Document:

Exhibit 10.2

 

CONVERTIBLE PROMISSORY NOTE

 

	Effective Date: November 3, 2020	U.S. $2,110,000.00

 

 

FOR VALUE RECEIVED,
SPI Energy Co., Ltd., a Cayman Islands corporation (“Borrower”),
promises to pay to Streeterville Capital, LLC, a Utah limited liability company,
or its successors or assigns (“Lender”), $2,110,000.00 and any interest, fees, charges, and late fees accrued
hereunder on the date that is twelve (12) months after the Purchase Price Date (the “Maturity Date”) in accordance
with the terms set forth herein and to pay interest on the Outstanding Balance at the rate of ten percent (10%) per annum from
the Purchase Price Date until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a
360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance
with the terms of this Note. This Convertible Promissory Note (this “Note”) is issued and made effective as
of November 3, 2020 (the “Effective Date”). This Note is issued pursuant to that certain Securities Purchase
Agreement dated November 3, 2020, as the same may be amended from time to time, by and between Borrower and Lender (the “Purchase
Agreement”). Certain capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated
herein by this reference.

 

This Note carries an
OID of $100,000.00. In addition, Borrower agrees to pay $10,000.00 to Lender to cover Lender’s legal fees, accounting costs,
due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note (the “Transaction
Expense Amount”), all of which amount is fully earned and included in the initial principal balance of this Note. The
purchase price for this Note shall be $2,000,000.00 (the “Purchase Price”), computed as follows: $2,110,000.00
original principal balance, less the OID, less the Transaction Expense Amount. The Purchase Price shall be payable by Lender by
wire transfer of immediately available funds.

 

1.             Payment; Prepayment.

 

1.1.          
Payment. All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares
(as defined below), as provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that
purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to
(c) accrued and unpaid interest, and thereafter, to (d) principal.

 

1.2.          
Prepayment. Notwithstanding the foregoing, Borrower shall have the right to prepay all or any portion of the Outstanding
Balance (less such portion of the Outstanding Balance for which Borrower has received a Lender Conversion Notice (as defined below)
or a Redemption Notice (as defined below) from Lender where the applicable Conversion Shares have not yet been delivered). If Borrower
exercises its right to prepay this Note, Borrower shall make payment to Lender of an amount in cash equal to 115% multiplied by
the portion of the Outstanding Balance Borrower elects to repay.

 

2.             Security. This Note is unsecured.

 

3.             Lender Optional Conversion.

 

3.1.          
Lender Conversions. Lender has the right at any time after the Purchase Price Date until the Outstanding Balance
has been paid in full, at its election, to convert (“Lender Conversion”) all or any portion of the Outstanding
Balance into shares (each instance of conversion is referred to herein as a “Lender Conversion Shares”) of fully
paid and non-assessable Ordinary Shares, $0.0001 par value per share (“Ordinary Shares”), of Borrower as per
the following conversion formula: the number of Lender Conversion Shares equals the amount being converted (the “Conversion
Amount”) divided by the Lender Conversion Price (as defined below). Conversion notices in the form attached hereto as
Exhibit A (each, a “Lender Conversion Notice”) may be effectively delivered to Borrower by any method
set forth in the “Notices” Section of the Purchase Agreement, and all Lender Conversions shall be cashless and not
require further payment from Lender. Borrower shall deliver the Lender Conversion Shares from any Lender Conversion to Lender in
accordance with Section 9 below.

 

 

 

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3.2.          
Lender Conversion Price. Subject to adjustment as set forth in this Note, the price at which Lender has the right
to convert all or any portion of the Outstanding Balance into Ordinary Shares is $26.00 per share (the “Lender Conversion
Price”).

 

4.             Defaults
and Remedies.

 

4.1.          
Defaults. The following are events of default under this Note (each, an “Event of Default”): (a)
Borrower fails to pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) Borrower
fails to deliver any Lender Conversion Shares in accordance with the terms hereof; (c) Borrower fails to deliver any Redemption
Conversion Shares (as defined below) in accordance with the terms hereof; (d) a receiver, trustee or other similar official shall
be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days
or shall not be dismissed or discharged within sixty (60) days; (e) Borrower becomes insolvent or generally fails to pay, or admits
in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; (f) Borrower makes
a general assignment for the benefit of creditors; (g) Borrower files a petition for relief under any bankruptcy, insolvency or
similar law (domestic or foreign); (h) an involuntary bankruptcy proceeding is commenced or filed against Borrower; (i) Borrower
or any pledgor, trustor, or guarantor of this Note defaults or otherwise fails to materially observe or materially perform any
covenant, obligation, condition or agreement of Borrower or such pledgor, trustor, or guarantor contained herein or in any other
Transaction Document (as defined in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section
4 of the Purchase Agreement; (j) any representation, warranty or other statement made or furnished by or on behalf of Borrower
or any pledgor, trustor, or guarantor of this Note to Lender herein, in any Transaction Document, or otherwise in connection with
the issuance of this Note is false, incorrect, incomplete or misleading in any material respect when made or furnished; (k) the
occurrence of a Fundamental Transaction without Lender’s prior written consent; (l) Borrower fails to maintain the Share
Reserve (as defined in the Purchase Agreement); (m) Borrower effectuates a reverse split of its Ordinary Shares without twenty
(20) Trading Days prior written notice to Lender; (n) any money judgment, writ or similar process is entered or filed against Borrower
or any subsidiary of 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) calendar days unless otherwise consented to by Lender; (o) Borrower fails to be DWAC Eligible;
(p) Borrower fails to observe or perform in any material respect any covenant set forth in Section 4 of the Purchase Agreement
and such failure is not cured by the Borrower within ten (10) days of notice thereof; or (q) Borrower, any affiliate of Borrower,
or any pledgor, trustor, or guarantor of this Note breaches any covenant or other term or condition contained in any Other Agreements
and such breach is not cured by the Borrower within ten (10) days of notice thereof.

