Document:

LEAK OUT AGREEMENT

 

EXHIBIT 10.05

LEAK OUT AGREEMENT

THIS LEAK OUT AGREEMENT (the “Agreement”) is entered into as of this 17th day of August, 2017 (the “Effective Date”) by and between DIP SPV1, LP, a British Virgin Islands limited partnership (the “Stockholder”) and Social Reality, Inc., a Delaware corporation (the “Company”).

WHEREAS, Leapfrog Media Trading, Inc., a Delaware corporation ("Seller") and the Company are parties to that certain Asset Purchase Agreement dated April 20, 2017, as amended by Amendment No. 1 dated August 17, 2017 (collectively, the “Purchase Agreement”) pursuant to which the Company agreed, at the Closing thereunder, to acquire the Purchased Assets from Seller in exchange for the Consideration Shares. Capitalized terms used but not otherwise defined herein are used herein with the respective meanings given to them under the Purchase Agreement.

WHEREAS, as a closing condition of the Purchase Agreement, Seller agreed to restrict the disposition of the Consideration Shares by Seller.

WHEREAS, pursuant to the terms and conditions of Purchase Agreement, Seller instructed the Company to issue to the Stockholder at Closing, as Seller's designee, One Hundred Eighty-four Thousand (184,000) of the Consideration Shares.

WHEREAS, as Seller’s designee to receive Consideration Shares under the Purchase Agreement, the Stockholder is required and has agreed to restrict the disposition of the Consideration Shares by it.

NOW THEREFORE, in consideration of the premises and of the terms and conditions contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. 

LEAK OUTS.

(a) 

At such time as the Stockholder is able to resell the Consideration Shares in accordance with the provisions of Rule 144 of the Securities Act (the "Expiration of the Holding Period"), the Stockholder agrees to limit the resales of such Shares in the public market as follows:

(i) 

if the daily average trading volume on all trading markets on which the Buyer Common Stock is then quoted or listed (i) is less than 30,000 shares of Common Stock, the Stockholder shall not sell more than 1,000 Shares per trading day; (ii) is greater than 30,000 shares of Common Stock, but less than 100,000 shares, the Stockholder shall not sell more than 5,000 Shares per trading day; and (iii) is greater than 100,000 shares, the Stockholder shall not sell more than 50,000 Shares; and

(ii)

any permitted resales by the Stockholder shall be at the then current bid price of the Common Stock.

2. 

TRANSFER; SUCCESSOR AND ASSIGNS. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. In the event of any sale, transfer, assignment, pledge or other hypothecation of the Consideration Shares, other than the resale of such shares in the public market pursuant to this Agreement (a "Transfer"), as a condition precedent to such Transfer the Stockholder will deliver a leak out agreement in form and substance identical to this Agreement from the proposed transferee. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

3. 

COMPLIANCE WITH SECURITIES LAWS. In the event of a Transfer, as a condition to the Company agreeing to such Transfer, the Stockholder shall have furnished the Company with an opinion of counsel reasonably satisfactory to the Company, to the effect that the Transfer is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) and that the Transfer otherwise complies with the terms of this Agreement.

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4.

LEGEND.

(a) 

The Stockholder hereby agrees that each outstanding certificate representing the Consideration Shares shall, in addition to any other legends as may be required in compliance with Federal securities laws or as contemplated by the Purchase Agreement, bear a legend reading substantially as follows:

THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A LEAK OUT AGREEMENT DATED AUGUST 17, 2017, BETWEEN THE ISSUER AND THE STOCKHOLDER LISTED ON THE FACE HEREOF. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE PROVIDED TO THE HOLDER HEREOF UPON REQUEST. NO TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH LOCK UP AGREEMENT.

(b) 

A copy of this Agreement shall be filed with the corporate secretary of the Company, shall be kept with the records of the Company. In addition, a copy of this Agreement shall be filed with the Company's transfer agent of record.

5. 

NO OTHER RIGHTS. The Stockholder understands and agrees that the Company is under no obligation to register the sale, transfer or other disposition of the Consideration Shares under the Securities Act or to take any other action necessary in order to make compliance with an exemption from such registration available.

6. 

SPECIFIC PERFORMANCE. The Stockholder acknowledges that there would be no adequate remedy at law if the Stockholder fails to perform any of its obligations hereunder, and accordingly agrees that the Company, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of the Stockholder under this Agreement in accordance with the terms and conditions of this Agreement. Any remedy under this Section 6 is subject to certain equitable defenses and to the discretion of the court before which any proceedings therefor may be brought.

7. 

NOTICES. All notices, statements, instructions or other documents required to be given hereunder shall be in writing and shall be given either personally or by mailing the same in a sealed envelope, first-class mail, postage prepaid and either certified or registered, return receipt requested, or by telecopy, and shall be addressed to the Company at its principal offices and to the Stockholder at the address last appearing on the books and records of the Company.

8. 

RECAPITALIZATIONS AND EXCHANGES AFFECTING CONSIDERATION SHARES. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Consideration Shares, to any and all shares of capital stock or equity securities of the Company which may be issued by reason of any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification or otherwise.

9. 

GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Any suit, action or proceeding with respect to this Agreement shall be brought in the state or federal courts located in Los Angeles County in the State of California. The parties hereto hereby accept the exclusive jurisdiction and venue of those courts for the purpose of any such suit, action or proceeding. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection that any of them may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any judgment entered by any court in respect thereof brought in Los Angeles County, California, and hereby further irrevocably waive any claim that any suit, action or proceeding brought in Los Angeles County, California has been brought in an inconvenient form.

10. 

COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11. 

ATTORNEYS' FEES. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and

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necessary disbursements in addition to any other relief to which such party may be entitled as determined by such court, equity or arbitration proceeding.

12. 

AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended with the written consent of the Company and the Stockholder. No delay or failure on the part of the Company in exercising any power or right under this Agreement shall operate as a waiver of any power or right.

13. 

SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, portions of such provisions, or such provisions in their entirety, to the extent necessary, shall be severed from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

14. 

CONSTRUCTION; TERMS. This Agreement has been entered into freely by each of the parties, following consultation with their respective counsel, and shall be interpreted fairly in accordance with its respective terms, without any construction in favor of or against either party. All terms not otherwise defined herein shall have the same meaning as in the Purchase Agreement.

15. 

