Document:

Blueprint

  Exhibit
10.8

 

[Date
of Award]

 

[Name]

[Street]

[City,
State]

 

Dear
[Name]:

 

RE:            

Employee Stock
Option Award Agreement (“Agreement”)

 

Exactus, Inc. (the
“Company”) has designated you to be a recipient of a
Non-Qualified Stock Option to purchase shares of the common stock
of the Company, (“Common Stock”), subject to the
employment-based vesting restrictions and other terms set forth in
this Agreement and in the Exactus, Inc. 2016 Equity Incentive Plan
(the “Plan”). Capitalized terms not otherwise defined
herein shall have the meaning set forth in the Plan.

 

The
grant of this Non-Qualified Stock Option is made pursuant to the
Plan. The Plan is administered by the Administrator (as defined in
the Plan). The terms of the Plan are incorporated into this
Agreement and in the case of any conflict between the Plan and this
Agreement, the terms of the Plan shall control. A copy of the Plan
will be provided to you upon request.

 

1.           Grant.
In consideration of your agreements contained herein, the Company
hereby grants to you a Non-Qualified Stock Option to purchase from
the Company [______] shares of Common Stock at $[____] per share
(the “NSO”). The exercise price of the NSO is equal to
the closing price of the Common Stock on the OTCQB exchange on
[_____________] (the “Grant Date”) or, if the Common
Stock was not so traded on such date, the reported
“closing” price of a shares of Common Stock on the most
recent preceding day on which the Common Stock was so
traded.

 

2.           Vesting.
The grant of the NSO is subject to the following terms and
conditions:

 

(a)           The
NSO with respect to the number of shares set forth below shall
vest, and shall be exercisable, upon your continued employment with
the Company (or any Related Company) through the following Vesting
Dates:

 

	

 

Vesting Date

	

Number of shares of Common Stock for which NSO shall become vested
and exercisable on Vesting Date

	

 

December
31, 2017

 

	

 

[50%
total shares]

	

The
first day of each month during the period beginning on January 1,
2018 and ending December 1, 2020.

	

 

[1/36th
of remaining 50% of total shares]

 

 

-1-

 

 

 (b)           Upon
a Change in Control of the Company (as defined in the Plan) the NSO
shall become 100% vested and exercisable to the extent not already
vested and exercisable.

 

(c)           If
you die or become Disabled (as determined by the Committee) while
you are employed by the Company (or any Related Company) and your
employment with the Company (or any Related Company) is terminated
as a result of such death or Disability and you are not otherwise
100% vested in the NSO, the NSO shall be vested with respect to a
number of shares of Common Stock (including the number of shares
with respect to which the NSO is already vested under this
Agreement) equal to the total number of shares listed above in
Section 1 multiplied by a fraction (not to exceed 1), the numerator
of which is the number of full months elapsed from the Grant Date
until the date of your death or Disability, and the denominator of
which is the number of months between the Grant Date and the final
Vesting Date listed in the table in Section 2(a).

 

(d)           Notwithstanding
the foregoing, you must be employed by the Company (or any Related
Company) on the relevant Vesting Date for the NSO to vest. If your
employment with the Company (or any Related Company) terminates for
any reason, any rights you may have under the NSO and this
Agreement with regard to any unvested portion of the NSO and the
shares covered by such unvested portion of the NSO shall be null
and void.

 

3.            

Exercise.

 

(a)           Except
as otherwise stated in this Agreement and in the Plan, the vested
portion of the NSO may be exercised, in whole or in part, from the
respective Vesting Date described above until the earliest of (i)
ten years and one day following the Grant Date, or (ii) the end of
the applicable period set forth in subsection (b) below. Any
portion of the NSO that is not exercised prior to its expiration
shall be forfeited.

 

(b)           Except
as otherwise stated in this section, the NSO may be exercised only
while you are employed by the Company (or any Related Company). The
exercisability of the NSO after you have ceased to be employed by
the Company (or any Related Company) is subject to the following
terms and conditions:

 

(i)           

If your employment
by the Company (or any Related Company) is terminated by you or the
Company (or any Related Company) for any reason other than your
death or Disability, you may exercise any or all of the NSO that is
then fully vested and exercisable within three months after your
employment by the Company (or any Related Company)
terminates.

