Document:

ryi-ex1024_547.htm

Exhibit 10.24

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) by and between Ryerson Holding Corporation (the “Corporation”) and James Claussen (the “Executive”), is made and entered into on February 22, 2021, with retroactive effect as of January 11, 2021 (the “Effective Date”).

The Corporation currently engages Executive in the position of Executive Vice President and Chief Financial Officer, in accordance with the terms and conditions contained in that certain Employment Agreement, dated as of February 22, 2005 (the “Prior Employment Agreement”), by and between Executive and Joseph T. Ryerson & Son, Inc., as assigned to, and assumed by, the Corporation, and as amended on each of May 4, 2009, May 18, 2020, October 20, 2020 and January 11, 2021 (collectively, the “Prior Amendments”), and each of the Corporation and Executive wish to amend and restate the Prior Employment Agreement in its entirety and in accordance with the terms and conditions contained herein, effective as of February 22, 2021, for the sole purpose of reflecting such Prior Amendments.

The Corporation desires to continue to employ Executive in the position of Executive Vice President & Chief Financial Officer and the Executive desires to continue such appointment. In that employment the Executive is entrusted with knowledge of the Corporation’s business and operational methods. The Corporation wishes to protect its business and operational methods through the restrictions and covenants specified herein. The Executive recognizes that the Corporation’s business and operational methods require protection, and the Executive continues to be willing to protect the Corporation’s business and operational methods through the restrictions and covenants specified herein.

NOW, THEREFORE, the Executive and the Corporation hereby agree as follows.

1.Position and Duties.  The Executive will serve as Executive Vice President and Chief Financial Officer of the Corporation, and in such capacity shall have such duties and responsibilities as may be assigned to him from time to time by the Corporation.  The Executive shall have such authorities and powers as are inherent to the undertaking of this position and necessary to carry out these responsibilities and duties.  Notwithstanding the foregoing or any other provisions of this Agreement, the Executive and the Corporation understand and agree that the responsibilities and duties of the Executive, in the capacity of Executive Vice President and Chief Financial Officer of the Corporation, may change from time to time due to changes in the nature, structure or needs of the Corporation’s business and that any such changes in the Executive’s duties and responsibilities that are consistent with such changes in the Corporation’s business shall not constitute a reduction or increase in the Executive’s duties and responsibilities for purposes of this Agreement.  Until such time as Executive’s replacement is appointed as President of Central Steel and Wire Company, LLC (“CSW”), Executive will on a temporary basis continue to serve as President of CSW in addition to his role as Executive Vice President & Chief Financial Officer of the Corporation.

The Executive shall devote his or her best efforts and full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Corporation and its affiliated companies. The Executive shall perform 

 

 

all assigned duties to the best of his or her abilities in a diligent, trustworthy, businesslike and efficient manner.

The Executive’s primary location of employment will be the Corporation’s headquarters in Chicago, Illinois.  The Corporation will continue to provide the Executive with support to cover his temporary living expenses in Chicago through June 30, 2023. [__]. All other expenses will be a cost to the Executive.

2.Compensation.  Subject to the terms and conditions of this Agreement, while the Executive is employed by the Corporation under this Agreement, the Executive shall be compensated for services as follows:

	
 
	
(A)
	
Effective as of the Effective Date, the Executive’s annual base salary shall be $425,000 (“Annual Base Salary”), payable in bi-weekly installments under the Corporation’s general payroll practices, subject to customary withholding.

	
 
	
(B)
	
The Executive will be eligible for an incentive bonus payment from the Corporation each calendar year or applicable performance period (the “Performance Bonus”) in accordance with the Corporation’s Annual Incentive Plan (or successor plan) of the Corporation as in effect from time to time.  The Target Bonus Percentage shall be 75% of Annual Base Salary.  The Corporation reserves the right, in its sole discretion, to terminate or modify the Annual Incentive Plan or to change the target bonus percentage.

	
 
	
(C)
	
Except as otherwise specifically provided herein, the Executive shall be provided with health, welfare and other benefits to the same extent and on the same terms as those benefits are provided by the Corporation from time to time to other similarly situated executives of the Corporation. Nothing in this Agreement precludes the Corporation from amending or terminating any plans or programs generally applicable to salaried employees or executives, as the case may be.

	
 
	
(D)
	
The Executive shall be reimbursed by the Corporation, on terms and conditions that are applicable to other similarly situated executives of the Corporation, for reasonable out­of-pocket expenses for entertainment, travel, meals, lodging and similar items, consistent with the Corporation’s expense reimbursement policy in effect at the time. Nothing in this Agreement precludes the Corporation from amending or terminating its expense reimbursement policy.

	
 
	
(E)
	
The Executive shall be eligible for four (4) weeks of vacation in each calendar year. Eligibility for additional weeks of vacation will be based on the Corporation’s vacation policy in effect at the time.

	
 
	
(F)
	
The Executive will be eligible to participate in the Joseph T. Ryerson & Son, Inc. Long-Term Incentive Plan (the “Plan”), subject to the terms and conditions of the Plan, with an allocation of RSUs, PSUs, stock options, or 

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other grants as available under the plan and approved by the Corporation’s Board of Directors and its Chief Executive Officer.  It is currently contemplated, subject to approval by the Corporation’s Board of Directors, that the Executive will receive a Plan grant in 2021 consisting of RSUs and PSUs representing the right to receive up to 35,000 shares of Corporation common stock in the aggregate.

3.Rights and Payments Upon Termination.  The Executive’s right to benefits and payments, if any, for periods after the date the Executive’s employment with the Corporation terminates for any reason (the “Termination Date”) shall be determined in accordance with this Paragraph 3:

	
 
	
(A)
	
Termination by the Corporation for Reasons Other Than Cause; Termination by the Executive for Good Reason.  If the Corporation terminates the Executive’s employment for reasons other than Cause or as a result of termination by the Executive for Good Reason, then for the period (the “Benefit Period”) commencing on the Executive’s Termination Date and ending on the earliest of:

	
 
	
(i)
	
the twelfth month after the Termination Date (less the period attributable to any pay in lieu of notice in accordance with the final sentence of Paragraph 4 of this Agreement);

	
 
	
(ii)
	
the date the Executive violates or initiates any legal challenge to the provisions of Paragraphs 4, 5 or 6 of this Agreement; or

	
 
	
(iii)
	
the date of the Executive’s death or the date the Executive is determined to be eligible for benefits under the Corporation’s Long Term Disability Plan;

The Executive shall continue to receive from the Corporation bi-weekly payments based on his or her Annual Base Salary, a Bonus (as defined below), and certain other benefits in effect as of the Termination Date. Benefits provided under the terms of this Paragraph 3(A) are medical and dental coverage only (unless the Executive is eligible for retiree medical benefits on the Termination Date, in which case only dental coverage is offered under this Paragraph 3(A)). All other benefits shall be terminated on the Termination Date. To retain eligibility for medical and dental benefit coverage, the Executive must pay premiums equivalent to the amounts required of active employee participants in these benefit plans.

“Bonus” shall mean one payment of the average annual amount of the Performance Bonus paid to the Executive under the Annual Incentive Plan or successor plan for the three or fewer Performance Bonus payments paid to the Executive immediately preceding the year in which the Termination Date occurs.  For purposes of calculating the average annual amount of the Performance Bonus, where no Performance Bonus is paid in any of the three 

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years preceding the Termination Date used in the calculation described herein, any such year or years will be included in the average calculation as zero. This Bonus payment is payable in the first quarter of the year following the year in which the Executive’s termination occurs.