ENTIRE AGREEMENT. This Agreement and the documents referred to herein constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements existing between the parties hereto are expressly canceled.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

			
	 
	COMPANY:

	 
	 
	 

	 
	SOCIAL REALITY, INC.

	 
	 
	 

	 
	By:

	/s/ Christopher Miglino

	 
	 
	Christopher Miglino,

	 
	 
	Chief Executive Officer

	 
	 
	 

	 
	STOCKHOLDER:

	 
	 
	 

	 
	DIP SPV1, LP.

	 
	 
	 

	 
	By:

	/s/ Antonio Ruiz-Gimenez

	 
	 
	Name: Antonio Ruiz-Gimenez

	 
	 
	Its: Managing Partner

3NEITHER 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 (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

Principal Amount: $550,000.00Issue Date:
March 23, 2018 Purchase Price: $500,000.00 Original Issue Discount: $50,000.00

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE
RECEIVED, CLEANSPARK, INC., a Nevada corporation (hereinafter called the “Borrower” or
“Company”), hereby promises to pay to the order of LABRYS FUND, LP, a Delaware limited partnership, or
registered assigns (the “Holder”) the sum of up to US$550,000.00, together with any interest as set forth herein,
and to pay interest on the unpaid principal balance hereof at the rate of twelve
percent (12%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same
becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The
consideration to the Borrower for this Note is up to $500,000.00 (the
“Consideration”). The Holder shall pay $200,000.00 of the Consideration (the “First Tranche”) within
a reasonable amount of time of the full execution of the transactional documents related to this Note. At the closing of the
First Tranche, the outstanding principal amount under this Note shall be $220,000.00, consisting of the First Tranche plus
the prorated portion of the OID (as defined herein). The Holder may pay, in its sole discretion, such additional amounts of
the Consideration and at such dates as the Holder may choose in its sole discretion. THE PRINCIPAL SUM DUE TO THE HOLDER
SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE HOLDER, AS WELL AS THE APPLICABLE PORTION OF THE OID, FEES,
AND INTEREST. The maturity date for each tranche funded shall be six (6)
months from the effective date of the payment for the respective tranche (each a “Maturity Date”), and is the date
upon which the principal sum of each respective tranche, as well as any accrued
and unpaid interest and other penalties relating to that respective tranche, shall be due and payable. In connection with the
issuance of this convertible promissory note (the “Note”), the Borrower shall, on the Issue Date, issue
137,500 shares of common stock (the “Returnable Shares”) to Holder as a

 

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commitment fee, provided,
however, the Returnable Shares must be returned to the Borrower’s treasury
if the Note is fully repaid and satisfied prior to the date which is one hundred eighty
(180) days following the Issue Date, subject further to the terms and conditions of
this Note.

 

This Note may not be
prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which
is not paid when due shall bear interest at the rate of the lesser of (i) twenty-four
percent (24%) per annum or (ii) the maximum amount allowed by law from the due date
thereof until the same is paid (the “Default Interest”). Interest shall commence accruing on the
date that the Note is fully paid and shall be computed on the basis of a 365-day
year and the actual number of days elapsed. All payments due hereunder (to the extent
not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof)
shall be made in lawful money of the United States of America.

 

All payments shall be made
at such address as the Holder shall hereafter give to the Borrower by written notice
made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a business day, the same shall
instead be due on the next succeeding day which is a business day and, in the case
of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall
not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the
term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the
city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein,
and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the
date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

This Note carries a prorated
original issue discount of $50,000.00 (the “OID”), to cover the Holder’s accounting fees, due diligence fees,
monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which is included in
the principal balance of this Note. Thus, the purchase price of this Note shall be up to $500,000.00, computed as follows: the
Principal Amount minus the OID.

 

This Note is free from all
taxes, liens, claims and encumbrances with respect to the issue thereof and shall not
be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability
upon the holder thereof.

 

The following terms shall also
apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

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1.1      
Conversion Right. The Holder shall have the
right, in its sole and absolute discretion, from time to time, and at any time on or following the
date of this Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of the
Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the
remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount
of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the
Issue Date, or any shares of capital stock or other securities of the Borrower
into which such Common Stock shall hereafter be changed or reclassified at the Conversion Price (as defined below) determined as
provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to
convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation
on conversion or exercise analogous to the limitations contained herein) and (2) the
number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination
of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1)
of such proviso, provided, further, however, that the limitations on conversion may be waived by the
Holder (up to a maximum of 9.99%) upon, at the election of the Holder, not less than 61 days’ prior notice to the
Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined
by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion
of this Note shall be determined by dividing the Conversion Amount (as defined below)
by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto
as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion is submitted by facsimile or e-mail (or by
other means resulting in, or reasonably expected to result in, notice) to the Borrower before 11:59 p.m., New York, New York time
on such conversion date (the “Conversion Date”).

 

The term “Conversion
Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted
in such conversion, plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount
at the interest rates provided in this Note to the Conversion Date, provided however, that the Borrower shall have the right to
pay any or all interest in cash, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred
to in the immediately preceding clauses (1) and/or (2), plus (4) any Additional Principal for such Conversions, plus (5)
at the Holder’s option, any amounts owed to the Holder pursuant to any
other provision of this Note, all subject to the 4.99% (or up to 9.99% if increased as provided above) limitation discussed above.

 

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		1.2	Conversion Price.

 

(a)      
Calculation of Conversion Price. Subject to the adjustments described herein, the
conversion price (the “Conversion Price”) shall equal the lesser of (i)
70% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 30%) during the previous twenty
(20) Trading Day period ending on the latest complete Trading Day prior to the date
of this Note and (ii) the Alternate Conversion Price (as defined herein)(subject to
equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities
or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions
and similar events). The “Alternate Conversion Price” shall mean 70% multiplied by the
Market Price (as defined herein) (representing a discount rate of 30%). “Market Price” means the lowest Trading Price
(as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the
latest complete Trading Day prior to the Conversion Date. “Trading Price”
means, for any security as of any date, the lesser of: (i) the
lowest trade price on the OTC Pink, OTCQB, or applicable trading market (the “OTC Market”) as reported by a
reliable reporting service (“Reporting Service”) designated by the Holder
or, if the OTC Market is not the principal trading market for such security, the trading price of such security on the
principal securities exchange or trading market where such security is listed or traded or, if no trading price of such
security is available in any of the foregoing manners, the average of the trading prices
of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc.,
or (ii) the lowest closing bid price on the OTC Market as reported by a Reporting Service
designated by the Holder or, if the OTC Market is not the principal trading market
for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers
for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If the Trading Price
cannot be calculated for such security on such date in the manner provided above, the
Trading Price shall be the fair market value as mutually determined by the Borrower
and the holders of a majority in interest of the Notes being converted for which the
calculation of the Trading Price is required in order to determine the Conversion Price
of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC Market
or on the principal securities exchange or other securities market on which the Common
Stock is then being traded. The Borrower shall be responsible for the
fees of its transfer agent and all DTC fees associated with any such issuance. In the
event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error.

