

a)Calculation of Conversion Price. The conversion
price hereunder (the

"Conversion Price") shall equal
the lower of either (i) the closing sale price of the Common Stock

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on
the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 60% of the lowest sale price for
the Common Stock on the Principal Market during the fifteen (15) consecutive Trading Days immediately preceding the Conversion
Date. However, if Company's share price at any time loses the bid (ex: 0.0001 on the ask with zero market makers on the bid on
level 2), then the Conversion Price may, in the Holder's sole and absolute discretion, be reduced to a fixed conversion price of
0.00001 (if lower than the conversion price otherwise). If such Common Stock is not traded on the
OTCBB, OTCQB, Nasdaq or NYSE, then such sale price shall be the sale price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no sale 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. If such sale price cannot be calculated for such security on such date in the
manner provided above, such price shall be the fair market value as mutually determined by the Borrower and the Holder. if the
Borrower's Common stock is chilled for deposit at DTC, becomes chilled at any point while this Note remains outstanding or deposit
or other additional fees are payable due to a Yield Sign, Stop Sign or other trading restrictions, or if the closing sale price
at any time falls below 0.01, then such 60% figure specified in clause 1 .2(a)(ii) above shall be reduced to 45%. Additionally,
the Borrower acknowledges that it will take all reasonable steps necessary or appropriate, including providing a board of directors
resolution authorizing the issuance of common stock and an opinion of counsel confirming the rights of Holder to sell shares of
Common Stock issuable or issued to Holder on conversion of this Note pursuant to Rule 144 as promulgated by the SEC ("Rule
144"), as such Rule may be in effect from time to time. If the Borrower does not promptly provide a board of directors' resolution
and an opinion from Company counsel, and so long as the requested sale may be made pursuant to Rule 144, the Company agrees to
accept an opinion of counsel to the Holder which opinion will be issued at the Company's expense and the conversion dollar amount
will be reduced by $750.00 to cover the cost of such legal opinion. "Trading Day" shall mean any day on which
the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on
which the Common Stock is then being traded. Additionally, if the Company ceases to be a reporting company pursuant to the 1934
Act or if the Note cannot be converted into free trading shares after 181 days from the issuance date, an additional 15% discount
will be attributed to the Conversion Price.

b)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 (as defined below) the Borrower shall pay to the Holder $1,000.00 per day in cash, for each day beyond
the Deadline that the Borrower fails to deliver 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, 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 this Note is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, or interference
with such conversion right are difficult if not impossible to quantify. Accordingly the parties acknowledge that the liquidated
damages provision contained in this Section are justified.

1..3.Authorized Shares. The Borrower
covenants that the Borrower will at all times while this Note is outstanding reserve from its authorized and unissued Common
Stock a

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sufficient
number of shares, free from
preemptive rights, to provide for the
issuance of Common Stock upon the full conversion
of this Note. The Borrower is required at all times to have authorized and reserved three (3) times the number of shares that is
actually issuable upon full conversion of this Note (based on the Conversion Price of the Notes in effect from time to time)(the
"Reserved Amount"). Initially, the Company will instruct the Transfer Agent to reserve three million five hundred thousand
(3,500,000) shares of common stock in the name of the Holder for issuance upon conversion hereof. 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 this
Note 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 this Note in full. 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. Subject to Section 1.1, this Note may be converted
by the Holder in whole or in part at any time and from time to time after the Issue Date, by 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 11:59
p.m., New York, New York time).

b)                 
Book Entry 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 fade, 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 duly and properly executed 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.

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 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.

g)                 
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

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relief, the parties agree that if delivery
of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline, the Borrower shall
pay to the Holder $1,000.00 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock to the Holder. 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, 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, or 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(g) are justified.

h)The Borrower acknowledges that it will take
all reasonable steps

necessary or appropriate, including providing
an opinion of counsel confirming the rights of Holder to sell shares of Common Stock issued to Holder on conversion of the Note
pursuant to Rule 144 as promulgated by the SEC ("Rule 144"), as such Rule may be in effect from time to time. If the
Borrower does not promptly provide an opinion from Borrower counsel, and so long as the requested sale may be made pursuant to
Rule 144, the Borrower agrees to accept an opinion of counsel to the Holder which opinion will be issued at the Borrower's expense.

1.5.Restricted
Securities. 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 (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). Any legend set forth on any stock certificate evidencing any Conversion Shares 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 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 acceptable to the Company, or (ii) in the case of the Common Stock issued or 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 without any restriction as to the number of securities as of a particular date that
can then be immediately sold.

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
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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) Adiustment 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, for clarification, the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring
entity 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.

