Document:

Exhibit 4.2

 

THIS THIRD SUPPLEMENTAL INDENTURE is dated as of March 15, 2017, among Johnson Controls International plc, a public limited company organized under the laws of Ireland (the “Company”), U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”), and Elavon Financial Services DAC, UK Branch, as paying agent (the “Paying Agent”).

 

RECITALS

 

A.            The Company and the Trustee executed and delivered an Indenture, dated as of December 28, 2016 (the “Base Indenture”), to provide for the issuance by the Company from time to time of debt securities evidencing its indebtedness.

 

B.            Pursuant to resolutions of the Board of Directors, the Company has authorized the issuance of the Offered Securities (as defined herein).

 

C.            The entry into this Third Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Base Indenture.

 

D.            The Company desires to enter into this Third Supplemental Indenture pursuant to Section 9.01 of the Base Indenture to establish the terms of the Offered Securities in accordance with Section 2.01 of the Base Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Base Indenture.

 

E.            All things necessary to make this Third Supplemental Indenture a valid indenture and agreement according to its terms have been done.

 

NOW, THEREFORE, for and in consideration of the foregoing premises, the Company, the Trustee and the Paying Agent mutually covenant and agree for the equal and proportionate benefit of the respective Holders from time to time of the Offered Securities as follows:

 

ARTICLE I.

 

Section 1.01         Definitions of Terms.

 

(a)           Capitalized terms used but not defined in this Third Supplemental Indenture shall have the meanings ascribed thereto in the Base Indenture.

 

(b)           As used herein, the following terms shall have the following meanings with respect to the Offered Securities only:

 

“Offered Securities” means the 1.000% Senior Notes due 2023 issued pursuant to this Third Supplemental Indenture, in an initial aggregate principal amount of €1,000,000,000, together with any additional Securities of such series issued pursuant to Section 2.01(b) of the Base Indenture.

 

 

“Reference Bond” means, in relation to any Treasury Rate calculation, a German government bond whose maturity is closest to the maturity of the Offered Securities, or if the Company or an independent investment bank appointed by the Company considers that such similar bond is not in issue, such other German government bond as the Company or an independent investment bank appointed by the Company, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Company or an independent investment bank appointed by the Company, determine to be appropriate for determining the Treasury Rate.

 

“Remaining Scheduled Payments” means, with respect to each Offered Security to be redeemed, the remaining scheduled payments of principal of and interest on the relevant Offered Security that would be due after the related redemption date but for the redemption. If that redemption date is not an Interest Payment Date with respect to an Offered Security, the amount of the next succeeding scheduled interest payment on the relevant Offered Security will be reduced by the amount of interest accrued on the Offered Security to the redemption date.

 

“Treasury Rate” means the rate per annum (which, if less than zero, shall be deemed to be zero) equal to the annual equivalent yield to maturity of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its principal amount) equal to the middle market price of the Reference Bond prevailing at 11:00 a.m. (London time) on the third Business Day preceding such redemption date as determined by the Company or an independent investment bank appointed by the Company.

 

Section 1.02         Terms of Offered Securities.  The following terms relate to the Offered Securities:

 

(1)           The Offered Securities constitute a single series of securities having the title “1.000% Senior Notes due 2023”.

 

(2)           The initial aggregate principal amount of the Offered Securities that may be authenticated and delivered under the Base Indenture (except for Offered Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Offered Securities pursuant to Section 2.05, 2.06, 2.07, 2.11 or 3.03 of the Base Indenture) is €1,000,000,000.

 

(3)           The entire Outstanding principal of the Offered Securities shall be payable on September 15, 2023.

 

(4)           The Offered Securities will bear interest at a rate of 1.000% per annum.  The basis upon which interest shall be calculated will be the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the Offered Securities (or March 15, 2017, if no interest has been paid on the Offered Securities), to but excluding the next scheduled Interest Payment Date. This payment convention is referred to as “ACTUAL/ACTUAL (ICMA),” as defined in the statutes, by-laws, rules and recommendations published by the International Capital Markets Association (the “ICMA Rulebook”).

 

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(5)           Interest on the Offered Securities shall accrue from March 15, 2017, or, if later, the most recent Interest Payment Date to which interest in respect of the Offered Securities has been paid or provided for.  The Interest Payment Date for the Offered Securities shall be September 15 of each year, beginning on September 15, 2017.  Interest in respect of the Offered Securities shall be payable annually in arrears on each applicable Interest Payment Date to the applicable Holders of record at the close of business on the September 1 next preceding such Interest Payment Date (the “regular record date”).

 

(6)           The Company initially appoints Elavon Financial Services DAC, UK Branch (“Elavon, UK Branch”) as Paying Agent with respect to the Offered Securities pursuant to Section 4.03 of the Base Indenture until such time as Elavon, UK Branch has resigned or a successor has been appointed. Elavon, UK Branch hereby accepts such initial appointment, and the Company confirms that such initial appointment is acceptable to it. Elavon, UK Branch shall have all of the rights, privileges, protections and immunities granted to the Trustee in the Indenture mutatis mutandis. Principal of, premium, if any, interest on and additional amounts, if any, on the Offered Securities will be payable at the office or agency of the Paying Agent at Elavon Financial Services DAC, Block E, Cherrywood Business Park, Loughlinstown, Dublin, Ireland acting through its UK Branch (registered number BR009373) from its offices at Fifth Floor, 125 Old Broad Street, London EC2N-1AR, United Kingdom, until such time as the Company designates an alternate place of payment.

 

(7)           [Reserved].