 

(b)         
Adjustment to Conversion Price. At any time after the Issue Date, (i) if in the
case that the Borrower’s Common Stock is not deliverable by DWAC (including if the Borrower’s transfer agent
has a policy prohibiting or limiting delivery of shares of

 

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the Borrower’s
Common Stock specified in a Notice of Conversion), (ii) if the Borrower ceases to
be a reporting company pursuant or subject to the Exchange Act, (iii) if the
Borrower loses a market (including the OTCBB, OTCQB, OTC Pink or an equivalent replacement exchange) for its Common Stock,
(iv) if the Borrower fails to maintain its status as “DTC Eligible” for
any reason, (v) if the Conversion Price is less than one cent ($0.01), (vi) if the Note
cannot be converted into free trading shares on or after six months from the Issue
Date, (vii) if at any time the Borrower does not maintain or replenish the Reserved Amount (as defined herein) within three (3)
business days of the request of the Holder, (viii) if the
Borrower fails to maintain the listing of the
Common Stock on at least one of the OTC Markets or an equivalent replacement
exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market, the New York Stock Exchange, or the NYSE MKT, (ix) if the Borrower
fails to comply with the reporting requirements of the Exchange Act; the reporting
requirements necessary to satisfy the availability of Rule 144 to the Holder or its
assigns, including but not limited to the timely fulfillment of its filing requirements
as a fully-reporting issuer registered with the SEC, the requirements for XBRL filings, the requirements for disclosure of financial
statements on its website, (x) if the Borrower effectuates a reverse split of its Common
Stock without twenty (20) days prior written notice to the Holder, (xi) if OTC Markets changes the
Borrower’s designation to ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull and Crossbones),
or ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign), (xii) any cessation of trading
of the Common Stock on at least one of the OTC Markets or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market, the New York Stock Exchange, or the NYSE MKT, and such cessation of trading shall continue for a period of five
consecutive (5) Trading Days, and/or (xiii) the Borrower loses the
“bid” price for its Common Stock ($0.0001 on the “Ask”
with zero market makers on the “Bid” per Level 2), and/or (xiv) if the
Holder is notified in writing by the Company or the Company’s transfer agent that the
Company does not have the necessary amount of authorized and issuable shares
of Common Stock available to satisfy the issuance of Shares pursuant to a Conversion Notice, then the Holder shall be entitled
to increase, by 10% for each occurrence, cumulative or otherwise, the discount to the
Conversion Price shall apply for all future conversions under the Note. Under no circumstances shall the
Conversion Price be less than 30% multiplied by the Market Price due to cumulative
effect.

 

		(c)	[Intentionally Omitted].

 

		(d)	[Intentionally Omitted].

 

(e)         
Par Value Adjustments. To the extent the Conversion Price of the Borrower’s
Common Stock closes below the par value per share, the Borrower will take all steps necessary to solicit the consent of the stockholders
to reduce the par value to the lowest value possible under law. The Borrower agrees
to honor all conversions submitted pending this adjustment.

 

(f)          
Conversion Price During Major Announcements. Notwithstanding anything contained in
the preceding section to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate
or merge with any other

 

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corporation (other than
a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any person, group or
entity (including the Borrower) publicly announces a tender offer to purchase 50% or
more of the Borrower's Common Stock (or any other takeover scheme) (the date of the
announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement
Date"), then the Conversion Price shall, effective upon the
Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to
the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and
(y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in this Section. For purposes hereof, "Adjusted Conversion Price Termination
Date" shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement
as contemplated by this Section has been made, the date upon which the Borrower (in
the case of clause (i) above) or the person,
group or entity (in the case of clause (ii) above) consummates or publicly announces
the termination or abandonment of the proposed
transaction or tender offer (or takeover scheme) which caused this Section 1.2(d) to become operative.

 

(g)                          
Pro Rata Conversion; Disputes. 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 Borrower shall issue
to the Holder the number of shares of Common Stock not in dispute and resolve such
dispute in accordance with Section 4.13.

 

1.3        
Authorized Shares. The Borrower covenants
that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient
number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note
issued pursuant to the Purchase Agreement. The Borrower is required at all times to
have authorized and reserved three (3) times the number of shares that is actually issuable upon full conversion of the Note (based
on the Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”). Initially, the Company will
instruct the Transfer Agent to reserve 1,269,231 shares of common stock in the name of the
Holder for issuance upon conversion hereof. The Reserved Amount shall be increased from time to time in accordance with
the Borrower’s obligations pursuant to Section 3(d) of the Purchase Agreement. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non- assessable. In addition, if the
Borrower shall issue any securities or make any change to its capital structure which would change the number of shares
of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the
Borrower shall at the same time make proper provision so that thereafter there shall
be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the
outstanding Notes.

 

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The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this
Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance
with the terms and conditions of this Note. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than
the initial Reserved Amount, regardless of any prior conversions, and the Reserved Amount will be increased by a factor of two
(2) each time the Borrower issues a Variable Security (as defined herein).

 

		1.4	Method of Conversion.

 

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

(A) submitting to the
Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the
Conversion Date prior to 11:59 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note
at the principal office of the Borrower.

 

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

 

(c)              
Book Entry upon Conversion. Notwithstanding anything to the contrary set forth herein,
upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this
Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the
Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the Holder and the Borrower, so as not
to require physical surrender of this Note

 

    	 	7	 

    	 

    

 

upon each such conversion.
In the event of any dispute or discrepancy, such records of the
Borrower shall, prima facie, be controlling and determinative in the absence
of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted
as aforesaid, the Holder may not transfer this Note unless the
Holder first physically surrenders this Note to the Borrower, whereupon the Borrower
will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment
by the Holder of any applicable transfer taxes) may request, representing in the aggregate
the remaining unpaid principal amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated
on the face hereof.

