Document:

AMENDMENT
NUMBER ELEVEN TO

LOAN
AND SECURITY AGREEMENT

 

THIS
AMENDMENT NUMBER ELEVEN TO LOAN AND SECURITY AGREEMENT
(this “Amendment”), dated as of April 25, 2016, is entered into between PMC
FINANCIAL SERVICES GROUP, LLC, a Delaware limited liability company (“Lender”), and
REEDS, INC., a Delaware corporation (“Borrower”), in light of the following:

 

RECITALS

 

WHEREAS,
Borrower and Lender have previously entered into that certain Amended and Restated Loan and Security Agreement, dated as of December
5, 2014, as amended from time to time (the “Agreement”).

 

WHEREAS,
Lender previously extended financial accommodations via the Revolving Loans pursuant to terms of the Agreement.

 

WHEREAS,
Borrower and Lender wish to amend the Agreement by changing the Borrowing Base on terms and conditions set forth in this Amendment.

 

NOW,
THEREFORE, the parties agree as follows:

 

1. DEFINITIONS.
All terms which are defined in the Agreement shall have the same definition when used herein unless a different definition is
assigned to such term under this Amendment.

 

2. AMENDMENTS.
Effective as of the date first set forth above, the Agreement is amended as follows:

 

2.1 Definition.
The following new definitions are added to Section 8 of the Agreement.

 

“Prepayments
on Temporary Eligible Glass” means prepayments made by Borrower for the purchase of Temporary Eligible Glass that is not
yet reflected in the inventory of Borrower. Evidence of such prepayments and related purchase orders to be provided if requested
by Lender.

 

“Temporary
Eligible Glass” means the glass bottles purchased between 3/31/16 and 9/30/16 exclusively for the seasonal promotional program
for Trader Joe’s, and other customer programs approved by Lender.

 

2.2 Borrowing
Base. The following new clause “(d)” is added to the end of the definition of “Borrowing Base”
is Section 1 of the Schedule as follows:

 

(d)
100% (the “Temporary Glass Advance Rate” and also an Advance Rate) of the value of Temporary Eligible Glass
and Prepayments on Temporary Eligible Glass. The maximum amount calculated from this clause “(d)” of the Borrowing
Base shall not exceed $550,000 and shall expire on 12/31/16.

 

    	 

    	 

    

 

3. WARRANT.

 

3.1
For consideration of the terms of this Amendment, Borrower shall provide Lender with a Common Stock Purchase Warrant to purchase
up to 10,000 Shares of Common Stock of Reeds, Inc.

 

4. CONDITIONS
PRECEDENT.

 

4.1
Each of the following is a condition precedent to the effectiveness of this Amendment:

 

A. Lender
shall have received a fully executed copy of this Amendment.

 

B. Lender
shall have received a fully executed copy of the Common Stock Purchase Warrant.

 

5. REPRESENTATIONS
AND WARRANTIES. Borrower hereby affirms to Lender that all of Borrower’s representations and warranties set forth in
the Agreement are true, complete and accurate in all respects as of the date hereof.

 

6. LIMITED
EFFECT. Except for the specific amendment contained in this Amendment, the Agreement shall remain unchanged and in full force
and effect.

 

7. COUNTERPARTS;
EFFECTIVENESS. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts,
each of which when so executed and delivered shall be deemed to be an original. All such counterparts, taken together, shall constitute
but one and the same Amendment. This Amendment shall become effective upon the execution of this Amendment by each of the parties
hereto.

 

[signatures
are on the next page]

 

    	2

    	 

    

 

IN
WITNESS WHEREOF, Lender and Borrower have executed this Amendment

 

	 	REEDS,
    INC.,
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 
	 	PMC
    FINANCIAL SERVICES GROUP, LLC
	 	 
	 	By:	/s/
    Walter E. Buttkus, III
	 	Name:	Walter
    E. Buttkus, III
	 	Title:	President

 

Signature
Page to Amendment Number Eleven to Loan and Security AgreementAMENDMENT
NUMBER TWELVE TO

LOAN
AND SECURITY AGREEMENT

 

THIS
AMENDMENT NUMBER TWELVE TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of May 13, 2016, is entered
into between PMC FINANCIAL SERVICES GROUP, LLC, a Delaware limited liability company (“Lender”), and REEDS,
INC., a Delaware corporation (“Borrower”), in light of the following:

 

RECITALS

 

WHEREAS,
Borrower and Lender have previously entered into that certain Amended and Restated Loan and Security Agreement, dated as of December
5, 2014, as amended from time to time (the “Agreement”).