 

 

-2-

 

 

(ii)           

If you become
Disabled while employed by the Company (or any Related Company),
you may exercise any or all of the NSO that is then fully vested
and exercisable within one year after your employment by the
Company (or any Related Company) terminates on account of
Disability. The Committee shall, in its discretion, determine
whether you are Disabled.

 

(iii)           

If you die while
you are employed by the Company (or any Related Company), the
person to whom your rights under the NSO shall have passed by will
or by the laws of distribution may exercise any or all of the NSO
that is then fully vested and exercisable within one year after
your death.

 

4.           

Payment Under NSO. You may
exercise the vested portion of the NSO in whole or in part, but
only with respect to whole shares of Common Stock. You may make
payment of the NSO price in cash, in shares of Common Stock that
you already own, in any combination of cash and shares of Common
Stock, or by net exercise. If you deliver shares of Common Stock to
make any such payment or make payment by net exercise, the shares
shall be valued at the Fair Market Value (as defined in the Plan)
thereof on the date you exercise the NSO.

 

5.           Transferability
of NSO. The NSO is not transferable by you (other than by
will or by the laws of descent and distribution) and, except as
otherwise stated in this Agreement, may be exercised during your
lifetime only by you.

 

6.           

Fractional Shares. A fractional
share of Common Stock will not be issued and any fractional shares
may be disregarded by the Company.

 

7.           Adjustments.
If the number of outstanding shares of Company Stock is increased
or decreased as a result of a stock dividend, stock split or
combination of shares, recapitalization, merger in which the
Company is the surviving corporation, or other change in the
Company's capitalization without the receipt of consideration by
the Company, the number and kind of shares with respect to which
you have an unexercised NSO and the exercise price shall be
proportionately adjusted by the Committee, whose determination
shall be binding.

 

8.           Exercise.
To exercise the NSO, you must deliver to the Corporate Secretary of
the Company written notice stating the number of shares you have
elected to purchase and arrange for payment to the Company as
described in Section 4 above. Notwithstanding the provisions of
Section 9, such notice may be sent to the Corporate Secretary via
e-mail.

 

9.           Notice.
Any notice to be given to the Company under the terms of this
Agreement shall be addressed to the Corporate Secretary at 4870
Sadler Road, Glen Allen, Virginia 23060. Any notice to be given to
you shall be addressed to you at the address set forth above or
your last known address at the time notice is sent. Notices shall
be deemed to have been duly given if mailed first class, postage
prepaid, addressed as above.

 

 

-3-

 

 

10.           Applicable
Withholding Taxes. By your acceptance of this Agreement, you
agree to pay to the Company the amount that must be withheld under
federal, state and local income and employment tax laws or to make
arrangements satisfactory to the Company for the payment of such
taxes.

 

11.           Applicable
Securities Laws. You may be required to execute a customary
written indication of your investment intent and such other
agreements the Company deems necessary or appropriate to comply
with applicable securities laws. The Company may delay delivery of
the shares purchased pursuant to the exercise of the NSO until you
have executed such indication or agreements.

 

12.           

Acceptance of NSO. This
Agreement deals only with the NSO you have been granted and not its
exercise. Your acceptance of the NSO, which shall be deemed to take
place when you sign this Agreement, places no obligation or
commitment on you to exercise the NSO. By signing this Agreement,
you indicate your acceptance of the NSO and your agreement to the
terms and conditions set forth in this Agreement, which, together
with the terms of the Plan, shall become the Company’s stock
option agreement with you. You also hereby acknowledge that a copy
of the Plan has been made available and agree to all of the terms
and conditions of the Plan, as it may be amended from time to time.
Unless the Company otherwise agrees in writing, the NSO reflected
in this Agreement will not be exercisable as an Option if you do
not accept this Agreement within thirty days of the Grant
Date.

 

13.           