In addition to the Bonus described above, provided that the Executive has not violated any of the provisions of Paragraphs 4, 5 or 6 of this Agreement, the Executive may be entitled to an additional Final Bonus (as defined below) for the year in which the Termination Date occurs. “Final Bonus” means an amount equal to the product of (I) the Executive’s Annual Base Salary multiplied by (2) the most recent Target Bonus Percentage established for the Executive under the Corporation’s Annual Incentive Plan (or successor plan); (3) multiplied by the percent attainment of the applicable performance measures, and multiplied by (4) a proration factor which is a fraction, the numerator of which is the number of whole months determined under (a) and (b) below, and the denominator of which is the number of whole months in the applicable bonus performance period. The valuation date for purposes of determining the proration factor is:

	
 
	
(a)
	
the last day of the month preceding the Termination Date if the Termination Date occurs from the 1st through the 15th of the month, and

	
 
	
(b)
	
the last day of the month in which the Termination Date occurs if the Termination Date occurs from the 16th through the last day of the month.

The percent attainment of the applicable performance measure is not prorated and is determined at the end of the bonus performance period as defined in accordance with the Corporation’s Annual Incentive Plan (or successor plan). The final bonus payment is payable in the first quarter of the year following the year in which the Executive’s termination occurs.

Annual Base Salary payments to the Executive during the Benefit Period shall not preclude the Executive’s eligibility for cash severance payments under the Corporation Severance Plan, provided, however, that any benefit continuation period under this Agreement shall run concurrently with the applicable benefit period under such Severance Plan and thus (i) the Executive shall not be eligible for noncash benefits under the Severance Plan during the Benefit Period, and (ii) cash payments due under the Severance Plan shall be reduced by the amount of cash payments made under this Agreement.

	
 
	
(B)
	
Termination By Corporation for Cause.  If the Corporation terminates the Executive’s employment for Cause, then except as agreed in writing between the Executive and the Corporation, the Executive shall be entitled to receive only compensation and benefits earned up to the Termination 

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Date. The Executive shall not be entitled to receive any payments or benefits under this Agreement with respect to the period after the Executive’s Termination Date and the Corporation shall have no obligation to make any additional payments or provide any other benefits with respect to the period after the Executive’s Termination Date.

	
 
	
(C)
	
Termination for Death or Disability.  If the Executive’s termination is caused by the Executive’s death or permanent disability (as that term is defined under the Corporation’s Long Term Disability Plan), then the Executive (or in the event of his or her death, his or her estate) shall be entitled to continued payments of Annual Base Salary for the period commencing on the Termination Date and ending on the earlier of (i) the last day of the calendar month in which his or her Termination Date occurs; (ii) the date on which the Executive violates the provisions of Paragraphs 4, 5 or 6 of this Agreement; (iii) the date of the Executive’s death; or (iv) the date of the Executive’s permanent disability.

	
 
	
(D)
	
Termination for Voluntary Resignation, Mutual Agreement or Other Reasons.  If the Executive’s termination occurs on account of his or her voluntary resignation, mutual agreement of the parties, or any reason other than those specified in Paragraphs (A), (B) or (C) above, then, except as agreed in writing between the Executive and the Corporation, the Executive shall not be entitled to receive any payments or benefits under this Agreement with respect to the period after the Executive’s Termination Date and the Corporation shall have no obligation to make any additional payments or provide any additional benefits with respect to the period after the Executive’s Termination Date. The Executive’s termination of employment for Good Reason shall not be treated as a voluntary resignation for purposes of this Agreement.

	
 
	
(E)
	
Definitions.  For purposes of this Agreement:

	
 
	
(i)
	
The term “Cause” shall mean:

	
 
	
(a)
	
the continuous performance by the Executive of his or her duties under this Agreement in a manner that is inconsistent with past, acceptable performance or in a way that has a demonstrably negative impact on business results of the Corporation, its subsidiaries or affiliates, as determined by the Corporation in its sole discretion; or

	
 
	
(b)
	
the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Corporation or its affiliates, monetarily or otherwise, as determined by the Corporation in its sole discretion; or

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(c)
	
conduct by the Executive that involves a material and substantial violation of Corporation Policy, a violation of criminal law, illegal harassment of other employees, theft, fraud or dishonesty; or

	
 
	
(d)
	
the Executive’s violation of the provisions of Paragraphs 4, 5 or 6 hereof.

	
 
	
(ii)
	
The term “Good Reason” means (a) the assignment to the Executive of duties which are materially inconsistent with the Executive’s position and duties under this Agreement, including, without limitation, a material diminution or reduction in title, office or responsibilities or a reduction in Annual Base Salary, if such assignment is not changed by the Corporation, after written notice by the Executive to the Corporation of such diminution or reduction giving the Corporation reasonable opportunity to cure, or (b) the involuntary relocation of the Executive to a location that is not within the Chicago metropolitan area. Notwithstanding the foregoing, nothing herein shall limit the ability of the Corporation to change the job duties of the Executive consistent with Paragraph 1 of this Agreement.

	
 
	
(F)
	
Release.  Notwithstanding any provision herein to the contrary, the payment of any amount or provision of any benefit pursuant to subsection (A) or (C) of this Section 3 (collectively, the “Severance Benefits”) shall be conditioned upon Executive’s execution, delivery to the Corporation, and non-revocation of a general release of claims in favor of the Corporation and its affiliates in a form acceptable to the Corporation within sixty (60) days following the Termination Date.  If Executive fails to execute the release of claims in such a timely manner so as to permit any revocation period to expire prior to the end of such sixty (60) day period, or timely revokes Executive’s acceptance of such release following its execution, Executive shall not be entitled to any of the Severance Benefits.  Further, (i) to the extent that any of the Severance Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the sixtieth (60th) day following the Termination Date, but for the condition on executing the release of claims as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day and (ii) to the extent that any of the Severance Benefits do not constitute “nonqualified deferred compensation” for purposes of Section 409A of the Code, any payment of any amount or provision of any benefit otherwise scheduled to occur following the Termination Date, but for the condition on executing the release of claims as set forth herein, shall not be made until the first regularly scheduled payroll date following the date the release of claims is timely executed and the applicable revocation period has ended, 

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after which, in each case, any remaining Severance Benefits shall thereafter be provided to Executive according to the applicable schedule set forth herein.  For the avoidance of doubt, in the event of a termination due to Executive’s death or permanent disability, Executive’s obligations herein to execute and not revoke the release of claims may be satisfied on Executive’s behalf by Executive’s estate or a person having legal power of attorney over Executive’s affairs.

Notwithstanding any other provision of this Agreement, the Executive shall automatically cease to be an employee of the Corporation and its affiliates as of his or her Termination Date and, to the extent permitted by applicable law, any and all monies that the Executive owes to the Corporation shall be repaid before any post-termination payments are made to the Executive under this Agreement.

