Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE
AGREEMENT (this “Agreement”) dated as of [  ], 202[  ], by and between Red Cat Holdings, Inc., a Nevada
corporation, with offices at 1607 Ponce De Leon Avenue, Suite 407, San Juan, Puerto Rico 00909 (the “Company”),
and [  ] (the “Buyer”) with offices at ___________________________.

 

WHEREAS:

 

A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “Securities Act”); and

 

B.
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement,
(i) a 12% convertible note (the “Note”) of the Company, in the form attached hereto as Exhibit A in the
principal amount of $[ ].00, convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common
Stock”), and (ii) a Common Stock Purchase Warrant (the “Warrant”), in the form attached hereto as
Exhibit B, with an exercise price of $1.50 per share, upon the terms and subject to the limitations and conditions set forth
in such Note and Warrant; and

 

C.
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, the Note and the Warrant as set forth
immediately below its name on the signature pages hereto.

 

NOW THEREFORE,
in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and the Buyer hereby agree
as follows:

1.
Purchase and Sale of Note and Warrant.

 

a.
Purchase of Note and Warrant. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer
and the Buyer agrees to purchase from the Company the Note and Warrant.

 

b.
Form of Payment. On the Closing Date, (i) the Buyer shall fund the principal amount for the Note and Warrant to be
issued and sold to it at the Closing (as defined below) by wire transfer of immediately available funds to the Company, in accordance
with the Company’s written wiring instructions, against delivery of the Note and Warrant, and (ii) the Company shall
deliver such duly executed Note and Warrant on behalf of the Company, to the Buyer, against delivery of the purchase price thereof.

 

c.
Closing Date. The date and time of the issuance and sale of the Note and Warrant pursuant to this Agreement (the
“Closing Date”) shall be on or about simultaneous with the execution and delivery of this Agreement, or such
other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”)
shall occur on the Closing Date at such location as may be agreed to by the parties.

 

d.
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to
sell, and the Buyer agrees to purchase, the Note and Warrant as set forth on each Buyer’s signature page hereto. At any closing
hereunder, the Company shall deliver to each Buyer its respective Note and Warrant.

 

2.
Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:

 

a.
Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the Warrant, and the shares of Common
Stock issuable upon conversion of the Note pursuant to the terms thereof and exercise of the Warrant pursuant to the terms thereof
(such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively
with the Note and Warrant, the “Securities”) for its own account and not with a present view towards the public
sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act.

 

b.
Accredited Investor Status. The Buyer is, as of the date hereof, and on each date on which it exercises the Warrants
or converts the Note, an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act.

 

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

 

d.
Information. The Buyer and the Buyer’s attorney, accountant, purchaser representative and/or tax advisor, if
any (collectively, the “Advisors”), as the case may be, if any, have been, and for so long as the Note remain
outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer
and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity
to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic
information and will not disclose such information unless such information is disclosed to the public prior to or promptly following
such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its
advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and
warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree
of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties
made herein.

 

e.
Governmental Review. The Buyer understands that no United States federal or state agency or any other government
or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

 

f.
Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not
being registered under the Securities Act or any applicable state securities laws, and the Securities may not be transferred unless
(a) the Securities are sold pursuant to an effective registration statement under the Securities Act, (b) the Buyer shall
have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary
for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold
or transferred to an “affiliate” (as defined in Rule 144 promulgated under the Securities Act (or a successor rule)
(“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or the Securities are
sold pursuant to Regulation S under the Securities Act (or a successor rule) (“Regulation S”), and the Buyer
shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein
to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending
arrangement.

 

g.
Legends. The Buyer understands that the Note and Warrant, and, until such time as the Conversion Shares have been
registered under the Securities Act or may be sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

 

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

 

The legend set forth
above shall be removed and the Company shall issue a certificate without such legend to the holder of any shares upon which it
is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an
effective registration statement filed under the Securities Act without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the Securities Act, which opinion shall be accepted by the Company so that
the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.

h.
Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the
signature pages hereto.