Binding Effect. This Agreement
shall be binding upon and inure to the benefit of your legatees,
distributees, and personal representatives and the successors of
the Company (or any Related Company. Any references herein to the
Company (or any Related Company) shall include any successor
company to either.

 

 

 

 

[SIGNATURE PAGE
FOLLOWS]

 

 

-4-

 

 

IN
WITNESS WHEREOF, the Company has caused this Stock Option Award
Agreement to be signed, as of this _____ date of _______________,
___________.

 

 

EXACTUS,
INC.

 

By:__________________________________

Name:                                                                

Its:
                                                                 

 

 

Agreed
and Accepted:

 

 

________________________________

[Name
of Grant Recipient]

 

________________________________

[Date]

 

 

 

 

-5-Blueprint

 

Exhibit 10.9

 

 

NEITHER
THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. 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:
$229,899.63                                                                                   
Issue Date: January 11, 2019

Purchase
Price: $206,909.67

Original
Issue Discount: $22,989.96

 

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, EXACTUS, INC., a Nevada corporation
(hereinafter called the “Borrower”), hereby promises to
pay to the order of Harvey
Kesner, or registered assigns (the “Holder”) the
principal sum of $229,899.63 (the “Principal Amount”),
together with interest at the rate of eight percent (8%) per annum,
at maturity or upon acceleration or otherwise, as set forth herein
(the “Note”). The consideration to the Borrower for
this Note is $206,909.67 (the “Consideration”). At the
closing, the outstanding principal amount under this Note shall be
$229,899.63, consisting of the Consideration plus the OID (as
defined herein). The maturity date shall be twelve (12) months from
the Issue Date (the “Maturity Date”), and is the date
upon which the principal sum, as well as any accrued and unpaid
interest and other fees shall be due and payable. 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 by the Maturity Date, shall bear interest at the
rate of the lesser of (i) eighteen percent (18%) per annum and (ii)
the maximum amount permitted by applicable law 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 the Borrower’s common stock (the
“Common Stock”) in accordance with the terms hereof)
shall be made in lawful money of the United States of America. All
payments shall be made at such address as the Holder shall
hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to
be due by the terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in
full, the extension of the due date thereof shall not be taken into
account for purposes of determining the amount of interest due on
such date. As used in this Note, the term “business
day” shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the city of New York, New York are
authorized or required by law or executive order to remain
closed.

 

 

 

-1-

 

 

 

This
Note carries an original issue discount of $22,989.96 (the
“OID”), to cover the Holder’s legal fees,
accounting fees, due diligence fees, monitoring, and/or other
transactional costs incurred in connection with the purchase and
sale of the Note, which is included in the principal balance of
this Note. Thus, the purchase price of this Note shall be
$206,909.67, computed as follows: the Principal Amount minus the
OID.

 

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 additional terms shall also apply to this
Note:

 

ARTICLE
I. CONVERSION RIGHTS

 

1.1                               Conversion
Right. The Holder shall have the right at any time on or
after the 170th calendar day after the Issue Date to convert all or
any part of the outstanding and unpaid principal amount and accrued
and unpaid interest 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, provided,
further,
however, that the
limitations on conversion may be waived (up to a maximum of 9.99%)
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 6:00 p.m., New
York, New York time on such conversion date (the “Conversion
Date”). The term “Conversion Amount” means, with
respect to any conversion of this Note, the sum of (1) the
principal amount of this Note to be converted in such conversion
plus (2) at the
Holder’s option, accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Note to the
Conversion Date, plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the
immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s
option, any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof.

