Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of November 18, 2019, is by and among Freedom Leaf Inc.,
a Nevada corporation with offices located at 3571 E. Sunset Road, Suite 420, Las Vegas, NV 89120 (the “Company”),
and the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).

 

RECITALS

 

A.       The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation
D (“Regulation D”) as promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
under the 1933 Act.

 

B.       The
Company has authorized senior convertible notes, in the form attached hereto as Exhibit A (the “Notes”),
which Notes shall be convertible into shares of the Company’s common stock, $0.001 par value per share (the “Common
Stock”) (as converted, collectively, the “Conversion Shares”), in accordance with the terms of the
Notes.

 

C.       Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) the aggregate
original principal amount of the Notes set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, and
(ii) a warrant to acquire up to that number of additional shares of Common Stock set forth opposite such Buyer’s name in
column (4) on the Schedule of Buyers, in the form attached hereto as Exhibit B (the “Warrants”)
(as exercised, collectively, the “Warrant Shares”). The Notes, the Conversion Shares, the Warrants and the Warrant
Shares are collectively referred to herein as the “Securities.”

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

1.           
PURCHASE AND SALE OF Notes AND WARRANTS.

 

(a)               
Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7
below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company
on the Closing Date (as defined below), a Note in the principal amount as is set forth opposite such Buyer’s name in column
(3) on the Schedule of Buyers, along with the Warrants to acquire up to that number of Warrant Shares as is set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers.

 

(b)               
Closing. The closing (the “Closing”) of the purchase of the Notes and the Warrants by the Buyers
shall occur at the offices of Kleinberg, Kaplan, Wolff & Cohen, P.C., 551 Fifth Avenue, New York, New York 10176. The date
and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st)
Business Day on which the conditions to the Closing set forth in Sections 6 and 7 below are satisfied
or waived (or such later date as is mutually agreed to by the Company and each Buyer). As used herein, “Business Day”
means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required
by law to remain closed.

 

 

 

    
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(c)               
Purchase Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer (the “Purchase
Price”) shall be the amount set forth opposite such Buyer’s name in column (5) and/or the amount set forth opposite
such Buyer’s name in column (6), as applicable, on the Schedule of Buyers. Each Buyer shall pay its respective Purchase Price
for the Note and related Warrants to be purchased by such Buyer at the Closing.

 

(d)               
Form of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price to the Company for the
Notes and the Warrants to be issued and sold to such Buyer at the Closing, by (A) wire transfer of immediately available funds
in accordance with the Company’s written wire instructions or (B) by cancellation of indebtedness of Company (or any of its
Subsidiaries) to Buyer; and (ii) the Company shall deliver to each Buyer (A) a Note (in such amount as is set forth opposite
such Buyer’s name in column (3) of the Schedule of Buyers), and (B) a Warrant pursuant to which such Buyer shall have the
right to acquire up to such number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule
of Buyers, in all cases, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

 

2.            
BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that:

 

(a)               
Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.

 

(b)               
No Public Sale or Distribution. Such Buyer is (i) acquiring its Note and Warrants, (ii) upon conversion of its Note
will acquire the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of its Warrants will acquire
the Warrant Shares issuable upon exercise thereof, in each case, for its own account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales
registered or exempted under the 1933 Act and any applicable state laws; provided, however, that by making the representations
herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business.
Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of
the Securities.

 

(c)               
Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a)
of Regulation D.

 

(d)               
Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal and state securities laws and that the Company
is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and
the eligibility of such Buyer to acquire the Securities.

 

 

 

    
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(e)               
Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested
by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives
shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained
herein or any representations and warranties contained in any other Transaction Document or any other document or instrument executed
and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby. Such Buyer understands
that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

 

(f)                
No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(g)               
Transfer or Resale. Such Buyer understands that except as provided in Sections 4(h) and 4(m) hereof: (i) the Securities
have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested
by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to the Company, to the effect that such Securities
to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined
in Section 3(s)) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder;
and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

(h)               
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such
Buyer and constitutes the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with
their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.

 

(i)                
No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such
Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Buyer to perform its obligations hereunder.

 

(j)                
Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.

 

 

 

    
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(k)             
Certain Trading Activities. Such Buyer has not directly or indirectly, nor has any Person acting on behalf of or
pursuant to any understanding with such Buyer, engaged in any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities) since the time that such Buyer was first contacted by the
Company regarding the investment in the Company contemplated herein. “Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (“Regulation SHO”)
and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements
(including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers
(but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). Such Buyer does not
as of the date hereof, and will not immediately following the Closing, own 10% or more of the Company’s issued and outstanding
shares of Common Stock (calculated based on the assumption that all Common Stock, including without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles
the holder thereof to receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common
Stock owned by such Buyer, whether or not presently exercisable or convertible, have been fully exercised or converted (as the
case may be) but taking into account any limitations on exercise or conversion (including “blockers”) contained therein).

 

(l)               
General Solicitation. Such Buyer is not purchasing the Securities as a result of any advertisement, article, notice
or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television
or radio or presented at any seminar.

 

(m)             
Rule 506(d) Representation. Such Buyer represents that it is not a person of the type described in Section 506(d)
of Regulation D that would disqualify the Company from engaging in a transaction pursuant to Section 506 of Regulation D.

 

3.            
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents
and warrants to each of the Buyers that:

 

(a)              
Organization and Qualification. Each of the Company and each of the Subsidiaries are entities duly organized and
validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power
and authorization to own their properties and to carry on their business as now being conducted and as presently proposed to be
conducted. Each of the Company and each of the Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.
As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the
Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in the other Transaction
Documents or (iii) the authority or ability of the Company or any of the Subsidiaries to perform their respective obligations under
the Transaction Documents (as defined below). Other than the Subsidiaries, there is no Person in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest. For purposes of this Agreement, Cannabis Business Solutions
Inc., Leafceuticals Inc., Freedom Leaf International Inc., Leafceuticals Europe, SL, FL–Accuvape, LLC, Tierra Science Global,
LLC, ECS Labs, LLC, B&B Labs, LLC, and Texas Wellness Center, LLC are collectively referred to herein as the “Subsidiaries”
and each individually as a “Subsidiary.”

 

 

 

    
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(b)              
Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform
its obligations under this Agreement, the Notes, the Warrants and the other Transaction Documents to which it is a party and to
issue the Securities in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to
enter into and perform its obligations under the Transaction Documents to which it is a party. The execution and delivery of this
Agreement and the other Transaction Documents by the Company and the Subsidiaries and the consummation by the Company and the Subsidiaries
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the reservation
for issuance and issuance of the Conversion Shares issuable upon conversion of the Notes, the issuance of the Warrants and the
reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants) have been duly authorized by
the Company’s board of directors or other governing body, as applicable, and (other than the filing with the SEC of a Notice
on Form D and one or more registration statements in accordance with Section 4(f) hereof and any other filings as may be required
by any state securities agencies) no further filing, consent or authorization is required by the Company, the Subsidiaries, their
respective Boards of Directors or their stockholders or other governing body. This Agreement and the other Transaction Documents
to which it is a party have been duly executed and delivered by the Company and constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights
to indemnification and to contribution may be limited by federal or state securities law. The Transaction Documents to which each
Subsidiary is a party have been duly executed and delivered by each such Subsidiary, and constitutes the legal, valid and binding
obligations of such Subsidiary, enforceable against such Subsidiary in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except
as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents”
means, collectively, this Agreement, the Notes, the Warrants, the Irrevocable Transfer Agent Instructions (as defined in Section
5(b)) and each of the other agreements and instruments entered into by the parties hereto in connection with the transactions contemplated
hereby and thereby.

 

(c)              
Issuance of Securities. The issuance of the Notes and the Warrants are duly authorized and upon issuance in accordance
with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all taxes, liens,
charges and other encumbrances with respect to the issue thereof. As of the Closing, the Company shall have reserved from its duly
authorized capital stock not less than 120% of the sum of (i) the maximum number of Conversion Shares issuable upon conversion
of the Notes (without taking into account any limitations on the conversion of the Notes set forth therein) and (ii) the maximum
number of Warrant Shares issuable upon exercise of the Warrants (without regard to any limitations on the exercise of the Warrants
set forth therein). Upon conversion in accordance with the Notes or exercise in accordance with the Warrants (as the case may be),
the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued, fully paid and nonassessable and
free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and
warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration
under the 1933 Act.

 

(d)             
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the Subsidiaries
and the consummation by the Company and the Subsidiaries of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes, the Warrants, the Conversion Shares and Warrant Shares and the reservation for issuance
of the Conversion Shares and Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined in
Section 3(r)) or other organizational documents of the Company or any of the Subsidiaries, any capital stock of the Company or
any of the Subsidiaries or Bylaws (as defined in Section 3(r)) of the Company or any of the Subsidiaries, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company
or any of the Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
foreign, federal and state securities laws and regulations and the rules and regulations of the OTCQB (the “Principal
Market”)) applicable to the Company or any of the Subsidiaries or by which any property or asset of the Company or any
of the Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that
could not reasonably be expected to have a Material Adverse Effect.

 

 

 

    
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(e)             
Consents. Neither the Company nor any Subsidiary is required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents,
in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior
to the Closing Date, and neither the Company nor any of the Subsidiaries are aware of any facts or circumstances which might prevent
the Company or any Subsidiary from obtaining or effecting any of the registration, application or filings pursuant to the preceding
sentence. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances
which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

 

(f)               
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of the Subsidiaries, (ii)
an “affiliate” (as defined in Rule 144) of the Company or any of the Subsidiaries or (iii) to its knowledge, a “beneficial
owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act
of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial
advisor or fiduciary of the Company or any of the Subsidiaries (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s decision
to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company,
each Subsidiary and their respective representatives.

 

(g)              
No General Solicitation; No Placement Agent’s Fees. Neither the Company, nor any of the Subsidiaries or affiliates,
nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. Except as set forth on
Schedule 3(g), neither the Company nor any of the Subsidiaries has engaged any placement agent or other agent in connection
with the sale of the Securities.