 

i.
No Solicitation. The Buyer is unaware of, is in no way relying on, and did not become aware of the offering of the
Securities through or as a result of, any form of general solicitation or general advertising including, without limitation, any
article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television
or radio, in connection with the offering and sale of the Securities and is not subscribing for the Securities and did not become
aware of the offering of the Securities through or as a result of any seminar or meeting to which the Buyer was invited by, or
any solicitation of a subscription by, a person not previously known to the Buyer in connection with investments in securities
generally.

j.
Brokerage Fees. The Buyer has taken no action that would give rise to any claim by any person for brokerage commissions,
finders’ fees or the like relating to this Agreement or the transaction contemplated hereby.

k.
Buyer’s Advisors. The Buyer and its Advisors, as the case may be, have such knowledge and experience in financial,
tax, and business matters, and, in particular, investments in securities, so as to enable it to utilize the information made available
to it in connection with the Notes to evaluate the merits and risks of an investment in the Notes and the Company and to make an
informed investment decision with respect thereto.

l. Buyer Liquidity.
The Buyer has adequate means of providing for Buyer’s current financial needs and foreseeable contingencies and has no need
for liquidity of its investment in the Securities for an indefinite period of time, and after purchasing the Securities the Buyer
will be able to provide for any foreseeable current needs and possible personal contingencies. The Buyer must bear and acknowledges
the substantial economic risks of the investment in the Securities including the risk of illiquidity and the risk of a complete
loss of this investment.

m. No
Other Representations or Information. In evaluating the suitability of an investment in the Securities, the Buyer has not
relied upon any representation or information (oral or written) with respect to the Company or its subsidiaries, or otherwise,
other than as stated in this Agreement. No oral or written representations have been made, or oral or written information furnished,
to the Buyer or its Advisors, if any, in connection with the offering of the Notes.

n.
Authorization; Enforcement. The Buyer has the requisite power and authority to enter into and perform this Agreement
and to purchase the Securities. The execution, delivery and performance of this Agreement and the Securities by the Buyer and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or
partnership action, and no further consent or authorization of the Buyer or its Board of Directors, stockholders, partners, members,
as the case may be, is required. This Agreement has been duly authorized, executed and delivered by the Buyer and upon execution
of this Agreement by the Company, constitute, or shall constitute when executed and delivered, a valid and binding obligation of
the Buyer enforceable against the Buyer in accordance with the terms hereof and thereof, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

o.
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Buyer of
the transactions contemplated hereby and thereby or relating hereto do not and will not (i) if the Buyer is not an individual,
result in a violation of the Buyer’s charter documents or bylaws or other organizational documents or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of any agreement, indenture or instrument or obligation to which
the Buyer is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to the Buyer or its properties (except for such
conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on the Buyer).
The Buyer is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase
the Securities in accordance with the terms hereof.

p.
SEC Filings.The Buyer has reviewed, or had an opportunity to review, all of the SEC Filings and “Forward
Looking Statements” disclaimers contained therein.  In addition, the Buyer has reviewed and acknowledges it has
such knowledge, sophistication, and experience in securities matters, and understands the risks related to the Company, including
without limitation to, the “Risk Factors’ in the 10K form filed on April 30, 2020, which the Company has made available
through the EDGAR system.

q.
Restricted Securities.   Buyer understands that the Securities have not been registered under the
1933 Act and such Buyer will not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities unless
pursuant to an effective registration statement under the 1933 Act, or unless an exemption from registration is available.  Notwithstanding
anything to the contrary contained in this Agreement, such Buyer may transfer (with an opinion of counsel satisfactory to the Company
and its counsel) the Securities to its Affiliates (as defined below), provided that each such Affiliate is an “accredited
investor” under Regulation D and such Affiliate agrees to be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or entity means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such person or entity.  Affiliate includes
each subsidiary of the Company.  For purposes of this definition, “control” means the power to direct the
management and policies of such person or firm, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

3.
Representations and Warranties of the Company. The Company represents and warrants to the Buyer that, except as otherwise
disclosed in the Company’s public filings and reports with the SEC:

 

a.
Organization and Qualification. The Company and each of its subsidiaries, if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry on its business, such that the failure to so qualify
would not have a material adverse effect on the assets or business of the Company, its subsidiaries, or the ability of the Company
to perform its obligations hereunder.