 

(8)           Prior to June 15, 2023 (three months prior to the maturity date), the Company may, at its option, redeem the Offered Securities, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to the greater of (i) 100% of the principal amount of the Offered Securities to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments discounted to the redemption date, on an annual basis (ACTUAL/ACTUAL (ICMA)), at a rate equal to the Treasury Rate plus 20 basis points plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of Holders of record on the relevant regular record date to receive interest due on the relevant Interest Payment Date).

 

On or after June 15, 2023 (three months prior to their maturity date), the Company may, at its option, redeem the Offered Securities, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to 100% of the principal amount of the Offered Securities to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of Holders of record on the relevant regular record date to receive interest due on the relevant Interest Payment Date).

 

In addition, the Offered Securities may be redeemed pursuant to Article XIV of the Base Indenture.

 

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(9)           Except as provided in Section 4.08 of the Base Indenture, the Offered Securities shall not be subject to redemption, repurchase or repayment at the option of any Holder thereof, upon the occurrence of any particular circumstance or otherwise.  The Offered Securities will not have the benefit of any sinking fund.

 

(10)         The Offered Securities shall be substantially in the form attached hereto as Exhibit A, the terms of which are herein incorporated by reference.

 

(11)         The Offered Securities will be issued in registered form without interest coupons and only in denominations of €100,000 and whole multiples of €1,000 in excess thereof.

 

(12)         All payments of interest and principal, including payments made upon any redemption or repurchase of the Offered Securities, will be payable in Euros.  If, on or after March 9, 2017, the Euro is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the control of the Company or if the Euro is no longer being used by the then member states of the European Monetary Union that have adopted the Euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the Offered Securities will be made in Dollars until the Euro is again available to the Company or so used. In such circumstances, the amount payable on any date in Euros will be converted into Dollars at the rate mandated by the U.S. Federal Reserve Board as of the close of business on the second Business Day prior to the relevant payment date or, in the event the U.S. Federal Reserve Board has not mandated a rate of conversion, on the basis of the then most recent Dollar/Euro exchange rate available on or prior to the second Business Day prior to the relevant payment date as determined by the Company in its sole discretion. Any payment in respect of the Offered Securities so made in Dollars will not constitute an Event of Default under the Offered Securities or the Indenture.  Neither the Trustee nor the Paying Agent shall have any responsibility for any calculation or conversion in connection with the foregoing.

 

(13)         [Reserved].

 

(14)         [Reserved].

 

(15)         The Offered Securities shall be issuable in whole in the registered form of one or more Global Securities, and the common depositary on behalf of Euroclear and Clearstream shall be the initial Depositary.

 

(16)         The Offered Securities will not be convertible into or exchangeable for other Securities, common shares or other securities of the Company.

 

(17)         [Reserved].

 

(18)         [Reserved].

 

(19)         [Reserved].

 

(20)         Upon the Company’s request, each Holder and beneficial owner shall provide a properly completed and executed IRS Form W-9 or IRS Form W-8, as applicable, as

 

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would have been applicable if the Company were incorporated in the United States of America, any State thereof or the District of Columbia.

 

(21)         The Offered Securities may be defeased in accordance with the provisions of Section 11.03 of the Base Indenture and the Indenture shall cease to be of further effect with respect to the Offered Securities in accordance with the provisions of Section 11.02 of the Base Indenture; provided, however, that (a) for purposes of defeasance of the Offered Securities and satisfaction and discharge of the Indenture with respect to the Offered Securities and (b) as otherwise used in Article XI of the Base Indenture with respect to the Offered Securities, the term “Governmental Obligations” shall have the meaning set forth in Section 1.03(a) of this Third Supplemental Indenture.

 

(22)         [Reserved].

 

(23)         The Offered Securities will be issued as Unrestricted Securities.

 

(24)         No Offered Securities shall be issued with guarantees.

 

(25)         The additional provisions set forth in Section 1.03 shall be applicable to the Offered Securities.

 

Section 1.03         Additional Terms of Offered Securities.

 

(a)           For purposes of the Base Indenture and this Third Supplemental Indenture, with respect to the Offered Securities the term “Governmental Obligations” means (x) any security which is (i) a direct obligation of the German government or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the German government the payment of which is fully and unconditionally guaranteed by the German government, the central bank of the German government or a governmental agency of the German government, which, in either case (x)(i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (x)(i) or (x)(ii) above or in any specific principal or interest payments due in respect thereof.

 

(b)           Claims against the Company for the payment of principal or Additional Amounts, if any, of the Offered Securities will be prescribed ten years after the applicable due date for payment thereof. Claims against the Company for the payment of interest, if any, of the Offered Securities will be prescribed five years after the applicable due date for payment of interest.

 

(c)           The third and fourth sentences of Section 2.05(c) of the Base Indenture shall not apply to the Offered Securities, and instead the following shall apply:

 

Each Global Security is exchangeable for Definitive Securities only if (1) the Depositary for such Global Security notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security and a successor Depositary is not appointed by the Company within 90 days after receiving that notice; (2) upon request of a Holder of any Offered Securities upon the occurrence and continuance of an Event of Default with respect to the Offered Securities;

 

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or (3) the Company determines that such Global Security will be exchangeable for Definitive Securities and notifies the Trustee of its decision. Upon the occurrence of any of the foregoing clauses (1), (2) and (3), the provisions of Section 2.11 of the Base Indenture shall no longer apply to the Offered Securities.