 

4.2.          
Remedies. At any time and from time to time after Lender becomes aware of the occurrence of any Event of Default
(taking into account any cure periods), Lender may accelerate this Note by written notice to Borrower, with the Outstanding Balance
becoming immediately due and payable in cash at the Mandatory Default Amount. Notwithstanding the foregoing, at any time following
the occurrence of any Event of Default, Lender may, at its option, elect to increase the Outstanding Balance by applying the Default
Effect (subject to the limitation set forth below) via written notice to Borrower without accelerating the Outstanding Balance,
in which event the Outstanding Balance shall be increased as of the date of the occurrence of the applicable Event of Default pursuant
to the Default Effect, but the Outstanding Balance shall not be immediately due and payable unless so declared by Lender (for the
avoidance of doubt, if Lender elects to apply the Default Effect pursuant to this sentence, it shall reserve the right to declare
the Outstanding Balance immediately due and payable at any time and no such election by Lender shall be deemed to be a waiver of
its right to declare the Outstanding Balance immediately due and payable as set forth herein unless otherwise agreed to by Lender
in writing). Notwithstanding the foregoing, upon the occurrence of any Event of Default described in clauses (d), (e), (f), (g)
or (h) of Section 4.1, the Outstanding Balance as of the date of acceleration shall become immediately and automatically due and
payable in cash at the Mandatory Default Amount, without any written notice required by Lender. At any time following the occurrence
of any Event of Default, upon written notice given by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning
on the date the applicable Event of Default occurred at an interest rate equal to the lesser of fifteen percent (15%) per annum
or the maximum rate permitted under applicable law (“Default Interest”). For the avoidance of doubt, Lender
may continue making Lender Conversions and Redemption Conversions (as defined below) at any time following an Event of Default
until such time as the Outstanding Balance is paid in full. In connection with acceleration described herein, Lender need not provide,
and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without
expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender
shall have all rights as a holder of the Note until such time, if any, as Lender receives full payment pursuant to this Section
4.2. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Nothing
herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver Conversion
Shares upon Conversion of the Note as required pursuant to the terms hereof.

 

 

 

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5.             Unconditional
Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation
of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has
or may have hereafter against Lender, its successors and assigns, and agrees to make the payments or Conversions called for herein
in accordance with the terms of this Note.

 

6.             Waiver.
No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting
the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or
consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent
or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

 

7.            
Rights Upon Issuance of Securities.

 

7.1.          
 [INTENTIONALLY OMITTED]

 

7.2.          
Adjustment of Lender Conversion Price upon Subdivision or Combination of Ordinary Shares. Without limiting any provision
hereof, if Borrower at any time on or after the Effective Date subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding Ordinary Shares into a greater number of shares, the Lender Conversion Price
in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision hereof, if Borrower
at any time on or after the Effective Date combines (by combination, reverse stock split or otherwise) one or more classes of its
outstanding Ordinary Shares into a smaller number of shares, the Lender Conversion Price in effect immediately prior to such combination
will be proportionately increased. Any adjustment pursuant to this Section 7.2 shall become effective immediately after the effective
date of such subdivision or combination. If any event requiring an adjustment under this Section 7.2 occurs during the period that
a Redemption Conversion Price is calculated hereunder, then the calculation of such Redemption Conversion Price shall be adjusted
appropriately to reflect such event.

 

7.3.          
Other Events. In the event that Borrower (or any subsidiary) shall take any action to which the provisions hereof
are not strictly applicable, or, if applicable, would not operate to protect Lender from dilution or if any event occurs of the
type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then Borrower’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Lender Conversion Price so as to
protect the rights of Lender, provided that no such adjustment pursuant to this Section 7.3 will increase the Lender Conversion
Price as otherwise determined pursuant to this Section 7, provided further that if Lender does not accept such adjustments
as appropriately protecting its interests hereunder against such dilution, then Borrower’s board of directors and Lender
shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments,
whose determination shall be final and binding and whose fees and expenses shall be borne by Borrower.

 

8.             Borrower
Redemptions.

 

8.1.          
Redemption Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Redemption
Conversion (the “Redemption Conversion Price”) shall be the lesser of (a) the Lender Conversion Price, and (b)
the Market Price.

 

8.2.          
Redemption Conversions. Beginning on the date that is six (6) months from the Purchase Price Date, Lender shall have
the right, exercisable at any time in its sole and absolute discretion, to redeem (each, a “Redemption”) any
portion of the Note up to $350,000.00 per calendar month (such amount, the “Redemption Amount”) by providing
Borrower with a notice substantially in the form attached hereto as Exhibit B (each, a “Redemption Notice”,
and each date on which Lender delivers a Redemption Notice, a “Redemption Date”). For the avoidance of doubt,
Lender may submit to Borrower one (1) or more Redemption Notices in any given calendar month so long as the aggregate amount redeemed
in such calendar month does not exceed $350,000.00. At the election of the Borrower, payments of each Redemption Amount may be
made (a) in cash, or (b) by converting such Redemption Amount into Ordinary Shares (“Redemption Conversion Shares”,
and together with the Lender Conversion Shares, the “Conversion Shares”) in accordance with this Section 8.2
(each, a “Redemption Conversion”) per the following formula: the number of Redemption Conversion Shares equals
the portion of the applicable Redemption Amount being converted divided by the Redemption Conversion Price, or (c) by any combination
of the foregoing, so long as the cash is delivered to Lender on the third (3rd) Trading Day immediately following the
applicable Redemption Date and the Redemption Conversion Shares are delivered to Lender on or before the applicable Delivery Date
(as defined below). Notwithstanding the foregoing, Borrower will not be entitled to elect a Redemption Conversion with respect
to any portion of any applicable Redemption Amount and shall be required to pay the Redemption Amount in cash, if on the applicable
Redemption Date there is an Equity Conditions Failure, and such failure is not waived in writing by Lender. Notwithstanding that
failure to repay this Note in full by the Maturity Date is an Event of Default, the Redemption Dates shall continue after the Maturity
Date pursuant to this Section 8.2 until the Outstanding Balance is repaid in full. Once Borrower has redeemed an amount equal
to half of the original principal amount of this Note in cash, any subsequent Redemptions it makes in cash will be subject to a
twenty-five percent (25%) premium.

 

 

 

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8.3.          
Allocation of Redemption Amounts. Following its receipt of a Redemption Notice, Borrower may either ratify Lender’s
proposed allocation in the applicable Redemption Notice or elect to change the allocation by written notice to Lender by email
or fax within seventy-two (72) hours of its receipt of such Redemption Notice, so long as the sum of the cash payments and the
amount of Redemption Conversions equal the applicable Redemption Amount. If Borrower fails to notify Lender of its election to
change the allocation prior to the deadline set forth in the previous sentence, it shall be deemed to have ratified and accepted
the allocation set forth in the applicable Redemption Notice prepared by Lender. Borrower acknowledges and agrees that the amounts
and calculations set forth thereon are subject to correction or adjustment because of error, mistake, or any adjustment resulting
from an Event of Default or other adjustment permitted under the Transaction Documents (an “Adjustment”). Furthermore,
no error or mistake in the preparation of such notices, or failure to apply any Adjustment that could have been applied prior to
the preparation of a Redemption Notice may be deemed a waiver of Lender’s right to enforce the terms of any Note, even if
such error, mistake, or failure to include an Adjustment arises from Lender’s own calculation. Borrower shall deliver the
Redemption Conversion Shares from any Redemption Conversion to Lender in accordance with Section 9 below on or before each applicable
Delivery Date.