 

WHEREAS,
Lender previously extended financial accommodations via the Revolving Loans pursuant to terms of the Agreement.

 

WHEREAS,
Borrower and Lender wish to amend the Agreement by modifying the repayment of the Cap Ex Loans on terms and conditions set forth
in this Amendment.

 

NOW,
THEREFORE, the parties agree as follows:

 

1.DEFINITIONS.
All terms which are defined in the Agreement shall have the same definition when used herein unless a different definition is
assigned to such term under this Amendment.

 

2.AMENDMENTS.
Effective as of the date first set forth above, the Agreement is amended as follows:

 

2.1
Cap Ex Loans. The first and third paragraphs of Section 1(c), Cap Ex Loans, of the Schedule, dated December
5, 2014, are replaced in their entirety as follows:

 

“Subject
to the terms and conditions of this Agreement, from the Effective date through June 30, 2016 (the “Draw Period”),
Lender agrees to make Capital Expenditures Loans (each a “Cap Ex Loan” and collectively, the “Cape Ex Loans”)
in an aggregate outstanding amount, including any amounts funded under the existing Master Lease Agreement, not to exceed $3,210,000
at any time. No Cap Ex Loans may exceed one hundred percent (100%) of the total invoice for Eligible Equipment (excluding taxes,
shipping, warranty charges, freight discounts, and installation expenses relating to such Eligible Equipment).”

 

“Interest
only shall be payable on any and all Cap Ex Loans outstanding from time to time until June 30, 2016, at which time, the principal
amount of each outstanding Cap Ex Loan, plus any accrued but unpaid interest thereon, will be aggregated and repaid in equal monthly
payments of principal and interest (based on a 48-month amortization) commencing on July 31, 2016 and continuing on the same day
of each month thereafter until the earliest of the following dates (“Cap Ex Loan Maturity Date): (i) the date the Cap Ex
Loan has been paid in full; or (ii) October 1, 2017; or (iii) the date this Agreement terminated by its terms or is terminated,
as provided in this Agreement. On the Cap Ex Loan Maturity Date (or, if earlier, upon acceleration of the Obligations in accordance
with the terms of this Agreement), the entire unpaid principal balance of the Cap Ex Loan, plus all other Obligations relating
to the Cap Ex Loan (including accrued and unpaid interest thereon, and, if applicable, the Cap Ex Loan Prepayment Fee) shall be
due and payable. Any portion of the Cap Ex Loan that is repaid may not be reborrowed.

 

    	 	 	 

    	 		 

    

 

2.4
Extension of Maturity Dates. Sections 1 and 4 of the Schedule to the Loan and Security Agreement dated December
5, 2014 (Revolving Loans, Term Loan and Cap Ex Loans) and Schedule #2 to the Loan and Security Agreement dated September 1, 2015
(Term Loan B), as amended from time to time, are hereby amended to extend the Revolving Loan Maturity Date, Term Loan Maturity
Date, Cap Ex Loan Maturity Date and Term Loan B Maturity Date from April 1, 2017 to October 1, 2017.

 

3.WARRANT.

 

3.1
For consideration of the terms of this Amendment, Borrower shall provide Lender with a Common Stock Purchase Warrant to purchase
up to 50,000 Shares of Common Stock of Reeds, Inc.

 

4.CONDITIONS
PRECEDENT.

 

4.1
Each of the following is a condition precedent to the effectiveness of this Amendment:

 

	 	A.	Lender
    shall have received a fully executed copy of this Amendment.
	 	 	 
	 	B.	Lender
    shall have received a fully executed copy of the Common Stock Purchase Warrant.

 

5.CONDITIONS
SUBSEQUENT.