 

(h)              
No Integrated Offering. None of the Company, the Subsidiaries or any of their affiliates, nor any Person acting on
their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through
integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of
the Company under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the
Company, the Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps referred to in
the preceding sentence that would require registration of the issuance of any of the Securities under the 1933 Act or cause the
offering of any of the Securities to be integrated with other offerings.

 

(i)               
Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares
will increase in certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares upon
conversion of the Notes and Warrant Shares upon exercise of the Warrants in accordance with this Agreement, the Notes and the Warrants
is, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.

 

 

 

    
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(j)               
Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or other organizational
document or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as
a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities. The Company and its board of directors have taken all necessary action,
if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial
ownership of shares of Common Stock or a change in control of the Company or any of the Subsidiaries.

 

(k)              
SEC Documents; Financial Statements. Except for the Company’s Annual Report on Form 10-K for the fiscal year
ended June 30, 2019, the Company’s Quarterly Report on Form 10-Q for the three months ended December 31, 2018, the Company’s
Quarterly Report on Form 10-Q for the three months ended September 30, 2018, and the financial statements required by Regulation
S-X related to the Company’s acquisition of ECS Labs, LLC, during the one (1) year prior to the date hereof, the Company
has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein
and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred
to as the “SEC Documents”). The Company has delivered or made available to the Buyers or their respective representatives
true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as
of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which will not be material, either individually or in the aggregate). No other information provided
by or on behalf of the Company to the Buyers which is not included in the SEC Documents, including, without limitation, information
referred to in Section 2(e) of this Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance
under which they are or were made.

 

(l)               
Absence of Certain Changes. Since March 31, 2019, (i) there has been no event, occurrence or development that would,
to the Company’s knowledge, reasonably be expected to result in a Material Adverse Effect, (ii) neither the Company nor any
of its Subsidiaries has incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred
in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company has not altered its method of
accounting, (iv) the Company has not (A) declared or paid any dividends, (B) sold any assets, individually or in the aggregate,
in excess of $50,000 outside of the ordinary course of business or (C) had capital expenditures, individually or in the aggregate,
in excess of $50,000 and (v) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant
to existing Company stock option plans or as set forth in the SEC Documents.

 

 

 

    
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(m)             
No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance
has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of the Subsidiaries or their
respective business, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise),
that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1
filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced
or which would have a material adverse effect on any Buyer’s investment hereunder.

 

(n)             
Conduct of Business; Regulatory Permits. Neither the Company nor any of the Subsidiaries is in violation of any material
term of or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of the Subsidiaries or Bylaws or their organizational charter, certificate of formation
or articles or certificate of incorporation or bylaws, respectively. Neither the Company nor any of the Subsidiaries is in violation
of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of the Subsidiaries,
and neither the Company nor any of the Subsidiaries will conduct its business in violation of any of the foregoing, except in all
cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting
the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock
by the Principal Market in the foreseeable future. Since July 2, 2018, (i) the Common Stock has been designated for quotation on
the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the
Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting
of the Common Stock from the Principal Market. The Company and each of the Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse
Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.

 

(o)              
Foreign Corrupt Practices. Neither the Company nor any of the Subsidiaries, nor to the Company’s knowledge,
any director, officer, agent, employee or other Person acting on behalf of the Company or any of the Subsidiaries has, in the course
of its actions for, or on behalf of, the Company or any of the Subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(p)             
Sarbanes-Oxley Act. The Company and each Subsidiary is in material compliance with all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all applicable rules and regulations promulgated by
the SEC thereunder that are effective as of the date hereof.

 

(q)              Transactions
With Affiliates. Other than the grant of stock options disclosed on Schedule 3(q) and except as disclosed in the
SEC Documents, none of the officers, directors or employees of the Company or any of the Subsidiaries is presently a party to
any transaction with the Company or any of the Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company or any of the Subsidiaries, any corporation, partnership,
trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director,
trustee or partner.

 

 

 

    
	 	8	 

     

    

 

(r)               
Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 10,000,000
shares of Preferred Stock, of which, none are issued and outstanding on the Closing Date, and (ii) 1,000,000,000 shares of Common
Stock, of which 585,983,209 shares are issued and outstanding, and 45,437,477 shares are reserved for issuance pursuant to securities
(other than the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock. No shares of Common
Stock or Preferred Stock are held in treasury. All of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and nonassessable.  Except as disclosed in Schedule 3(r): (i) none of the
Company’s or any Subsidiary’s capital stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company or any Subsidiary; (ii) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or
any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any amounts filed in connection
with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding securities
or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) neither the Company
nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so
disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. The Company
has furnished to the Buyers true, correct and complete copies of the Company’s Articles of Incorporation, as amended and
as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as amended
and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable
or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto that have not been
disclosed in the SEC Documents.

 

 

 

 

 

 

 

 

 

 

 

    
	 	9	 

     

    

 

(s)             
Indebtedness and Other Contracts. Except as disclosed on Schedule 3(s), neither
the Company nor any of the Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating
to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication,
(A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property
or services (including, without limitation, “capital leases” in accordance with generally accepted accounting principles)
(other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing,
in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property),
(F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	10	 

     

    

 

(t)                Absence
of Litigation. Except as set forth on Schedule 3(t), there is no action, suit, proceeding, inquiry or
investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of the Subsidiaries,
the Common Stock or any of the Company’s or the Subsidiaries’ officers or directors which is outside of the
ordinary course of business or individually or in the aggregate could have a Material Adverse Effect.

 

(u)              
Insurance. The Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance
coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

 

(v)             
Employee Relations. Neither the Company nor any of the Subsidiaries is a party to any collective bargaining agreement
or employs any member of a union. The Company believe that its and its Subsidiaries’ relations with their respective employees
are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company
or any of the Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any
such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer
or other key employee of the Company or any of the Subsidiaries is, to the Company’s knowledge, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other
key employee (as the case may be) to the Company’s knowledge does not subject the Company or any of the Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and the Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions
of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

(w)             
Title. Except as set forth on Schedule 3(w), the Company and the Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them which is material to the business
of the Company and the Subsidiaries, in each case, free and clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by
the Company and any of the Subsidiaries. Any real property and facilities held under lease by the Company or any of the Subsidiaries
are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the Company or any of the Subsidiaries.

 

(x)              
Intellectual Property Rights. The Company and the Subsidiaries own or possess adequate rights or licenses to use
all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, original
works, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all
applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective
businesses as now conducted and as presently proposed to be conducted. None of the Company’s or the Subsidiaries’ material
Intellectual Property Rights have expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned,
within three years from the date of this Agreement. The Company has no knowledge of any infringement by the Company or any of the
Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of the Subsidiaries, being threatened, against the Company or any of the Subsidiaries regarding
their Intellectual Property Rights, except as disclosed in the SEC Documents. The Company is not aware of any facts or circumstances
which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and each of the Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property
Rights.

 

 

 

    
	 	11	 

     

    

 

(y)             
Environmental Laws. The Company and the Subsidiaries (i) are in compliance with all Environmental Laws (as defined
herein), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local
or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations
issued, entered, promulgated or approved thereunder.

 

(z)             
Subsidiary Rights. The Company or one of the Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all capital securities of the Subsidiaries as owned by the
Company or such Subsidiary.

 

(aa)           
Tax Status. The Company and each of the Subsidiaries (i) has timely made or filed all foreign, federal and state
income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely
paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply,
except in each case where the failure to file, pay or set aside would not have a Material Adverse Effect. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and the Subsidiaries
know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(bb)           
Internal Accounting and Disclosure Controls. The Company and each of the Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets
or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals
and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the 1934 Act) that are effective in ensuring that information required to be disclosed by
the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within
the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated
and communicated to the Company’s management, including its principal executive officer or officers and its principal financial
officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of the
Subsidiaries has received any notice or correspondence from any accountant relating to any potential material weakness in any part
of the system of internal accounting controls of the Company or any of the Subsidiaries.

 

(cc)           
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or
any of the Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company
in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.

 

 

 

    
	 	12	 

     

    

 

(dd)          
Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an
“investment company,” an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter” for,
an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

 

(ee)            
Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company (i) that
following the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof,
none of the Buyers have been asked by the Company or any of the Subsidiaries to agree, nor has any Buyer agreed with the Company
or any of the Subsidiaries, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) that any Buyer, and
counter parties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently
may have a “short” position in the Common Stock which were established prior to such Buyer’s knowledge of the
transactions contemplated by the Transaction Documents, and (iii) that each Buyer shall not be deemed to have any affiliation with
or control over any arm’s length counter party in any “derivative” transaction. The Company further understands
and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to
the Press Release (as defined in Section 4(i), one or more Buyers may engage in hedging and/or trading activities at various times
during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the
Warrant Shares or Conversion Shares, as applicable, deliverable with respect to the Securities are being determined and (b) such
hedging and/or trading activities, if any, can reduce the value of the existing stockholders’ equity interest in the Company
both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned
hedging and/or trading activities do not constitute a breach of this Agreement or any other Transaction Document or any of the
documents executed in connection herewith or therewith.

 

(ff)              
Manipulation of Price. Neither the Company nor any of the Subsidiaries has, and, to the knowledge of the Company,
no Person acting on their behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization
or manipulation of the price of any security of the Company or any of the Subsidiaries to facilitate the sale or resale of any
of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities,
or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company
or any of the Subsidiaries.

 

(gg)           
Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which
are required to be paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will be,
or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied
with.

 

(hh)           
Shell Company Status. The Company is not, and has not, since November 20, 2013, been, an issuer identified in Rule
144(i)(1).

 

(ii)              
U.S. Real Property Holding Corporation. Neither the Company nor any of the Subsidiaries is, or has ever been, and
so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company and each Subsidiary shall so certify upon
any Buyer’s request.