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. Such assets shall be held in escrow by the Company pending any such conversion

d)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,

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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.

e)               
Stock Dividends and Stock Splits. If the Company, at any time while

this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common
Stock on shares of Common Stock or any securities convertible into or exercisable for Common Stock; (B) subdivides outstanding
shares of Common Stock into a larger number of shares; (C) combines (including by way of a reverse stock split) outstanding shares
of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of shares of the Common Stock,
any shares of capital stock of the Company, then the Conversion Price (and each sale or bid price used in determining the Conversion
Price) shall be multiplied by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.

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.

1.7.Revocation. If any Conversion Shares
are not received by the Deadline, the

Holder may revoke the applicable
Conversion pursuant to which such Conversion Shares were issuable. This Note shall remain convertible after the Maturity Date hereof
until this Note is repaid or converted in full.

1.8.Prepayment. Notwithstanding anything to
the contrary contained in this Note,

subject
to the terms of this Section, at any time during the period beginning on the Issue Date and ending on the date which is six (6)
months following the Issue Date ("Prepayment Termination Date"), Borrower shall have the right, exercisable on not less
than five (5) Trading
Days prior written notice to the Holder of this Note, to prepay the outstanding balance on this Note (principal and accrued interest),
in full, in accordance with this Section. 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: (I) that the Borrower is exercising its right
to prepay the Note, and (2) the date of prepayment which shall be not more than ten (tO) Trading Days from the date of the

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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 or upon the order of the Holder as specified by the Holder in writing to the Borrower 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 (the "Optional Prepayment Amount") equal to 130%, 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 pj (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 Sections 1.3 and 1.4(g) hereof. 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. After the Prepayment
Termination Date, the Borrower shall have no right to prepay this Note.

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; Liens. Notwithstanding
section 4(m) of the Purchase

Agreement, so long as the Borrower shall
have any obligation under this Note, the Borrower shall not, without promptly providing an Event Disclosure Notice to the Holder,
as set forth in section 4(m) of the Purchase Agreement, (i) 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,
or (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business, or (ii) enter into,
create or incur any liens, claims or encumbrances of any kind, on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom. securing any indebtedness occurring after the date
hereof.

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

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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.

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
in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof.

2.6.Charter. So long as the Borrower
shall have any obligations under this Note,

the Borrower shall not amend its
charter documents, including without limitation its certificate of incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder.

ARTICLE III. EVENTS OF DEFAULT

Any one or more of the following
events which shall occur and/or be continuing shall constitute an event of default (each, an "Event of Default"):

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.

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 at any time following the execution
hereof or) 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 five (5)
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.

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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 seven (7) 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.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 $50,000.00, 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.

3.7.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.

3.8.Delisting of Common Stock. The
Borrower shall fail to maintain the listing of

the Common Stock on at least one of the OTCQB
or an equivalent replacement exchange, Nasdaq, the NYSE or AMEX.

3.9.Failure to Comply with the Exchange
Act, The Borrower shall fail to comply

in any material respect 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.

3.10.Liquidation. Any dissolution,
liquidation, or winding up of Borrower or any

substantial portion of its business.

3.11.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.

3.12.
Maintenance of Assets. The failure by Borrower, during the term of this Note, 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).

3.13.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.

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3.14.Reverse Splits. The Borrower effectuates
a reverse split of its Common Stock

without twenty (20) days prior written notice to the Holder.

 

3.15.
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.

3.16.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, 3.6, 3.8, 3.9, 3.11, 3.12,
3.13, 3.14, and/or 3. 15 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 in the remaining sections of Articles Ill (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 paymentjj 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

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conversion
of or otherwise pursuant to such Default Sum in accordance with Article 1, 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. The Holder may still convert any amounts due hereunder, including
without limitation the Default Sum, until such time as this Note has been repaid in full.

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, email 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 or email, with accurate
confirmation generated by the transmitting facsimile machine or computer, at the address, email or number designated in the Purchase
Agreement (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.

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.

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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 1933 Act). 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.

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 New York without
regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. Any
action brought by either party against the other concerning the transactions contemplated by this Agreement must be brought only
in the civil or state courts of New York or in the federal courts located in the State and county of New York. Both parties and
the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. 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 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 unenforceability of any other
provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking
other legal action against the Borrower in any other jurisdiction to collect on the Borrower's obligations to Holder, to realize
on any collateral or any other security for such obligations, or to enforce a judgment or other decision in favor of the Holder.
This Note shall be deemed an unconditional obligation of Borrower for the payment of money and,
without limitation to any other remedies of Holder, may be enforced against Borrower by summary proceeding pursuant to New York
Civil Procedure Law and Rules Section 3213 or any similar rule or statute in the jurisdiction
where enforcement is sought. For purposes of such rule or statute, any other document or agreement to which Holder and Borrower
are parties or which Borrower delivered to Holder, which may be convenient or necessary to determine Holder's rights hereunder
or Borrower's obligations to Holder are deemed a part of this Note, whether or not such other document or agreement was delivered
together herewith or was executed apart from this Note.