 

(d)      
Payment of Taxes. The Borrower shall
not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of
Common Stock or other securities or property on conversion of this Note in a name other than that of the
Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the Holder’s account) requesting the
issuance thereof shall have paid to the Borrower the amount of any such tax
or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(e)    
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder
of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements
for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or
upon the order of the Holder certificates for the
Common Stock issuable upon such conversion within two (2) business days after such receipt (the “Deadline”)
(and, solely in the case of conversion of the
entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the
Purchase Agreement.

 

(f)     
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a
Notice of Conversion, the Holder shall be deemed to be the holder of record of the
Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this
Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all
rights with respect to the portion of this Note being so converted shall forthwith terminate except the
right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder
shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the absence of
any action by the Holder to enforce the same, any waiver or consent with respect to
any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay
in the enforcement of any other obligation of the

 

    	 	8	 

    	 

    

 

Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The
Conversion Date specified in the Notice of Conversion shall be the Conversion
Date so long as the Notice of Conversion is received by the Borrower before 11:59 p.m.,
New York, New York time, on such date.

 

(g)      
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the Borrower is participating
in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request
of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the
Borrower shall use its commercially reasonable best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal At Custodian (“DWAC”) system.

 

(i) Failure to Deliver
Common Stock Prior to Delivery Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including
actual damages and/or equitable relief, the parties agree that if delivery of the Common
Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described
in Section 1.3 above, which failure shall be governed by such Section) the Borrower
shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common
Stock until the Borrower issues and delivers a certificate to the Holder or credit the Holder's
balance account with OTC for the number of shares of Common Stock to which the Holder
is entitled upon such Holder's conversion of any Conversion Amount (under Holder's and Borrower's expectation that any damages
will tack back to the Issue Date). Such cash amount shall be paid to Holder by the fifth day of the month following the month in
which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the
month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event
interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible
into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right
to the Holder. The damages resulting from a failure, attempt to frustrate, and interference
with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated
damages provision contained in this Section 1.4(i) are justified.

 

(j)       Rescindment
of a Notice of Conversion. If (i) the Borrower fails to respond to Holder within one (1) business day from the
Conversion Date confirming the details of Notice of Conversion, (ii) the Borrower fails to provide any of the shares of the Borrower’s
Common Stock requested in the Notice of Conversion within two (2) business days
from the Conversion Date specified therein, (iii) the Holder is unable to procure a legal opinion required to have the shares
of the Borrower’s Common Stock issued unrestricted and/or deposited to sell for any reason related

 

    	 	9	 

    	 

    

 

to the Borrower’s
standing, (iv) the Holder is unable to deposit the shares of the Borrower’s Common
Stock requested in the Notice of Conversion for any reason related to the Borrower’s
standing, (v) at any time after a missed Deadline, at the Holder’s sole discretion,
(vi) if, within three (3) business days of the transmittal of the Notice of Conversion to the
Borrower, the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion, or (vii) if
OTC Markets changes the Borrower's designation to ‘Limited Information’ (Yield), ‘No Information’ (Stop
Sign), ‘Caveat Emptor’ (Skull & Crossbones), ‘OTC’, ‘Other OTC’ or ‘Grey Market’
(Exclamation Mark Sign) or other trading restriction on the day of or any day after the Conversion Date, then the
Holder maintains the option and sole discretion to rescind the applicable Notice
of Conversion (“Rescindment”) pursuant to which such Conversion Shares were issuable with a “Notice of Rescindment.”
This Note shall remain convertible before and after the Maturity Date hereof until this Note is repaid or converted in full.

 

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

 

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

 

    	 	10	 

    	 

    

 

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

 

		1.6	Effect of Certain Events.

 

(a)       
Effect of Merger, Consolidation, Etc. At the option of the Holder, the
sale, conveyance or disposition of all or substantially all of the assets of
the Borrower, the effectuation by the Borrower
of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or
the consolidation, merger or other business combination of the Borrower with or into
any other Person (as defined below) or Persons when the Borrower is not the survivor
shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required
to pay to the Holder upon the consummation of and as a condition to such transaction
an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person”
shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

 

(b)    
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued
and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same
or a different number of shares of another class or classes of stock or securities of the
Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other
than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the
right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of
the

 

    	 	11	 

    	 

    

 

shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to
receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations
on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the
rights and interests of the Holder of this Note to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion
of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter
deliverable upon the conversion hereof. The Borrower shall not affect any transaction
described in this Section 1.6(b) unless (a) it first gives, to the extent practicable,
thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of
the special meeting of shareholders to approve, or if there is no such record date,
the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or
sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the
resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c)      
Adjustment Due to Distribution. If the Borrower shall declare or make any distribution
of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of
capital or otherwise (including any dividend or distribution to the Borrower’s
shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”),
then the Holder of this Note shall be entitled, upon any conversion of this Note after
the date of record for determining shareholders entitled to such Distribution, to receive the
amount of such assets which would have been payable to the Holder with respect to the
shares of Common Stock issuable upon such conversion had such Holder been the holder
of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

 

(d)    
Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and
outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, in
connection with the issuance of any security convertible or exercisable into shares of Common Stock, except for shares of Common
Stock issued directly to purchasers of the Company’s common stock at $0.80 per share with respect to the
ongoing offering, bona fide employees, officers, directors, or vendors or suppliers of the
Borrower in satisfaction of amounts owed to such vendors or suppliers (provided, however, that such vendors or suppliers shall
not have an arrangement to transfer, sell or assign such shares of Common Stock prior to the issuance of such shares), any shares
of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or
underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance
(or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance,
the Conversion Price will be reduced to the amount of the consideration
per share received by the Borrower in such Dilutive Issuance.

 

    	 	12	 

    	 

    

 

The Borrower shall be
deemed to have issued or sold shares of Common Stock if the Borrower in any manner
issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable,
to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible
Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred
to as “Options”) and the price per share for which Common Stock is issuable
upon the exercise of such Options is less than the Conversion Price then in effect,
then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price per
share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the
minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options,
plus, in the case of Convertible Securities issuable upon the exercise of such Options, the
minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the
Conversion Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

 

Additionally, the Borrower
shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities,
whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the
price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For the purposes
of the preceding sentence, the “price
per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the
total amount, if any, received or receivable by the Borrower as consideration for the issuance
or sale of all such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the conversion or exchange thereof
at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

(e)      
Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower
issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”)
pro rata to the record holders of

 

    	 	13	 

    	 

    

 

any class of Common Stock,
then the Holder of this Note will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(f)         
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of
the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute
such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request
at any time of the Holder, furnish to such Holder a like certificate setting forth
(i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect
and

(iii) the number of shares
of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of
the Note.