 

 

 

-2-

 

 

 

1.2                              Conversion
Price.

 

(a)         Calculation
of Conversion Price. The Conversion Price shall the lesser
of (i) $0.25 and (ii) the Variable Conversion Price (as defined
herein) (subject, in each case, to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower
relating to the Borrower’s securities or the securities of
any subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar
events)(also subject to adjustment as further described herein).
The "Variable Conversion Price" shall mean 60% multiplied by the
Market Price (as defined herein) (representing a discount rate of
40%). “Market Price” means the average of the three (3)
lowest Trading Prices (as defined below) for the Common Stock
during the twenty (20) Trading Day period ending on the last
complete Trading Day prior to the Conversion Date. “Trading
Price” or “Trading Prices” means, for any
security as of any date, the lowest traded price on the Over-the-
Counter Pink Marketplace, OTCQB, or applicable trading market (the
“OTCQB”) as reported by a reliable reporting service
(“Reporting Service”) designated by the Holder (i.e.
www.Nasdaq.com) or, if the OTCQB is not the principal trading
market for such security, on the principal securities exchange or
trading market where such security is listed or traded or, if the
lowest intraday trading price of such security is not available in
any of the foregoing manners, the lowest intraday price of any
market makers for such security that are quoted on the OTC Markets.
If the Trading Prices cannot be calculated for such security on
such date in the manner provided above, the Trading Prices 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 Prices are 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 OTCQB, or on the principal
securities exchange or other securities market on which the Common
Stock is then being traded. If at any time while this Note is
outstanding, an Event of Default (as defined herein) occurs, then
an additional discount of 12.5% shall be factored into the Variable
Conversion Price until this Note is no longer outstanding
(resulting in a discount rate of 52.5% assuming no other
adjustments are triggered hereunder). If at any time while this
Note is outstanding, the Borrower’s Common Stock are not
deliverable via DWAC, an additional 5% discount shall be factored
into the Variable Conversion Price until this Note is no longer
outstanding (resulting in a discount rate of 45% assuming no other
adjustments are triggered hereunder).

 

Each
time, while this Note is outstanding, the Borrower enters into a
Section 3(a)(9) transaction (including but not limited to the
issuance of new promissory notes or of a replacement promissory
note), or Section 3(a)(10) transaction, in which any 3rd party has the right
to convert monies owed to that 3rd party (or receive
shares pursuant to a settlement or otherwise) at a discount to
market greater than the Variable Conversion Price in effect at that
time (prior to all other applicable adjustments in the Note), then
the Variable Conversion Price shall be automatically adjusted to
such greater discount percentage (prior to all applicable
adjustments in this Note) until this Note is no longer outstanding.
Each time, while this Note is outstanding, the Borrower enters into
a Section 3(a)(9) transaction (including but not limited to the
issuance of new promissory notes or of a replacement promissory
note), or Section 3(a)(10) transaction, in which any 3rd party has a look
back period greater than the look back period in effect under the
Note at that time, then the Holder’s look back period shall
automatically be adjusted to such greater number of days until this
Note is no longer outstanding. The adjustments in this paragraph,
with respect to Section 3(a)(9) transactions, shall not take effect
unless the holder of the note with more favorable terms is eligible
to convert. The Borrower shall give written notice to the Holder,
with the adjusted Variable Conversion Price and/or adjusted look
back period (each adjustment that is applicable due to the
triggering event), within one (1) business day of an event that
requires any adjustment described in the two immediately preceding
sentences.

 

 

-3-

 

 

 

All
expenses incurred by Holder with respect to the Borrower’s
transfer agent, for the issuance of the Common Stock into which
this Note is convertible into, shall immediately and automatically
be added to the balance of the Note at such time as the expenses
are incurred by Holder.

 

If at
any time the Conversion Price as determined hereunder for any
conversion would be less than the par value of the Common Stock,
then at the sole discretion of the Holder, the Conversion Price
hereunder may equal such par value for such conversion and the
Conversion Amount for such conversion may be increased to include
Additional Principal, where “Additional Principal”
means such additional amount to be added to the Conversion Amount
to the extent necessary to cause the number of conversion shares
issuable upon such conversion to equal the same number of
conversion shares as would have been issued had the Conversion
Price not been adjusted by the Holder to the par value
price.