 

(d)           The second sentence of Section 2.11(a) of the Base Indenture shall not apply to the Offered Securities, and instead the following shall apply:

 

The Holder of a Global Security representing an Offered Security shall be the only Person entitled to receive payments in respect of Offered Securities represented by such Global Security, and the Company will be discharged by payment to, or to the order of, the Holder of such Global Security in respect of each amount so paid. After payment to the Depositary (or its nominee) of interest, principal or other amounts in respect of the Offered Securities represented by a Global Security, the Company will not have responsibility or liability for the payment of such amounts to Euroclear or Clearstream or to Holders or beneficial owners of book-entry interests in the Offered Securities. Each Person owning a beneficial interest in an Offered Security must rely on the procedures of the Depositary and, if such Person is not a Participant, on the procedures of the Participant through which such Person owns its interest, in order to exercise any rights of a Holder of Offered Securities.

 

(e)           Any notice or communication by the Company or the Trustee to the Paying Agent is duly given if in writing and delivered electronically or in person or mailed by first-class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the following address:

 

Elavon Financial Services DAC, UK Branch

Fifth Floor

125 Old Broad Street

London

EC2N-1AR

United Kingdom

Facsimile: 44 (0)207 365 2577

Attention: MBS Relationship Management

 

ARTICLE II.

 

MISCELLANEOUS

 

Section 2.01         Confirmation of Indenture.  The Base Indenture, as supplemented and amended by this Third Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture, this Third Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

 

Section 2.02         Concerning the Trustee.  In carrying out the Trustee’s responsibilities hereunder, the Trustee shall have all of the rights, protections and immunities which it possesses under the Indenture.  The recitals contained herein and in the Offered Securities, except the certificate of authentication, shall be taken as the statements of the Company, and the Trustee assumes

 

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no responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Third Supplemental Indenture or of the Offered Securities.  The Trustee shall not be accountable for the use or application by the Company of the Offered Securities or the proceeds thereof.  The Company hereby reaffirms its obligations under the Base Indenture to indemnify and hold harmless the Trustee as required under Article 7 of the Base Indenture, including under Section 7.06 of the Base Indenture. This indemnity shall survive the final payment in full of the Offered Securities and the resignation or removal of the Trustee solely to the extent expressly provided in Article 7 of the Base Indenture.

 

Section 2.03         Governing Law.  This Third Supplemental Indenture and the Offered Securities shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York without regard to conflicts of laws principles that would require the application of any other law.

 

Section 2.04         Separability.  In case any provision in this Third Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 2.05         Counterparts.  This Third Supplemental Indenture may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

 

Section 2.06         No Benefit.  Nothing in this Third Supplemental Indenture, express or implied, shall give to any Person other than the parties hereto and their successors or assigns, and the Holders of the Offered Securities, any benefit or legal or equitable rights, remedy or claim under this Third Supplemental Indenture or the Base Indenture.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed all as of the day and year first above written.

 

 

	
 
    	
JOHNSON CONTROLS INTERNATIONAL   PLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/Frank A. Voltolina
    
	
 
    	
Name:
    	
Frank A. Voltolina
    
	
 
    	
Title:
    	
Vice President and Corporate Treasurer
    
				

 

[Signature Page to Third Supplemental Indenture]

 

 

	
 
    	
U.S. BANK NATIONAL ASSOCIATION,
    
	
 
    	
as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/Yvonine Siira
    
	
 
    	
Name: Yvonine Siira
    
	
 
    	
Title: Vice PResident
    

 

[Signature Page to Third Supplemental Indenture]

 

 

	
 
    	
ELAVON FINANCIAL SERVICES DAC,   UK BRANCH,
    
	
 
    	
as Paying Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/Laurence Griffiths
    
	
 
    	
Name: Laurence Griffiths
    
	
 
    	
Title: Authorised Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/Chris Hobbs
    
	
 
    	
Name: Chris Hobbs
    
	
 
    	
Title: Authorised Signatory
    

 

[Signature Page to Third Supplemental Indenture]

 

 

EXHIBIT A

FORM OF 1.000% SENIOR NOTES DUE 2023

 

THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE (AS DEFINED HEREIN) GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE HOLDERS OF BENEFICIAL INTERESTS HEREIN, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE ANY SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.05(C) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO THE INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR TO ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF ANY ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO SUCH ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF HAS AN INTEREST HEREIN.

 

 

1.000% SENIOR NOTES DUE 2023

 

	
No. [    ]
    	
€[     ]
    

Common Code 158047675

ISIN No. XS1580476759

CUSIP. 478375 AV0

 

JOHNSON CONTROLS INTERNATIONAL PLC

 

promises to pay to [USB Nominees (UK Limited)] [   ] or registered assigns, the principal sum of [    ] Euros[, or such other sum as is set forth in the Schedule of Increases or Decreases of the Global Security attached hereto,] on September 15, 2023.

 

Interest Payment Date:  September 15 of each year

 

Regular Record Date:  September 1 of each year

 

Each Holder of this Note (as defined below), by accepting the same, agrees to and shall be bound by the provisions hereof and of the Indenture described herein, and authorizes and directs the Trustee described herein on such Holder’s behalf to be bound by such provisions.  Each Holder of this Note hereby waives all notice of the acceptance of the provisions contained herein and in the Indenture and waives reliance by such Holder upon said provisions.

 

This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose unless the Certificate of Authentication hereon shall have been duly executed by the Trustee or Authenticating Agent by manual or facsimile signature of an authorized signatory.  The provisions of this Note are continued on the reverse side hereof, and such continued provisions shall for all purposes have the same effect as though fully set forth at this place.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in accordance with Section 2.04 of the Indenture.