 

b. Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, and
to consummate the transactions contemplated hereby and to issue the Securities, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, by the Company and the consummation by it of the transactions contemplated
hereby (including without limitation, the issuance of the Note and the Warrant and the issuance and reservation for issuance of
the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of
Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii)
this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative
is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith
and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Buyer, will constitute,
a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights
and remedies.

c.
Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the
Note and the Warrant in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and 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 Company and will not impose personal liability upon the holder thereof.

 

d.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common
Stock upon the issuance of the Conversion Shares upon conversion of the Note and exercise of the Warrant. The Company further acknowledges
that its obligation to issue Conversion Shares upon conversion of the Note and exercise of the Warrant in accordance with the respective
terms thereof, is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests
of other shareholders of the Company.

 

e.
No Conflicts. The execution, delivery and performance of this Agreement, the Note and the Warrant by the Company
and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance
and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of
the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute
a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which
the Company or any of its subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject) applicable to the Company or any of its subsidiaries or by which any property
or asset of the Company or any of its subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the aggregate, have a material adverse effect). All
consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence
have been obtained or effected on or prior to the date hereof.

 

f.
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company or any of its subsidiaries, or their officers or directors in their capacity
as such, that could have a material adverse effect.

 

g.
Acknowledgment Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer
is acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer
or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company further represents
to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation
by the Company and its representatives.

 

h.
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the Securities Act of the issuance of the Securities to the Buyer. The issuance of the Securities
to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.

 

4.
Expenses. Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants,
appraises or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby whether or
not the transactions contemplated hereby are consummated.

5.
Miscellaneous.

 

a.
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada
without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard exclusively
in federal or state court sitting in Clark County, Nevada, and expressly consent to the jurisdiction and venue of the Supreme Court
of Nevada, sitting in Douglas County and the United States District Court for the District of Nevada for the adjudication of any
civil action asserted pursuant to this paragraph. The Company and Buyer waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. 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 Agreement 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 Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner
permitted by law.

b.
Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile or other electronic transmission of a copy of this Agreement bearing the signature of the party
so delivering this Agreement.

 

c.
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect
the interpretation of, this Agreement.

 

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

 

e.
Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest
of the Buyer and by the Company.

f.
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in this Agreement, whenever Buyer
exercises a right, election, demand or option under this Agreement and the Company does not timely perform its related obligations
within the periods therein provided, then Buyer may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and
rights; provided, however, that, in the case of a rescission of a conversion of a Note or exercise of a Warrant,
the applicable Buyer shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise
notice concurrently with the return to such Buyer of the aggregate exercise price paid to the Company for such shares and the restoration
of such Buyer’s right to acquire such shares pursuant to such Buyer’s Warrant (including, issuance of a replacement
warrant certificate evidencing such restored right).

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

 

If to the Company,
to:

 

Red Cat Holdings,
Inc.

1607 Ponce
De Leon Avenue

Suite 407

San Juan, Puerto
Rico 00909

Attn: Jeffrey M. Thompson, Chief Executive
Officer 

 

 

With a copy to (which copy should not constitute a notice hereunder):

 

The Crone
Law Group P.C.

500 Fifth Avenue

Suite 938

New York,
NY 10110

Attn:
Mark Crone

 

If to the Buyer:

 

[  ]

_______________________

 

_______________________

    Attn:
[  ]

 

 

Each party shall provide
notice to the other party of any change in address.

 

h.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other.

 

i.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

j.
Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement
shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. Each
party agrees to indemnify and hold harmless the other party and all their officers, directors, employees and agents for loss or
damage arising as a result of or related to any breach or alleged breach by such party of any of its representations, warranties
and covenants set forth in this Agreement.

 

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

 

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

 

[Remainder of Page Intentionally Omitted;
Signature Page to Follow]

    	 

    	 

    

 

 

IN WITNESS WHEREOF, the
undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

 

 

RED CAT HOLDINGS, INC.

 

 

 

By: _______________________________

Jeffrey M. Thompson

President and Chief Executive Officer 

 

 

 

[    ]

 

 

By:________________________________

Name:

Title:

 

SUBSCRIPTION AMOUNT:

 

 

	Aggregate Principal Amount of Note:    	$[  ].00

 

    	 

    	 

    

  

RED
CAT HOLDINGS, INC.