 

		1.7	[Intentionally Omitted].

 

		1.8	Status as Shareholder. Upon submission of a Notice of Conversion
by a Holder,

(i) the
shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s
allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii)
the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right
to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in
equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing,
if a Holder has not received certificates for all shares of Common Stock prior to the third (3rd) business day after the expiration
of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects
to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the
rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as
practicable, return such unconverted Note to the Holder or, if the Note has not been
surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall
retain all of its rights and remedies (including, without limitation,

(i) 
the right to receive Conversion
Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion
Default and any subsequent Conversion Default and (ii) the right to have the Conversion
Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert
this Note.

 

    	 	14	 

    	 

    

 

1.9     
Prepayment. Notwithstanding anything to the contrary contained in this Note, the
Borrower may prepay the amounts outstanding hereunder pursuant to the following terms and conditions:

 

(a)     
At any time during the initial one hundred eighty (180) day period following the funding
date of the respective tranche of this Note, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note, to prepay the outstanding amount of the
respective tranche of this Note by making a payment to the Holder of an amount in cash equal to the sum of: (i) the then outstanding
principal amount of the respective tranche of this Note (provided, however, that if the Borrower
elects a partial prepayment, then the minimum principal amount of such partial prepayment shall be at least $45,000.00) plus

(ii)
accrued and unpaid interest on the unpaid principal amount of the respective tranche of this Note plus (iii) Default Interest,
if any, in accordance with Article III, plus (iv) any Additional Principal, plus (v) at the Holder’s option,
any amounts owed to the Holder pursuant to any other provision of this Note, plus (vi) $750.00 to reimburse Holder for the
fees associated with the Returnable Shares.

 

(b) 
After the expiration of one hundred eighty (180) days following the funding date of the
respective tranche of this Note, the Borrower shall have no right of prepayment with
respect to that specific tranche of this Note.

 

Any notice of prepayment hereunder
(an “Optional Prepayment Notice”) shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay a specific tranche of
this Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the
Borrower shall make payment of the applicable prepayment amount to or upon the order of the Holder as specified by the Holder
in writing to the Borrower at least three (3) business days prior to the
Optional Prepayment Date.

 

Upon confirmation by Holder
that the prepayment has been received by the Holder and that all amounts outstanding under this Note are paid in full, the Holder
shall return the Returnable Shares back to the Company’s treasury (provided, however, that if the Borrower prepaid only a
portion of the Note pursuant to the terms of the Note, then the pro rata portion of the Returnable Shares shall be returned to
the Company’s treasury on or around the Maturity Date of the First Tranche). If the Borrower delivers an Optional Prepayment
Notice and fails to pay the applicable prepayment amount due to the Holder of the Note within two (2) business days following the
Optional Prepayment Date, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section
1.9 and the Holder shall no longer be required to return the Returnable Shares to the Borrower under any circumstances.

 

    	 	15	 

    	 

    

 

ARTICLE II. CERTAIN COVENANTS

 

2.1       
Distributions on Capital Stock. So long as the
Borrower shall have any obligation under this Note, the Borrower shall not without
the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether
in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the
form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution
in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a
majority of the Borrower’s disinterested directors.

 

2.2      
Restriction on Stock Repurchases. So long as the
Borrower shall have any obligation under this Note, the Borrower shall not without
the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other
securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such shares.

 

		2.3	[INTENTIONALLY OMITTED].

 

2.4     
Sale of Assets. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise
dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the
disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

		2.5	[INTENTIONALLY OMITTED].

 

2.6     
3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not
enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in
part, Section 3(a)(l0) of the Securities Act (a “3(a)(l0) Transaction”).
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(l0) Transaction while this
note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than Fifteen
Thousand Dollars ($15,000), will be assessed and will become immediately due and payable to the Holder at its election in the
form of a cash payment or added to the balance of this Note (under Holder's and Borrower's expectation that this amount
will tack back to the Issue Date).

 

2.7     
Preservation of Existence, etc. The Borrower
shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges,
and become or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum assets) to become
or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such qualification necessary.

 

    	 	16	 

    	 

    

 

2.8        
Non-circumvention. The Borrower hereby covenants and agrees that the
Borrower will not, by amendment of its Certificate or Articles of Incorporation or 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 the provisions of this Note and take all action as may be required
to protect the rights of the Holder.

 

2.9         
Charter. So long as the Borrower shall have any obligations under this Note, the
Borrower shall not amend its charter documents, including without limitation its certificate of incorporation and bylaws, in any
manner that materially and adversely affects any rights of the Holder.

 

 

ARTICLE III. EVENTS OF DEFAULT

 

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

 

3.1      
Failure to Pay Principal or Interest. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise. Any amount
of principal on this Note which is not paid when due shall bear interest at the rate of Twenty Four percent (24%) per annum from
the due date thereof until the same is paid (“Default Interest”).

 

3.2    
Conversion and the Shares. The Borrower fails to reserve the
Reserved Amount required for Holder at all times, issue shares of Common Stock to the Holder
(or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the
Holder of the conversion rights of the
Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for shares of Common Stock issued to the Holder
upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent
not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated
form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note
as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders
its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on
any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and
when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations
described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not
to honor its obligations shall not be rescinded in writing) for two (2) business days after the
Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations
to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated
due to a balance owed by the Borrower to its transfer agent. If at the option of the
Holder, the Holder advances any
funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower
to the Holder within forty eight (48) hours of a demand from the Holder.

 

    	 	17	 

    	 

    

 

3.3     
Breach of Covenants. The Borrower breaches any material covenant or other material
term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement.

 

3.4     
Breach of Representations and Warranties. Any representation or warranty of the Borrower
made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including,
without limitation, the Purchase Agreement), shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will have)
a material adverse effect on the rights of the Holder with respect to this Note or
the Purchase Agreement.

 

3.5    
Receiver or Trustee. The Borrower or any subsidiary of the
Borrower shall make an assignment for the benefit of creditors or commence proceedings for its dissolution, or apply for or consent
to the appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be appointed for the Borrower or for a substantial part of
its property or business without its consent and shall not be discharged within sixty (60) days after such appointment.