 

	
Date:  [  ]    [   ], 20[   ]
    	
 
    
	
 
    	
 
    
	
 
    	
JOHNSON   CONTROLS INTERNATIONAL PLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities referred to in the within-mentioned Indenture.

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
[By:               ,
    
	
 
    	
as   Authenticating Agent]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    

 

 

JOHNSON CONTROLS INTERNATIONAL PLC

 

1.000% Senior Notes due 2023

 

This security is one of a duly authorized series of debt securities of Johnson Controls International plc, a public limited company organized under the laws of Ireland (the “Company”), issued or to be issued in one or more series under and pursuant to an Indenture for the Company’s debt securities, dated as of December 28, 2016 (the “Base Indenture”), duly executed and delivered by and among the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated as of March 15, 2017 (the “Third Supplemental Indenture” and, the Base Indenture as so supplemented, the “Indenture”), by and among the Company, the Trustee and Elavon Financial Services DAC, UK Branch, as paying agent (the “Paying Agent”).  By the terms of the Base Indenture, the Securities issuable thereunder are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Base Indenture.  This Security is one of the series designated on the face hereof (individually, a “Note,” and collectively, the “Notes”), and reference is hereby made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities of the Trustee, the Company and the Holders of the Notes (the “Noteholders”).  Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Base Indenture or the Third Supplemental Indenture, as applicable.

 

1.                          Interest.  The Company promises to pay interest on the principal amount of this Note at an annual rate of 1.000%.  The Company will pay interest annually in arrears on September 15 of each year (each such day, an “Interest Payment Date”).  If any Interest Payment Date, redemption date or maturity date of this Note is not a Business Day, then payment of principal, premium, if any, or interest shall be made on the next Business Day with the same force and effect as if made on the nominal date such payment was due, and no interest shall accrue for the period after such nominal date to the date of such payment on the next Business Day.  Interest on the Notes will accrue from the most recent date to which interest has been paid or duly provided for (or [March 15, 2017], if no interest has been paid).  Interest on the Notes will be calculated based on the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid (or [March 15, 2017], if no interest has been paid), to but excluding the next scheduled Interest Payment Date (ACTUAL/ACTUAL (ICMA)).

 

2.                                      Method of Payment.  The Company will pay the interest installment on this Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for the Notes to the Person in whose name this Note (or one or more Predecessor Securities hereto) is registered at the close of business on the regular record date referred to on the facing page of this Note for such interest installment.  In the event that this Note or a portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on this Note will be paid upon presentation and surrender of this Note as provided in the Indenture.  All payments of interest and principal, including payments made upon any redemption or repurchase of this Note, will be payable in Euros. If, on or after March 9, 2017, the Euro is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the control of the Company or if the Euro is no longer being used by the then member states of the European 

 

 

Monetary Union that have adopted the Euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the Notes will be made in Dollars until the Euro is again available to the Company or so used. In such circumstances, the amount payable on any date in Euros will be converted into Dollars at the rate mandated by the U.S. Federal Reserve Board as of the close of business on the second Business Day prior to the relevant payment date or, in the event the U.S. Federal Reserve Board has not mandated a rate of conversion, on the basis of the then most recent Dollar/Euro exchange rate available on or prior to the second Business Day prior to the relevant payment date as determined by the Company in its sole discretion. Any payment in respect of the Notes so made in Dollars will not constitute an Event of Default under the Notes or the Indenture. Neither the Trustee nor the Paying Agent shall have any responsibility for any calculation or conversion in connection with the foregoing.

 

3.                          Paying Agent, Transfer Agent and Security Registrar.  Initially, Elavon Financial Services DAC, UK Branch will act as paying agent, and the Trustee will act as transfer agent and Security Registrar.  The Company may change or appoint any paying agent, Security Registrar or transfer agent without prior notice to any Noteholder.  The Company or any of its subsidiaries may act as paying agent, transfer agent or Security Registrar in respect of any Notes.

 

4.                          Indenture.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect from time to time.  The Notes are subject to all such terms, and Noteholders are referred to the Indenture and TIA for a statement of such terms.  The Notes are unsecured general obligations of the Company and constitute the series designated on the face hereof as the “1.000% Senior Notes due 2023”, initially limited to €1,000,000,000 in aggregate principal amount.

 

The Company will furnish to any Noteholder upon written request and without charge a copy of the Base Indenture and the Third Supplemental Indenture.  Requests may be made to: Johnson Controls International plc, One Albert Quay, Cork, Ireland.

 

5.                          Optional Redemption.  The Notes will be subject to redemption in accordance with the terms of Section 1.02(8) of the Third Supplemental Indenture and Articles III and XIV of the Base Indenture.  If the giving of notice of redemption shall have been completed as provided in the Indenture, interest on such Notes or portions of Notes will cease to accrue on and after the date fixed for redemption, unless the Company defaults in the payment of the applicable redemption price and accrued interest (if any) with respect to any such Note or portion thereof.  The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

6.                          Change of Control Triggering Event.  Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless the Company has exercised its right to redeem the Notes by giving irrevocable notice on or prior to the 30th day after the Change of Control Triggering Event in accordance with the Indenture, each Holder of Notes will have the right to require the Company to purchase all or a portion of such Holder’s Notes pursuant to a Change of Control Offer in accordance with Section 4.08 of the Base Indenture.