 

ACCREDITED
INVESTOR CERTIFICATION

 

For
Individual Investors Only

(all
Individual Investors must CHECK one)

(
) (A) a natural person whose individual net worth, or joint net worth with that person's spouse (not counting the primary residence),
at the time of his purchase exceeds $1,000,000;

 

(
) (B) a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income
level in the current year;

 

(
) (C) a natural person who is a director, executive officer, or general partner of the issuer of the securities being offered
or sold, or any director, executive officer, or general partner of a general partner of the issuer;

 

(
) (D) a natural person who holds a Series 7, 65 or 82 license in good standing or who holds certain other educational or professional
certifications designated or approved by the SEC;

 

(
) (E) a natural person who qualifies as a “knowledgeable employee,” as defined in 17 CFR § 270.3c-5, of a particular
private fund solely with respect to an investment in such private fund;

 

(
) (F) a bank as defined in Section 3(a)(2) of the Securities Act or a savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance Partnership as defined in Section 2(13) of the Securities
Act; an investment Partnership registered under the Investment Partnership Act of 1940 or a business development Partnership as
defined in Section 2(a)(48) of that Act; a Small Business Investment Partnership licensed by the U.S. Small Business Administration
under Section 301 (c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees if such
plan has total assets in excess of $5,000,000; or an employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA"), if the investment decision is made by a plan fiduciary, as defined in Section 3 (21)
of ERISA, which fiduciary is either a bank. savings and loan association, insurance Partnership or registered investment adviser,
or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are Accredited Investors (as listed in categories (A)-(G)),

 

(
) (G) a private business development partnership as defined in Section 202(a)(22) of the Investment Advisors Act of 1940;

 

(
) (H) an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business
trust, or a partnership, with total assets in excess of $5,000,000, and which was not formed for the specific purpose of acquiring
the Interests;

 

(
) (I) a trust, with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the Interests whose
purchase is directed by a person who has knowledge and experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in Interests;

 

(
) (J) any entity registered as an investment adviser pursuant to Section 203 of the Investment Advisers Act of 1940 or applicable
state laws;

 

(
) (K) any entity qualifying as “Rural Business Investment Company” as defined in Section 384(A)(14) of the Consolidated
Farm and Rural Development Act;

 

(
) (L) any entity, including Native American tribes, labor unions, government bodies, funds, limited liability companies, etc.,
owning “investments” as defined in 17 CFR § 270.2a51-1(b) in excess of $5,000,000 which is not formed for the
purpose of acquiring the Interests offered herein;

 

(
) (M) any “family office” or “family client” each as defined in 17 CFR § 275.202(a)(11)(G)-1: (a)
having at least $5,000,000 in assets under management; (b) which was not formed for the purpose of acquiring the Interest offered
herein; (c) whose prospective investments are managed by “a person who has such knowledge and experience in financial and
business matters that such family office is capable of evaluating the merits and risk of the prospective investment.”

 

(
) (N) an entity in which all of the equity owners are "accredited investors" (as listed in categories (A)-(L)).

    	 

    	 

    

RED CAT HOLDINGS,
INC.

 

For Non-U.S. Person Investors

(all Investors who are not a U.S. Person must INITIAL
this section):

 

	Initial _______	The investor is not a “U.S. Person” as defined in Regulation S; and specifically, the investor is not:
	 	 
	A.	a natural person resident in the United States of America, including its territories and possessions (“United States”);
	 	 
	B.	a partnership or corporation organized or incorporated under the laws of the United States;
	 	 
	C.	an estate of which any executor or administrator is a U.S. Person;
	 	 
	D.	a trust of which any trustee is a U.S. Person;
	 	 
	E.	an agency or branch of a foreign entity located in the United States;
	 	 
	F.	a non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person;
	 	 
	G.	a discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; or
	 	 
	H.	a partnership or corporation: (i) organized or incorporated under the laws of any foreign jurisdiction; and (ii) formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.
	 	 