 

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. The Borrower is
required at all times to have authorized and reserved four (4)
times the number of shares that is actually issuable upon full
conversion of the Note (based on the Conversion Price of the Notes
in effect from time to time)(the “Reserved Amount”).
The Reserved Amount shall be increased from time to time in
accordance with the Borrower’s obligations 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 Notes. The
Borrower (i) acknowledges that it has irrevocably instructed its
transfer agent to issue certificates for the Common Stock issuable
upon conversion of this Note, and (ii) agrees that its issuance of
this Note shall constitute full authority to its officers and
agents who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
shares of Common Stock in accordance with the terms and conditions
of this Note. 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.

 

 

-4-

 

 

 

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 on or
after the 170th calendar day 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.

 

(b)         Surrender
of Note Upon Conversion. Notwithstanding anything to the
contrary set forth herein, upon conversion of this Note in
accordance with the terms hereof, the Holder shall not be required
to physically surrender this Note to the Borrower unless the entire
unpaid principal amount of this Note is so converted. The Holder
and the Borrower shall maintain records showing the principal
amount so converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the Holder and the
Borrower, so as not to require physical surrender of this Note upon
each such conversion. In the event of any dispute or discrepancy,
such records of the Borrower shall, prima facie, be controlling and
determinative in the absence of manifest error. Notwithstanding the
foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the
Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid
principal amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on
the face hereof.

 

(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.

 

 

 

-5-

 

 

(e) Obligation of Borrower to Deliver
Common Stock. Upon receipt by the Borrower of a Notice of
Conversion, the Holder shall be deemed to be the holder of record
of the Common Stock issuable upon such conversion, the outstanding
principal amount and the amount of accrued and unpaid interest on
this Note shall be reduced to reflect such conversion, and, unless
the Borrower defaults on its obligations under this Article I, all
rights with respect to the portion of this Note being so converted
shall forthwith terminate except the right to receive the Common
Stock or other securities, cash or other assets, as herein
provided, on such conversion. If the Holder shall have given a
Notice of Conversion as provided herein, the Borrower’s
obligation to issue and deliver the certificates for Common Stock
shall be absolute and unconditional, irrespective of the absence of
any action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment
against any person or any action to enforce the same, any failure
or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Borrower to the Holder in connection with such conversion. The
Conversion Date specified in the Notice of Conversion shall be the
Conversion Date so long as the Notice of Conversion is received by
the Borrower before 6:00 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 relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of
this Note is not delivered by the Deadline (other than a failure
due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section) the Borrower shall pay
to the Holder $2,000 per day in cash, for each day beyond the
Deadline that the Borrower fails to deliver such Common Stock. 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(g) are
justified.

 

 

-6-

 

 

 

1.5                               Concerning
the Shares. The shares of Common Stock issuable upon
conversion of this Note may not be sold or transferred unless (i)
such shares are sold pursuant to an
effective registration statement under the Act or (ii) the Borrower
or its transfer agent shall have been furnished with an opinion of
counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to
the effect that the shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration or
(iii) such shares are sold or transferred pursuant to Rule 144
under the Act (or a successor rule) (“Rule 144”) or
(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. Except as otherwise provided
(and subject to the removal provisions set forth below), until such
time as the shares of Common Stock issuable upon conversion of this
Note have been registered under the Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of
securities as of a particular date that can then be immediately
sold, each certificate for shares of Common Stock issuable upon
conversion of this Note that has not been so included in an
effective registration statement or that has not been sold pursuant
to an effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the
following form, as appropriate:

 

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

 

The
legend set forth above shall be removed and the Borrower shall
issue to the Holder a new certificate therefore free of any
transfer legend if (i) the Borrower or its transfer agent shall
have received an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to
the effect that a public sale or transfer of such Common Stock may
be made without registration under the Act, which opinion shall be
accepted by the Borrower so that the sale or transfer is effected
or (ii) in the case of the Common Stock issuable upon conversion of
this Note, such security is registered for sale by the Holder under
an effective registration statement filed under the Act or
otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can
then be immediately sold. In the event that the Borrower does not
accept the opinion of counsel provided by the Holder with respect
to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, provided that the opinion provides a
reasonable basis
for an exemption from registration, at the Deadline, it will
be considered an Event of Default pursuant to
Section 3.2 of the Note.