 

4.1
Consistent with past Reeds Inc. funding practices, Borrower shall provide evidence to Lender that it has raised capital outside
of this Agreement of no less than $1,500,000 on terms acceptable to Lender by no later than July 31, 2016.

 

6.REPRESENTATIONS
AND WARRANTIES. Borrower hereby affirms to Lender that all of Borrower’s representations and warranties set forth in
the Agreement are true, complete and accurate in all respects as of the date hereof.

 

7.LIMITED
EFFECT. Except for the specific amendment contained in this Amendment, the Agreement shall remain unchanged and in full force
and effect.

 

8.COUNTERPARTS;
EFFECTIVENESS. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts,
each of which when so executed and delivered shall be deemed to be an original. All such counterparts, taken together, shall constitute
but one and the same Amendment. This Amendment shall become effective upon the execution of this Amendment by each of the parties
hereto.

 

[signatures
are on the next page] 

 

    	 	2	 

    	 		 

    

 

IN
WITNESS WHEREOF, Lender and Borrower have executed this Amendment.

 

	 	REEDS,
    INC.,
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	PMC
    FINANCIAL SERVICES GROUP, LLC
	 	 	 
	 	By	/s/
    Walter E. Buttkus, III
	 	Name:	Walter E. Buttkus, III
	 	Title:	President

 

Signature
Page to Amendment Number Twelve to Loan and Security AgreementNEITHER
THE ISSUANCE NOR SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE (THE “SECURITIES”) HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE NOTE AND THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
NOTE OR 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 NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE NOTE.

 

	Principal
    Amount: $700,000.00	Issue
    Date: May 13, 2016

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, Life Clips, Inc., a Wyoming corporation (hereinafter called the “Borrower”), hereby promises to
pay to the order of Edgestone Associates, Inc., a Florida corporation, or its registered assigns (the “Holder”) the
principal sum of $700,000.00, together with interest from the date of payment to Borrower of the cash portion of the Consideration
(as hereinafter defined) at the rate of ten percent (10%) per annum, at maturity or upon acceleration or otherwise, as set forth
herein (the “Note”). The consideration to the Borrower for this Note is $700,000.00 (the “Consideration”),
payable in cash on the Issue Date. All references in this Note to the principal amount then due hereunder shall refer to the Consideration
that has not subsequently been converted under Article I of this Note or repaid by Borrower, as of such date. The maturity date
for the Note 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 relating to this Note, 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 twenty-two percent (22%) per annum from
the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the Issue Date
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, $0.001 par value per share (the “Common Stock”) in accordance
with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address
as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead
be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date
on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than
a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed.

 

     

     

    

 

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 the shares of Common Stock issued upon conversion of this Note
will, upon payment of the Conversion Price (as defined below) to the Borrower, not impose personal liability upon the holder thereof.

 

The
following additional terms shall apply to this Note:

 

Article
I. CONVERSION RIGHTS

 

1.1
Conversion Right. The Holder shall have the right at any time 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 in 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 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	 

     

    

 

1.2Conversion
Price.

 

(a)Calculation
of Conversion Price. The Conversion Price shall be 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 50% multiplied by the Market Price (as defined herein) (representing a discount rate of 50%). “Market Price”
means the lowest Trading Price (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the
last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the
lowest traded price on the Over-the-Counter Pink Marketplace, or applicable trading market (the “OTC PINK”) as reported
by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC PINK
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 OTC PINK, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded.

 

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 (currently a twenty (20) Trading Day look back period as described
in this Section 1.2(a) applies), 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 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	 

     

    

 

1.3Authorized
Shares. The Borrower covenants that during the period the conversion right exists under this Note, 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 (without regard to any limitations on conversion). The Borrower is required
at all times to have authorized and reserved three 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”). For purposes
of computing the Reserved Amount as of the Issue Date, the Market Price on the Trading Day prior to the Issue Date shall be used.
The Reserved Amount shall be increased from time to time, but no less frequently than the end of each calendar quarter or within
10 days of demand by Holder, 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.

 

1.4Method
of Conversion.

 

(a)Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time
to time after the Issue Date, by (A) submitting to the Borrower 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.