 

(jj)             
No Disqualification Event. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of
the 1933 Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge,
any Person, with respect to the Company, listed in the first paragraph of Rule 506(d)(1) (a “Covered Person”).
The Company has exercised reasonable care to determine whether any Covered Person is subject to a Disqualification Event.

 

 

 

    
	 	13	 

     

    

 

(kk)            
DTC Eligibility. The Company’s Transfer Agent is a participant in and the Common Stock is eligible for transfer
pursuant to the Depository Trust Company Fast Automated Securities Transfer Program.

 

(ll)              
Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the
Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material,
nonpublic information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated
by this Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on
the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding
the Company and the Subsidiaries, their businesses and the transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company or any of the Subsidiaries is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each press release issued by the Company or any of the Subsidiaries during
the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. No event or circumstance has occurred or information exists
with respect to the Company or any of the Subsidiaries or its or their business, properties, liabilities, prospects, operations
(including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public
disclosure at or before the date hereof or announcement by the Company but which has not been so publicly announced or disclosed.
The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Sections 2.

 

4.            
COVENANTS.

 

(a)              
Best Efforts. Each party shall use its best efforts to timely satisfy each of the conditions to be satisfied by it
as provided in Sections 6 and 7 of this Agreement.

 

(b)              
Form D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof to each Buyer promptly after such filing (provided that this requirement shall be deemed satisfied
upon the filing of the Form D through the SEC’s EDGAR system). The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of
the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action
so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following
the Closing Date.

 

(c)              
Reporting Status. Until the date on which the Registrable Securities (as defined in Section 4(l) below) become freely
tradable on the Principal Market (the “Reporting Period”), the Company shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act (provided that any late report cured to the satisfaction of the SEC within 15
calendar days of the date it was required to be filed shall not be deemed a breach of this Section 4(c)), and the Company shall
not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination.

 

(d)              
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities solely as follows: (i) approximately
$1,651,800 for general working capital purposes and (ii) approximately $250,000 for payments required by certain employment agreements
entered into in connection with the Company’s acquisition of ECS Labs, LLC and expenses related thereto.

 

 

 

    
	 	14	 

     

    

 

(e)              
Financial Information. The Company agrees to send the following to each Buyer during the Reporting Period (i) unless
the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business
Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim
reports or any consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow statements
for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile copies of all press releases issued by the
Company or any of the Subsidiaries, unless such press release is otherwise available to the public through the EDGAR system, and
(iii) copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously
with the making available or giving thereof to the shareholders, unless such notices or other information is otherwise available
to the public through the EDGAR system.

 

(f)              
Listing. The Company shall promptly secure the listing of all of the Registrable Securities upon each national securities
exchange and automated quotation system, if any, upon which the shares of Common Stock are then listed (subject to official notice
of issuance) and shall maintain such listing of all Registrable Securities from time to time issuable under the terms of the Transaction
Documents on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market, the New York or American Stock Exchange, the Nasdaq Global Market, the Nasdaq
Global Select Market or the Nasdaq Capital Market (each, an “Eligible Market”). The Company shall not take any
action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The
Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).

 

(g)              
Fees. (i) The Company shall pay or reimburse Merida Capital Partners III LP (“Merida”) or its
designee(s) (in addition to any other expense amounts paid to any Buyer prior to the date of this Agreement) for all reasonable
costs and expenses incurred by it or its affiliates in connection with the transactions contemplated by the Transaction Documents
for legal fees, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence
in connection therewith. The Company acknowledges that the balance of such legal fees and expenses may be withheld by Merida from
its Purchase Price at the Closing.

 

(ii)        The Company
shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions
(other than for Persons engaged by any Buyer or Persons claiming rights due to the acts of a Buyer) relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear
its own expenses in connection with the sale of the Securities to the Buyers.

 

(h)              
Pledge of Securities. Notwithstanding anything to the contrary contained in Section 2(g),
the Company acknowledges and agrees that the Securities may be pledged by a Buyer in connection with a bona fide margin agreement
or other bona fide loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed
to be a transfer, sale or assignment of the Securities hereunder, except as may otherwise be required under applicable securities
laws, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities
to such pledgee by a Buyer.

 

 

 

 

    
	 	15	 

     

    

 

(i)               
Disclosure of Transactions and Other Material Information. On or before 8:30 a.m., New York time, on the second (2nd)
Business Day following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material
terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the
material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement), the form of
the Notes and the form of the Warrants) (including all attachments, the “8-K Filing”). From and after the issuance
of the Press Release, the Company shall have disclosed all material, nonpublic information delivered to any of the Buyers by the
Company or any of the Subsidiaries, or any of their respective officers, directors, employees or agents (if any) in connection
with the transactions contemplated by the Transaction Documents. The Company shall not, and the Company shall cause each of the
Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with any
material, nonpublic information regarding the Company or any of the Subsidiaries from and after the issuance of the Press Release
without the express prior written consent of such Buyer. If a Buyer has, or believes it has, received any material, nonpublic information
regarding the Company or any of its Subsidiaries in breach of the immediately preceding sentence, such Buyer shall provide the
Company with written notice thereof in which case the Company shall, within one (1) Trading Day of the receipt of such notice,
make a public disclosure of all such material nonpublic information so provided. In the event of a breach of any of the foregoing
covenants by the Company, any of the Subsidiaries, or any of its or their respective officers, directors, employees and agents
(as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the
Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement
or otherwise, of such material, nonpublic information without the prior approval by the Company, any of the Subsidiaries, or any
of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of the
Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents, for any such disclosure
of such information. Subject to the foregoing, neither the Company nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that, in the case of clause (i), each Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release). Without the prior written consent of any applicable Buyer,
the Company shall not (and shall cause each of the Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing
(other than the 8-K Filing), announcement, release or otherwise, except as otherwise required by any law, rule or regulation applicable
to the Company after consultation with the Buyer.

 

(j)               
Reservation of Shares. So long as any Notes or Warrants remain outstanding, the Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, no less than 120% of (i) the maximum number of shares
of Common Stock issuable upon conversion of all the Notes (without regard to any limitations on the exercise of the Notes set forth
therein) and (ii) the maximum number of shares of Common Stock issuable upon exercise of all the Warrants (without regard to any
limitations on the exercise of the Warrants set forth therein).

 

(k)              
Conduct of Business. The business of the Company and the Subsidiaries shall not be conducted in violation of any
law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or
in the aggregate, in a Material Adverse Effect.

 

(l)               
Piggyback Registrations. If, at any time during the three (3) year period following the date hereof, there is not
an existing and effective registration statement covering all of the Registrable Securities and the Company shall determine to
prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under
the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their
then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with the company’s stock option or other employee benefit plans), then the Company
shall deliver to each Buyer a written notice of such determination and, if within fifteen (15) days after the date of the delivery
of such notice, any such Buyer shall so request in writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such Buyer requests to be registered; provided, however, that the Company shall
not be required to register any Registrable Securities pursuant to this Section 4(l) that are eligible for resale pursuant to Rule
144 (without volume restrictions). For purposes hereof, “Registrable Securities” means (i) the Conversion Shares
issued or issuable upon conversion of the Notes, (ii) the Warrant Shares issued or issuable upon exercise of the Warrants and (iii)
any capital stock of the Company issued or issuable with respect to the Notes, the Conversion Shares, the Warrant Shares or the
Warrants, including, without limitation, (1) as a result of any share split, share dividend, recapitalization, exchange or similar
event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock are converted or exchanged
and shares of capital stock of a Successor Entity (as defined in the Warrants) into which the shares of Common Stock are converted
or exchanged, in each case, without regard to any limitations on exercise of the Warrants.

 

 

 

    
	 	16	 

     

    

 

(m)             
Passive Foreign Investment Company. The Company shall conduct its business in such a manner as will ensure that the
Company will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended.

 

(n)               Restriction on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly
or indirectly, redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the prior express written
consent of the Required Holders (as defined in the Notes).

 

(o)             
Restriction on Certain Indebtedness. So long as any Notes are outstanding, the Company shall not, directly or indirectly,
(i) incur any Indebtedness (as defined in the Notes) other than Permitted Indebtedness (as defined in the Notes) or (ii) grant
any Liens (as defined in the Notes) other than Permitted Liens (as defined in the Notes), in each case, without the prior express
written consent of the Required Holders (as defined in the Notes).

 

(p)               Notice of Disqualification Events. The Company will notify the in writing, prior to the Closing of (i) any Disqualification
Event relating to any Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating
to any Covered Person.

 

5.            
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)              
Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company
as it may designate by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall
record the name and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address
of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable upon conversion
of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep
the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

 

(b)             
Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent
transfer agent in the form acceptable to the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue
certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered
in the name of each Buyer or its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Notes or the exercise of the Warrants (as the case may be).
The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b), and stop transfer instructions to give effect to Section 2(g)
hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise
be freely transferable on the books and records of the Company to the extent provided in this Agreement and the other Transaction
Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g),
the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit
shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such
sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion Shares or Warrant Shares
sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent
shall issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance
with Section 5(d) below. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company
shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s
transfer agent on each Effective Date. Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated
with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne by the Company.

 

 

 

    
	 	17	 

     

    

 

(c)              
Legends. Each Buyer understands that the certificates or other instruments representing the Notes and the Warrants
and, until such time as the resale of the Conversion Shares and the Warrant Shares (as the case may be) have been registered under
the 1933 Act as contemplated by Section 4(l) hereof or are eligible for sale pursuant to Rule 144, the stock certificates representing
the Conversion Shares and the Warrant Shares (as the case may be), except as set forth below, shall bear any legend as required
by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):

 

[NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE
BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT 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 TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE 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.