 

9.             Method of Conversion Share Delivery. On or before the close of business on the fifth (5th) Trading Day
following each Redemption Date or the fifth (5th) Trading Day following the date of delivery of a Lender Conversion
Notice, as applicable (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible at such time and such
Conversion Shares are eligible for delivery via DWAC, deliver or cause its transfer agent to deliver the applicable Conversion
Shares electronically via DWAC to the account designated by Lender in the applicable Lender Conversion Notice or Redemption Notice.
If Borrower is not DWAC Eligible or such Conversion Shares are not eligible for delivery via DWAC, it shall deliver to Lender or
its broker (as designated in the Lender Conversion Notice or Redemption Notice), via reputable overnight courier, a certificate
representing the number of Ordinary Shares equal to the number of Conversion Shares to which Lender shall be entitled, registered
in the name of Lender or its designee. For the avoidance of doubt, Borrower has not met its obligation to deliver Conversion Shares
by the Delivery Date unless Lender or its broker, as applicable, has actually received the certificate representing the applicable
Conversion Shares no later than the close of business on the relevant Delivery Date pursuant to the terms set forth above. Moreover,
and notwithstanding anything to the contrary herein or in any other Transaction Document, in the event Borrower or its transfer
agent refuses to deliver any Conversion Shares without a restrictive securities legend to Lender on grounds that such issuance
is in violation of Rule 144 under the Securities Act of 1933, as amended (“Rule 144”), Borrower shall deliver
or cause its transfer agent to deliver the applicable Conversion Shares to Lender with a restricted securities legend, but otherwise
in accordance with the provisions of this Section 9. In conjunction therewith, Borrower will also deliver to Lender a written explanation
from its counsel or its transfer agent’s counsel opining as to why the issuance of the applicable Conversion Shares violates
Rule 144.

 

10.          Conversion
Delays. If Borrower fails to deliver Conversion Shares in accordance with the timeframe stated in Section 9, Lender may at
any time prior to receiving the applicable Conversion Shares rescind in whole or in part such Conversion, with a corresponding
increase to the Outstanding Balance (any returned amount will tack back to the Purchase Price Date for purposes of determining
the holding period under Rule 144). In addition, for each Lender Conversion, in the event that Lender Conversion Shares are not
delivered by the fifth (5th) Trading Day (inclusive of the day of the Conversion), a late fee equal to 2% of the applicable
Conversion Share Value rounded to the nearest multiple of $100.00 but with a floor of $500.00 per day (but in any event the cumulative
amount of such late fees for each Conversion shall not exceed 200% of the applicable Conversion Share Value) will be assessed
for each day after the fifth (5th) Trading Day (inclusive of the day of the Conversion) until Lender Conversion Share
delivery is made; and such late fee will be added to the Outstanding Balance (such fees, the “Conversion Delay Late Fees”).

 

11.          Restriction on Equity Sales. If at any time after the date that is six (6) months from the Purchase Price Date, Borrower
is unable to issue Ordinary Shares to Lender as result of any lock-up or other agreement or restriction prohibiting the issuance
of Ordinary Shares for a certain period of time, then the Outstanding Balance will automatically be increased by three percent
(3%) for each thirty (30) day period that Borrower is prohibited from issuing Ordinary Shares (which increase shall be pro-rated
for any partial period). For the avoidance of doubt, such increase to the Outstanding Balance shall be in addition to all other
rights and remedies available to Lender under this Note and the other Transaction Documents and shall not be in lieu of, nor deemed
to be a waiver of any other rights or remedies available to Lender under this Note or any of the other Transaction Documents, including
without limitation calling an Event of Default if Borrower fails to deliver Conversion Shares in accordance with the terms of this
Note.

 

 

 

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12.          Ownership
Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, Borrower shall
not effect any conversion of this Note to the extent that after giving effect to such conversion would cause Lender (together
with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of Ordinary Shares outstanding on such
date (including for such purpose the Ordinary Shares issuable upon such issuance) (the “Maximum Percentage”).
For purposes of this section, beneficial ownership of Ordinary Shares will be determined pursuant to Section 13(d) of the 1934
Act. Notwithstanding the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time
as the Market Capitalization is less than $10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%”
is replaced with “9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall remain at
9.99% until increased, decreased or waived by Lender as set forth below. By written notice to Borrower, Lender may increase, decrease
or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof.
The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns
of Lender.

 

13.          Issuance
Cap. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, Borrower and Lender
agree that the total cumulative number of shares of Common Stock issued to Lender hereunder together with all other Transaction
Documents may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that
such limitation will not apply following Approval (defined below). If the number of shares of Common Stock issued to Investor
reaches the Nasdaq 19.99% Cap, so as not to violate the 20% limit established in Listing Rule 5635(d), Borrower will use reasonable
commercial efforts to: (a) obtain stockholder approval of the Note and the issuance of additional Conversion Shares, if necessary,
in accordance with the requirements of Nasdaq Listing Rule 5635(d), or (b) obtain Nasdaq approval of the Note and the issuance
of additional Conversion Shares (the “Approval”). In the event Borrower is unable to deliver any additional
Conversion Shares to Lender as a result of the Nasdaq 19.99% Cap, then until such time as Borrower is able to obtain the Approval,
all Redemption Amounts must be paid in cash.

 

14.          Opinion
of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right to
have any such opinion provided by its counsel.

 

15.          Governing
Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this reference.

 

16.          Arbitration of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration
Provisions (as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

17.         Cancellation. After repayment or conversion of the entire Outstanding Balance, this Note shall be deemed paid in
full, shall automatically be deemed canceled, and shall not be reissued.

 

18.          Amendments.
The prior written consent of both parties hereto shall be required for any change or amendment to this Note.

 

19.          Assignments.
Borrower may not assign this Note without the prior written consent of Lender. This Note and any Ordinary Shares issued upon conversion
of this Note may be offered, sold, assigned or transferred by Lender without the consent of Borrower.

 

20.          Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with the subsection of the Purchase Agreement titled “Notices.”

 

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

 

22.          Severability.
If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of Borrower
and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.

 

[Remainder of page intentionally left
blank; signature page follows]

 

 

 

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IN WITNESS WHEREOF,
Borrower has caused this Note to be duly executed as of the Effective Date.

 

	 	BORROWER:

SPI
Energy Co., Ltd.

 

 

By: _____________________________

Name: ___________________________

Title: ____________________________

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

Streeterville
Capital, LLC

 

 

By: ___________________________

       John M. Fife, President 

 

 

[Signature Page
to Convertible Promissory Note]

 

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ATTACHMENT 1

DEFINITIONS

 

For purposes of this
Note, the following terms shall have the following meanings:

 

A1.           
“Approved Stock Plan” means any stock option plan in effect as of the Purchase Price Date which has been
approved by the board of directors of Borrower, pursuant to which Borrower’s securities may be issued to any employee, officer
or director for services provided to Borrower.