This Agreement is intended to comply with Section 409A of the Code, to the extent applicable.  Notwithstanding any provision herein to the contrary, this Agreement shall be interpreted and administered consistent with this intent.  If this Agreement provides for multiple severance payments, each separate payment provided pursuant to its terms shall be treated as a separate “payment” for purposes of Section 409A of the Code.  In addition, if the Executive is properly deemed a “specified employee” within the meaning of Section 409A of the Code, as determined by the Corporation under its Section 409A administrative policies, any severance payment made to the Executive under this Agreement shall not be made earlier than six (6) months after the termination date to the extent necessary not to incur additional tax under Section 409A of the Code.

4.Termination by Executive or Corporation with Notice.  Subject to the payment obligations and rights set forth in Paragraph 3 above, the Corporation and the Executive agree that either party may terminate the Executive’s employment under this Agreement for any or no reason. Each party is obligated to give the other thirty (30) days written notice (the “Notice Period”) before terminating the Executive’s employment relationship, except that no such notice shall be required in the case of the death of the Executive or the Corporation’s termination of the Executive’s employment for Cause or if the Corporation and the Executive otherwise agree in writing.

During the Notice Period, the Executive shall (i) meet with the Chief Executive Officer of the Corporation or his or her designee to wind up any pending work and provide an orderly transfer to other employees of the duties, responsibilities, accounts, customers and clients for which the Executive has been responsible; (ii) work with the Corporation to identify key Confidential Information (as defined in Paragraph 5 below) likely to be in the Executive’s possession and provide it to the Corporation as instructed; (iii) disclose and discuss the Executive’s future employment plans in light of the Executive’s obligations under this Agreement; (iv) deliver to the Corporation all property belonging to the Corporation, including any duplicates, copies or abstracts thereof; and (v) devote full time and attention to these obligations and the Executive’s other responsibilities as directed by the Corporation. Notwithstanding the foregoing, the Corporation may, in its sole discretion, terminate the duties of the Executive at any time during the Notice Period provided that the Corporation continues to pay the Executive any Base Salary that may be due to the Executive for any portion of such thirty (30) days’ Notice Period remaining after the Corporation terminates the duties of the Executive.

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5.Confidentiality and Ownership. The Executive acknowledges and agrees that the Confidential Information (as defined in Paragraph 5(A) below) is the property of the Corporation, its subsidiaries and affiliates. Accordingly, the Executive agrees as follows:

	
 
	
(A)
	
Confidential Information. Except as may be required by applicable law or the lawful order of a court or regulatory body, or except to the extent that the Executive has express authorization in writing from the Corporation to do otherwise, the Executive will keep secret and confidential, during the Executive’s employment and at all times thereafter, all Confidential Information and not disclose such Confidential Information, either directly or indirectly, to any other person, firm or business entity, or to use it in any way. For purposes of this Agreement, “Confidential Information” means all non­public information, observations or data relating to the Corporation, its subsidiaries or affiliates, its customers and/or vendors and suppliers, which the Executive has learned or will learn during his or her employment with the Corporation, its subsidiaries or affiliates, whether or not a trade secret within the meaning of applicable law, including but not limited to: (i) new products and new product development; (ii) marketing strategies and plans, market experience with products, and market research; (iii) manufacturing processes, technologies and production plans and methods; (iv) formulas, research in progress and unpublished manuals or know how, devices, methods, techniques, processes and inventions; (v) regulatory filings and communications; (vi) identity of and relationship with licensees, licensors or suppliers; (vii) finances, financial information, and financial management systems; (viii) technological and engineering data; (ix) identities of and information concerning customers, vendors and suppliers and prospective customers, vendors and suppliers; (x) development, expansion and business strategies, pricing strategies, plans and techniques; (xi) computer programs; (xii) research and development activities; (xiii) litigation and pending litigation; (xiv) personnel information; and (xv) any other information or documents which the Executive is told or reasonably ought to know the Corporation, its subsidiaries or affiliates regard as proprietary or confidential.

	
 
	
(B)
	
Upon the Executive’s Termination Date or at the Corporation’s earlier request, the Executive will promptly return to the Corporation any and all records, documents, data, memoranda, reports, physical property, information, computer disks, tapes or software or other materials, and all copies thereof, relating to the business of the Corporation and its subsidiaries and affiliates obtained by the Executive during his or her employment with the Corporation, its subsidiaries or affiliates. The Executive further agrees to deliver to the Corporation, at its request, any computer in the Executive’s possession or control which has contained any Confidential Information for the purpose of ensuring that all Confidential Information stored on the computer has been delivered to the Corporation.

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(C)
	
The Executive agrees that all inventions, innovations, discoveries, improvements, developments, trade secrets, processes, procedures, methods, designs, analyses, drawings, reports, and all similar or related information which relates to the Corporation’s or any of its subsidiaries’ or affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Executive while employed by the Corporation or its subsidiaries or affiliates (“Work Product”) belong to the Corporation or such subsidiary or affiliate. The Executive shall promptly inform the Corporation of such Work Product, and shall execute such assignments as may be necessary to transfer to the Corporation or its affiliates the benefits of the Work Product, in whole or in part, or conceived by the Executive either alone or with others, which result from any work which the Executive may do for or at the request of the Corporation, whether or not conceived by the Executive while the Executive’s non-work time or off the premises of the Corporation, including such of the foregoing items conceived during the course of employment which are developed or perfected after the Executive’s Termination Date. The Executive shall assist the Corporation or its nominee, to obtain patents, trademarks and service marks and the Executive agrees to execute all documents and to take all other actions which are necessary or appropriate to secure to the Corporation and its subsidiaries and affiliates the benefits thereof. Such patents, trademarks and service marks shall become the property of the Corporation and its affiliates. The Executive shall deliver to the Corporation all sketches, drawings, models, figures, plans, outlines, descriptions or other information with respect thereto.

	
 
	
(D)
	
To the extent that any court or agency seeks to have the Executive disclose Confidential Information, the Executive shall immediately inform the Corporation, and the Executive shall take such reasonable steps to prevent disclosure of Confidential Information until the Corporation has been informed of such requested disclosure. To the extent that the Executive obtains information on behalf of the Corporation or any of its affiliates that may be subject to attorney-client privilege as to the Corporation’s attorneys, the Executive shall take reasonable steps to maintain the confidentiality of such information and to preserve such privilege.

	
 
	
(E)
	
Nothing in the foregoing provisions of this Paragraph 5 shall be construed so as to prevent the Executive from using, after the Executive’s termination of employment with the Corporation, in connection with his or her employment for himself or an employer other than the Corporation or any of its affiliates, knowledge which was acquired by him or her during the course of his or her employment with the Corporation and its affiliates, and which is generally known to persons of his or her experience in other companies in the same industry.

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(F)
	
Executive understands that nothing in this Agreement shall be construed to prohibit Executive from (I) filing a charge or complaint with, participating in an investigation or proceeding conducted by, or reporting possible violations of law or regulation to any federal, state or local government agency, (II) truthfully responding to or complying with a subpoena, court order, or other legal process, or (III) exercising any rights Executive may have under applicable labor laws to engage in concerted activity with other employees.