	And, in addition:	 
	 	 
	I.	the investor was not offered the securities in the United States;
	 	 
	J.	at the time the buy-order for the securities was originated, the investor was outside the United States; and
	 	 
	K.	the investor is purchasing the securities for its own account and not on behalf of any U.S. Person (as defined in Regulation S) and a sale of the securities has not been pre-arranged with a purchaser in the United States.

  

    	 

    	 

    

RED CAT HOLDINGS,
INC.

 

Investor Profile

(Must be completed by Investor)

Section A - Personal
Investor Information

Investor Name(s): ____________________________________________________________________________________

Individual executing Profile or Trustee: ___________________________________________________________________

Social Security Numbers / Federal I.D. Number: ____________________________________________________________

 

Date of Birth:                          ________________________                   Marital Status: _____________________________

Joint Party Date of Birth:     ________________________                   Investment Experience
(Years): ________________

Annual Income:                     ________________________                   Liquid Net Worth: __________________________

Net Worth*:                            ________________________

Tax Bracket:                          _____ 15% or below                     _____ 25% - 27.5%                     _____ Over 27.5%

Home Street Address: _________________________________________________________________________________

Home City, State & Zip Code: __________________________________________________________________________

Home Phone: _____________________   Home Fax: _____________________   Home
Email: _____________________

Employer: __________________________________________________________________________________________

Employer Street Address: ______________________________________________________________________________

Employer City, State & Zip Code: _______________________________________________________________________

Bus. Phone: ____________________          Bus. Fax: ____________________           Bus.
Email: ____________________

Type of Business: ____________________________________________________________________________________

Outside Broker/Dealer: ________________________________________________________________________________

 

Section B –
Certificate Delivery Instructions

____ Please deliver Note to the Employer Address listed in Section A.

____ Please deliver Note to the Home Address listed in Section A.

____ Please deliver Note to the following address: __________________________________________________________

 

 

Please check if you are a FINRA member or affiliate of a FINRA
member firm: ____

	_____________________________	 	_______________________
	Investor Signature	 	Date

 

*
For purposes of calculating your net worth in this form, (a) your primary residence shall not be included as an asset;
(b) indebtedness secured by your primary residence, up to the estimated fair market value of your primary residence at the time
of your purchase of the securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding
at the time of your purchase of the securities exceeds the amount outstanding 60 days before such time, other than as a result
of the acquisition of your primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness
that is secured by your primary residence in excess of the estimated fair market value of your primary residence at the time of
your purchase of the securities shall be included as a liability

    	 	 	 

     

    

ANTI MONEY LAUNDERING REQUIREMENTS

The USA PATRIOT Act

The USA PATRIOT Act is designed to detect,
deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage
firms and financial institutions. Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money
laundering programs.

To help you understand these efforts,
we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.

What is money laundering?

Money laundering is the process of disguising
illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection
with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.

How big is the problem and why is
it important?

The use of the U.S. financial system
by criminals to facilitate terrorism or other crimes could well taint our financial markets. According to the U.S. State Department,
one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.

What are we required to do to eliminate
money laundering?

Under rules required by the USA PATRIOT
Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent
audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with such laws.
As part of our required program, we may ask you to provide various identification documents or other information. We will ask you
for your name, address, date of birth and other information that will allow us to identify you. We will ask to see a non-expired
valid issued government identification, such as your driver’s license or other identifying documents. Until you provide the
information or documents we need, we may not be able to effect any transactions for you.

    	 

    	 

    

ANTI-MONEY LAUNDERING INFORMATION FORM

The following is required in accordance with
the AML provision of the USA PATRIOT ACT.

(Please fill out and return with requested
documentation.)

INVESTOR NAME: ____________________________________________

LEGAL ADDRESS: _____________________________________________

_____________________________________________

SSN# or TAX ID#

OF INVESTOR:     _____________________________________________

FOR INVESTORS WHO ARE INDIVIDUALS:

YEARLY
INCOME:  ____________________          AGE: _____________

NET WORTH (excluding value of primary
residence):  ________________

OCCUPATION:  ________________________________________________

ADDRESS OF EMPLOYER:______________________________________

  ______________________________________

INVESTMENT OBJECTIVE(S):
___________________________________

IDENTIFICATION & DOCUMENTATION
AND SOURCE OF FUNDS:

		1.	Please submit a copy of non-expired identification for the authorized signatory(ies) on the investment
documents, showing name, date of birth, address and signature. The address shown on the identification document MUST match the
Investor’s address shown on the Investor Signature Page.