 

 

7.                          Denominations, Transfer, Exchange.  The Notes are in registered form without interest coupons in the denominations of €100,000 or any integral multiple of €1,000 in excess thereof.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  Subject to and in accordance with Section 2.05 of the Base Indenture, the Notes may be presented for exchange or for registration of transfer at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose.

 

8.                          Persons Deemed Owners.  Prior to the due presentment for the registration of a transfer of any Note, the Company, the Trustee, any applicable paying agent, any transfer agent and any Security Registrar may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and neither the Company nor the Trustee nor any applicable paying agent, transfer agent or Security Registrar shall be affected by any notice to the contrary.

 

9.                          [Reserved].

 

10.                   [Reserved].

 

11.                   Defaults and Remedies.  If an Event of Default shall have occurred and be continuing in respect of the Notes, in each and every such case, unless the principal of all the Notes shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then Outstanding, by notice in writing to the Company, and to the Trustee if given by such Noteholders, may declare the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, notwithstanding anything contained in the Indenture or in the Notes to the contrary.

 

12.                   Trustee, Paying Agent, Transfer Agent and Security Registrar May Hold Notes.  The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee.  However, in the event that the Trustee acquires any conflicting interest, it must either eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee or resign.  Any Authenticating Agent, paying agent, transfer agent or Security Registrar may do the same with like rights and duties.  The Trustee must also comply with Section 7.08 of the Base Indenture.

 

13.                   No Recourse Against Others.  No recourse under or upon any obligation, covenant or agreement of the Indenture, or of any Note, or for any claim based thereon or otherwise in respect hereof or thereof, shall be had against any incorporator, shareholder, officer or director, past, present or future as such, of the Company or of any predecessor or successor Person, either directly or through the Company or any such predecessor or successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that the Indenture, the Notes and the obligations issued hereunder and thereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors as such, of the Company or of any predecessor or successor Person, or any of them, because of the creation of the indebtedness authorized by the Indenture, or under or by reason of

 

 

the obligations, covenants or agreements contained in the Indenture or in any of the Notes or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director as such, because of the creation of the indebtedness authorized by the Indenture, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in any of the Notes or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of the Indenture and the issuance of the Notes.

 

14.                   Discharge of Indenture.  The Indenture contains certain provisions pertaining to discharge and defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

 

15.                   Authentication.  This Note shall not be valid until the Trustee or Authenticating Agent signs the certificate of authentication attached to the other side of this Note.

 

16.                   [Reserved].

 

17.                   Additional Amounts.  The Company is obligated to pay Additional Amounts on this Note to the extent provided in Article XIV of the Indenture.

 

18.                   Abbreviations.  Customary abbreviations may be used in the name of a Noteholder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

19.                   Governing Law.  The Indenture and this Note shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York without regard to conflicts of laws principles that would require the application of any other law.

 

 

ASSIGNMENT FORM

	
 
    
	
To   assign this Note, fill in the form below: (I) or (we) assign and   transfer this Note to
    
	
 
    
	
 
    
	
(Insert assignee’s soc. sec. or tax I.D. no.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address and zip code)
    
	
 
    

and irrevocably appoint                                                                               agent to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Your   Signature:
    	
 
    
	
 
    	
(Sign   exactly as your name appears on the face of this 
    
	
 
    	
Note)
    
	
 
    	
 
    
	
Signature   Guarantee:
    	
 
    

 

 

SCHEDULE OF INCREASES OR DECREASES OF THE GLOBAL SECURITY

 

The initial outstanding principal amount of this Global Security is €[        ]. The following increases and decreases in this Global Security have been made:

 

	
Date of Exchange
    	
 
    	
Amount of decrease in
   Principal Amount of
   this Global Security
    	
 
    	
Amount of increase in
   Principal Amount of
   this Global Security
    	
 
    	
Principal Amount of
   this Global Security
   following such decrease
   (or increase)
    	
 
    	
Signature of authorized
   officer of Security
   Registrar or
   TrusteeExhibit 4.1

 

NEITHER THIS NOTE NOR THE SECURITIES
INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

QPAGOS

 

Convertible
Note

 

	Issuance Date:  March 9, 2017	Original Principal Amount:     $100,000
	Note No. QPAG-1	 

 

FOR VALUE RECEIVED,
QPAGOS, a Nevada corporation with a par value of $0.001 per common share (“Par Value”) (the "Company"),
hereby promises to pay to the order of Vista Capital Investments, LLC or registered assigns (the "Holder")
the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion
or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption
or otherwise (in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding
Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date")
until the same becomes due and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof).

 

The Original Principal
Amount is $100,000 (one hundred thousand) plus accrued and unpaid interest and any other fees. The Holder shall pay $100,000 of
Consideration upon closing of this Note. For purposes hereof, the term “Outstanding Balance” means the Original Principal
Amount, as reduced or increased, as the case may be, pursuant to the terms hereof for conversion, breach hereof or otherwise, plus
any accrued but unpaid interest, collection and enforcements costs, and any other fees, penalties, damages or charges incurred
under this Note.

 

(1)          GENERAL
TERMS

 

(a)          Payment
of Principal. The "Maturity Date" shall be two years from the date of each payment of Consideration, as may
be extended at the option of the Holder in the event that, and for so long as, an Event of Default (as defined below) shall not
have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall not have
occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and
the failure to cure would result in an Event of Default. 

 

(b)          Interest.
This Note shall bear interest (“Interest”) at the rate of Eight Percent (8%) per annum from the Issuance Date until
the same is paid, or otherwise converted in accordance with Section 3 below. Interest shall commence accruing on the Issuance Date,
shall be computed on the basis of a 365-day year.