 

A2.           
“Closing Bid Price” and “Closing Trade Price” means the last closing bid price and
last closing trade price, respectively, for the Ordinary Shares on its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of the Ordinary Shares prior to 4:00:00 p.m.,
New York time, as reported by Bloomberg, or, if its principal market is not the principal securities exchange or trading market
for the Ordinary Shares, the last closing bid price or last trade price, respectively, of the Ordinary Shares on the principal
securities exchange or trading market where the Ordinary Shares is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price or last trade price, respectively, of the Ordinary Shares in the over-the-counter market
on the electronic bulletin board for the Ordinary Shares as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for the Ordinary Shares by Bloomberg, the average of the bid prices, or the ask prices, respectively,
of any market makers for the Ordinary Shares as reported by OTC Markets Group, Inc., and any successor thereto. If the Closing
Bid Price or the Closing Trade Price cannot be calculated for the Ordinary Shares on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of the Ordinary Shares on such date shall be the fair
market value as mutually determined by Lender and Borrower. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during such period.

 

A3.           
“Conversion” means a Lender Conversion under Section 3 or a Redemption Conversion under Section 8.

 

A4.           
“Conversion Factor” means 80%.

 

A5.           
“Conversion Share Value” means the product of the number of Lender Conversion Shares deliverable pursuant
to any Lender Conversion Notice multiplied by the Closing Trade Price of the Ordinary Shares on the Delivery Date for such Lender
Conversion.

 

A6.           
“Deemed Issuance” means an issuance of Ordinary Shares that shall be deemed to have occurred on the latest
possible permitted date pursuant to the terms hereof in the event Borrower fails to deliver Conversion Shares as and when required
pursuant to Section 9 of this Note. For the avoidance of doubt, if Borrower has elected or is deemed under Section 8.3 to have
elected to pay a Redemption Amount in Redemption Conversion Shares and fails to deliver such Redemption Conversion Shares, such
failure shall be considered a Deemed Issuance hereunder even if an Equity Conditions Failure exists at that time or other relevant
date of determination.

 

A7.           
“Default Effect” means multiplying the Outstanding Balance as of the date the applicable Event of Default
occurred by (a) fifteen percent (15%) for each occurrence of any Major Default, or (b) five percent (5%) for each occurrence of
any Minor Default, and then adding the resulting product to the Outstanding Balance as of the date the applicable Event of Default
occurred, with the sum of the foregoing then becoming the Outstanding Balance under this Note as of the date the applicable Event
of Default occurred; provided that the Default Effect may only be applied three (3) times hereunder with respect to Major Defaults
and three (3) times hereunder with respect to Minor Defaults; and provided further that the Default Effect shall not apply to any
Event of Default pursuant to Section 4.1(b) hereof.

 

A8.           
“DTC” means the Depository Trust Company or any successor thereto.

 

A9.           
“DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer program.

 

 

Attachment 1 to Convertible Promissory Note

 

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A10.        
“DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.

 

A11.        
“DWAC Eligible” means that (a) Borrower’s Ordinary Shares is eligible at DTC for full services
pursuant to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system; (b) Borrower
has been approved (without revocation) by DTC’s underwriting department; (c) Borrower’s transfer agent is approved
as an agent in the DTC/FAST Program; (d) the Conversion Shares are otherwise eligible for delivery via DWAC; and (e) Borrower’s
transfer agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.

 

A12.        
“Equity Conditions Failure” means that any of the following conditions has not been satisfied on any
given Redemption Date: (a) with respect to the applicable date of determination all of the Conversion Shares would be freely
tradable under Rule 144 or without the need for registration under any applicable federal or state securities laws (in each case,
disregarding any limitation on conversion of this Note); (b) no Event of Default shall have occurred or be continuing hereunder;
(c) the average and median daily dollar volume of the Ordinary Shares on its principal market for the previous twenty (20) and
two hundred (200) Trading Days shall be greater than $75,000.00; and (d) the Market Capitalization is greater than or equal to
$30,000,000.00.

 

A13.        
“Excluded Securities” means any shares of Common Stock or options to purchase Common Stock issued or
issuable: (a) in connection with any Approved Stock Plan; provided that the option term, exercise price or similar provisions
of any securities outstanding pursuant to such Approved Stock Plan are not amended, modified or changed on or after the Purchase
Price Date; or (b) other than pursuant to a convertible debt instrument.

 

A14.        
“Fundamental Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly
or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries
is the surviving corporation) any other person or entity, or (ii) Borrower or any of its subsidiaries shall, directly or indirectly,
in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other person or entity, or (iii) Borrower or any of its subsidiaries shall,
directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange
offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of Borrower (not including any
shares of voting stock of Borrower held by the person or persons making or party to, or associated or affiliated with the persons
or entities making or party to, such purchase, tender or exchange offer), or (iv) Borrower or any of its subsidiaries shall,
directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or
entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Borrower (not including
any shares of voting stock of Borrower held by the other persons or entities making or party to, or associated or affiliated with
the other persons or entities making or party to, such stock or share purchase agreement or other business combination), or (v) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify
the Ordinary Shares, other than an increase in the number of authorized shares of Borrower’s Ordinary Shares, or (b) any
“person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and
the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding
voting stock of Borrower. Notwithstanding the foregoing, any transaction related to the spinoff or reorganization of SolarJuice
Co., Ltd. or Orange Power Co., Ltd. will not be considered to be a Fundamental Transaction.

 

A15.        
“Major Default” means any Event of Default occurring under Sections 4.1(a), 4.1(c), 4.1(l), or 4.1(p).

 

A16.        
 “Mandatory Default Amount” means the Outstanding Balance following the application of the Default Effect.

 

A17.        
“Market Capitalization” means a number equal to (a) the average VWAP of the Ordinary Shares for the immediately
preceding fifteen (15) Trading Days, multiplied by (b) the aggregate number of outstanding Ordinary Shares as reported on Borrower’s
most recently filed Form 10-Q or Form 10-K.

 

A18.        
“Market Price” means the Conversion Factor multiplied by the lowest Closing Trade Price during the ten
(10) Trading Days immediately preceding the applicable measurement date.

 

 

Attachment 1 to Convertible Promissory Note,

 

    	 	8	 

     

    

 

A19.        
“Minor Default” means any Event of Default that is not a Major Default.

 

A20.        
“OID” means an original issue discount.

 

A21.        
“Other Agreements” means, collectively, (a) all existing and future agreements and instruments between,
among or by Borrower (or an affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing
agreement or a material agreement that affects Borrower’s ongoing business operations.

 

A22.        
“Outstanding Balance” means as of any date of determination, the Purchase Price, as reduced or increased,
as the case may be, pursuant to the terms hereof for payment, Conversion, offset, or otherwise, plus the OID, the Transaction Expense
Amount, accrued but unpaid interest, collection and enforcements costs (including attorneys’ fees) incurred by Lender, transfer,
stamp, issuance and similar taxes and fees related to Conversions, and any other fees or charges (including without limitation
Conversion Delay Late Fees) incurred under this Note.

 

A23.        
“Purchase Price Date” means the date the Purchase Price is delivered by Lender to Borrower.

 

A24.        
“Trading Day” means any day on which the New York Stock Exchange (or such other principal market for
the Ordinary Shares) is open for trading.