 

3.6        
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the Borrower, or the Borrower
admits in writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for
bankruptcy relief, all under federal or state laws as applicable or the Borrower admits in writing its inability to pay its debts
generally as they mature, or have filed against it an involuntary petition for bankruptcy relief, all under international, federal
or state laws as applicable.

 

3.7         
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial
portion of its business.

 

3.8        
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits
it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s
ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become
due.

 

3.9      
Maintenance of Assets. The failure by
Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to
conduct its business (whether now or in the future).

 

    	 	18	 

    	 

    

 

3.10     
Cross-Default. Notwithstanding anything to the contrary contained in this Note or
the other related or companion documents, a breach or default by the Borrower of any
covenant or other term or condition contained in any of the Other Agreements (as defined herein), after the passage of all applicable
notice and cure or grace periods, shall, at the option of the
Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but
in no event required) to apply all rights and remedies of the Holder under the terms
of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements”
means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and (2) the
Holder or any other third party, including, without limitation, promissory notes; provided, however, the term “Other
Agreements” shall not include this Note. Each of the loan transactions will be
cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

 

3.11     
Funding Window. The Borrower agrees that it will not enter into a similar type financing
transaction (e.g. convertible promissory note) with or issue a Variable Security to any party other than the Holder for a period
of fifteen (15) Trading Days following the Issue Date without written approval from
the Holder. The Borrower agrees that this is a material term of the Note and any breach of this Section 3.11 will result in an
Event of Default.

3.12     
Judgments. Any money judgment, writ or similar process shall be entered or filed
against the Borrower or any subsidiary of the Borrower or any of its property or other
assets for more than $100,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise
consented to by the Holder, which consent will not be unreasonably withheld.

 

3.13     
Replacement of Transfer Agent. In the event that the Borrower proposes to replace
its transfer agent and (i) the Borrower fails to obtain written approval from the Holder
prior to the effective date of such replacement, or (ii) the Borrower fails to provide, prior to the effective date of such replacement,
a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including
but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved
Amount) signed by the successor transfer agent to Borrower and the Borrower.

 

3.14      
Bid Price. If the Borrower loses the
“bid” price for its Common Stock ($0.0001 on the “Ask” with
zero market makers on the “Bid” per Level 2) and/or a market (including
the OTCBB, OTCQB or an equivalent replacement exchange) for its Common Stock.

 

3.15     
Failure To Deliver Returnable Shares. The Borrower fails to deliver the
Returnable Shares to the Holder within three (3) business days of the Issue
Date.

 

		3.16	[INTENTIONALLY OMITTED].

 

    	 	19	 

    	 

    

 

3.17     
Maximum Conversion. If at any time while this Note is outstanding, and assuming the
beneficial ownership limitations contained in this Note did not apply to this specific calculation, the Holder could convert
the amounts outstanding under Note into more than 4.99% of the outstanding shares of
Common Stock of the Company as of the date
of calculation (including any beneficial ownership associated with the Returnable Shares held at the time of such calculation).

 

3.18     
Prohibition on Debt and Variable Securities. So long as the Note is outstanding,
the Issuer shall not, without written consent of the Investor, issue any convertible
security or variable rate security, excluding debt that (i) is incurred by a subsidiary or special purpose entity owned directly
or indirectly in whole or in part by the Company for the purpose of financing the purchase of the Company’s products and
services in the ordinary course of the Company’s business, and (ii) is not required
to be reflected as a liability on the face of the Company’s consolidated balance sheet in accordance with U.S. generally
accepted accounting principles) or any Variable Security. A Variable Security shall mean any security issued by the Issuer that
(i) has or may have conversion rights of any kind, contingent, conditional or otherwise in which the number of shares that may
be issued pursuant to such conversion right varies with the market price of the
common stock; (ii) is or may become convertible into common stock (including without limitation convertible debt, warrants
or convertible preferred stock), with a conversion or exercise price that varies with the market price of the
common stock, even if such security only becomes convertible or exercisable following an event of default, the passage of
time, or another trigger event or condition; or (iii) was issued or may be issued in the future in exchange for or in connection
with any contract, security, or instrument, whether convertible or not, where the number
of shares of common stock issued or to be issued is based upon or related in any way to the
market price of the common stock, including, but not limited to, common stock issued in connection with a Section 3(a)(9)
exchange, a Section 3(a)(10) settlement, or any other similar settlement or exchange.

 

3.19     
OTC Marketplace Segments. If (i) the Common
Stock of the Borrower or the Borrower itself has any notation on the OTC Markets Group website (www.otcmarkets.com)
other than “Current Information,” including but not limited to “Limited Information” (Yield Sign) or “No
Information” (Stop Sign), or if the Common Stock of the
Borrower is shown only as quoted on the “grey markets,” and

(ii) by reason thereof,
the Holder is unable to obtain a standard “144 legal opinion” from an attorney reasonably acceptable to The Holder,
its brokerage firm, and the Company’s transfer agent in order to facilitate the Holder’s conversion of any of the Borrower’s
obligations hereunder into shares of the Borrower’s Common Stock and thereupon deposit such shares into the Holder’s
brokerage account.

 

		3.20	[INTENTIONALLY OMITTED].

 

3.21     
Inside Information. Any attempt by the Borrower or its officers, directors, and/or
affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers,
directors, and/or affiliates of material non-public information concerning the Borrower, to the holder or its successors and assigns,
which is not immediately cured by Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.

 

    	 	20	 

    	 

    

 

3.22     
DDQ. If any of the information in the
due diligence questionnaire, provided by the Borrower to the Holder on or around the
Issue Date, is false or misleading in any material respect.

 

3.23 
Prior Notes. If, at any time on or after the Issue Date, the
Borrower alters the conversion terms of any promissory note that was issued
on or before the day immediately prior to the Issue Date.

 

3.24  
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the
reporting requirements of the Exchange Act (including but not limited to becoming delinquent in its filings); and/or the Borrower
shall cease to be subject to the reporting requirements of the Exchange Act.