 

     

     

    

 

(2)         EVENTS
OF DEFAULT. 

 

(a)          An
“Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body):

 

(i)          The
Company's failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note (including,
without limitation, the Company's failure to pay any redemption payments or amounts hereunder); 

 

(ii)         A
Conversion Failure as defined in section 3(b)(ii)

 

(iii)        The
Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the
Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company
or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating
to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any
such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty
one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the
Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay,
its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with
a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall
by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate
or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

 

(iv)        The
Company or any subsidiary of the Company shall default in any of its obligations under any other Note or any mortgage, credit agreement
or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement
of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall
hereafter be created; and

 

(v)         The
Common Stock is suspended or delisted for trading on the Over the Counter OTCQB Venture Marketplace or OTCPink Open Marketplace
(the “Primary Market”). 

 

(vi)        The
Company loses its ability to deliver shares via “DWAC/FAST” electronic transfer.

 

(vii)       The
Company loses its status as “DTC Eligible.”

 

(viii)      The
Company shall become late, excluding Rule 12-b-25 provisions, or delinquent in its filing requirements as a fully-reporting issuer
registered with the Securities & Exchange Commission.

 

    	 	2	 

     

    

 

(ix)         The
Company shall fail to reserve and keep available out of its authorized Common Stock a number of shares equal to at least 5 (five)
times the full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note.

 

(x)          The
Company shall fail to meet all requirements to satisfy the availability of Rule 144 to the Investor or its assigns including but
not limited to timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, requirements
for XBRL filings, and requirements for disclosure of financial statements on its website.

 

(b)        
Upon the occurrence of any Event of Default (without the need for any party to give any notice or
take any other action), the Outstanding Balance shall immediately and automatically increase to 120% of the Outstanding Balance
immediately prior to the occurrence of the Event of Default (the “Default Sum”). Upon the occurrence of any Event of
Default, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the Outstanding Balance, 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. 

 

(3)          CONVERSION
OF NOTE. This Note shall be convertible into shares of the Company's
Common Stock, on the terms and conditions set forth in this Section 3.

 

(a)          Conversion
Right. Subject to the provisions of Section 3(c), at any time or times 150 days after the Issuance Date, the Holder shall be
entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and non-assessable
shares of Common Stock in accordance with Section 3(b), at the Conversion Price (as defined below). The number of shares of Common
Stock issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal to the quotient of dividing
the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion.
If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of
a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer agent fees, legal fees, costs
and any other fees or costs that may be incurred or charged in connection with the issuance of shares of the Company’s Common
Stock to the Holder arising out of or relating to the conversion of this Note. 

 

(i)          "Conversion
Amount" means the portion of the Original Principal Amount and Interest to be converted, plus any penalties, redeemed
or otherwise with respect to which this determination is being made.

 

(ii)         "Conversion
Price" shall equal 60% of the average of the lowest 2 trading prices occurring during the previous fifteen (15) consecutive
Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note,
subject to adjustment as provided in this Note.

 

    	 	3	 

     

    

 

(b)          Mechanics
of Conversion.

 

(i)          Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"),
the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York, NY Time,
on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion
Notice") to the Company. On or before the third Business Day following the date of receipt of a Conversion Notice (the
"Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common
Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided
that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder
shall be entitled which certificates shall not bear any restrictive legends unless required pursuant the Rule 144. If this Note
is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the
Conversion Amount being converted, then the Company shall, upon request of the Holder, as soon as practicable and in no event later
than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing
the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion
of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission
of a Conversion Notice.

 

(ii)         Company's
Failure to Timely Convert. If within two (2) Trading Days after the Company's receipt of the facsimile or email copy of a Conversion
Notice the Company shall fail to issue and deliver to Holder via “DWAC/FAST” electronic transfer the number of shares
of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"),
the Original Principal Amount of the Note shall increase by $500 per day until the Company issues and delivers a certificate to
the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled
upon such holder's conversion of any Conversion Amount (under Holder’s and Company’s expectation that any damages will
tack back to the Issuance Date). Company will not be subject to any penalties once its transfer agent processes the shares to
the DWAC system. If the Company fails to deliver shares in accordance with the timeframe stated in this Section, resulting
in a Conversion Failure, the Holder, at any time prior to selling all of those shares, may rescind any portion, in whole or in
part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the
Outstanding Balance with the rescinded conversion shares returned to the Company (under Holder’s and Company’s expectations
that any returned conversion amounts will tack back to the original date of the Note).

 

(iii)        DWAC/FAST
Eligibility. If the Company fails for any reason to deliver to the Holder the Shares by DWAC/FAST electronic
transfer (such as by delivering a physical stock certificate), or if there is a Conversion Failure as defined in Section
3(b)(ii), and if the Holder incurs a Market Price Loss, then at any time subsequent to incurring the loss the Holder may
provide the Company written notice indicating the amounts payable to the Holder in respect of the Market Price Loss and the
Company must make the Holder whole by either of the following options at Holder’s election:

 

Market Price
Loss = [(High trade price for the period between the day of conversion and the day the shares clear in the Holder’s brokerage
account) x (Number of shares receivable from the conversion)] – [(Net Sales price realized by Holder) x (Number of shares
receivable from the conversion)].

 

Option A –
Pay Market Price Loss in Cash. The Company must pay the Market Price Loss by cash payment, and any such cash payment must be made
by the third business day from the time of the Holder’s written notice to the Company.