 

(d)             
Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section
5(c) above or any other legend (i) while a registration statement (including the Registration
Statement) covering the resale of such Securities is effective under the Securities Act, (ii) if such Securities are eligible to
be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such
Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of counsel), (iii) in
connection with a sale, assignment or other transfer (other than under Rule 144) provided such Buyer provides the Company with
an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the
Securities may be made without registration under the applicable requirements of the 1933 Act or (iv) if such legend is not required
under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements
issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than two (2) Trading Days
(as defined below) following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended
certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form
necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be
required above in this Section 5(d), as directed by such Buyer, either: (A) deliver (or cause
to be delivered to) such Buyer a certificate representing such Securities that is free from all restrictive and other legends or
(B) credit the balance account of such Buyer’s or such Buyer’s nominee with DTC with a number of shares of Common Stock
equal to the number of Conversion Shares or Warrant Shares (as the case may be) represented by the certificate, the conversion
notice or exercise notice (as the case may be) so delivered by such Buyer (the date by which such certificate is required to be
delivered to such Buyer or such credit is so required to be made to the balance account of such Buyer’s or such Buyer’s
nominee with DTC pursuant to the foregoing is referred to herein as the “Required Delivery Date”).

 

(e)              
Failure to Timely Deliver; Buy-In. If the Company fails to (i) issue and deliver (or cause to be delivered) to a
Buyer by the Required Delivery Date a certificate representing the Securities so delivered to the Company by such Buyer that is
free from all restrictive and other legends in accordance with Section 5(d) above, or (ii) credit the balance account of such Buyer’s
or such Buyer’s nominee with DTC for such number of shares of Conversion Shares or Warrant Shares so delivered to the Company,
then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer on each day after
the Required Delivery Date that the issuance or credit of such shares is not timely effected an amount equal to 2% of original
principal amount of such Buyer’s Note. In addition to the foregoing, if the Company fails to so properly deliver such unlegended
certificates or so properly credit the balance account of such Buyer’s or such Buyer’s nominee with DTC by the Required
Delivery Date, and if on or after the Required Delivery Date such Buyer purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Buyer of shares of Common Stock that such Buyer anticipated
receiving from the Company without any restrictive legend (a “Buy-In”), then the Company shall, within two (2)
Trading Days after such Buyer’s request and in such Buyer’s sole discretion, either (i) pay cash to such Buyer in an
amount equal to such Buyer’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock
so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation
to deliver to such Buyer a certificate or certificates or credit such Buyer’s DTC account representing such number of shares
of Common Stock that would have been issued if the Company timely complied with its obligations hereunder and pay cash to such
Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Conversion
Shares or Warrant Shares (as the case may be) that the Company was required to deliver to such Buyer by the Required Delivery Date
times (B) the average VWAP of the Common Stock for the five (5) Trading Day period immediately preceding the Required Delivery
Date.

 

 

 

    
	 	18	 

     

    

 

For purposes of this
Section 5(e), “VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for the
Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded) during the
period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg Financial
Markets (“Bloomberg”) through its “Volume at Price” function or, if the foregoing does not apply,
the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such
security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average
of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If VWAP cannot be calculated for
such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value
as mutually determined by the Company and the Buyer. If the Company and the Buyer are unable to agree upon the fair market value
of such security, then they shall agree in good faith on a reputable investment bank to make such determination of fair market
value, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company. All such determinations
shall be appropriately adjusted for any share dividend, share split or other similar transaction during such period. “Trading
Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

6.                  
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

(a)              
The obligation of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time in their sole discretion by providing each
Buyer with prior written notice thereof:

 

(i)         
Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii)        
Such Buyer shall have delivered to the Company the Purchase Price (less, in the case of MCP Wellness II LP, a Delaware limited
partnership, the amount withheld pursuant to Section 4(g) of this Agreement on behalf of Merida) for the Note and the related Warrants
being purchased by such Buyer at the Closing by (A) wire transfer of immediately available funds pursuant to the wire instructions
provided by the Company or (B) by cancellation of indebtedness of Company or its Subsidiaries to Buyer.

 

(iii)       
The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as
of a specific date, which shall be true and correct as of such date), and such Buyer shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by such Buyer at or prior to the Closing Date.

 

7.            
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

(a)               The obligation
of each Buyer hereunder to purchase its Note and the related Warrants at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

 

 

    
	 	19	 

     

    

 

(i)        
The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer (A) each of the
Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer a Note (in such
amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers and (B) the related Warrants
(for such number of shares of Common Stock as is set forth across from such Buyer’s name in column (4) of the Schedule of
Buyers) being purchased by such Buyer at the Closing pursuant to this Agreement.

 

(ii)        
The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in form acceptable
to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.

 

(iii)       
The Company shall have delivered to such Buyer a certificate evidencing the incorporation and good standing of the Company
in its state of incorporation issued by the Secretary of State (or comparable office) of such state within ten (10) days of the
Closing Date.

 

(iv)        The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and the organizational
documents of each Subsidiary and (iii) the Bylaws of the Company and the bylaws of each Subsidiary, each as in effect at the Closing,
in the form attached hereto as Exhibit C.

 

(v)       
Each and every representation and warranty of the Company shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested
by such Buyer in the form attached hereto as Exhibit D.

 

(vi)      
The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of
shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.

 

(vii)       The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Closing Date, in writing by the SEC or the Principal Market.

 

(viii)      The Company shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for
the sale of the Securities, including without limitation, those required by the Principal Market.

 

(ix)        No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.

 

 

 

    
	 	20	 

     

    

 

(x)         Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have
or result in a Material Adverse Effect.

 

(xi)        The Company and the Subsidiaries shall have delivered to such Buyer such other documents relating to the transactions contemplated
by this Agreement as such Buyer or its counsel may reasonably request.

 

8.            
TERMINATION.

 

In the event that the
Closing shall not have occurred with respect to a Buyer on or before ten (10) days from the date hereof due to the Company’s
or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
above (and a non-breaching party’s failure to waive such unsatisfied condition(s)), any such non-breaching party at any time
shall have the right to terminate its obligations under this Agreement with respect to such breaching party on or after the close
of business on such date without liability of such non-breaching party to any other party; provided, however, that
the abandonment of the sale and purchase of the Notes and the Warrants shall be applicable only to such non-breaching party providing
such written notice; provided further, notwithstanding any such termination the Company shall remain obligated to reimburse
the non-breaching Buyers for the expenses described in Section 4(g) above. Nothing contained in
this Section 8 shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

 

9.            
MISCELLANEOUS.

 

(a)             
Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)             
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original
thereof.

 

 

 

    
	 	21	 

     

    

 

(c)              
Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed
to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.

 

(d)               Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

(e)              
Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached
hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between
the Buyers, the Company, the Subsidiaries, their affiliates and Persons acting on their behalf with respect to the matters contained
herein and therein (provided that the foregoing shall not have any effect on any agreements any Buyer has entered into with the
Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company),
and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein
and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this Agreement may be amended or waived other than by an
instrument in writing signed by the Company and the holders of at least sixty percent (60%) of the then outstanding principal amount
of the Notes issued, and any amendment or to, or waiver of any provision of, this Agreement made in conformity with the provisions
of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable,
provided that any party may give a waiver in writing as to itself. No such amendment or waiver (unless given pursuant to the foregoing
proviso) shall be effective to the extent that it applies to less than all of the holders of the Notes then outstanding. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, holders of the Notes
or holders of the Warrants (as the case may be). The Company has not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made
any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise.

 

(f)               
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms
of this Agreement 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); or (iii) one (1) Business Day after deposit with an overnight courier service with next
day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

 

If to the Company:

 

Freedom Leaf Inc.

3571 E. Sunset Road, Suite 420

Las Vegas, Nevada 89120

Telephone: 954-895-3316

Facsimile:

Attention: Chief Executive Officer

 

If to the Transfer Agent:

 

Globex Transfer, LLC

780 Deltona Blvd., Suite 202

Deltona, FL 32725

Telephone: 813-344-4464

Facsimile: 386-267-2124

Attention: Michael Turner

 

 

 

    
	 	22	 

     

    

 

If to a Buyer, to its address and facsimile
number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,

 

with a copy (for informational
purposes only) to:

 

Kleinberg, Kaplan, Wolff & Cohen,
P.C.

551 Fifth Avenue

New York, New York 10176

Telephone: (212) 986-6000

Facsimile: (212) 986-8866

Attention: Jonathan Ain, Esq.

 

with a copy (for informational
purposes only) to:

 

BRUNSON CHANDLER & JONES, PLLC

175 S. Main Street, 14th Floor

Salt Lake City, UT 84111

Telephone: 801.303.5730

Facsimile: 801.355.5005

Attention: Lance Brunson, Esq.

 

or to 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 five (5) days prior to the effectiveness of such change; provided, that Kleinberg, Kaplan, Wolff & Cohen, P.C.
shall only be provided copies of notices sent to Merida. Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) 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 (C) provided by an overnight
courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service
in accordance with clause (i), (ii) or (iii) above, respectively.

 

(g)              
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of any of the Securities. The Company shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the holders of at least eighty percent (80%) of the aggregate number
of Registrable Securities issued and issuable under the Transaction Documents, including, without limitation, by way of a Fundamental
Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Warrants). A Buyer may assign some or all of its rights hereunder in connection with transfer of
any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.

 

(h)              
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person,
other than the Indemnitees referred to in Section 9(k).

 

 

 

    
	 	23	 

     

    

 

(i)               
Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be
responsible only for its own representations, warranties, agreements and covenants hereunder.

 

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

 

(k)             
Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring
the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents
or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether
any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising
out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary
in any of the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained
in any of the Transaction Documents or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third
party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) and arising out of
or resulting from (i) the execution, delivery, performance or enforcement of any of the Transaction Documents, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii)
any disclosure properly made by such Buyer pursuant to Section 4(i), (iv) the status of such Buyer
or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents,
(v) any untrue statement or alleged untrue statement of a material fact in a registration statement or prospectus (as amended or
supplemented) covering all or any portion of the Registrable Securities or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were
made, not misleading or (vi) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including
without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a registration statement, except, with respect to clause (c), to the extent such Indemnified Liability arises
from an Indemnitee’s gross negligence, bad faith or willful misconduct. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.