 

A25.        
“VWAP” means the volume weighted average price of the Ordinary Shares on the principal market for a particular
Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg.

 

 

 

[Remainder of page
intentionally left blank]

 

 

Attachment 1 to Convertible Promissory Note

 

    	 	9	 

     

    

 

EXHIBIT A

 

Streeterville Capital, LLC

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

	SPI Energy Co., Ltd.	Date:_________________
	Attn: Xiaofeng Peng	 
	#1128, 11/F, No. 52 Hung To Road	 
	Kwun Tong, Kowloon	 
	Hong Kong SAR, China	 

 

LENDER CONVERSION NOTICE

 

The above-captioned Lender hereby gives
notice to SPI Energy Co., Ltd., a Cayman Islands corporation (the “Borrower”), pursuant to that certain Convertible
Promissory Note made by Borrower in favor of Lender on November 3, 2020 (the “Note”), that Lender elects to
convert the portion of the Note balance set forth below into fully paid and non-assessable Ordinary Shares of Borrower as of the
date of conversion specified below. Said conversion shall be based on the Lender Conversion Price set forth below. In the event
of a conflict between this Lender Conversion Notice and the Note, the Note shall govern, or, in the alternative, at the election
of Lender in its sole discretion, Lender may provide a new form of Lender Conversion Notice to conform to the Note. Capitalized
terms used in this notice without definition shall have the meanings given to them in the Note.

 

		A.	Date of Conversion: ____________
		B.	Lender Conversion #: ____________
		C.	Conversion Amount: ____________
		D.	Lender Conversion Price: _______________
		E.	Lender Conversion Shares: _______________ (C divided by D)
		F.	Remaining Outstanding Balance of Note: ____________*

 

* Subject to adjustments for corrections,
defaults, interest and other adjustments permitted by the Transaction Documents (as defined in the Purchase Agreement), the terms
of which shall control in the event of any dispute between the terms of this Lender Conversion Notice and such Transaction Documents.

 

Please transfer the Lender Conversion
Shares electronically (via DWAC) to the following account:

 

	Broker:  ______________________	Address:	_________________________
	DTC#:  _______________________	 	________________________
	Account #:  ___________________	 	________________________
	Account Name:  ________________	 	 

 

To the extent the
Lender Conversion Shares are not able to be delivered to Lender electronically via the DWAC system, deliver all such certificated
shares to Lender via reputable overnight courier after receipt of this Lender Conversion Notice (by facsimile transmission or otherwise)
to:

_____________________________________

_____________________________________

_____________________________________

 

 

[Signature Page Follows]

 

Exhibit A to Convertible Promissory Note

 

    	 	10	 

     

    

 

 

Sincerely,

 

Lender:

 

Streeterville
Capital, LLC

 

By: Iliad Management, LLC, its General
Partner

 

By:       Fife
Trading, Inc., its Manager

 

 

By: _________________________

       John
M. Fife, President

 

 

 

 

 

 

 

Exhibit A to Convertible Promissory Note

 

    	 	11	 

     

    

 

EXHIBIT B

Streeterville Capital, LLC

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

	SPI Energy Co., Ltd.	Date:
    ________________
	Attn: Xiaofeng Peng	 
	#1128, 11/F, No. 52 Hung To Road Kwun Tong, Kowloon	 
	Hong Kong SAR, China	 

 

REDEMPTION NOTICE

 

The above-captioned Lender hereby gives
notice to SPI Energy Co., Ltd., a Cayman Islands corporation (the “Borrower”), pursuant to that certain Convertible
Promissory Note made by Borrower in favor of Lender on November 3, 2020 (the “Note”), that Lender elects to
redeem a portion of the Note in Redemption Conversion Shares or in cash as set forth below. In the event of a conflict between
this Redemption Notice and the Note, the Note shall govern, or, in the alternative, at the election of Lender in its sole discretion,
Lender may provide a new form of Redemption Notice to conform to the Note. Capitalized terms used in this notice without definition
shall have the meanings given to them in the Note.

 

REDEMPTION INFORMATION 

 

		A.	Redemption Date: ____________, 201_
		B.	Redemption Amount: ____________
		C.	Portion of Redemption Amount to be Paid in Cash: ____________
		D.	Portion of Redemption Amount to be Converted into Ordinary Shares: ____________ (B minus C)
		E.	Redemption Conversion Price: _______________ (lower of (i) Lender Conversion Price in effect and
(ii) Market Price as of Redemption Date)
		F.	Redemption Conversion Shares: _______________ (D divided by E)
		G.	Remaining Outstanding Balance of Note: ____________ *

 

* Subject to adjustments for corrections,
defaults, interest and other adjustments permitted by the Transaction Documents (as defined in the Purchase Agreement), the terms
of which shall control in the event of any dispute between the terms of this Redemption Notice and such Transaction Documents.

 

Please transfer the Redemption Conversion
Shares, if applicable, electronically (via DWAC) to the following account:

 

	Broker:  ____________________	Address:	_________________________
	DTC#:  ______________________	 	________________________
	Account #:  ___________________	 	________________________
	Account Name:  ________________	 	 

 

To the extent the
Redemption Conversion Shares are not able to be delivered to Lender electronically via the DWAC system, deliver all such certificated
shares to Lender via reputable overnight courier after receipt of this Redemption Notice (by facsimile transmission or otherwise)
to:

_____________________________________

_____________________________________

_____________________________________

 

 

 

Exhibit B to
Convertible Promissory Note

 

    	 	12	 

     

    

 

Sincerely,

 

Lender:

 

Streeterville
Capital, LLC

 

By: Iliad Management, LLC, its General
Partner

 

By:       Fife
Trading, Inc., its Manager

 

 

By: _________________________

       John
M. Fife, President

 

 

 

 

 

 

 

 

Exhibit B to
Convertible Promissory Note

 

    	 	13Document

Exhibit 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

The parties to this Separation Agreement and General Release (the “Agreement”) are Paul Melkus (“Employee”) and Highlands REIT, Inc. (“Highlands” or “Employer”), collectively referred to as the “Parties.”  In consideration of the promises, mutual covenants and agreements contained in this Agreement, Employee and Employer agree as follows:

1.Termination Date.  Effective October 30, 2020 (the “Separation Date”), Employee shall be terminated from, and voluntarily cease to hold, any and all offices and positions with Highlands, its parent, affiliates and related companies or entities (the “Employer Entities”).  Employee’s separation from Highlands shall be deemed to be, and shall be called, a mutual separation without Cause or Good Reason, as either term is defined in the Amended and Restated Executive Employment Agreement dated November 17, 2018 (the “Employment Agreement”). 