 

    	 	4	 

     

    

 

Option B –
Add Market Price Loss to Outstanding Balance. The Company must pay the Market Price Loss by adding the Market Price Loss to the
Outstanding Balance (under Holder’s and the Company’s expectation that any Market Price Loss amounts will tack back
to the Issuance Date).

 

In the case that conversion
shares are not deliverable by DWAC/FAST electronic transfer an additional 10% discount to the Conversion Price will apply.

 

(iv)        DTC
Eligibility & Sub-Penny. If the Company fails to maintain its status as “DTC Eligible” for any reason, or,
if the effective Conversion Price as calculated in Section 3(a)(ii) is less than $0.01 at any time (regardless of whether or not
a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by ten thousand dollars
($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance
Date). In addition, the Conversion Price shall be permanently redefined to equal the lesser of (a) $0.01 or (b) 50% of the average
of two lowest trade occurring during the fifteen (15) consecutive Trading Days immediately preceding the applicable Conversion
Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.

 

(v)         Par
Value True-Up. In the event that the Conversion Price is less than Par Value on the Conversion Date, the Holder may elect to
submit a Conversion Notice (attached hereto as Exhibit A) with a conversion price equal to the Company’s Par Value. In addition,
upon written notice from the Holder in the form attached hereto as Exhibit B (the “True-Up Notice”), the Holder
may require the Company, at the Holder’s election, to either (A) issue and deliver to the Holder a number of shares of Common
Stock as equals (X) the Conversion Amount divided by 60% of the lowest trade occurring during the twenty five (25) consecutive
Trading Days immediately preceding the applicable Conversion Date, less (Y) the Conversion Amount divided by the Par Value (Any
additional shares of Common Stock issuable pursuant to this Section 3(b)(v) shall be referred to herein as “True-Up Shares”),
or (B) add to the Outstanding Balance a dollar amount equal to the number of True-Up Shares (as calculated above) multiplied by
the high trade price on the Conversion Date (Any dollar amount added to the Outstanding Balance pursuant to this Section 3(b)(v)
shall be referred to herein as the “True-Up Balance”) (under Holder’s and the Company’s expectation that
any True-Up Balance amounts will tack back to the Issuance Date).

 

(vi)        Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice
may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and
the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note
upon conversion.

 

    	 	5	 

     

    

 

(c)          Limitations
on Conversions or Trading.

 

(i)          Beneficial
Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the right to convert any
portion of this Note or receive shares of Common Stock as payment of interest hereunder to the extent that after giving effect
to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would beneficially own
(as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of
the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment
of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at
the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess
of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the principal amount of this Note is convertible shall
be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal amount of this
Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance
in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for
the maximum principal amount permitted to be converted on such Conversion Date in accordance with Section 3(a) and, any principal
amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Note. In the event
that the Market Capitalization of the Company falls below $2,500,000, the term “4.99%” above shall be permanently replaced
with “9.99%”. “Market Capitalization” shall be defined as the product of (a) the closing price of the Common
Stock of the Common stock multiplied by (b) the number of shares of Common Stock outstanding as reported on the Company’s
most recently filed Form 10-K or Form 10-Q. The provisions of this Section may be waived by Holder upon not less than 65 days prior
written notification to the Company.

 

(ii)         Capitalization.
So long as this as this Note is outstanding, upon written request of the Holder, the Company shall furnish to the Holder the then-current
number of common shares issued and outstanding, the then-current number of common shares authorized, and the then-current number
of shares reserved for third parties.

 

(d)          Other
Provisions.

 

(i)          Share
Reservation. The Company shall at all times reserve and keep available out of its authorized Common Stock a number of shares
equal to at least 5 (five) times the full number of shares of Common Stock issuable upon conversion of all outstanding amounts
under this Note; and within 3 (three) Business Days following the receipt by the Company of a Holder's notice that such minimum
number of shares of Common Stock is not so reserved, the Company shall promptly reserve a sufficient number of shares of Common
Stock to comply with such requirement. The Company will at all times reserve at least 3,000,000 shares of Common Stock for conversion.

 

(ii)         Prepayment.
At any time prior to the Maturity Date the Company shall have the option, upon 10 business days’ notice to Holder (“Notice
Period”), to pre-pay the entire remaining outstanding principal amount of this Note in cash, as per the following schedule:

 

		·	Anytime within 90 days from the Issuance Date at 120% of the Outstanding Balance

		·	Anytime within 91-121 days from the Issuance Date at 130% of the Outstanding Balance

		·	Anytime within 122-180 days from the Issuance Date at 135% of the Outstanding Balance

		·	Anytime within 180-365 from the Issuance Date at 135% of the Outstanding Balance

 

The redemption must be
closed and paid for within 3 business days following the Notice Period or the redemption will be invalid and the Company may not
redeem this Note. The Holder may convert this Note pursuant to the terms hereof at all times (following 150 days of this Note),
including during the Notice Period, until the Redemption Amount has been received in full.

 

    	 	6	 

     

    

 

(iii)        Terms
of Future Financings. So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any
security (or upon any amendment to any existing 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 Company shall
notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part of the
Note. 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, conversion lookback periods, interest rates, original issue discounts, stock
sale price, private placement price per share, and warrant coverage.

 

(iv)        All
calculations under this Section 3 shall be rounded up to the nearest $0.00001 or whole share.

 

(v)         Nothing
herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the
Company's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein
and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security.
The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof
or under applicable law. 