 

 

-7-

 

 

 

1.6                              [Intentionally
Omitted].

 

1.7                              Status
as Shareholder. Upon submission of a Notice of Conversion by
a Holder, (i) the shares covered thereby (other than the shares, if
any, which cannot be issued because their issuance would exceed
such Holder’s allocated portion of the Reserved Amount or
Maximum Share Amount) shall be deemed converted into shares of
Common Stock and (ii) the Holder’s rights as a Holder of such
converted portion of this Note shall cease and terminate, excepting
only the right to receive certificates for such shares of Common
Stock and to any remedies provided herein or otherwise available at
law or in equity to such Holder because of a failure by the
Borrower to comply with the terms of this Note. Notwithstanding the
foregoing, if a Holder has not received certificates for all shares
of Common Stock prior to the tenth (10th) business day after the
expiration of the Deadline with respect to a conversion of any
portion of this Note for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock
by so notifying the Borrower) the Holder shall regain the rights of
a Holder of this Note with respect to such unconverted portions of
this Note and the Borrower shall, as soon as practicable, return
such unconverted Note to the Holder or, if the Note has not been
surrendered, adjust its records to reflect that such portion of
this Note has not been converted. In all cases, the Holder shall
retain all of its rights and remedies (including, without
limitation, (i) the right to receive Conversion Default Payments
pursuant to Section 1.3 to the extent required thereby for such
Conversion Default and any subsequent Conversion Default and (ii)
the right to have the Conversion Price with respect to subsequent
conversions determined in accordance with Section 1.3) for the
Borrower’s failure to convert this Note.

 

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.

 

ARTICLE
III. EVENTS OF DEFAULT

 

If any
of the following events of default (each, an “Event of
Default”) shall occur:

 

3.1                              Failure
to Pay Principal or Interest. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise, and such breach
continues for a period of ten (10) days.

 

 

 

-8-

 

 

 

3.2                              Conversion
and the Shares. The Borrower fails to reserve a sufficient
amount of shares of common stock as required under the terms of
this Note (including Section 1.3 of this Note), 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) 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) 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 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 two (2) 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.

 

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 and such breach continues for a period of ten
(10) 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, 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.

 

 

 

-9-

 

 

 

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, 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 or quotation of the Common Stock on the OTCQB or an
equivalent replacement exchange, the Nasdaq Global Market, the
Nasdaq Capital Market, the New York Stock Exchange, or the NYSE
MKT.

 

3.9                              Failure
to Comply with the Exchange Act. The Borrower shall fail to
comply with the reporting requirements of the Exchange Act
(including but not limited to becoming delinquent in its filings),
and/or the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.

 

3.10                              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                              Financial
Statement Restatement. The Borrower replaces its auditor, or
any 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.

 

 

 

-10-

 

 

3.13                       Replacement
of Transfer Agent. In the event that the Borrower replaces
its transfer agent, and the Borrower fails to provide prior to the
effective date of such replacement, a fully executed Irrevocable
Transfer Agent Instructions (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.

 

3.14                       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 financial instrument, including but not limited
to all convertible promissory notes, currently issued, or hereafter
issued, by the Borrower, to the Holder or any other 3rd party (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, in which
event the Holder shall be entitled to apply all rights and remedies
of the Holder under the terms of this Note by reason of a default
under said Other Agreement or hereunder.

 

3.15                       Inside
Information. Any attempt by the Borrower or its officers,
directors, and/or affiliates to transmit, convey, disclose, or any
actual transmittal, conveyance, or disclosure by the Borrower or
its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its
successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on
that same date.

 

3.16                       No
bid. At any time while this Note is outstanding, the lowest
Trading Prices on the OTCQB or other applicable principal trading
market for the Common Stock is equal to or less than
$0.0001.

 

3.17                       Failure
to Repay Upon Qualified Offering. The Borrower fails to
repay the Note, in its entirety, pursuant to the terms of the Note,
with funds received from its next completed offering (with the
understanding that all related issuances of an offering shall be
aggregated for purposes of the calculation hereunder) of
$750,000.00 or more (consummated on or after the Issue
Date).