	
 
	
(G)
	
Pursuant to the Defend Trade Secrets Act, nothing in this Agreement shall prevent Executive from disclosing information (I) “in confidence” to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (II) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

6.Noncompetition/Nonsolicitation.  The Executive acknowledges that the industry in which the Corporation is engaged is an international business which is highly competitive and that the Executive is a key executive of the Corporation. The Executive further acknowledges that as a result of his or her senior position within the Corporation, he or she has acquired and will acquire extensive Confidential Information and knowledge of the Corporation’s business and the industry in which it operates and will develop relationships with and knowledge of customers, employees, vendors and suppliers of the Corporation and its subsidiaries and affiliates. Accordingly, the Executive agrees that during the time the Executive is employed by the Corporation, its subsidiaries or affiliates (the “Employment Period”) and for a period of 12 (twelve) months after the Termination Date (the “Restricted Period”):

	
 
	
(A)
	
The Executive will not directly or indirectly, own, operate, manage, control, participate, consult with, advise, or have any financial interest in (whether for himself or for any other person and whether as proprietor, principal, stockholder, partner, agent, director, officer, employee, consultant, independent contractor or in any other capacity), any Competitor of the Corporation, or in any manner engage in the start-up of a business (including by himself or in association with any person, firm, corporate or other business organization through any other entity) in competition with the Corporation’s, business provided that this shall not prevent the Executive from ownership of 1% or less of the outstanding stock of any corporation listed on the New York Stock Exchange or included in the National Association of Securities Dealers Automated Quotation System or ownership of securities in any entity affiliated with the Corporation. “Competitor” refers to a person or entity, including metals-related Internet marketplaces, engaged in the metal service center processing and/or distribution business.

	
 
	
(B)
	
The Executive will not directly or indirectly contact, call upon, solicit business from, or sell any products sold or distributed by the Corporation to 

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any customer or prospective customer of the Corporation with whom employees of the Corporation had contact during the Employment Period.

	
 
	
(C)
	
The Executive will not directly or indirectly either alone or in cooperation with others, encourage any employees of the Corporation to seek or accept an employment or business relationship with a person or entity other than the Corporation, or in any way interfere with the relationship of the Corporation and any subsidiary or affiliate and any employee thereof, including without limitation, to hire, solicit for hire, or discuss or encourage the employment of, any of the employees of the Corporation who were employed by the Corporation during the Employment Period; provided however, this shall not apply to an employee whose employment was terminated by the Corporation before the Termination Date, if such termination was not caused by any direct or indirect involvement of the Executive or a subsequent employer of the Executive.

	
 
	
(D)
	
The Executive will not directly or indirectly either alone or in cooperation with others, encourage any supplier, distributor, franchisee, licensee, or other business relation of the Corporation, any subsidiary or affiliate of the Corporation to cease or curtail doing business with the Corporation, any subsidiary or affiliate of the Corporation, or in any way interfere with the relationship between any such customer, supplier, distributor, franchisee, licensee or business relation and the Corporation or subsidiary or affiliate.

If any restriction set forth in this Agreement is determined by a court of competent jurisdiction to be unreasonable or unenforceable with respect to scope, time, geographical, customer or other coverage under circumstances then existing, the parties agree that (a) the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law, so as to provide the maximum legally enforceable protection of the Corporation’s interests as described in this Agreement, without negating or impairing any other restrictions or agreements set forth herein, and (b) the Benefit Period shall be reduced so as not to exceed any revised Restricted Period.

7.No Conflict.  The Executive represents that the Executive is not a party to any agreement with any third party containing a non-competition provision, non-solicitation provision, confidentiality provision or any other restriction that would prohibit or restrict the Executive’s employment with the Corporation or any part of the services which the Executive provides to the Corporation or its clients. Moreover, the Executive represents that the Executive is not limited by any court order or other legal obligation from performing any assigned duties for the Corporation and that the Executive has no rights which may conflict with the interests of the Corporation or with the Executive’s obligations hereunder. The Executive represents that the Executive does not possess any documents or material containing confidential information from any prior employer and, to the extent the Executive knows or possesses any such confidential information, the Executive agrees not to disclose it to the Corporation. Finally, the Executive states that he/she has disclosed to the Corporation all prior confidentiality, non-solicitation and non-compete agreements which he has entered into with his prior employers.

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8.Change of Title, Duties.  The Executive agrees that if, at any time, the Executive’s title or duties is changed by the Corporation consistent with Paragraph 1 of this Agreement, the Executive nevertheless will continue to be bound in all particulars to the terms and conditions of this Agreement.

9.Validity.  If any one or more of the provisions contained in the Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be constructed as if such invalid, illegal, or unenforceable provision had never been contained herein.

10.Reasonableness of Restrictions/Injunctive Relief.

	
 
	
(A)
	
The Executive acknowledges that his or her rights to compete and disclose Confidential Information and trade secrets are limited hereby only to the extent necessary to protect the Corporation against unfair competition and that, in the event the Executive’s employment with the Corporation terminates for any reason, the Executive will be able to earn a livelihood without violating the foregoing restrictions. The Executive acknowledges that the restrictions cited herein are reasonable and necessary for the protection of the Corporation’s legitimate business interests.

	
 
	
(B)
	
The Executive acknowledges that the services to be rendered by the Executive as the Executive Vice President and Chief Financial Officer are of a special, unique and extraordinary character and, in connection with such services, the Executive will, by virtue of his/her senior position with the Corporation, have access to confidential information vital to the Corporation’s business. The Executive consents and agrees that if the Executive violates any of the provisions of this Agreement, the Corporation would sustain irreparable harm and, therefore, in addition to any other remedies which the Corporation may have under this Agreement or otherwise, the Corporation shall be entitled to an injunction from any court of competent jurisdiction restraining the Executive from committing or continuing any such violation of this Agreement, including, without limitation, restraining the Executive from disclosing, using for any purpose, selling, transferring or otherwise disposing of, in whole or in part, any trade secrets, Confidential Information, proprietary information, client or customer lists or other information pertaining to the financial condition, business, manner of operation, affairs, plans or prospects of the Corporation. The Executive acknowledges that damages at law would not be an adequate remedy for violation of this Agreement, and the Executive therefore agrees that the provisions may be specifically enforced against the Executive in any court of competent jurisdiction. Nothing contained herein shall be construed as prohibiting the Corporation from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages.

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(C)
	
The parties agree that money damages would be inadequate for any breaches of Paragraphs 4, 5 and 6 of this Agreement. Therefore, in the event of a breach or threatened breach of Paragraphs 4, 5 or 6, the Corporation, or its successors or assigns may, in addition to other rights and remedies existing in its favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief, to enforce, or prevent any violation of, the provisions hereof (without posting a bond or other security).

	
 
	
(D)
	
The Executive agrees that: (i) the covenants set forth in Paragraph 6 are reasonable, (ii) the Corporation would not have entered into this Agreement but for the covenants of the Executive contained in Paragraph 6, and (iii) the covenants contained in Paragraph 6 have been made in order to induce the Corporation to enter into this Agreement.

11.Successors and Assigns.  This Agreement shall be binding on, and inure to the benefit of, the Corporation and its successors and assigns and any person acquiring, whether by merger, reorganization, consolidation, or by purchase of all or substantially all of the assets of the Corporation. The Executive agrees that the Corporation may assign its rights and obligations under this Agreement. This Agreement shall be binding upon the Executive, without regard to the duration of his employment by the Corporation or reasons for the cessation of such employment, and inure to the benefit of his administrators, executors, and heirs, although the obligations of the Executive are personal and may be performed only by the Executive. The interests of the Executive under this Agreement may not be voluntarily assigned, alienated or encumbered by the Executive or his successors in interest, and any attempt to do so shall be void and of no effect.