2.Severance Pay.  Subject to the condition that Employee has not revoked this Agreement during the Revocation Period (as defined below) and subject to Employee’s compliance with this Agreement, Employer agrees to make payments to Employee in the total gross amount of $2,000,000, subject to all applicable withholding and other employment taxes (collectively, the “Severance Pay”).  The Severance Pay will be paid out in two installments: (a) $1,000,000, within 14 days after expiration of the revocation period set forth in paragraph 21, below, provided that the revocation period has expired without revocation by Employee, to be paid as follows: (i) $80,652 to be paid to Salvatore Prescott Porter & Porter, PLLC, as attorneys’ fees, with Form 1099s sent for that portion to Employee and to Salvatore Prescott Porter & Porter, PLLC, and (ii) $919,348 to be paid to Employee; and (b) $1,000,000 on or before May 31, 2022, provided that the revocation period expired without revocation by Employee (the “Second Payment”).  Employer’s obligation to make the Second Payment will be accelerated to the closing date of any transaction in which all or substantially all of the assets or equity of Employer is sold, if such date precedes May 31, 2022.  Employee acknowledges and agrees that the payments specified in paragraphs 2-4 of this Agreement are in full and complete satisfaction of any and all liabilities or obligations the Employer Entities have or may have to Employee, under the Employment Agreement or otherwise, including but not limited to any and all obligations with respect to salary, bonuses, holiday pay, vacation pay, severance pay, insurance, and any other benefits or claims, at any time in the past, present, or future.  The Parties further agree the payments provided in this Agreement are provided by the Employer Entities solely under this Agreement on the Employer Entities’ own accord, subject to Employee’s compliance with the terms herein, and that Employee was not legally entitled to the payments provided herein and will not receive the payments unless Employee executes this Agreement, does not revoke this Agreement, and complies with this Agreement.

3.Vacation Pay.  Employer will pay out Employee’s accrued vacation pay in the amount of $44,399.27 (subject to withholding and employment taxes) on or before November 13, 2020.

4.Benefit Continuation.    Provided  that Employee does not revoke this agreement and completes and timely files all necessary COBRA election documentation, Employer will reimburse Employee for his COBRA premium costs for a period that begins on the Separation Date and ends on the earlier of (a) 18 months following the Separation Date; or (b) the date Employee becomes eligible to be covered under any other group health plan (as an employee or otherwise) that does not contain any exclusion or limitation with respect to any preexisting condition which would actually limit Employee’s coverage under such plan.  In the event such premium reimbursements, by reason of change in the applicable law, may, in the reasonable view of the Company, result in tax or other penalties on the Company or in the event that the Company is otherwise unable to continue to cover Employee under its group health plan or ceases to maintain or participate in a group health plan, this provision shall terminate and Employee and the Company shall, in good faith, negotiate for a substitute provision that would not result in such tax or other penalties or would provide Executive with a comparable benefit or value, as applicable.

5.Confidentiality; Non-Assistance; Non-Solicitation.

(a)    Employee acknowledges that the Employer Entities’ business is highly specialized and utilizes information which Employee has had access to, is not generally known, is highly confidential and constitutes trade secrets, including proprietary information relating to any Employer Entity’s plans, analysis or strategies; financial information or data; research and development; personnel information; investor, customer and client lists and information; information about the Employer Entities’ actual and targeted assets; non-public information acquired by Employee concerning the requirements and specifications of any Employer Entity’s employees, agents, vendors, contractors, customers and potential customers; other non-public financial information, business and marketing plans; and any other information which is confidential to the Employer Entities (the “Confidential Information”). 

(b)     Prior to, and at any time on or after the Separation Date, Employee shall maintain in the strictest confidence and will not, directly or indirectly, use, intentionally or inadvertently publish or otherwise disclose to any third party, any Confidential Information or other non-public information of or belonging to any Employer Entity, regardless of its form, without the prior written explicit consent of the General Counsel of Employer.  Employee will not create, or provide information to, cooperate with or otherwise assist any person who he knows, or has reason to know, is creating or preparing to create any article, book, movie, internet posting or any other work depicting Highlands or any officer, director, or employee thereof in any medium.  Employee understands that he may always communicate directly with a regulatory authority about a possible violation of an applicable law or rule.  Employee also understands and agrees that, without prior written authorization from Employer’s General Counsel, Employee is not authorized to disclose to anyone a communication that is covered by Highlands’s attorney-client privilege.

(c)    Employee further acknowledges that Employer and Employer Entities expend significant resources to develop and maintain their base of investors, lenders, customers and employees, that these relationships are long-standing and have been developed and maintained over a long period of years, that the Employer Entities alone placed Employee in a position to interact with their investors, clients and employees, and that the Employer Entities would be irreparably harmed if their relationships were destroyed or tampered with because such relationships are a significant asset of the Employer Entities.

(d)    In light of Employee’s acknowledgments regarding Confidential Information, investor, lender, and customer relationships and the payments being made hereunder, Employee agrees that, through May 31, 2022, Employee will not, directly or indirectly:

(i) approach, engage with, work with, or contact, any bidder or potential bidder for the Employer’s assets or equity who could benefit, to the detriment of any other bidder or potential bidder, from Employee’s knowledge, experience, and exposure to the confidential information, trade secrets, and relationships with the Employer’s investors and lenders;
(ii) recruit, hire, retain or attempt to recruit, hire, or retain, any then-current employee or independent contractor of Employer, or any former employee who was employed by Employer within the prior six months, for employment or engagement with an entity other than Employer; or
(iii) entice or attempt to persuade Employer’s then-current employees or independent contractors to leave employment or engagement with Employer.

(e)    Tolling.  The running of the time periods applicable in Paragraph 4(d) hereof shall be suspended during the period of any violation of these provisions by Employee.

(f)     Reasonableness of Covenants.  Employee acknowledges that the duration and scope of each of the above restrictions and limitations (including, but not limited to, the time periods, geographic, and customer scopes of restriction) are fair, reasonable, and necessary to protect the Employer Entities’ legitimate protectable interests, including their interests in Confidential Information and investor, customer and employee relationships set forth above.  Employee acknowledges that the above restrictions will not prevent Employee from earning a livelihood or obtaining gainful employment.

(g)    Additional Duties Under Applicable Law.  All of Employee’s obligations set forth in this Agreement shall be in addition to those which exist under statute and at common law.  

6.    Company Property.  Employee will turn over to Employer within one business day of the Separation Date, all memoranda, records, documents, Employer manuals, credit cards, pass keys, and all other Highlands information or property (whether in hard copy or electronic form), no matter how produced, reproduced or maintained, which is in Employee’s possession.

7.    Non-Disparagement.  Employee agrees that neither he, nor anyone else on his behalf, will disparage, defame, or demean Employer or any other Employer Entity or any of their directors, officers, shareholders, members, employees, attorneys, or agent.  Employee further agrees that neither he, nor anyone else on his behalf will take any other action which is intended to, or should be reasonably expected to, harm any Employer Entity or its reputation, or to otherwise lead to unfavorable or unwanted publicity for such entity or any of their directors, officers, shareholders, members, employees, attorneys, or agents.  Likewise, Employer agrees that its officers and directors will not disparage, defame, or demean Employee and will not take any other action which is intended to, or should be reasonably expected to, harm Employee or his reputation.  If Employer receives an inbound call asking for a reference for Employee, Employer shall provide his dates of employment only and shall provide no additional information.  The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings. 