Upon the occurrence of
any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16,
3.17, 3.18, 3.19,

3.20, 3.21, 3.22, 3.23, and/or
3.24, the Holder shall no longer be required to return the Returnable Shares to the
Borrower under any circumstances and the Note shall become immediately due and payable and the Borrower shall pay to the Holder,
in full satisfaction of its obligations hereunder, an amount equal to (i) 150% (EXCEPT WITH RESPECT TO SECTION 3.2, IN WHICH CASE
150% SHALL BE REPLACED

WITH 200%) times the
sum of (w) the then outstanding principal amount of this Note plus (x)
accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment
Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the
date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default
Sum”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or
notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses,
of collection, and the Holder shall be entitled to exercise all other rights and remedies
available at law or in equity. This requirement by the Borrower shall automatically apply upon the occurrence of an Event of Default
without the need for any party to give any notice or take any other action. Additionally, if this Note is not paid at the Maturity
Date, then the outstanding principal due under this Note shall increase by Fifteen Thousand and No/100 United States Dollars ($15,000).

 

The Holder shall have
the right at any time to convert the Default Amount, in whole or in part, at the Conversion
Price in effect at the time of conversion, subject to the beneficial ownership limitations
contained in the Note.

 

If the Holder shall commence
an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the
Holder prevails in such action, the Holder shall be reimbursed by the Borrower for its attorneys' fees and other
costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

    	 	21	 

    	 

    

 

If the Holder shall commence
an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the
Holder prevails in such action, the Holder shall be reimbursed by the Borrower for its attorneys' fees and other costs and expenses
incurred in the investigation, preparation and prosecution of such action or proceeding.

 

 

ARTICLE IV. MISCELLANEOUS

 

4.1     
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in
the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All
rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2     
Notices. All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently by written notice. Any notice or other communication required
or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower,
to: CleanSpark, Inc.

70 North Main Street, Suite 105

Bountiful, UT 84010

E-mail: info@cleanspark.com
If to the Holder:

    	 	22	 

    	 

    

 

Labrys Fund, LP 48

Parker Road

Wellesley, MA 02482

E-mail: admin@equiluxgroup.com

With a copy to
(which copy shall not constitute notice): Legal & Compliance, LLC

330 Clematis Street, Ste. 217 West Palm
Beach, FL 33401 Attn: Chad Friend, Esq., LL.M.

E-mail: CFriend@LegalAndCompliance.com

 

4.3     
Amendments. This Note and any provision hereof may only be amended by an instrument
in writing signed by the Borrower and the Holder. The term “Note” and all
reference thereto, as used throughout this instrument, shall mean this instrument (and the
other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then
as so amended or supplemented.

 

4.4     
Assignability. The Holder may assign or transfer this Note to any transferee at its
sole discretion. This Note shall be binding upon the Borrower and its successors and
assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an
“accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the
contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.
The Holder and any assignee, by acceptance of this Note, acknowledge and agree that
following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note
may be less than the amount stated on the face hereof. The Borrower shall not assign
any of its rights or obligations under this Note without the signed written consent of the Holder.

 

4.5     
Cost of Collection. If default is made in the payment of this Note, the Borrower
shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.

 

4.6    
Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of Nevada without regard to principles of conflicts of laws. The parties hereby warrant and represent that
the selection of Nevada law as governing under this Note (i) has a reasonable nexus to each of the Parties and to the transactions
contemplated by the Note; and (ii) does not offend any public policy of Nevada, Massachusetts, or of any other state, federal,
or other jurisdiction. Any action brought by either party against the other arising out of or related to this Note, or any
other agreements between the parties, shall be commenced only in the state or federal courts of general jurisdiction located in
the Commonwealth of Massachusetts, except that all such disputes between the parties shall be subject to alternative dispute resolution
through binding arbitration at the Holder’s sole discretion and election (regardless of which

 

    	 	23	 

    	 

    

 

party initiates the
legal proceedings). The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.
The parties agree that, in connection with any such arbitration proceeding, each shall
submit or file any claim which would constitute a compulsory counterclaim within the same proceeding as the claim to which it relates.
Any such claim that is not submitted or filed in such proceeding shall be waived and such party will forever be barred from asserting
such a claim. Both parties agree to submit to the jurisdiction of such courts or to such arbitration panel, as the case may be.

 

If the Holder elects alternative
dispute resolution by arbitration, the arbitration proceedings shall be conducted in the Commonwealth of Massachusetts and administered
by the American Arbitration Association in accordance with its Commercial Arbitration
Rules and Mediation Procedures in effect on the Issue Date, except as modified by this Note. The
Holder’s election to arbitrate shall be made in writing, delivered to the other party, and filed with the American
Arbitration Association. The American Arbitration Association must receive the demand for arbitration prior to the date when the
institution of legal or equitable proceedings would be barred by the applicable statute of limitations, unless legal or
equitable proceedings between the parties have already commenced, and the receipt by the American Arbitration Association of a
written demand for arbitration also shall constitute the institution of legal or equitable proceedings for statute of limitations
purposes. The parties shall be entitled to limited discovery at the discretion of the arbitrator(s)
who may, but are not required to, allow depositions. The parties acknowledge that the arbitrators’ subpoena power is not
subject to geographic limitations. The arbitrator(s) shall have the right to award individual relief which he or she deems proper
under the evidence presented and applicable law and consistent with the parties’ rights to, and limitations on, damages and
other relief as expressly set forth in this Note. The award and decision of the arbitrator(s)
shall be conclusive and binding on all parties, and judgment upon the award may be entered in any court of competent jurisdiction.
The Holder reserves the right, but shall have no obligation, to advance the Issuer’s
share of the costs, fees and expenses of any arbitration proceeding, including any arbitrator fees, in order for such arbitration
proceeding to take place, and by doing so will not be deemed to have waived or relinquished its right to seek the recovery of those
amounts from the arbitrator, who shall provide for such relief in the final award, in addition to the costs, fees, and expenses
that are otherwise recoverable. The foregoing agreement to arbitrate shall be specifically enforceable under applicable law in
any court having jurisdiction thereof.

 

THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, 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.

 

    	 	24	 

    	 

    

 

The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party
hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in
connection with this Note or any other related transaction document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

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

 

4.8     
Purchase Agreement. By its acceptance of this Note, each party agrees to be bound
by the applicable terms of the Purchase Agreement.