 

(l)              
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.

 

(m)             
Remedies. Each Buyer and each holder of any Securities shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall
be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiary’s
(as the case may be) obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers.
The Company therefore agrees that the Buyers shall be entitled to seek specific performance and/or temporary, preliminary and permanent
injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving
actual damages and without posting a bond or other security.

 

 

 

    
	 	24	 

     

    

 

(n)             
Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and
the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the
case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights

 

(o)              
Payment Set Aside. To the extent that the Company or any Subsidiary makes a payment or payments to any Buyer hereunder
or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder,
and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company or any Subsidiary, a trustee, receiver or any other Person under any law (including, without limitation,
any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar
amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“US Dollars”),
and all amounts owing under this Agreement and all other Transaction Documents shall be paid in US Dollars. All amounts denominated
in other currencies shall be converted in the US Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation.
“Exchange Rate” means, in relation to any amount of currency to be converted into US Dollars pursuant to this
Agreement, the US Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

(p)             
Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents
are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create
a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations or the
transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are not acting
in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents
has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for
such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such
Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction
Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company in the negotiation
of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control
of the Company, not the action or decision of any Buyer, and was done solely for the convenience of the Company and the Subsidiaries
and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained
in this Agreement and in each other Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between
the Company, the Subsidiaries and the Buyers collectively and not between and among the Buyers.

 

[signature
pages follow]

 

 

 

    
	 	25	 

     

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.

 

	 	

COMPANY:

	 	 
	 	FREEDOM LEAF Inc.
	 	 
	 	 
	 	By: /s/ Carlos
Frias
	 	Name: Carlos Frias
	 	Title: CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	26	 

     

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.

 

	 	
        BUYERS:

	 	
         

         

        MCP WELLNESS II LP

         

        By: MCP Wellness II Manager LLC, its general
        partner

         

         

         

        By: /s/ Kevin Gibbs

        Name: Kevin Gibbs

        Title: Authorized Signatory

         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	27	 

     

    

 

SCHEDULE OF BUYERS

 

 

	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)	 	(7)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buyer	 	Address
                                         	 	Principal
                                         Amount of Note	 	Number
                                         

                                         of 
 Warrants
	 	Purchase
                                         Price (cash)	 	Purchase
                                         Price (Cancellation of indebtedness)	 	Legal Representative’s

    Address
	 	 	 	 	 	 	 	 	 	 	 	 	 
	MCP
                                         Wellness II LP
 
 
  
	 	641
                                         Lexington Avenue
 18th
                                         Floor
 New
                                         York, NY 10022
  
  
  
	 	$5,000,000	 	15,000,000	 	$1,901,800	 	A
                                         total of $3,098,200, comprised of cancellation of the following securities, of which
                                         all right, title and interest have been assigned to MCP Wellness II LP prior to the Effective
                                         Date:
  
 Promissory
                                         Note, dated as of April 15, 2019, issued by ECS Labs, LLC, in favor of Merida Capital
                                         Partners II LP, for a principal sum of $200,000.
  
 Promissory
                                         Note, dated as of May 21, 2019, issued by Freedom Leaf Inc., in favor of Merida Capital
                                         Partners II LP, for a principal sum of $183,750.
  
 Promissory
                                         Note, dated as of June 18, 2019, issued by Freedom Leaf Inc., in favor of Merida Capital
                                         Partners III LP, for a principal sum of $630,000.
  
 Promissory
                                         Note, dated as of July 24, 2019, issued by Freedom Leaf Inc., in favor of Merida Capital
                                         Partners III LP, for a principal sum of $200,000.
  
 Promissory
                                         Note, dated as of August 20, 2019, issued by Freedom Leaf Inc., in favor of Merida Capital
                                         Partners III LP, for a principal sum of $400,000.
  
 Promissory
                                         Note, dated as of September 13, 2019, issued by Freedom Leaf Inc., in favor of Merida
                                         Capital Partners III LP, for a principal sum of $500,000.
  
 Promissory
                                         Note, dated as of October 15, 2019, issued by Freedom Leaf Inc., in favor of Merida Capital
                                         Partners III LP, for a principal sum of $900,000.
  
  
  
	 	Kleinberg, Kaplan, Wolff & Cohen, P.C. 
551 Fifth Avenue
    
New York, NY 10176 
Attn: Jonathan Ain

 

 

 

 

    
	 	28	 

     

    

 

EXHIBITS

 

		Exhibit A	Form of Note

		Exhibit B	Form of Warrant

		Exhibit C	Form of Secretary’s Certificate

		Exhibit D	Form of Officer’s Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	29Exhibit 10.2

 

NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE 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. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE
TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.

 

Freedom
Leaf Inc.

 

Convertible
Note

 

 

	Issuance Date: November 18,
    2019	Original Principal Amount: U.S. $5,000,000.00

 

FOR VALUE RECEIVED,
Freedom Leaf Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of MCP Wellness
II LP, a Delaware limited partnership, or its registered assigns (“Holder”) the amount set out above as the
Original Principal Amount (as increased on any Interest Date, or 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, whether upon an Interest Date (as defined below) or the Maturity Date
or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Note
(including all Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of
an issue of Convertible Notes issued pursuant to that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated on or around the date hereof, by and among, inter alia, the Company and the Holder on the Closing Date (collectively,
the “Notes” and such other Convertible Notes, the “Other Notes”). Certain capitalized terms
used herein are defined in Section 26.

 

1.            
PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder the
outstanding Principal amount, together with any accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and
Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

 

2.            
INTEREST; INTEREST RATE.

 

(a)       
Interest on this Note shall commence accruing on the Issuance Date and shall accrue daily
at the Interest Rate on the outstanding Principal amount from time to time, shall be computed on the basis of a 360-day year comprised
of twelve 30-day months from the actual number of days elapsed and shall be payable in arrears for each Interest Period on the
last day of the applicable Interest Period during the period beginning on the Issuance Date and ending, subject to earlier acceleration,
redemption or conversion, on, and including, the Maturity Date (even if the Maturity Date is not the last day of an Interest Period)
(each, an “Interest Date”), with the first Interest Date being December 31, 2019. Interest shall be payable
under this Note not in cash but by increasing the Principal amount of this Note by an amount equal to the Interest accrued for
the applicable Interest Period. From and after the occurrence and during the continuance of any Event of Default, the Interest
Rate shall be increased to eighteen percent (18%). In the event that such Event of Default is subsequently cured, the adjustment
referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest
as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the
extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event
of Default.

 

 

 

    
	 	1	 

     

    

 

3.            
CONVERSION OF NOTES. This Note shall be convertible into shares of Common Stock (as
defined below), on the terms and conditions set forth in this Section 3.

 

(a)        
Conversion Right. Subject to the provisions of Section 3(d), at any time or times on
or 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(c), at the Conversion
Rate (as defined below). 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, stamp and similar taxes that may be payable with
respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

 

(b)        
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any
Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(the “Conversion Rate”).

 

(i)                
“Conversion Amount” means the portion of the Principal (including for the
avoidance of doubt any accrued Interest added to such Principal pursuant to Section 2(a) hereof) to be converted, redeemed or otherwise
with respect to which this determination is being made.

 

(ii)             
“Conversion Price” means, as of any Conversion Date or other date of determination,
$0.20, subject to adjustment as provided herein.

 

(c)        
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 facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto
as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section 3(c)(iii), surrender
this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction). On or before the first (1st) Trading Day following
the date of receipt of a Conversion Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or
before the second (2nd) Trading Day following the date of receipt of a Conversion Notice (the “Share Delivery
Date”), the Company shall 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 (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver
(via reputable overnight courier) 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. If this Note is physically
surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal
portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than two
(2) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note
(in accordance with Section 16(d)) 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 on the Conversion Date. In the event of a partial conversion of this Note pursuant hereto, the Principal
amount converted shall be deducted as set forth in the Conversion Notice.

 

 

 

    
	 	2	 

     

    

 

(ii)             
Company’s Failure to Timely Convert. If the Company shall fail, for any reason
or for no reason, to issue to the Holder within two (2) Trading Days after the Company’s receipt of a facsimile copy of a
Conversion Notice, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s balance account with
DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of any Conversion
Amount (as the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to the
Holder, (1) the Company shall pay in cash to the Holder on each day after such second (2nd) Trading Day that the issuance
of such shares of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares
of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled and (B) the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares
of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice to the Company, may void
its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not been
converted pursuant to such Conversion Notice; provided that the voiding of a Conversion Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise.
In addition to the foregoing, if within two (2) Trading Days after the Company’s receipt of the facsimile copy of a Conversion
Notice, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the
Company’s share register or credit the Holder’s or its designee’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if
on or after such second (2nd) Trading Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such conversion that the
Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within two (2) Business
Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver
such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to
the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account
with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder
(as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Stock times (B) the Closing Sale Price of the Common Stock on the Trading Day immediately
preceding the Conversion Date.

 

(iii)           
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, Interest and Late
Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) 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.

 

 

 

    
	 	3	 

     

    

 

(iv)            
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion
Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions
of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to
have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based
on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount
of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable
to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common
Stock not in dispute and resolve such dispute in accordance with Section 21.

 

(d)        
Limitations on Conversions.