 

3.18                       Failure
to Register. The Borrower fails to use commercially
reasonable efforts to: (1) file a registration statement covering
the Holder’s resale of the common stock underlying the Note
(the “Registration Statement”) within thirty (30) days
following the Issue Date, (ii) cause the Registration Statement to
become effective within one hundred twenty

 

(120)
days following the Issue Date, or (iii) maintain the effectiveness
of the Registration Statement beginning on the 90th day after the
Issue Date and ending on the date that the Note is satisfied in
full.

 

 

 

-11-

 

 

 

Upon
the occurrence of any Event of Default specified in Sections 3.1,
3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9,
3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, and/or 3.18
exercisable through the delivery of
written notice to the Borrower by such Holders (the “Default
Notice”), 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 150% (EXCEPT THAT
150% SHALL BE REPLACED
WITH 200% WITH RESPECT TO A DEFAULT UNDER SECTION
3.2)
multiplied by the
then outstanding entire balance of the Note (including principal
and accrued and unpaid interest) plus Default Interest, if any,
plus any amounts
owed to the Holder pursuant to Sections 1.4(g) hereof
(collectively, in the aggregate of all of the above, the
“Default Sum”), 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.

 

The
Holder shall have the right at any time to require the Borrower to
issue the number of shares of Common Stock of the Borrower equal to
the Default Amount divided by the Conversion Price then in effect,
subject to issuance in tranches due to the beneficial ownership
limitations contained in this Note.

 

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, facsimile, or electronic mail 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, upon electronic mail
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:

 

EXACTUS,
INC.

4870
Sadler Rd., Suite 300 Glen Allen, VA 23060

e-mail: tryan@exactusinc.com

 

 

 

-12-

 

 

 

If to
the Holder:

 

Harvey
Kesner

e-mail:
pdox74@gmail.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 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
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 Nevada 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 and/or federal courts of
New York, NY. 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 Agreement or any other
Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law.

 

 

 

-13-

 

 

 

4.7                              Certain
Amounts. Whenever pursuant to this Note the
Borrower is
required to pay an amount in excess of the outstanding principal
amount (or the portion thereof required to be paid at that time)
plus accrued and unpaid interest plus Default Interest on such
interest, the Borrower and the Holder agree that the actual damages
to the Holder from the receipt of cash payment on this Note may be
difficult to determine and the amount to be so paid by the Borrower
represents stipulated damages and not a penalty and is intended to
compensate the Holder in part for loss of the opportunity to
convert this Note and to earn a return from the sale of shares of
Common Stock acquired upon conversion of this Note at a price in
excess of the price paid for such shares pursuant to this Note. The
Borrower and the Holder hereby agree that such amount of stipulated
damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity
to convert this Note into shares of Common Stock.

 

4.8                              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.

 

4.9                               Prepayment.
Notwithstanding anything to the contrary contained in this Note,
the Borrower may prepay this Note, during the initial 170 day
period after the issuance of this Note, by making a payment to the
Holder of an amount in cash equal to 135% multiplied by the total
amount outstanding under the Note. The Borrower may not prepay this
Note after the 170th day after the
issuance of this Note.

 

Usury. To the extent it may
lawfully do so, the Borrower hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any action or proceeding that may be brought by
the Holder in order to enforce any right or remedy under this Note.
Notwithstanding any provision to the contrary contained in this
Note, it is expressly agreed and provided that the total liability
of the Borrower under this Note for payments which under the
applicable law are in the nature of interest shall not exceed the
maximum lawful rate authorized under the law applicable to this
Note (the “Maximum Rate”), and, without limiting the
foregoing, in no event shall any rate of interest or default
interest, or both of them, when aggregated with any other sums
which under the law applicable to this Note in the nature of
interest that the Borrower may be obligated to pay under this Note
exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by the law applicable to this Note is
increased or decreased by statute or any official governmental
action subsequent to the Issue Date, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
this Note from the effective date thereof forward, unless such
application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is
paid by the Borrower to the Holder with respect to indebtedness
evidenced by this the Note, such excess shall be applied by the
Holder to the unpaid principal balance of any such indebtedness or
be refunded to the
Borrower, the manner of handling such excess to be at the
Holder’s election.