 

4.9     
Notice of Corporate Events. Except as otherwise provided below, the
Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this
Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials
and other information sent to shareholders). In the event of any taking by the
Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment
of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation,
reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right,
or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance
of all or substantially all of the assets of the Borrower or any proposed liquidation,
dissolution or winding up of the Borrower, the Borrower shall mail a notice to the
Holder, at least twenty (20) days

 

    	 	25	 

    	 

    

 

prior to the record date
specified therein (or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such record is to be taken
for the purpose of such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or other event
to the extent known at such time. The Borrower shall make a public announcement of
any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the
Holder in accordance with the terms of this Section 4.9 including, but not limited
to, name changes, recapitalizations, etc. as soon as possible under law.

 

4.10                  
Usury. If Notwithstanding any provision in this Note or the
related transaction documents to the contrary, the total liability for payments
of interest and payments in the nature of interest, including, without limitation,
all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed
by the usury laws of the jurisdiction governing this Note or any other applicable law.
In the event the total liability of payments of interest and payments in the nature
of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest,
shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period
exceeds the limit imposed by the usury laws of the jurisdiction governing this Note,
all sums in excess of those lawfully collectible as interest for the period in question
shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the
outstanding principal balance due hereunder immediately upon receipt of such sums by the Holder hereof, with the
same force and effect as though the Company had specifically designated such excess sums to be so applied to the reduction
of the principal balance then outstanding, and the Holder hereof had agreed to accept
such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect,
by notice in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible
as interest, rather than accept such sums as a prepayment of the principal balance
then outstanding. It is the intention of the parties that the Company does not intend or expect to pay, nor does the Holder intend
or expect to charge or collect any interest under this Note greater than the highest non-usurious rate of interest which may be
charged under applicable law.

 

4.11                  
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations
under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions
of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition
to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and
to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or
other security being required. No provision of this Note shall alter or impair the obligation
of the Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and
rate, and in the form, herein prescribed.

 

    	 	26	 

    	 

    

 

4.12                 
Severability. 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 to such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision
hereof.

 

4.13                  Dispute
Resolution. In the case of a dispute as to the determination of the
Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Default Sum, Issue, Closing or Maturity Date,
the closing bid price, or fair market value (as the case may be) or the arithmetic
calculation of the Conversion Price or the applicable prepayment amount(s) (as the case
may be), the Borrower or the Holder shall submit the disputed determinations or
arithmetic calculations via facsimile (i) within two (2) Business Days after receipt of the
applicable notice giving rise to such dispute to the Borrower or the Holder or
(ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such
dispute. If the Holder and the Borrower
are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination or
arithmetic calculation (as the case may be) being submitted to the Borrower
or the Holder, then the Borrower shall, within two (2) Business Days, submit via
facsimile (a) the disputed determination of the Conversion Price, the
closing bid price, the or fair market value (as the case may be) to an
independent, reputable investment bank selected by the Borrower and approved by the Holder or (b) the disputed
arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Default Sum to an
independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower shall
cause at its expense the investment bank or the accountant to perform the
determinations or calculations and notify the Borrower and the Holder of the results no later than ten (10) Business Days
from the time it receives such disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation shall be binding upon all parties absent demonstrable error.

 

4.14                
Terms of Future Financings. So long as this Note is outstanding, upon any issuance
by the Borrower or any of its subsidiaries of any security with any term more favorable
to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder
in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the
Holder. The types of terms contained in another security that may be more favorable to the holder of such security include,
but are not limited to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original
issue discounts, stock sale price, private placement price per share, and warrant coverage.

 

    	 	27	 

    	 

    

 

		4.15	[INTENTIONALLY OMITTED].

 

4.16                
Disclosure. Upon receipt or delivery by the
Company of any notice in accordance with the terms of this Note, unless the Company
has in good faith determined that the matters relating to such notice do not constitute material, non- public information relating
to the Company or any of its Subsidiaries, the Company shall within one (1) Trading Day after any such receipt or delivery, publicly
disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes
that a notice contains material, non-public information relating to the Company or
any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the
absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute
material, non- public information relating to the Company or its Subsidiaries.

 

4.17                     
Right of First Refusal. If at any time while this Note is outstanding, the
Borrower has a bona fide offer of capital or financing from any 3rd party with respect to any convertible security of $100,000.00
or more, that the Borrower intends to act upon, then the
Borrower must first offer such opportunity to the Holder to provide such capital
or financing to the Borrower on the same terms as each respective 3rd party’s
terms. Should the Holder be unwilling or unable to provide such capital or financing to the Borrower within 5 trading days from
Holder’s receipt of written notice of the offer (the “Offer Notice”) from the Borrower, then the Borrower may
obtain such capital or financing from that respective 3rd party upon the exact same terms and conditions offered by the Borrower
to the Holder, which transaction must be completed within 30 days after the date of
the Offer Notice. If the Borrower does not receive the capital or financing from the
respective 3rd party within 30 days after the date of the respective Offer Notice,
then the Borrower must again offer the capital or financing opportunity to the Holder
as described above, and the process detailed above shall be repeated. The Offer Notice
must be sent via electronic mail to Admin@EquiluxGroup.com.

 

 

 

 

 

 

 

 

[signature page to follow]

 

    	 	28	 

    	 

    

 

IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer as of the date first above written.

 

 

CLEANSPARK, INC.

 

 

By: /s/ S. Matthew Schultz

Name: Matthew Schultz Title: Chief Executive
Officer

 

    	 	29	 

    	 

    

 

EXHIBIT A

NOTICE
OF CONVERSION

 

The undersigned
hereby elects to convert $_____principal amount of the Note (defined below) together with $_____of accrued and unpaid interest thereto,
totaling $into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common
Stock”) as set forth below, of CleanSpark, Inc., a Nevada corporation (the “Borrower”), according to the conditions
of the convertible note of the Borrower dated as of March 23, 2018 (the “Note”), as of the date written below. No
fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

[ ]
The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
undersigned or its nominee with DTC through its Deposit Withdrawal At Custodian system (“DWAC Transfer”).

 

Name of DTC Prime Broker: Account Number:

 

[
] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
below or, if additional space is necessary, on an attachment hereto:

 

Name: Labrys Fund, LP

Address: 

 

Date
of Conversion:

 

Applicable Conversion Price:$

 

Number of Shares of Common Stock to be Issued

Pursuant to Conversion of the Notes:

 

 

 

Amount of Principal Balance Due remaining

Under the Note after this conversion:

 

 

Accrued and unpaid interest remaining:

 

Default Amounts & Penalties remaining (if applicable):

 

 

 

LABRYS FUND, LP

 

By:________________

Name:_____________

Title: Principal

Date: ______________

 

    	 	30

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