 

(4)          Section
3(a)(10) Transaction. So long as this Note is outstanding, the Company shall not enter
into any transaction or arrangement 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”). In the event that the Company does enter into, or
makes any issuance of Common Stock related to a 3(a)(10) Transaction while this note is outstanding, a liquidated damages charge
of 25% of the outstanding principal balance of this Note, but not less than $25,000, will be assessed and will become immediately
due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.

 

(5)          PIGGYBACK
REGISTRATION RIGHTS. The Company shall include on the next registration statement the Company files with SEC, excluding the
existing registration No. 333-212859 now in process (or on the subsequent registration statement if such registration statement
is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 25% of the
outstanding principal balance of this Note, but not less than $25,000, being immediately due and payable to the Holder at its election
in the form of cash payment or addition to the balance of this Note.

 

(6)          REISSUANCE
OF THIS NOTE.

 

(a)          Assignability.
The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit
of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company’s
approval. 

 

(b)          Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company
shall execute and deliver to the Holder a new Note representing the outstanding Principal.

 

    	 	7	 

     

    

 

(7)         NOTICES. Any
notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) (iii)
upon receipt, when sent by email; or (iv) one (1) Trading Day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall
be those set forth in the communications and documents that each party has provided the other immediately preceding the issuance
of this Note or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party
has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written
confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

The addresses for such communications shall
be:

 

If to the Company, to:

 

QPAGOS

1900 W. Glades Road

Suite 265

Boca Raton, FL 33431

Attn: Gaston Pereira, CEO

Email: gaston.pereira@qpagos.com

 

If to the Holder:

 

VISTA CAPITAL INVESTMENTS, LLC

406 9th Avenue, Suite 201

San Diego, CA 92101

Attn:David Clark, Principal

Email:dclark@vci.us.com

    	 	8	 

     

    

 

(8)         APPLICABLE
LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of Nevada, without giving
effect to conflicts of laws thereof. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of California or in the federal courts located in the city and county
of San Diego, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction
of such courts.

 

(9)         WAIVER.
Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 

(10)        LIQUIDATED
DAMAGES. Holder and Company agree that in the event Company fails to comply with any of the terms or provisions of this Note,
Holder's damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties' inability
to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Holder and
Company agree that any fees, balance adjustments, default interest or other charges assessed under this Note are not penalties
but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Holder's and Company's expectations
that any such liquidated damages will tack back to the Closing Date for purposes of determining the holding period under Rule 144).

 

[Signature Page Follows]

 

    	 	9	 

     

    

 

IN WITNESS WHEREOF,
the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.

 

	 	COMPANY:
	 	 
	 	QPAGOS
	 	 
	 	By:	/s/ Gaston Pereira
	 	 	 
	 	Name:	Gaston Pereira
	 	 	 
	 	Title:	Chief Executive Officer

 

	 	HOLDER:
	 	 
	 	VISTA CAPITAL INVESTMENTS, LLC.
	 	 
	 	By:	/s/ David Clark
	 	 
	 	Name: David Clark
	 	 
	 	Title: Principal

 

[Signature Page to Convertible Note No.
QPAG-1]

 

     

     

    

 

EXHIBIT
A

 

CONVERSION
NOTICE

 

[Company Contact, Position]

QPAGOS

[Company Address]

[Contact Email Address}

 

The undersigned hereby elects to convert a portion of the $________
Convertible Note _______ issued to Vista Capital Investments, LLC on ____________ into Shares of Common Stock of ____________ according
to the conditions set forth in such Note as of the date written below.

 

By accepting this notice of conversion, you are acknowledging
that the number of shares to be delivered represents less than 10% (ten percent) of the common stock outstanding. If the number
of shares to be delivered represents more than 9.99% of the common stock outstanding, this conversion notice shall immediately
automatically extinguish and debenture Holder must be immediately notified.

 

	Date of Conversion:	 	 
	Conversion Amount:	 	 
	Conversion Price:	 	 
	Shares to be Delivered:	 	 

 

Shares delivered in name of:

 

VISTA CAPITAL INVESTMENTS, LLC

 

	Signature:	 
	 	By:
	 	Title:
	 	Vista Capital Investments, LLC

 

     

     

    

 

EXHIBIT
B

 

TRUE-UP
NOTICE

 

[Company Contact, Position]

QPAGOS

[Company Address]

[Contact Email Address}

 

The undersigned hereby gives notice to
QPAGOS, a ______ corporation (the “Company”), pursuant to that certain Note dated _______  ___, 20__ by and between
the Company and the Holder (the “Note”), that the Holder elects to:

 

		___	Receive fully paid and non-assessable True-Up Shares pursuant to Section 3(b)(v) of the Note (such
Additional Origination Shares shall be calculated as set forth below), or

 

		___	Add to the Outstanding Balance a dollar amount equal to the True-Up Amount (such True-Up Amount
shall be calculated as set forth below).

 

The number of True-Up Shares Holder is
entitled to receive is calculated as follows:

 

Conversion Amount ($___) / ___%
of the lowest trade occurring during the _________ (__) consecutive Trading Days immediately preceding the applicable Conversion
Date ($_.__) - Conversion Amount ($___) divided by the Par Value ($_.__) =

 

____________ True-Up
Shares

 

The amount of True-Up Balance to be added
to the Outstanding Balance is calculated as follows:

 

Number of True-Up Shares (_____)
* high trade price on the Conversion Date ($_.__)=

 

____________ True-Up
Balance

 

Shares delivered in name of:

 

VISTA CAPITAL INVESTMENTS, LLC

 

	Signature:	 
	 	By:
	 	Title:
	 	Vista Capital Investments, LLC

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