8.    Cooperation.  Following the Separation Date, in further consideration of the payments that are being made to Employee pursuant to this Agreement, Employee will cooperate with Employer Entities, regarding any investigation, or threatened or actual legal proceeding, by or against any Employer Entity or by any private person or government agency, but agrees not to disclose or to discuss with anyone who is not directing or assisting in any Employer Entity investigation or case, other than Employee’s attorney, the fact of or the subject matter of any investigation, except as required by law.  Employee also agrees, to the extent legally permitted, to promptly inform Employer if Employee is asked to assist in any investigation of Employer or its affiliates (or their actions), regardless of whether a lawsuit or other proceeding has then been filed against Employer with respect to such investigation, and shall not do so unless legally required.  

9.    Share Repurchase.  Employee is currently the owner of 2,304,547 shares of common stock in Employer (the “Shares”).  Conditioned on Employee’s execution of this Agreement, Employee’s not revoking this Agreement, and Employee’s full compliance with this Agreement, Employer will repurchase all Shares for $0.36/share, for an aggregate purchase price equal to $829,636.92 (the “Purchase Price”).  Within fourteen days of passage of the expiration of the deadline for Employee revoking this Agreement, if he does not do so, Highlands or its designee shall deliver to Employee the Purchase Price by wire transfer of immediately available funds to the account(s) designated by Employee.  Employee represents and warrants that he holds of record and owns beneficially the Shares and Employee will transfer to Highlands hereunder good and marketable title to such Shares, free and clear of all liens, encumbrances, restrictions on transfer (other than any restrictions under applicable securities laws (both state and federal)), taxes, options, warrants, rights, calls, commitments, proxies or other contract rights.  Employee acknowledges and agrees that the Shares have been repurchased by Highlands as of the Separation Date, all right, title and interest in the Shares are now owned by Highlands, and Employee no longer has any rights as a holder of the Shares or pursuant to any agreement relating to the Shares.  Furthermore, from and after the date hereof, and when requested by the Employer, Employee will, without further consideration, execute and deliver all such instruments of conveyance and transfer and will take such further actions as the Employer may reasonably deem necessary or desirable in order to transfer the Shares to the Employer and to carry out fully the provisions and purposes of this Agreement.

10.    Release.  In consideration for the payments under this Agreement, EMPLOYEE HEREBY RELEASES, FOREVER DISCHARGES THE EMPLOYER ENTITIES AND ANY PREDECESSOR, SUCCESSOR, JOINT VENTURE AND PARENT OF ANY EMPLOYER ENTITY, AND ANY AND ALL OF THEIR RESPECTIVE PAST OR PRESENT OFFICERS, DIRECTORS, PARTNERS, INSURERS, AGENTS, ATTORNEYS, EMPLOYEES, TRUSTEES, ADMINISTRATORS, FIDUCIARIES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”), FROM ANY AND ALL MANNER OF ACTIONS, CAUSES OF ACTIONS, DEMANDS, CLAIMS, AGREEMENTS, PROMISES, DEBTS, COMPENSATORY, LIQUIDATED, PUNITIVE OR OTHER DAMAGES, LAWSUITS, ANY LIABILITIES OF ANY NATURE WHATSOEVER, RIGHTS, DUES, CONTROVERSIES, COSTS, EXPENSES AND FEES (COLLECTIVELY, “CLAIMS”), WHETHER ARISING IN CONTRACT (INCLUDING UNDER THE EMPLOYMENT 

AGREEMENT OR ANY OTHER WRITTEN OR ORAL AGREEMENT), TORT OR ANY OTHER THEORY OF ACTION, WHETHER ARISING IN LAW OR EQUITY, WHETHER KNOWN OR UNKNOWN, CHOATE OR INCHOATE, MATURED OR UNMATURED, CONTINGENT OR FIXED, LIQUIDATED OR UNLIQUIDATED, ACCRUED OR UNACCRUED, ASSERTED OR UNASSERTED, FROM THE BEGINNING OF TIME UP TO THE END OF THE RESTRICTED PERIOD, THAT EMPLOYEE (OR EMPLOYEE’S SPOUSE, HEIRS, EXECUTORS, ADMINISTRATORS OR ASSIGNS) MAY HAVE, EXCEPT FOR THOSE OBLIGATIONS CREATED BY THIS AGREEMENT AND THOSE OBLIGATIONS SPECIFICALLY EXCLUDED UNDER PARAGRAPH 3 OF THIS AGREEMENT.  The Released Parties are intended to be third-party beneficiaries of this Agreement, and this Agreement may be enforced by each of them in accordance with the terms hereof.  EMPLOYEE EXPRESSLY WAIVES THE BENEFIT OF ANY STATUTE OR RULE OF LAW WHICH, IF APPLIED TO THIS AGREEMENT, WOULD OTHERWISE PRECLUDE FROM ITS BINDING EFFECT ANY CLAIM AGAINST ANY RELEASED PARTY NOT NOW KNOWN BY EMPLOYEE TO EXIST.  THIS AGREEMENT IS INTENDED TO BE A GENERAL RELEASE THAT EXTINGUISHES ALL CLAIMS AGAINST ANY RELEASED PARTY.  

Without in any way limiting the generality of the foregoing, this Agreement constitutes a full release and disclaimer of any and all Claims arising out of or relating in any way to Employee’s employment, continued employment, retirement, resignation, termination of employment with Employer or otherwise, whether arising under or out of any contract (including but not limited to the Employment Agreement) or any statute including, but not limited to, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Age Discrimination in Employment Act of 1967 (“ADEA”), the Older Workers Benefit Protection Act of 1990 (“OWBPA”), the Family and Medical Leave Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Americans With Disabilities Act, and any county, municipal, and any other federal, state or local statute, ordinance or regulation, all as may be amended from time to time, or common law claims or causes of action relating to alleged discrimination, breach of contract or public policy, wrongful or retaliatory discharge, tortious action, inaction, or interference of any sort, defamation, libel, slander, personal or business injury, including attorneys’ fees and costs, and all claims for salary, bonus, vacation pay, and reimbursement.  Employee acknowledges and agrees that Employee’s separation from employment with the Employer Entities in compliance with the terms herein shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967, or any other statute, or the Employment Agreement or any other contract).  Employee further acknowledges and agrees that this Agreement constitutes a full release of any and all claims related to the Shares.  