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.

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4.8.Disclosure. Upon receipt or delivery
by the Company of any notice in

accordance
with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Trading Day
after any such receipt or delivery, publicly disclose such material,
non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder
contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume
that all matters relating to such notice do not constitute material, non-public information relating to the Company or its Subsidiaries.

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.

4.10; 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 he 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.

4.11.Usury. This Note shall be subject
to the anti-usury limitations contained in

the Purchase Agreement.

(Remainder of Page intentionally
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IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer as of the Issue Date first
set forth above.

LABOR SMART, INC.

By: /s/ Ryan Schadel,

CEO

 

 

 

 

 

 

 

 

 

 

 

 

    	16THIS NOTE AND THE COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 19339
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE 11933
ACT")

US $106,000.00

LABOR SMART, INC.

10% CONVERTIBLE REDEEMABLE NOTE

DUE NOVEMBER 12, 2015

BACK END NOTE

FOR VALUE RECEIVED,
Labor Smart, Inc. (the "Company") promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors
and permitted assigns ("Holder), the aggregate principal face amount of One Hundred Six Thousand Dollars exactly (U.S. $106,000.00)
on November 12, 2015 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate
of 10% per annum commencing on November 12, 2014. The interest will be paid to the Holder in whose name this Note is registered
on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are
payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company
as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding
principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the
Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company.
The forwarding of such cheek or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest
shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional
provisions:

1.This Note is exchangeable for an equal aggregate
principal amount of

of different authorized denominations,
as requested by the Holder surrendering the same.

Initials

    	 	1	 

    	 

    

No service charge will be made for such registration or transfer
or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

2.                 
The Company shall be entitled to withhold from all payments any amounts required to
be withheld under applicable laws.

3.                 
This Note may be transferred or exchanged only in compliance with the Securities Act of 1933,
as amended ("Act"), and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated
by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat
the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether
or not this Note be overdue, and neither the Company nor any such agent shall be
affected or bound by notice to the contrary. Any Holder
of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that
this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including
receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.                 
(a)The Holder of this Note is entitled, at its option, at any time after

180 days, and after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face
amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive
legend of any nature, at a price ("Conversion Price") for each share of Common Stock equal to 60% of the lowest
closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company's
shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twelve
prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of
Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight
Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business
days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common
Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received
such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such holder's
intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but
unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest whole share. In the event the Company experiences
a DTC "Chill" on its shares, the conversion price shall be decreased
to 50% instead of 60% while that "Chill" is in effect. In the event
the Company is not "Current" in its SEC filings at the time this note is cash funded, the discount shall be decreased
to 40%. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company
Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock
of the Company.

2

initials

    	 	2	 

    	 

    

(b)            
Interest on any unpaid principal balance of this Note shall be paid at the

rate of 10% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at
any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula
provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest
calculated on the unpaid principal balance of this Note to the date of such notice.

(c)            
This Note may not be prepaid, except that if the $106,000 Rule 144 con-

vertible redeemable note issued by the Company of even date herewith is redeemed by the Company within 6 months of the issuance
date of such Note, all obligations of the Company under this Note and all obligations of the Holder under the Holder issued Back
End Note will be automatically be deemed satisfied and this Note and the Holder issued Back End Note will be automatically be deemed
cancelled and of no further force or effect.

(d)           
Upon (i) a transfer of all or substantially all of the assets of the Company

to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other
change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or
(iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items
(i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the
Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption,
or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of
accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

(e)            
In case of any Sale Event (not to include a sale of all or substantially all of

the Company's assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such
Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders
of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person
or entity acting in good faith.

5.                 
No provision of this Note shall alter or impair the obligation of the Company, 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.

6.                 
The Company hereby expressly waives demand and presentment for pay-

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ment, notice of non-payment, protest,
notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect
amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

7.                 
The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be
incurred by the Holder in collecting any amount due under this Note.