 

    	 	4	 

     

    

 

(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.

 

(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.

 

    	 	5	 

     

    

 

(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 an Event of Default) 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.

 

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 Securities Act of 1933, as amended (the
“Securities 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 Securities 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 Securities 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 or electronic
book entry 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 OFFER, ISSUANCE OR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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.”

 

    	 	6	 

     

    

 

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 Securities 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 Securities 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, at the Deadline, and such opinion has, in the opinion of
the Borrower’s counsel, been properly rendered, it will be considered an Event of Default pursuant to Section 3.2 of the
Note.

 

1.6Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby 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

 

2.1Distributions
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.

 

    	 	7	 

     

    

 

2.2Restriction
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:

 

3.1Failure
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 five (5) days.

 

3.2Conversion
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)(and such breach continues for a period of five (5) days), fails to issue shares
of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise
by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its
transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its
transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically
or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs,
delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend
to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder
shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer
agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a
balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s
transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within five (5)
business days of a demand from the Holder, either in cash or as an addition to the balance of the Note, and such choice of payment
method is at the discretion of the Borrower.

 

3.3Breach
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.

 

    	 	8	 

     

    

 

3.4Breach
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.

 

3.5Receiver
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.

 

3.6Judgments.
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 $25,000, 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.

 

3.7Bankruptcy.
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.

 

3.8Delisting
of Common Stock. The Borrower shall fail to maintain the listing or quotation of the Common Stock on the OTC PINK or an equivalent
replacement exchange, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT.

 

3.9Failure
to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act, and/or
the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

3.10Liquidation.Any
dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11Cessation
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.

 

3.12Financial
Statement Restatement. The Borrower restates 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.

 

    	 	9	 

     

    

 

3.13Reverse
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 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.

 

3.16Cross-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 (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.

 

3.17No
bid. At any time while this Note is outstanding, the lowest Trading Prices on the OTC PINK or other applicable principal trading
market for the Common Stock is equal to or less than $0.0001.

 

then,
and in any such event, the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal
to 150% multiplied by the then outstanding principal amount due hereunder (including the principal amount advanced to Borrower
hereunder and not subsequently converted under Article I of this Note or repaid by Borrower and accrued and unpaid interest thereon)
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.

 

If
the Borrower fails to pay the Default Sum 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
Sum, the number of shares of Common Stock of the Borrower equal to the Default Sum 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

 

4.1Failure
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.

 

    	 	10	 

     

    

 

4.2Notices.
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:

 

Life
Clips Inc.

233
S. Sharon Amity Rd., Suite 201

Charlotte,
North Carolina 28211

Attention:
Chief Executive Officer

Email:
bgruder@lifeclips.com

 

If
to the Holder:

 

Edgestone
Associates, Inc.

PO
Box 276158

Boca
Raton, Florida 33427

Attention:
Arnold S. Goldin, President

E-mail:
arnold@arnoldgoldin.com

 

4.3Amendments.
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.

 

4.4Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the Securities 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.

 

4.5Cost
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.

 

    	 	11	 

     

    

 

4.6Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida 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 Florida. 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.

 

4.7Certain
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.

 

4.8Remedies.
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 any amount outstanding
under this Note, by making a payment to the Holder of an amount in cash equal to 150% multiplied the amount that the Borrower
is prepaying, subject to the Holder’s acceptance in Holder’s sole discretion.

 

    	 	12	 

     

    

 

4.10
Section 3(a)(10) Transactions. If at any time 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.

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer as of the Issue Date.

 

	 	Life
    Clips Inc..
	 	 
	 	By:	 /s/
    Robert Gruder 
	 	 	Robert
    Gruder, Chief Executive Officer

 

    	 	13	 

     

    

 

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
Life Clips, Inc., a Wyoming corporation (the “Borrower”) according to the conditions of the convertible note of the
Borrower dated as of ___, 2016 (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:

 

[___]

e-mail:
[___]

 

	 	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: 	 	 	 

 

	 	By:	 	 
	 	Name:	[___]	 
	 	Date:	 	 

 

    	 	14

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