 

(i)                
Beneficial Ownership. Notwithstanding anything to the contrary contained in this Note,
this Note shall not be convertible by the Holder hereof, and the Company shall not effect any conversion of this Note or otherwise
issue any shares of Common Stock to the extent (but only to the extent) that, if after giving effect to such conversion, the Holder
or any of its affiliates would beneficially own in excess of 4.9% (the “Maximum Percentage”) of the outstanding
shares of Common Stock immediately after giving effect to such conversion. By written notice to the Company, the Holder
may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.9% specified in such
notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice
is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of
the Notes. To the extent the above limitation applies, the determination of whether this Note shall be convertible (vis-à-vis
other convertible, exercisable or exchangeable securities owned by the Holder) shall, subject to such Maximum Percentage limitation,
be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No
prior inability to convert this Note, or to issue shares of Common Stock, pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. For purposes
of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined by the Holder in accordance with Section 13(d) of the 1934 Act (as defined
in the Securities Purchase Agreement) and the rules and regulations promulgated thereunder. The provisions of this paragraph shall
be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation.
The limitations contained in this paragraph shall apply to a successor Holder of this Note. For any reason at any time, upon the
written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without limitation, pursuant to this Note or securities issued pursuant to
the Securities Purchase Agreement. Each delivery of a Conversion Notice by the Holder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Conversion
Shares requested by the Holder in such Conversion Notice is permitted under this paragraph.

 

 

 

    
	 	4	 

     

    

 

4.            
RIGHTS UPON EVENT OF DEFAULT.

 

(a)        
Event of Default. Each of the following events shall constitute an “Event
of Default”:

 

(i)                
the suspension from trading or failure of the Common Stock to be listed on an Eligible Market
for a period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period;

 

(ii)             
the Company’s (A) failure to cure a Conversion Failure by delivery of the required number
of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or (B) notice, written or oral, to
any holder of the Notes, including, without limitation, by way of public announcement or through any of its agents, at any time,
of its intention not to comply with a request for conversion of any Notes into shares of Common Stock that is requested in accordance
with the provisions of the Notes, other than pursuant to Section 3(d);

 

(iii)           
at any time following the tenth (10th) consecutive day that the Holder’s
Authorized Share Allocation is less than the number of shares of Common Stock that the Holder would be entitled to receive upon
a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d)
or otherwise);

 

(iv)            
the Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal,
Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s or
any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined
in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failure to pay Interest
and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least five (5) Trading
Days;

 

(v)              
the Company fails to remove any restrictive legend on any certificate or any shares of Common
Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities acquired by the Holder under the
Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement,
unless otherwise then prohibited by applicable federal securities laws, and any such remains uncured for at least five (5) Trading
Days;

 

(vi)            
the occurrence of any default under, redemption of or acceleration prior to maturity of any
Indebtedness (as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect
to (A) Permitted Senior Indebtedness and (B) any Other Notes;

 

(vii)         
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for
the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or
any Subsidiary by a third party, shall not be dismissed within thirty (30) days of their initiation;

 

 

 

    
	 	5	 

     

    

 

(viii)       
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under
any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document
in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal,
state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial
part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of
any such action or the taking of any action by any Person to commence a UCC foreclosure sale or any other similar action under
federal, state or foreign law;

 

(ix)            
the entry by a court of (i) a decree, order, judgment or other similar document in respect
of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging
the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization,
arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or
foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar
document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30)
consecutive days;

 

(x)              
a final judgment or judgments for the payment of money in excess of $250,000 individually,
or $500,000 in the aggregate, are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within
ninety (90) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within ninety (90)
days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an
indemnity from a credit worthy party shall not be included in calculating the amounts set forth above so long as the Company provides
the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory
to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as
the case may be) will receive the proceeds of such insurance or indemnity within ninety (90) days of the issuance of such judgment;

 

(xi)            
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay,
when due, or within any applicable grace period, any payment with respect to any individual Indebtedness in excess of $250,000
due to any third party (or aggregate Indebtedness in excess of $500,000 due to any third parties), other than, with respect to
unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP, or
otherwise be in breach or violation of any agreement for monies owed or owing in an amount in excess of $250,000 individually,
or $500,000 in the aggregate, in each case, which breach or violation permits the other party thereto to declare a default or otherwise
accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage
of time or the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary,
which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including
results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its
Subsidiaries, individually or in the aggregate;

 

 

 

    
	 	6	 

     

    

 

(xii)         
the Company or any Subsidiary materially breaches any representation, warranty, covenant or
other term or condition of any Transaction Document, except, in the case of a breach of a covenant of any Transaction Document
which is curable, only if such breach remains uncured for a period of at least five (5) Trading Days;

 

(xiii)       
any material breach or failure in any respect by the Company or any Subsidiary to comply with
any provision of Section 12 of this Note;

 

(xiv)        
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes;

 

(xv)          
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs.

 

(b)        
Redemption Right. Upon the occurrence of an Event of Default with respect to this Note
or any Other Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier
(with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier
of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may
require the Company to redeem all or any portion of this Note by delivering written notice thereof (the “Event of Default
Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note
the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b)
shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the sum of the Conversion Amount to
be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late Charges
with respect to such Conversion Amount and Interest and (B) the Redemption Premium and (ii) the product of (X) the Conversion Rate
with respect to such sum of the Conversion Amount together with accrued and unpaid Interest with respect to such Conversion Amount
and accrued and unpaid Late Charges with respect to such Conversion Amount and Interest in effect at such time as the Holder delivers
an Event of Default Redemption Notice and (Y) the product of (1) the Equity Value Redemption Premium and (2) the greater of (I)
the Closing Sale Price of the Common Stock on the date immediately preceding such Event of Default, (II) the Closing Sale Price
of the Common Stock on the date immediately after such Event of Default and (III) the Closing Sale Price of the Common Stock on
the date the Holder delivers the Event of Default Redemption Notice (the “Event of Default Redemption Price”).
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 10. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any interest thereon) is paid in full,
the Conversion Amount submitted for redemption under this Section 4(b) (together with any interest thereon) may be converted, in
whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant
hereto, the Principal amount redeemed shall be deducted as set forth in the Event of Default Redemption Notice. The parties hereto
agree that in the event of the Company’s redemption of any portion of the Note under this Section 4(b), the Holder’s
damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and
the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption
premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s
actual loss of its investment opportunity and not as a penalty.

 

 

 

    
	 	7	 

     

    

 

5.            
RIGHTS UPON FUNDAMENTAL TRANSACTION.

 

(a)        
Assumption. The Company shall not enter into or be party to a Fundamental Transaction
unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction
Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory
to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder
of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal
amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes
and having similar ranking to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent
Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the
occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the
Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of
the Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other
property (except such items still issuable under Section 6, which shall continue to be receivable thereafter) issuable upon the
conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon
the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without
regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. The provisions
of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to
any limitations on the conversion of this Note.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	8	 

     

    

 

(b)       
Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading
Days prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction,
the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Fundamental Transaction
Notice”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction Notice
and ending on the later of twenty (20) Trading Days after (A) consummation of such Fundamental Transaction or (B) the date of receipt
of such Fundamental Transaction Notice, the Holder may require the Company to redeem all or any portion of this Note by delivering
written notice thereof (“Fundamental Transaction Redemption Notice”) to the Company, which Fundamental Transaction
Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this Note subject to redemption
pursuant to this Section 5 shall be redeemed by the Company in cash at a price equal to the greater of (i) the sum of (x) the product
of the Fundamental Transaction Redemption Premium and the Conversion Amount being redeemed and (y) the amount of any accrued but
unpaid Interest on such Conversion Amount being redeemed and accrued and unpaid Late Charges, if any, with respect to such Conversion
Amount and Interest through the date of such redemption payment and (ii) the product of (x) the Equity Value Redemption Premium
and (y) the sum of (1) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by dividing
(I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of Common Stock to be
paid to the holders of the shares of Common Stock upon consummation of the Fundamental Transaction (any such non-cash consideration
to be valued at the higher of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation
of such Fundamental Transaction, the Closing Sale Price on the Trading Day immediately following the public announcement of such
proposed Fundamental Transaction and the Closing Sale Price on the Trading Day immediately prior to the public announcement of
such proposed Fundamental Transaction) by (II) the Conversion Price plus (2) the amount of any accrued but unpaid Interest on such
Conversion Amount being redeemed and accrued and unpaid Late Charges, if any, with respect to such Conversion Amount and Interest
through the date of such redemption payment, (the “Fundamental Transaction Redemption Price”). Redemptions required
by this Section 5 shall be made in accordance with the provisions of Section 10 and shall have priority to payments to stockholders
in connection with a Fundamental Transaction. To the extent redemptions required by this Section 5(b) are deemed or determined
by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Fundamental Transaction
Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under this
Section 5(b) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant
to Section 3. In the event of a partial redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted
as set forth in the Fundamental Transaction Redemption Notice. The parties hereto agree that in the event of the Company’s
redemption of any portion of the Note under this Section 5(b), the Holder’s damages would be uncertain and difficult to estimate
because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable
substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by
the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and
not as a penalty.

 

 

 

 

 

 

 

 

 

    
	 	9	 

     

    

 

6.            
RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

 

(a)        
Purchase Rights. In addition to any adjustments pursuant to Section 7 below, if at
any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which
the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion
of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the
Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage).

 

(b)       
Other Corporate Events. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled
to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion
of this Note (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to
which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held
by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities
or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in
such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the
form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall
be applied without regard to any limitations on the conversion or redemption of this Note.

 

7.            
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

(a)        
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever from
and after the Issuance Date the Company issues or sells, or in accordance with this Section 7(a) is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the
Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share
(the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such
issue or sale or deemed issuance or sale (such lesser price being referred to as the “Applicable Price”) (the
foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Conversion Price then in
effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price
under this Section 7(a), the following shall be applicable:

 

 

 

    
	 	10	 

     

    

 

(i)                
Issuance of Options. If the Company in any manner grants or sells any Options and the
lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share. For purposes of this Section 7(a)(i), the “lowest price per
share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting
or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable
upon exercise of such Option. Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the
actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

(ii)             
Issuance of Convertible Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise
or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security
and upon conversion, exercise or exchange of such Convertible Security. Except as contemplated below, no further adjustment of
the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange
of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options
for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except
as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

(iii)           
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided
for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common
Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted
to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such
increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be)
at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Issuance Date are increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this
Section 7(a) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

 

 

    
	 	11	 

     

    

 

(iv)            
Calculation of Consideration Received. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration
is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (i) the
aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (ii) the fair
market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold
in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the
Company. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares
of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such
security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options
or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as
the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly
by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within
five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(v)              
Record Date. If the Company takes a record of the holders of shares of Common Stock
for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date
will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase
(as the case may be).