8.                 
If one or more of the following described 'Events of Default" shall occur:

(a)               
The Company shall default in the payment of principal or interest on this Note or any other
note issued to the Holder by the Company; or

(b)              
Any of the representations or warranties made by the Company herein or in any certificate or financial or other written
statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this
Note shall be false or misleading in any respect; or

(c)               
The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation
of the Company under this Note or any other note issued to the Holder and not cure such breach within 10 days; or

(d)              
The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy
relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under
federal or state laws as applicable; or

(e)               
A trustee, liquidator or receiver shall be appointed for the Company 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; or

(0Any
governmental agency or any court of competent jurisdiction at the in-

stance of any governmental agency shall assume custody
or control of the whole or any substantial portion of the properties or assets of the Company; or

(g)              
One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars
($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of fifteen (15)
days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or

		(h)	The Company shall have defaulted on or breached any term of any
other note of similar debt instrument into which the
Company has entered and failed to cure such de-4

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fault
within the appropriate grace period; or

(i)                
The Company shall have its Common Stock delisted from
a market (including the OTCQB marketplace) or, if the Common Stock trades on an exchange,
then trading in the Common Stock shall be suspended for more than 10 consecutive days;

(j)                
Intentionally Deleted;

(k)              
The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein
without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(1)The Company shall not replenish the reserve set
forth in Section 12, with-

in 5 business days of the request of the Holder ; or

(m)            
The Company's Common Stock has a closing bid price of less than $0.005 per share for at least 5 consecutive trading
days; or

(n)              
The aggregate dollar trading volume of the Company's Common Stock is less than fifty thousand dollars ($50,000.00)
in any 5 consecutive trading days; or

(o)              
The Company shall cease to be "current" in its filings with the Securities and Exchange Commission; or.

(p)  
The Company shall lose the "bid" price for its stock and a market (including the OTCBB marketplace or other
exchange)

Then, or at any time thereafter,
unless cured (except for 8(m) and 8(n) which are incurable defaults, the sole remedy of which is to allow the Holder to cancel
both this Note and the Holder Issued Note, and in each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder
and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand,
protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything
herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without
expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights
or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or,
if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. Further, if the
Note becomes due and payable, the Holder may use the outstanding principal and interest due under the Note to offset any payment
obligations it may have to the Company. In the event of a breach of 8(k) the penalty shall be $250 per day the shares are not issued
beginning on the 4th day after the conversion notice
was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. Once cash funded,
the penalty for a breach of Section 8(p) shall be an increase of the outstanding principal amounts by 20%. Once cash funded, in
the event of a breach of Section 8(1), the outstanding

5

    	 	5	 

    	 

    

principal
due under this Note shall increase by 50%. If
this Note is not paid at maturity, the outstanding
principal due under this Note shall increase by 10%.

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 Company for its attorneys' fees and other costs and expenses
incurred in the investigation, preparation and prosecution of such action or proceeding.

Make-Whole for Failure to Deliver
Loss. At the Holder's election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the
3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver
Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect
of the Failure to Deliver Loss and the Company must make the Holder whole as follows:

Failure to Deliver Loss = [(High trade price at any
time on or after the day of exercise) x (Number of conversion shares)]

9.               
In case any provision of this Note is held by a court of competent jurisdic-

tion to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this
Note will not in any way be affected or impaired thereby.

10.           
Neither this Note nor any term hereof may be amended, waived, dis-

charged or terminated other than by a written instrument signed by the Company and the Holder.

11.           
The Company represents that it is not a "shell" issuer and has never been a

"shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since
the Company has reported form 10 type information indicating it is no longer a "shell issuer. Further. The Company will instruct
its counsel to either (i) write a "144- 3(a) (9)" opinion to allow for salability of the conversion shares or (ii) accept
such opinion from Holder's counsel.

12.           
Prior to cash funding of this Note, The Company will issue irrevocable

transfer agent instructions reserving 4x the number of shares of Common Stock necessary to allow the holder to convert this note
based on the discounted conversion price set forth in Section 4(a) herewith. The reserve shall he replenished as needed to allow
for conversions of this Note. Upon full conversion of this Note, the reserve representing this Note shall be cancelled. The Company
will pay all transfer agent costs associated with issuing and delivering the shares.

13.           
The Company will give the Holder direct notice of any corporate actions

including but not limited to name changes, stock splits, recapitalizations etc. This notice shall he given to the holder as soon
as possible under law.

		14.	This Note shall be governed by and construed in accordance with
the laws

of New York applicable to contracts made and wholly to be performed within the State of New 6

    	 	6	 

    	 

    

York and shall
be binding upon the successors and assigns of each party hereto. The Holder and the Company
hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective as an original.

IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto
duly authorized.

Dated:
11/12/14

 

Labor
Smart, Inc.

 

By:
/s/ Ryan Schadel, CEO

 

 

 

 

 

 

 

 

 

    	 	7

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