12.Notification.  The Executive shall notify all future employers of the existence of Paragraphs 4, 5, 6, 9, 10, 17 and 18 of this Agreement and the terms thereof. The Executive will also provide the Corporation with information the Corporation may from time to time request to determine the Executive’s compliance with the terms of this Agreement. The Executive hereby authorizes the Corporation to contact the Executive’s future employers and other parties with whom the Executive has engaged or may engage in any business relationship to determine the Executive’s compliance with this Agreement and to communicate the contents of this Agreement to such employers and parties.

13.Cooperation in Certain Matters.  The Executive agrees that, during the Employment Period and after the Termination Date, the Executive will cooperate with the Corporation in any current or future or potential legal, business, or other matters in any reasonable manner as the Corporation may request, including but not limited to meeting with and fully answering the questions of the Corporation or its representatives or agents, and in any legal matter testifying and preparing to testify at any deposition or trial. The Corporation agrees to compensate the Executive for any reasonable expenses incurred as a result of such cooperation.

14.Captions.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

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15.No Mitigation.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as specifically provided in Paragraph 3(A) hereof, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation or benefits earned by the Executive as the result of employment by another employer.

16.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.

17.Governing Law.  In the event of any dispute arising under this Agreement, it is agreed that the law of the State of Illinois shall govern the interpretation, validity, and effect of this Agreement without regard to the place of performance or execution thereof.

18.Enforcement.  The Corporation and the Executive hereby submit to the jurisdiction and venue of any state or federal court located within Cook County, Illinois for resolution of any and all claims, causes of action or disputes arising out of, related to or concerning this Agreement and agree that services by registered mail to the addresses set forth below shall constitute sufficient service of process for any such action. The parties further agree that venue for all disputes between them, including those related to this Agreement, shall be with a state or federal court located within Cook County, Illinois. If the Corporation is required to seek enforcement of any of the provisions of this Agreement, the Corporation will be entitled to recover from the Executive its reasonable attorneys’ fees plus costs and expenses as to any issues on which it prevails.

19.Notices.  Notices provided for in this Agreement shall be in writing and shall be deemed to have been duly received when delivered in person or sent by facsimile transmission, on the first business day after it is sent by air express courier service or on the third business day following deposit in the United States registered or certified mail, return receipt requested, postage prepaid and addressed, in the case of the Corporation to the following address:

Ryerson Holding Corporation

227 W. Monroe St., 27th Floor

Chicago, Illinois 60606

Attention: Mark Silver

 

or to the Executive:

[__]

 

or such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon actual receipt.

20.Waiver of Breach.  The waiver by either the Corporation or the Executive of a breach of any provision of this Agreement shall not operate as or be deemed a waiver of any subsequent breach by either the Corporation or the Executive. Continuation of payments hereunder by the Corporation following a breach by the Executive of any provision of this Agreement shall 

14

 

not preclude the Corporation from thereafter terminating said payments based upon the same violation.

21.Survival of Agreement.  Except as otherwise expressly provided in this Agreement, the rights and obligations of the parties to this Agreement shall survive the termination of the Executive’s employment with the Corporation.

22.Acknowledgment by Executive.  The Executive represents to the Corporation that he is knowledgeable and sophisticated as to business matters, including the subject matter of this Agreement, that he has read this Agreement and that he understands its terms. The Executive acknowledges that, before assenting to the terms of this Agreement, the Executive has been given a reasonable time to review it, to consult with counsel of choice, and to negotiate at arm’s-length with the Corporation as to the contents.

23.Other Agreements and Modification.  This Agreement may be amended or cancelled only by written mutual Agreement executed by the parties. This Agreement constitutes the sole and complete Agreement between the Corporation and the Executive and supersedes all other agreements, both oral and written, between the Corporation and the Executive with respect to the matters contained herein, including, but not limited to, the Prior Employment Agreement and each of the Prior Amendments; provided, however, that this Agreement does not supersede the Corporations’ Severance Plan, except as specifically addressed in this Agreement. The parties acknowledge that other than what is contained in this Agreement, no verbal or other statements, inducements, or representations have been made to or relied upon by the Executive. The parties each represent to the other that they have read and understand this Agreement.

24.Ambiguities.  This Agreement has been negotiated at arms-length between persons knowledgeable in the matters dealt with herein. In addition, each party has been represented by experienced and knowledgeable legal counsel. Accordingly, the parties agree that neither the Corporation nor the Executive is the drafting party and that any rule of law or any other statutes, legal decisions or common law principles of similar effect that require interpretation of any ambiguities in this Agreement against the party that has drafted it is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to give effect to the intentions of the parties hereto.

 

15

 

 

 

IN WITNESS WHEREOF, the Executive has hereunto set his or her hand, and the Corporation has caused these presents to be executed in its name and on its behalf, as of the date above first written.

RYERSON HOLDING CORPORATION

 

 

		
	
Dated:  _____________
	
___________________________________

Mark Silver 

EVP, General Counsel & Chief HR Officer

 

 

 

	
Dated:  ______________
	
___________________________________

James Claussen

Executive Vice President & Chief Financial Officer

 

[Signature Page to Claussen Employment Agreement]Exhibit
10.1

 

NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED
IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. 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: $1,650,000.00	Issue
    Date: February 19, 2021
	Actual
    Amount of Purchase Price: $1,485,000.00	 

 

PROMISSORY
NOTE

 

FOR
VALUE RECEIVED, SIMPLICITY ESPORTS AND GAMING COMPANY, a Delaware corporation (hereinafter called the “Borrower”
or the “Company”) (Trading Symbol: WINR), hereby promises to pay to the order of ____________________, a Delaware
limited partnership, or registered assigns (the “Holder”), in the form of lawful money of the United States of America,
the principal sum of $1,650,000.00, which amount is the $1,485,000.00 actual amount of the purchase price (the “Consideration”)
hereof plus an original issue discount in the amount of $165,000.00 (the “OID”) (subject to adjustment herein) (the
“Principal Amount”) and to pay interest on the unpaid Principal Amount hereof at the rate of twelve percent (12%)
(the “Interest Rate”) per annum (with the understanding that the first twelve months of interest (equal to $198,000.00)
shall be guaranteed and earned in full as of the Issue Date) 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, as further provided herein. The
maturity date shall be twelve (12) months from the Issue Date (the “Maturity Date”), and is the date upon which the
outstanding balance owed under the Note shall be due and payable.

 

This
Note may not be prepaid or repaid in whole or in part except as otherwise explicitly set forth herein.

 

Interest
shall commence accruing on the date that the Note is fully funded and shall be computed on the basis of a 365-day year and the
actual number of days elapsed. Any Principal Amount or interest on this Note which is not paid when due shall bear interest at
the rate of the lesser of (i) fifteen percent (15%) per annum and (ii) the maximum amount permitted by law from the due date thereof
until the same is paid (“Default Interest”).

 

All
payments due hereunder (to the extent not converted into shares of common stock, $0.0001 par value per share, of the Borrower
(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.

 

Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”).
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. As used herein,
the term “Trading Day” means any day that shares of Common Stock are listed for trading or quotation on the Principal
Market (as defined in the Purchase Agreement), any tier of the OTC Markets, NASDAQ Stock Market, the New York Stock Exchange or
the NYSE American.