 

(b)       
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If
the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Issuance Date combines (by
combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment
pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination. If
any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder,
then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

 

(c)        
Other Events. In the event that the Company (or any direct or indirect subsidiary
thereof) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate
to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not
expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company’s Board of Directors (the “Board”) shall
in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 7(c) will increase the Conversion Price as otherwise determined
pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting
its interests hereunder against such dilution, then the Board and the Holder shall agree, in good faith, upon an independent investment
bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and
whose fees and expenses shall be borne by the Company.

 

 

 

    
	 	12	 

     

    

 

8.           
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not,
by amendment of its Articles of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note
and take all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon conversion of this
Note above the Conversion Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this
Note, and (iii) shall, so long as any of the Notes are outstanding, take all action necessary to reserve and keep available out
of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Notes, the maximum
number of shares of Common Stock as shall from time to time be necessary to effect the conversion of the Notes then outstanding
(without regard to any limitations on conversion).

 

9.            
RESERVATION OF AUTHORIZED SHARES.

 

(a)        
Reservation. The Company shall initially reserve out of its authorized and unissued
Common Stock a number of shares of Common Stock for each of the Notes equal to 120% of the entire Conversion Rate with respect
to the entire Conversion Amount of each such Note as of the Issuance Date. So long as any of the Notes are outstanding, the Company
shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose
of effecting the conversion of the Notes, 120% of the number of shares of Common Stock as shall from time to time be necessary
to effect the conversion of all of the Notes then outstanding; provided that at no time shall the number of shares of Common
Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations
on conversions) (the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions
of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based
on the original principal amount of the Notes held by each holder at the Closing (as defined in the Securities Purchase Agreement)
or increase in the number of reserved shares (as the case may be) (the “Authorized Share Allocation”). In the
event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro
rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of
the Notes then held by such holders.

 

(b)        
Insufficient Authorized Shares. If, notwithstanding Section 9(a), and not in limitation
thereof, at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number
of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that
they approve such proposal.

 

 

 

    
	 	13	 

     

    

 

10.          
HOLDER’S REDEMPTIONS.

 

(a)        
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price
to the Holder within five (5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption
Notice. If the Holder has submitted a Fundamental Transaction Redemption Notice in accordance with Section 5(b), the Company shall
deliver the applicable Fundamental Transaction Redemption Price to the Holder concurrently with the consummation of such Fundamental
Transaction if such notice is received prior to the consummation of such Fundamental Transaction and within five (5) Business Days
after the Company’s receipt of such notice otherwise. In the event of a redemption of less than all of the Conversion Amount
of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section
16(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption
Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder
all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable
Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x)
the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately
return this Note, or issue a new Note (in accordance with Section 16(d)) to the Holder representing the sum of such Conversion
Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late
Charges with respect to such Conversion Amount and Interest and (z) the Conversion Price of this Note or such new Notes shall be
adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided
and (B) the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is
voided. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall
not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such notice
with respect to the Conversion Amount subject to such notice.

 

(b)       
Redemption by Other Holders. Upon the Company’s receipt of notice from any of
the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events
or occurrences described in Section 4(b) or Section 5(b) (each, an “Other Redemption Notice”), the Company shall
immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile a copy of such notice.
If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period
beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s
applicable Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt
of the Holder’s applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts
designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then
the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of
the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company
during such seven (7) Business Day period.

 

11.          
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except
as required by law, and as expressly provided in this Note.

 

12.          
COVENANTS.

 

(a)        
Rank. All payments due under this Note (a) shall rank pari passu with all
Other Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries, other than the Permitted Senior
Indebtedness.

 

(b)        
Incurrence of Indebtedness. So long as this Note is outstanding, the Company shall
not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer
to exist any Indebtedness, other than the Permitted Indebtedness.

 

 

 

    
	 	14	 

     

    

 

(c)       
Existence of Liens. So long as this Note is outstanding, the Company shall not, and
the Company shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned
by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens.

 

(d)       
Restricted Payments. The Company shall not, and the Company shall not permit any of
its Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment
of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions
or otherwise), all or any portion of any Indebtedness (other than Permitted Senior Indebtedness), whether by way of payment in
respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise
made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii)
an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.

 

(e)       
Restriction on Redemption and Cash Dividends. Until all of the Notes have been converted,
redeemed or otherwise satisfied in accordance with their terms, the Company shall not, directly or indirectly, redeem, repurchase
or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent of the Holder.

 

(f)        
Restriction on Transfer of Assets. The Company shall not, and shall cause each Subsidiary
to not, sell, lease, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned or hereafter acquired
whether in a single transaction or a series of related transactions, other than (i) sales, leases, conveyances and other dispositions
of such assets or rights by the Company and its Subsidiaries that, in the aggregate, do not have a fair market value in excess
of $100,000 in any twelve (12) month period and (ii) sales of inventory in the ordinary course of business.

 

(g)       
Acceleration of Indebtedness. The Company shall not permit any Indebtedness of the
Company or any of the Subsidiaries to accelerate prior to the Maturity Date, other than Permitted Senior Indebtedness.

 

13.         
PARTICIPATION. The Holder, as the holder of this Note, shall be entitled to receive
such dividends paid and distributions made to the holders of Common Stock to the same extent as if the Holder had converted this
Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of Common
Stock on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock (provided, however, that to the extent that the
Holder’s right to participate in any such dividend or distribution would result in the Holder exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such dividend or distribution to such extent (or the beneficial ownership
of any such shares of Common Stock as a result of such dividend or distribution to such extent) and such dividend or distribution
to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Maximum Percentage).

 

14.          
AMENDING THE TERMS OF NOTES. The prior written consent of the Holder shall be required
for any change or amendment to this Note. No consideration shall be offered or paid to the Holder to amend or consent to a waiver
or modification of any provision of this Note unless the same consideration is also offered to all of the holders of the Other
Notes. The Holder shall be entitled, at its option, to the benefit of any amendment to any of the Other Notes.

 

15.          
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note
may be offered, sold, assigned or transferred by the Holder without the consent of the Company, unless registered pursuant to the
Securities Act or an applicable exemption from registration exists, or the Note or any shares of Common Stock issued upon conversion
of this Note is sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act. 

 

 

 

    
	 	15	 

     

    

 

16.          
REISSUANCE OF THIS NOTE.

 

(a)        
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to
the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with
Section 16(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and,
if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 16(d)) to the Holder
representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge
and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note,
the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.

 

(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 (as to which a written certification and
the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary and reasonable 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 (in accordance with Section
16(d)) representing the outstanding Principal.

 

(c)        
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 16(d)
and in principal amounts of at least $5,000) representing in the aggregate the outstanding Principal of this Note, and each such
new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d)        
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant
to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face
of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 16(a) or Section
16(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection
with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new
Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of
this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and
Late Charges on the Principal and Interest of this Note, from the Issuance Date.

 

17.          
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the
other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to
comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this
instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be
entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.

 

18.          
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the
hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy,
reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection
with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and
disbursements.

 

 

 

    
	 	16	 

     

    

 

19.          
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company
and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience
of reference and shall not form part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the
other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents
unless otherwise consented to in writing by the Holder.

 

20.          
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in
the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No
waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

21.          
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing
Bid Price, the Closing Sale Price or the fair market value or the arithmetic calculation of the Conversion Rate or any Redemption
Price, the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the
case may be) via facsimile within two (2) Business Days of receipt, or deemed receipt, of the applicable notice or other event
giving rise to such dispute (as the case may be) to the Company or the Holder (as the case may be). If the Holder and the Company
are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination or arithmetic
calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business
Days submit via facsimile (a) the disputed determination of the Closing Bid Price, the Closing Sale Price or fair market value
(as the case may be) to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the
disputed arithmetic calculation of the Conversion Rate or any Redemption Price (as the case may be) to the Company’s independent,
outside accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform
the determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten
(10) Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment
bank’s or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable
error.

 

22.          
NOTICES; PAYMENTS.

 

(a)        
Notices. Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the
Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation
of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to
the Holder.

 

(b)        
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant
to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the
Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement); provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available
funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.
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 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. Any amount of Principal or other amounts due under the Transaction Documents which is
not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such
amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late
Charge”).

 

 

 

    
	 	17	 

     

    

 

23.          
CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed
on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

 

24.          
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives
demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note and the Securities Purchase Agreement.

 

25.          
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative
to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on
any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

26.          
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the
following meanings:

 

(a)        
“Bloomberg” means Bloomberg Financial Markets.

 

(b)        
“Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(c)        
“Closing Bid Price” and “Closing Sale Price” means,
for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any
of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall
be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 21.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.

 

 

 

    
	 	18	 

     

    

 

(d)        
“Closing Date” shall have the meaning set forth in the Securities Purchase
Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.

 

(e)        
“Common Stock” means (i) the Company’s shares of common stock,
par value $.001 per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock.

 

(f)         
“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

 

(g)        
“Eligible Market” means the Principal Market, The New York or American
Stock Exchange, Inc., the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market.

 

(h)        
“Equity Value Redemption Premium” means 120%.

 

(i)        
“Excluded Securities” means (i) shares of Common Stock issued upon exercise
or conversion of any exercisable or convertible securities outstanding as of the date hereof, including without limitation the
Notes and Warrants issued pursuant to the Securities Purchase Agreement; (ii) shares of Common Stock or securities convertible
into Common Stock issued to officers, directors, employees, contractors, consultants or other advisors unanimously approved by
the Board; (iii) shares of Common Stock or securities convertible into Common Stock issued in connection with in consideration
for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or
license by the Company; and (iv) shares of Common Stock or securities convertible or exercisable into Common Stock that the holders
of a majority of the outstanding principal amount of Notes issued pursuant to the Securities Purchase Agreement elect in writing
to deem Excluded Securities.