 

4.10                                Section
3(a)(10) Transactions. If at any time on or after six (6)
months from the issue date and while this Note is outstanding, the
Borrower enters into a transaction structured in accordance with,
based upon, or related or pursuant to, in whole or in part, Section
3(a)(10) of the Securities Act (a “3(a)(10)
Transaction”), then a liquidated damages charge of 25% of the
outstanding principal balance of this Note at that time, will be
assessed and will become immediately due and payable to the Holder,
either in the form of cash payment or as an addition to the balance
of the Note, as determined by mutual agreement of the Borrower and
Holder.

 

 

 

-14-

 

 

 

4.11                                 Reverse
Split Penalty. If at any time on or after six (6) months
from the issue date and while this Note is outstanding, the
Borrower effectuates a reverse split with respect to the Common
Stock without providing notice to the Holder at least fifteen (15)
calendar days prior to the effectuation, then a liquidated damages
charge of 25% of the outstanding principal balance of this Note at
that time, will be assessed and will become immediately due and
payable to the Holder, either in the form of cash payment or as an
addition to the balance of the Note, as determined by mutual
agreement of the Borrower and Holder.

 

4.12                                 Right
of First Refusal. If at any time on or after six (6) months
from the issue date and while this Note is outstanding, the
Borrower has a bona fide offer of capital or financing from any
3rd party,
that the Borrower intends to act upon, then the Borrower must first
offer such opportunity to the Holder to provide such capital or
financing to the Borrower on the same terms as each respective
3rd
party’s terms. Should the Holder be unwilling or unable to
provide such capital or financing to the Borrower within 10 trading
days from Holder’s receipt of written notice of the offer
(the “Offer Notice”) from the Borrower, then the
Borrower may obtain such capital or financing from that respective
3rd party
upon the exact same terms and conditions offered by the Borrower to
the Holder, which transaction must be completed within 30 days
after the date of the Offer Notice. If the Borrower does not
receive the capital or financing from the respective 3rd party within 30
days after the date of the respective Offer Notice, then the
Borrower must again offer the capital or financing opportunity to
the Holder as described above, and the process detailed above shall
be repeated. The Offer Notice must be sent via electronic mail to
max@morningviewfn.com.

 

4.13                                 Terms
of Other Financings. At any
time on or after six (6) months from the issue date and while this
Note is outstanding, upon any issuance by the Borrower or any of
its subsidiaries of any security with any term more favorable to
the holder of such security or with a term in favor of the holder
of such security that was not similarly provided to the Holder in
this Note, then the Borrower shall notify the Holder of such
additional or more favorable term and such term, at Holder’s
option, shall become a part of the transaction documents with the
Holder. The types of terms contained in another security that may
be more favorable to the holder of such security include, but are
not limited to, terms addressing conversion discounts, prepayment
rate, conversion lookback periods, interest rates, original issue
discounts, stock sale price, private placement price per share, and
warrant coverage. With respect to promissory notes issued prior to
the Issue Date, this Section4.14 shall only apply if the
holder of the respective promissory note is eligible to convert at
any time after the Issue Date pursuant to the terms
thereunder.

 

[signature page to follow]

 

 

 

-15-

 

 

 

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its
name by its duly authorized officer this 11th day of January,
2019.

 

 

EXACTUS,
INC. 

 

By:______________________

Name:
Philip
Young

Title:
Chief Executive
Officer

 

                                               

 

-16-

 

 

 

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 EXACTUS, INC.,
a Nevada corporation (the “Borrower”) according to the
conditions of the convertible note of the Borrower dated as of
August 14, 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:

 

___________________________________

 

___________________________________

 

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: 

 

MORNINGVIEW
FINANCIAL, LLC

 

By:_                                                            

Name:

Title:

Date:

 

 

 

A-1

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