 

    	1

     

    

 

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

 

1.1
Conversion Right. The Holder shall have the right, at any time on or following the Issue Date, to convert all or any portion
of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) 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 notwithstanding anything to the contrary contained
herein, the a Holder shall not have the right to convert any portion of this Note, pursuant to Section 1 or otherwise, to the
extent that after giving effect to such issuance after conversion as set forth on the applicable Notice of Conversion, the Holder
(together with the Holder’s affiliates (the “Affiliates”), and any other Persons (as defined below) acting as
a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares
of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion of this
Note beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to
the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set
forth in the preceding sentence, for purposes of this Section 1.1, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that
the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 1.1, in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by
the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and
in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the
Common Stock outstanding at the time of the respective calculation hereunder. “Person” and “Persons” means
an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and any governmental entity or any department or agency thereof. The limitations contained in this paragraph
shall apply to a successor holder of this Note. The number of Conversion Shares 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 or Borrower’s transfer agent 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 or Borrower’s transfer agent 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 Rate to the Conversion Date, plus (3) at
the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or
(2).

 

    	2

     

    

 

1.2
Conversion Price.

 

(a)
Calculation of Conversion Price. The Principal Amount and interest (including any Default Interest) under this Note shall
be convertible into shares of Common Stock at a conversion price equal to $11.50 (the “Conversion Price”) per share.
If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value of the Common
Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such conversion
and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional Principal”
means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares
issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price
not been adjusted by the Holder to the par value price. The Conversion Price is 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. Holder shall
be entitled to deduct $1,500.00 from the conversion amount in each Notice of Conversion to cover Holder’s fees associated
with each Notice of Conversion, provided, however, that the aforementioned deduction shall only apply for the initial ten (10)
conversions under this Note.

 

1.3
Authorized and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, 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 a number of Conversion Shares equal to the sum of (i) the number of Conversion Shares issuable upon the full
conversion of this Note (assuming no payment of Principal Amount or interest) as of any issue date (taking into consideration
any adjustments to the Conversion Price pursuant to Section 2 hereof or otherwise) multiplied by (ii) one and a half (1.5)
(the “Reserved Amount”). The Borrower represents that upon issuance, the Conversion Shares will be duly and validly
issued, fully paid and non-assessable. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to
issue certificates for the Conversion Shares or instructions to have the Conversion Shares issued as contemplated by Section 1.4(f)
hereof, 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 or cause the Company to electronically issue shares of Common Stock to execute and
issue the necessary certificates for the Conversion Shares or cause the Conversion Shares to be issued as contemplated by Section
1.4(f) hereof in accordance with the terms and conditions of this Note.

 

If,
at any time the Borrower does not maintain the Reserved Amount (subject to a five (5) calendar day cure period after the Holder
provides notice to the Borrower of such failure to maintain the Reserved Amount), it will be considered an Event of Default under
this Note.

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion. This Note may be converted by the Holder in whole or in part, on any Trading Day, at any time
on or following the Issue Date, by submitting to the Borrower or Borrower’s transfer agent 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).
Any Notice of Conversion submitted after 11:59 p.m., New York, New York time, shall be deemed to have been delivered and received
on the next Trading Day.

 

(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 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.

 

    	3

     

    

 

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

 

(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f)
hereof) within three (3) Trading Days after such receipt (the “Deadline”) (and, solely in the case of conversion of
the entire unpaid Principal Amount and interest (including any Default Interest) under this Note, surrender of this Note). If
the Company shall fail for any reason or for no reason to issue to the Holder on or prior to the Deadline a certificate for the
number of Conversion Shares or to which the Holder is entitled hereunder and register such Conversion Shares on the Company’s
share register or to credit the Holder’s balance account with DTC (as defined below) for such number of Conversion Shares
to which the Holder is entitled upon the Holder’s conversion of this Note (a “Conversion Failure”), then, in
addition to all other remedies available to the Holder, (i) the Company shall pay in cash to the Holder on each day after the
Deadline and during such Conversion Failure an amount equal to 2.0% of the product of (A) the sum of the number of Conversion
Shares not issued to the Holder on or prior to the Deadline and to which the Holder is entitled and (B) the closing sale price
of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such Conversion
Shares to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon written notice to the Company, may void
its Notice of Conversion with respect to, and retain or have returned, as the case may be, any portion of this Note that has not
been converted pursuant to such Notice of Conversion; provided that the voiding of an Notice of Conversion shall not affect the
Company’s obligations to make any payments which have accrued prior to the date of such notice. In addition to the foregoing,
if on or prior to the Deadline the Company shall fail to issue and deliver a certificate to the Holder and register such Conversion
Shares on the Company’s share register or credit the Holder’s balance account with DTC for the number of Conversion
Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation
pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise
that the Holder anticipated receiving from the Company, then the Company shall, within two (2) Trading Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions and other reasonable and customary out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such Conversion Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Conversion
Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the closing sales price of the
Common Stock on the date of exercise. Nothing shall limit the Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing the Conversion Shares (or to electronically
deliver such Conversion Shares) upon the conversion of this Note as required pursuant to the terms hereof.

 

(e)
Obligation of Borrower to Deliver Common Stock. At the time that the Holder submits the Notice of Conversion to the Borrower
or Borrower’s transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon
such conversion, the outstanding Principal Amount and the amount of accrued and unpaid interest (including any Default Interest)
under 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 the Conversion
Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof) shall be absolute
and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect
to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay
in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other
circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The
Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is sent
to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time, on such date.

 

    	4

     

    

 

(f)
Delivery of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the Conversion
Shares issuable upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance
with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer
agent to electronically transmit the Conversion Shares issuable upon conversion hereof to the Holder by crediting the account
of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.

 

1.5
Concerning the Shares. The Conversion Shares 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 1933 Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the
Purchase Agreement)) 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, Rule 144A, Regulation S, or other applicable
exemption, 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 Conversion Shares have been registered under the 1933 Act or otherwise may be sold pursuant
to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as
of a particular date that can then be immediately sold, each certificate for the Conversion Shares 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 MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED
IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A, REGULATION S UNDER SAID ACT, OR OTHER APPLICABLE EXEMPTION. 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.”

 

    	5

     

    

 

The
legend set forth above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion
Shares without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by
electronic delivery by crediting the account of such holder’s broker with DTC, if, unless otherwise required by applicable
state securities laws: (a) such Conversion Shares are registered for sale under an effective registration statement filed under
the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any
restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or the
Holder provides the Legal Counsel Opinion (as contemplated by and in accordance with Section 4(m) of the Purchase Agreement) to
the effect that a public sale or transfer of such Conversion Shares may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with any such issuance. The Holder agrees to sell all Conversion Shares, including
those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery
requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Holder with respect
to the transfer of Conversion Shares pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, or
other applicable exemption, at the Deadline, notwithstanding that the conditions of Rule 144, Rule 144A, Regulation S, or other
applicable exemption, as applicable, have been met, it will be considered an Event of Default under this 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, 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 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 (defined in Section 3.21) 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 this Note, 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 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 effectuate any
transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, at least 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)
Purchase Rights. If, at any time when all or any portion of this Note is 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 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.