 

(j)         
“Fundamental Transaction” means that the Company shall, directly or indirectly,
in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets
of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person
or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange
offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business
combination), or (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting
power represented by issued and outstanding Common Stock.

 

(k)        
“Fundamental Transaction Redemption Premium” means 120%.

 

(l)         
“GAAP” means United States generally accepted accounting principles, consistently
applied.

 

(m)       
“Holder Pro Rata Amount” means a fraction (i) the numerator of which is
the original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal
amount of all Notes issued to the initial purchasers pursuant to the Securities Purchase Agreement on the Closing Date.

 

 

 

    
	 	19	 

     

    

 

(n)        
“Indebtedness” of any Person means all items which, in accordance with
GAAP, would be included in determining total liabilities of such Person as shown on the liability side of a balance sheet as at
the date Indebtedness of such Person is to be determined and, in any event, shall include (without limitation and without duplication):
(i) all trade accounts payable of such Person; (ii) any liability of such Person secured by any Lien on property owned or acquired
by such Person, whether or not such liability shall have been assumed; (iii) all contingent obligations of such Person; (iv) letters
of credit issued for the account of such Person or an affiliate thereof, and all obligations of such Person relating thereto; and
(v) all obligations (other than obligations to pay fees in connection therewith) of such Person in respect of interest rate or
currency swap agreements or similar arrangements.

 

(o)        
“Interest Period” means each of: the period beginning on and including
the Effective Date and ending on December 31, 2019; the period beginning on and including January 1 and ending on March 31 of each
calendar year thereafter commencing with 2020; the period beginning on and including April 1 and ending on June 30 of each calendar
year thereafter commencing with 2020; the period beginning on and including July 1 and ending on September 30 of each calendar
year thereafter commencing with 2020; and the period beginning on and including October 1 and ending on December 31 of each calendar
year thereafter commencing with 2020.

 

(p)        
“Interest Rate” means eight-percent (8%) per annum.

 

(q)        
“Maturity Date” shall mean November 18, 2022; provided, however,
that the Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default
shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the
failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation
of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice
is delivered prior to the Maturity Date; provided, further, that if a Holder elects to convert some or all of this
Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity
Date shall automatically be extended until such time as such provision shall not limit the conversion of this Note.

 

(r)         
“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.

 

(s)        
“Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market,
or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization
as of the date of consummation of the Fundamental Transaction.

 

(t)        
“Permitted Indebtedness” means (i) total Indebtedness of the Company and
the Subsidiaries outstanding as of the date hereof, exclusive of Indebtedness evidenced by this Note and the Other Notes; provided,
however, that such Indebtedness shall be made expressly subordinate in right of payment to the Indebtedness evidenced by
the Notes, as reflected in a written agreement acceptable to the Required Holders and approved by the Required Holders in writing,
and which Indebtedness does not provide at any time for (A) the payment, prepayment, repayment, repurchase or defeasance, directly
or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (B)
total interest and fees at a rate in excess of the Interest Rate; (ii) equipment leases and purchase money obligations of the Company
and the Subsidiaries not to exceed $500,000 in the aggregate outstanding at any time; (iii) Indebtedness evidenced by this Note
and the Other Notes; (iv) surety bonds required by the Company, or any of its Subsidiaries, to obtain regulatory permits, licenses
or insurance as part of conducting its business; and (iv) any other Indebtedness deemed “Permitted Indebtedness” hereunder
by the unanimous vote of all members of the Board.

 

 

 

    
	 	20	 

     

    

 

(u)        
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is
not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens
and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent
or that are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held
by the Company or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the
purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition,
provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment,
(v) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described
in clauses (i) and (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi)
leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s business, not
interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (vii) Liens in favor
of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation
of goods, (viii) Liens securing the Company’s obligations under the Notes, (ix) any Lien securing Permitted Senior Indebtedness,
and (x) any other Liens deemed “Permitted Liens” hereunder by the unanimous vote of all members of the Board.

 

(v)        
“Permitted Senior Indebtedness” means the Indebtedness described in clauses
(ii) and (iv) of Permitted Indebtedness.

 

(w)       
“Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or
agency thereof.

 

(x)         
“Principal Market” means the Over-the-Counter Bulletin Board.

 

(y)        
“Redemption Notices” means, collectively, the Event of Default Redemption
Notice and the Fundamental Transaction Redemption Notice, and each of the foregoing, individually, a “Redemption Notice.”

 

(z)         
“Redemption Premium” means 120%.

 

(aa)      
“Redemption Prices” means, collectively, the Event of Default Redemption
Price and the Fundamental Transaction Redemption Price, and each of the foregoing, individually, a “Redemption Price.”

 

(bb)     
“Required Holders” means the holders of Notes representing at least sixty
percent (60%) of the aggregate principal amount of the Notes then outstanding.

 

(cc)      
“SEC” means the United States Securities and Exchange Commission.

 

(dd)     
“Securities Purchase Agreement” means that certain securities purchase
agreement, dated on or around the date hereof, by and among the Company and the initial holders of the Notes pursuant to which
the Company issued the Notes and Warrants.

 

(ee)       “Subsidiaries” means, collectively, Cannabis Business Solutions Inc., Leafceuticals
Inc., Freedom Leaf International Inc., Leafceuticals Europe, SL, FL—Accuvape, LLC, Tierra Science Global, LLC, ECS Labs LLC,
B&B Labs, LLC, and Texas Wellness Center, LLC; each of the foregoing, individually, a “Subsidiary.”

 

 

 

    
	 	21	 

     

    

 

(ff)       
“Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder,
the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(gg)     
“Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not
include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that
the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or
market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00
p.m., New York time).

 

(hh)     
“VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such
security, then on the principal securities exchange or securities market on which such security is then traded) during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume
at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York
time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported
for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of
any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP
of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 21. All such determinations shall be appropriately adjusted for any share dividend, share split
or other similar transaction during such period.

 

(ii)        
“Warrants” has the meaning ascribed to such term in the Securities Purchase
Agreement, and shall include all warrants issued in exchange therefor or replacement thereof.

 

27.          
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with
the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day
after any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or any of
its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence
of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its Subsidiaries.

 

[signature page follows]

 

 

 

 

 

 

    
	 	22	 

     

    

 

 

IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the Issuance Date set forth above.

 

 

	 	Freedom
    Leaf Inc.
	 	 
	 	 
	 	By:  /s/ Carlos Frias          
	 	Name:Carlos Frias
	 	Title:CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	23	 

     

    

 

Each of the undersigned,
being the Subsidiaries named in the Securities Purchase Agreement, hereby absolutely and unconditionally guarantees the payment
and performance by the Company of all of its obligations under the foregoing Convertible Note. This is a guaranty of payment and
performance (and not merely of collection), and the Holder may proceed directly against the undersigned without any requirement
to first proceed or obtain any judgment against or exhaust any remedies with respect to the Company. This guaranty shall in no
manner be affected or impaired by (a) any amendment, modification, waiver, consent, compromise or other indulgence granted to the
Company under or in respect of this Note or any related agreement, (b) any failure by the Holder to insist upon strict performance
or observance by the Company of any of the terms of this Note or any related agreement, (c) any forbearance by the Holder, (d)
any bankruptcy, insolvency, receivership, reorganization, liquidation or other such proceeding relating to the Company, or (e)
any relief of the Company from any of its obligations as aforesaid by operation of law, in equity or otherwise. This guaranty shall
be subject in all cases to any defenses (other than defenses based upon or arising out of any bankruptcy, insolvency or reorganization
of the Company) available to the Company had the Holder proceeded directly against the Company rather than pursuant to this guaranty.

 

	 	Cannabis Business Solutions inc.
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	Leafceuticals Inc.
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	Freedom Leaf International Inc.
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	Leafceuticals
Europe, SL
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: CEO
	 	 
	 	FL—ACCUVAPE,
LLC
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager
	 	 
	 	Tierra Science Global, LLC
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager

 

 

 

 

 

 

 

 

 

    
	 	24	 

     

    

 

	 	ECS Labs LLC
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager
	 	 
	 	B&B
Labs, LLC
	 	 
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager
	 	 
	 	Texas
Wellness Center, LLC
	 	By: /s/ Carlos Frias
	 	Name: Carlos Frias
	 	Title: Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	25	 

     

    

 

EXHIBIT I

FREEDOM LEAF INC.

CONVERSION NOTICE

 

Reference is made to the Convertible Note
(the “Note”) issued to the undersigned by Freedom Leaf Inc. (the “Company”). In accordance
with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note
indicated below into shares of Common Stock, par value $.001 per share (the “Common Stock”), of the Company,
as of the date specified below.

 

	Date of Conversion:	 
	 	 
	Aggregate Conversion Amount to be converted:	 
	 	 
	Please confirm the following information:
	 
	Conversion Price:	 
	 	 
	Number of shares of Common Stock to be issued:	 
	 	 
	Please issue the Common Stock into which the Note is being converted in the following name and to the following address:
	 
	Issue to:	 
	 	 
	 	 
	 	 
	Facsimile Number:	 
	 	 
	Authorization:	 
	 	 
	By:	 
	 	 
	Title:	 
	 	 
	Dated:	 
	 	 
	Account Number:	 
	  (if electronic book entry transfer)	 
	 	 
	Transaction Code Number:	 
	  (if electronic book entry transfer)	 
	 	 	 	 	 	 	 	 	 	 	 	 

 

 

 

 

    
	 	26	 

     

    

 

ACKNOWLEDGMENT

 

The Company hereby
acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _____________, 2019, from the Company and acknowledged and agreed
to by ________________________.

 

 

	 	Freedom Leaf Inc.
	 	 
	 	 
	 	By:                                                                                       
	 	Name:
	 	Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
	 	27

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