Prior to the Separation Date, Employee, through counsel, suggested that he may claim to have been terminated by Employer in an effort to evade certain Change-in-Control provisions in his Employment Agreement, claiming that he believed Employer would experience a Change In Control as defined in Paragraph 12(d) of the Employment Agreement.  Employer denies any such effort or intent and denies that Employee would be entitled to any compensation even if there was a Change In Control following his termination, given that under Paragraph 5(b) of the Employment Agreement, any such entitlement would only exist were he terminated after a Change in Control.  Nevertheless, for the avoidance of doubt, Employee is waiving in this Agreement any claims that he is entitled to additional compensation from Employer for any reason, including the occurrence of a Change in Control after the Separation Date. Employee acknowledges and agrees that following the execution of this Agreement, Employer’s sole obligations and responsibilities to Employee are those defined in and limited by this Agreement.

Prior to the Separation Date, Employer, through counsel, suggested that Employee may have violated the terms of his Employment Agreement by improperly providing information about Employer to a third party.  For the avoidance of doubt, nothing that has occurred prior to the Separation Date shall be grounds for Employer not to make the payments to Employee that are provided in Paragraphs 2-4 above.

11.    Employee represents that Employee has not assigned or transferred, or purported to assign or transfer, to any person or entity, any Claim or any portion thereof or interest therein.

12.    Employee further acknowledges that, to the fullest extent legally permitted, Employee has specifically waived Employee’s right to any monetary recovery or injunctive relief in any lawsuit, including the right to any monetary recovery or injunctive relief in any lawsuit brought by any agency, entity or person on Employee’s behalf, 

with respect to any claims released herein, or resulting from the prosecution of any administrative charge, investigation or proceeding.  Employee understand that by signing this Agreement, Employee does not waive any rights that cannot be waived under law, including the right to file a charge with or participate in any administrative investigation or proceeding by the EEOC or any comparable federal, state or local agency.  However, Employee waives and releases, to the fullest extent legally permissible, all entitlement to any form of personal relief arising from a charge Employee or others may file.  Employee understands that this waiver and release of personal relief would not affect an agency’s ability to investigate a charge or to pursue relief on behalf of others.  Employer acknowledges that Employee does not waive or release any claims or other matters that, by operation of law, Employee cannot waive or release unilaterally.  The provisions of this Agreement should not be construed to interfere with Employee’s right to file charges with the EEOC or other administrative agency or otherwise communicate or cooperate with such agency, notwithstanding the waiver of monetary and other relief.  

13.    Voluntariness.  Employee warrants that no promise or inducement to enter into this Agreement has been offered or made except as set forth in this Agreement, that Employee is entering into this Agreement knowingly and voluntarily, without any force, threat or coercion and without reliance on any statement or representation made on behalf of any Employer Entity or by any person employed by or representing any Employer Entity, except for the written promises contained in this Agreement.

14.    Entire Agreement.  This Agreement constitutes the entire agreement and understanding between the Parties with regard to all matters, including but not limited to Employee’s employment, termination, stock ownership, any other payments owed to Employee and the other subject matters addressed in this Agreement, and supersedes and replaces all prior commitments, negotiations and agreements, whether written or oral, concerning the subject matters contained in this Agreement.  This Agreement is an integrated document; the consideration in it is the sole consideration for this Agreement.  

15.    Equitable Relief and Other Remedies.  The Parties agree that damages incurred as a result of a breach of this Agreement will be difficult to measure.  Furthermore, Employee acknowledges and agrees that the Employer Entities’ remedies at law for a breach or threatened breach of the provisions of Paragraph 4 would be inadequate.  In recognition of this fact, it is, therefore, further agreed that, in addition to any other remedies, equitable relief will be available to the Employer in the case of a breach or threatened breach of this Agreement.  It is also agreed that, in addition to any other remedies, in the event of a material breach of this Agreement, Employer may withhold and retain all or any portion of the remaining Severance Pay, and any Severance Pay previously paid to Employee shall immediately be repaid to Employer.

16.    Attorneys’ Fees.  In the event of litigation in connection with or concerning the subject matter of this Agreement, the prevailing party shall be entitled to recover all costs and expenses of litigation incurred by it, including such party’s reasonable attorneys’ fees.

17.    Severability and Reformation.  If any provision, paragraph, subsection or other portion of this Agreement shall be determined by any court of competent jurisdiction in any state to be invalid, illegal or unenforceable in whole or in part, and such determination shall become final, such provision or portion shall be deemed to be severed or limited, but only to the extent required to render the remaining provisions and portion of this Agreement enforceable to the maximum extent permitted by the laws of that state.  In addition, the Parties expressly empower a court of competent jurisdiction to modify any term or provision of this Agreement, but only to the extent necessary to comply with existing law and to enforce this Agreement as modified.

18.    No Admission.  Nothing in this Agreement shall be construed as an admission of any wrongdoing by any person or entity.

19.    Governing Law.  This Agreement was executed and delivered within the State of Illinois, and the rights and obligations of the Parties shall be construed and enforced in accordance with, and governed by, the laws of the State of Illinois without regard to any rules regarding conflict of laws.  

20.    Jurisdiction.  The Parties agree that any dispute relating to this Agreement or Employee’s employment with Employer or the termination thereof shall be exclusively submitted by the Parties to, and decided by, the courts in Chicago, Illinois.  Employee voluntarily and willingly subjects himself to the personal jurisdiction of the state and 

federal courts located in Chicago, Illinois, for any and all disputes related to this Agreement.  Employee also agrees to waive any requirement of personal service in any such dispute, and agrees that service of process in any such dispute may be effectuated by mailing a copy of such process to Employee at the address provided underneath Employee’s signature block on this Agreement.

21.    Revocation Period.  The Parties acknowledge that Employee shall have the right to revoke and cancel this Agreement if Employee, at any time within the seven calendar days following its execution (the “Revocation Period”), revokes it.  If Employee desires to revoke and cancel this Agreement, Employee must do so in writing and return this document to the General Counsel of Highlands REIT, Inc. within the Revocation Period, and all terms of the Agreement shall thereafter be void and of no effect.  If this Agreement is canceled and revoked by Employee, Employer shall have no obligations under this Agreement.

Employee has been hereby advised in writing and encouraged by Employer to consult with an attorney before signing this Agreement and that Employee has at least twenty-one (21) days to consider it.  Employee has carefully read and fully understands this Agreement, has had sufficient time to consider it, has had an opportunity to ask questions and have it explained, and is entering into this Agreement freely, knowingly and voluntarily, with an understanding that the general release contained herein will have the effect of waiving any action or recovery Employee might pursue for any claims arising on or prior to the date of the execution of this Agreement.  Employee understands that Employee has seven (7) days after the execution of this Agreement to revoke it and that this Agreement shall not become effective and enforceable until the Revocation Period has expired.  The Parties agree that the provisions contained in this Agreement may not be amended, waived, changed or modified, except in writing and signed by an authorized representative of each of the Parties.

                 IN WITNESS WHEREOF, the Parties have executed this Agreement.

						
	Date: November 4, 2020	/s/ Robert J. Lange 
		Name: Robert J. Lange
		Title: Executive Vice President, General Counsel and Secretary
		
		/s/ Paul Melkus
		Employee

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