 

    	6

     

    

 

(e)
Dilutive Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells
or grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants
any right to reprice, or otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant
or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for, or otherwise
entitle any person or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of this
Note, and any convertible notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective
price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such
issuances, collectively, a “Dilutive Issuance”) (it being agreed that if the holder of the Common Stock or other securities
so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance
shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion
Price shall be reduced, at the option of the Holder, to a price equal to the Base Conversion Price. Such adjustment shall be made
whenever such Common Stock or other securities are issued. By way of example, and for the avoidance of doubt, if the Company issues
a convertible promissory note (including but not limited to a Variable Rate Transaction), and the holder of such convertible promissory
note has the right to convert it into Common Stock at an effective price per share that is lower than the then Conversion Price
(including but not limited to a conversion price with a discount that varies with the trading prices of or quotations for the
Common Stock), then the Holder has the right to reduce the Conversion Price to such Base Conversion Price (including but not limited
to a conversion price with a discount that varies with the trading prices of or quotations for the Common Stock) in perpetuity
regardless of whether the holder of such convertible promissory note ever effectuated a conversion at the Base Conversion Price.
Notwithstanding the foregoing, no adjustment will be made under this Section 1.6(e) in respect of an Exempt Issuance. In the event
of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall be
calculated as if all such securities were issued at the initial closing.

 

An
“Exempt Issuance” shall mean the issuance of (a) shares of Common Stock or other securities to officers or directors
of the Company pursuant to any stock or option or similar equity incentive plan duly adopted for such purpose, by a majority of
the non-employee members of the Company’s Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose in a manner which is consistent with the Company’s prior business practices; (b)
securities issued pursuant to a merger, consolidation, acquisition or similar business combination approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of
a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or
to an entity whose primary business is investing in securities; (c) securities issued pursuant to any equipment loan or leasing
arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by a majority
of the disinterested directors of the Company; (d) securities issued with respect to which the Holder waives its rights in writing
under this Section 1.6(e); or (e) securities issued prior to the Issue Date that are convertible or exercisable into shares of
Common Stock unless the holder of such securities effectuates a conversion or exercise into shares of Common Stock on or after
the Issue Date (in such case, Section 1.6(e) shall apply to any effectuated conversion or exercise price on or after the Issue
Date).

 

(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, within three (3) calendar days after each written request
from 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.

 

    	7

     

    

 

1.7
[Intentionally Omitted].

 

1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the Conversion Shares covered thereby
(other than the Conversion 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 tenth (10th) business day after the expiration of the Deadline
with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its
status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with
respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note
to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been
converted. In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure to convert this
Note.

 

1.9
Prepayment. At any time prior to the date that an Event of Default occurs under this Note (the “Prepayment Period”),
the Borrower shall have the right, exercisable on three (3) Trading Days prior written notice to the Holder of the Note, to prepay
the outstanding Principal Amount and interest then due under this Note in accordance with this Section 1.9. 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 the Note, and (2) the date of prepayment which shall
be three (3) Trading Days from the date of the Optional Prepayment Notice (the “Optional Prepayment Date”). The Holder
shall have the right, at all times prior to the actual receipt of the full prepayment amount on the Optional Prepayment Date,
to instead convert all or any portion of the Note pursuant to the terms of this Note, including the amount of this Note to be
prepaid by the Borrower in accordance with this Section 1.9. On the Optional Prepayment Date, the Borrower shall make payment
of the amounts designated below to or upon the order of the Holder as specified by the Holder in writing to the Borrower. If the
Borrower exercises its right to prepay the Note in accordance with this Section 1.9, the Borrower shall make payment to the Holder
of an amount in cash equal to the sum of: (w) 100% multiplied by the Principal Amount then outstanding plus (x) accrued
and unpaid interest on the Principal Amount to the Optional Prepayment Date.

 

If
the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the
Note as provided in this Section 1.9, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant
to this Section 1.9.

 

1.10
Repayment from Proceeds. While any portion of this Note is outstanding, if the Company receives cash proceeds of more than
$2,000,000.00 (the “Minimum Threshold”) in the aggregate from public offerings or private placements to investors
(except with respect to proceeds from officers and directors of the Company) (for the avoidance of doubt, each time that the Company
receives cash proceeds from any of the aforementioned sources, then such amount shall be aggregated together), the Company shall,
within two (2) business days of Company’s receipt of such proceeds, inform the Holder of such receipt, following which the
Holder shall have the right in its sole discretion to require the Company to immediately apply up to 50% of all proceeds received
by the Company after the Minimum Threshold is reached to repay the outstanding amounts owed under this Note.

 

ARTICLE
II. RANKING AND CERTAIN COVENANTS

 

2.1
Ranking and Security. The obligations of the Borrower under this Note shall rank senior with respect to any and all unsecured
Indebtedness incurred following the Issue Date.

 

2.2
[Intentionally Omitted].

 

2.3
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.

 

2.4
[Intentionally Omitted].

 

    	8

     

    

 

2.5
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.
Notwithstanding anything to the contrary herein and for the avoidance of doubt, this Section 2.5 shall not apply to (i) the Company’s
transfer or disposition of up to 25% of Simplicity One Brasil Ltda to Jed Kaplan or (ii) the sale of an equity interest of a subsidiary
of the Borrower if such equity interest is less than 30% of the then total outstanding equity interests of such subsidiary.

 

2.6
[Intentionally Omitted].

 

2.7
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)(10) of the Securities.
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(10) Transaction while
this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than
$25,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of 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).

 

2.8
Preservation of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, (a) change the nature of its business; (b) sell, divest, change the structure
of any material assets other than in the ordinary course of business; or (c) enter into any Merchant Cash Advance transactions.
In addition, so long as the Borrower shall have any obligation under this Note, 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. For the avoidance of doubt, this Section 2.8 shall not apply to the Company’s
transfer or disposition of up to 25% of Simplicity One Brasil Ltda to Jed Kaplan.

 

2.9
Noncircumvention. The Company hereby covenants and agrees that the Company 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.

 

2.10
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking
by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note.

 

ARTICLE
III. EVENTS OF DEFAULT

 

It
shall be considered an event of default if any of the following events listed in this Article III (each, an “Event of Default”)
shall occur:

 

3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due
on this Note, whether at maturity, upon acceleration or otherwise, or fails to fully comply with Section 1.10 of this Note.

 

    	9

     

    

 

3.2
Conversion and the Shares. The Borrower (i) fails to issue Conversion Shares 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, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, (iii) fails to reserve the Reserved Amount at all times (subject to a five (5)
calendar day cure period after the Holder provides notice to the Borrower of such failure to maintain the Reserved Amount), or
(iii) 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 the Conversion Shares issuable 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 Conversion Shares 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) Trading 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.

 

3.3
Breach of Agreements and Covenants. The Borrower breaches any material agreement, covenant or other material term or condition
contained in the Purchase Agreement, this Note, the Irrevocable Transfer Agent Instructions or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith or therewith.

 

3.4
Breach of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement,
this Note, the Irrevocable Transfer Agent Instructions or in any agreement, statement or certificate given in writing pursuant
hereto or in connection herewith or therewith 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 apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.

 

3.6
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 $500,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7
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.

 

3.8
Failure to Comply with the 1934 Act. At any time after the Issue Date, the Borrower shall fail to comply with the reporting
requirements of the 1934 Act and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act. It shall
be an Event of Default under this Section 3.8 if the Borrower shall file any Notification of Late Filing on Form 12b-25 with the
SEC.

 

3.9
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.10
Cessation of Operations. Any cessation of all 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.

 

3.11
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). For the avoidance of doubt, this Section
3.11 shall not apply to the Company’s transfer or disposition of up to 25% of Simplicity One Brasil Ltda to Jed Kaplan.

 

3.12
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.

 

    	10

     

    

 

3.13
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, 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
Cross-Default. The declaration of an event of default by any lender or other extender of credit to the Company under any
notes, loans, agreements or other instruments of the Company evidencing any indebtedness of the Company (including those filed
as exhibits to or described in the Company’s filings with the SEC), after the passage of all applicable notice and cure
or grace periods.

 

3.15
Variable Rate Transactions. The Borrower consummates a Variable Rate Transaction (as defined in the Purchase Agreement)
at any time on or after the Issue Date.

 

3.16
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.

 

3.17
Unavailability of Rule 144. If, at any time on or after the date which is six (6) months after the Issue Date, the Holder
is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder,
the Holder’s brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate
the Holder’s conversion of any portion of the Note into free trading shares of the Borrower’s Common Stock pursuant
to Rule 144, and/or (ii) thereupon deposit such shares into the Holder’s brokerage account.

 

3.18
Delisting or Suspension of Trading of Common Stock. If, at any time on or after the Issue Date, the Borrower’s Common
Stock (i) is suspended from trading, (ii) halted from trading, and/or (iii) fails to be quoted or listed (as applicable) on any
level of the OTC Markets, any tier of the NASDAQ Stock Market, the New York Stock Exchange, or the NYSE American.

 

3.19
Failure to Pay an Interim Payment. The Borrower fails to pay an Interim Payment (as defined in this Note) when due as provided
in Section 4.16 of this Note.

 

3.20
Penny Stock. The Borrower’s Common Stock is deemed to be a “penny stock” as defined in SEC Rule 240.3a51-1
at any time after the Issue Date.

 

3.21
Rights and Remedies Upon an Event of Default. Upon the Holder’s provision of notice to the Borrower of the occurrence
of any Event of Default specified in this Article III, which has not been cured within five (5) calendar days (provided, however,
that this five (5) calendar day cure period shall not apply to any event of default under Sections 3.1, 3.2, and 3.19 of this
Note), this Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest)
through the date of full repayment multiplied by 125% (the “Default Amount”). Holder may, in its sole discretion,
convert the Default Amount into Common Stock in accordance with the terms of this Note.

 

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 of the Holder existing
hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

    	11

     

    

 

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, e-mail 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 e-mail or 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:

 

SIMPLICITY
ESPORTS AND GAMING COMPANY

7000
W. Palmetto Park Rd., Suite 505

Boca
Raton, FL 33433

Attention:
Jed Kaplan

e-mail:
jkaplan@simplicityesports.com

 

If
to the Holder:

 

____________________

____________________

e-mail:
____________________

 

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
as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4
Assignability. 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. Neither the Borrower nor the Holder shall assign this Note or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Holder may assign its rights hereunder
to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder
or to any of its “affiliates”, as that term is defined under the 1934 Act, without the consent of the Borrower. 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.

 

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

 

4.6
Governing Law; Venue; Attorney’s Fees. This Note shall be governed by and construed in accordance with the laws of
the State of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Note or any other agreement, certificate, instrument or document contemplated
hereby shall be brought only in the state courts located in the Commonwealth of Massachusetts or federal courts located in the
Commonwealth of Massachusetts. The Borrower hereby irrevocably waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED HEREBY. 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 agreement, certificate, instrument or document contemplated hereby or thereby 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. The prevailing party in any action or dispute brought in connection with this the Note or any other agreement, certificate,
instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s
fees and costs.

 

    	12

     

    

 

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. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement and the
documents entered into in connection herewith and therewith.

 

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 Change in Control 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 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.

 

4.10
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.

 

4.11
Construction; Headings. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall not
be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not
form part of, or affect the interpretation of, this Note.

 

    	13

     

    

 

4.12
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now
or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce
any right or remedy under this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed
and provided that the total liability of the Company under this Note for payments which under the applicable law are in the nature
of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any
other sums which under the applicable law in the nature of interest that the Company may be obligated to pay under this Note exceed
such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by applicable law and applicable to this
Note is increased or decreased by statute or any official governmental action subsequent to the Issue Date, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to this Note from the effective date thereof forward, unless
such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate
is paid by the Company to the Holder with respect to indebtedness evidenced by this the Note, such excess shall be applied by
the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such
excess to be at the Holder’s election.

 

4.13
Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or
rule of law (including any judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.

 

4.14
[Intentionally Omitted].

 

4.15
Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment
amount or Default Amount, 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 one (1) Trading Day 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 one (1) Trading Day 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 one (1) Trading
Day, submit (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, 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 one (1) Trading Day 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.

 

4.16
Interim Payment. In addition to all other obligations under this Note, the Borrower shall pay $363,000.00 in cash to the
Holder on or before August 19, 2021 (the “Interim Payment”) for the repayment of the OID (equal to $165,000.00) and
the guaranteed interest (equal to $198,000.00) under the Note.

 

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 (except with respect to the Borrower’s sale of its Common Stock, which may also include a common
stock purchase warrant component if such sale of Common Stock is pursuant to a registered offering by the Borrower (including
but not limited to an underwritten offering by a registered broker-dealer on behalf of the Borrower), 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 2 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 ______. This Section 4.17 shall not apply to any bona fide offer of capital or financing from an officer or director of
the Borrower.

 

[signature
page follows]

 

    	14

     

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on February 19, 2021.

 

	SIMPLICITY
    ESPORTS AND GAMING COMPANY	 
	 	 	 
	By:	 	 
	Name:	Jed
    Kaplan	 
	Title:	Chief
    Executive Officer	 

 

    	15

     

    

 

EXHIBIT
A — NOTICE OF CONVERSION

 

The
undersigned hereby elects to convert $ __________________principal amount of the Note (defined below) into that number of shares of Common Stock
to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of SIMPLICITY ESPORTS
AND GAMING COMPANY, a Delaware corporation (the “Borrower”), according to the conditions of the promissory note
of the Borrower dated as of February 19, 2021 (the “Note”), as of the date written below. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any.

 

Box
Checked as to applicable instructions:

 

	 	[  ]	The
    Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	 	 	 
	 	 	Name
    of DTC Prime Broker:
	 	 	Account
    Number:
	 	 	 
	 	[  ]	The
                                                                     undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
                                                                     set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified
                                                                     immediately below or, if additional space is necessary, on an attachment hereto:

 

	Date
    of Conversion:	 	 
	Applicable
    Conversion Price:	$	 
	Costs
                                         Incurred by the Undersigned to Convert

        the
        Note into Shares of Common Stock:
	 

        $
	 
	Number
                                         of Shares of Common Stock to be

        Issued
        Pursuant to Conversion of the Note:
	 

         
	 
	Amount
    of Principal Balance Due remaining Under the Note after this conversion:	 

         
	 

 

	By:	 
	Name:	 
	Title:	 
	Date:

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