	Current Driver’s License	or	Valid Passport	or	Identity Card

(Circle one or more)

		2.	If the Investor is a corporation, limited liability company, trust or other type of entity, please
submit the following requisite documents: (i) Articles of Incorporation, By-Laws, Certificate of Incorporation, Bylaws, Trust or
other similar documents for the type of entity; and (ii) Corporate Resolution or power of attorney or other similar document granting
authority to signatory(ies) and designating that they are permitted to make the proposed investment.

		3.	Please advise where the funds were derived from to make the proposed investment:

	Investments	Savings	Proceeds of Sale	Other ____________

(Circle one or more)

Signature:  ____________________________________

Print Name:  ___________________________________

Title (if applicable):  _____________________________

Date:  ________________________________________

 

    	 	 	 

     

    

EXHIBIT A

 

Convertible Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

EXHIBIT B

 

Common Stock Purchase WarrantExhibit 10.2

 

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

RED
CAT HOLDINGS, INC.

Convertible
Note

	Issuance Date:  [    ]	Original Principal Amount:$[   ].00
	 	 
	 	 

FOR VALUE RECEIVED,
RED CAT HOLDINGS, INC., a Nevada corporation (the "Company"), hereby promises to pay to [ ] or his registered
assign (the "Holder"), the amount set out above as the Original Principal Amount when due, whether upon the Maturity
Date (as defined below), acceleration or otherwise (in each case in accordance with the terms hereof) and to pay interest ("Interest")
on the outstanding Principal Amount at the Interest Rate (as defined below) from the date set out above as the Issuance Date (the
"Issuance Date") until the same becomes due and payable, upon the Maturity Date, acceleration or conversion (in
each case in accordance with the terms hereof).

(1)
GENERAL TERMS

(a)
Payment of Principal. The "Maturity Date" shall be two years from the Issuance Date, unless an Event
of Default (as defined below) shall have occurred and be continuing.

(b)
Interest. Interest shall accrue at a rate of 12% (“Interest Rate”) per annum and shall be applied
to the outstanding Original Principal Amount. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein)
to the Holder or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers
of Notes in cash, or in shares of common stock of the Company (the “Common Stock”) at the Conversion Price (as
defined below).

(c)
Security. This Note shall not be secured by any collateral or any assets pledged to the Holder.

(i)
Prepayment. Notwithstanding anything contained herein to the contrary, the Company shall have the right to prepay
all or any portion of the outstanding Principal Amount and accrued interest thereon, without penalty or premium, upon no less than
ten business days' prior notice to the Holder provided that (i) such amount must be paid in cash on the next business
day following such 10 business day notice period, and (ii) the Holder may still convert this Note pursuant to the terms hereof
at all times until such prepayment amount has been received in full.

(2) 
TERMS OF FUTURE FINANCINGS. 

(a)  
So long as this Note is outstanding, upon any issuance by the Company of any security, or an amendment to a security that
was issued before the date hereof, with any term that the Holder reasonably believes is more favorable to the holder of such security
or with a term in favor of the holder of such security that the Holder reasonably believes was not similarly provided to the Holder,
(I) the Company shall notify the Holder of such additional or more favorable term within one (1) business day of the issuance
and/or amendment (as applicable) of the respective security, and (ii) such term, at Holder's option, shall become a part
of this Note regardless of whether the Company has complied with the notification provision of this section. The types of terms
contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms
addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, and original issue discounts. Notwithstanding
the foregoing, the issuance of any security which is an Exempt Issuance (as defined below) shall not entitle to the Holder to such
more favorable term.

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

(i)
"Conversion Amount" means the portion of the Original Principal Amount and interest to be converted.

(ii)
"Conversion Price" shall be the lower of (a) $1.00, if the conversion herein occurs prior a Qualified Offering,
or (b) a 25% discount of the price per share of Common Stock offered in the Qualified Offering, if the conversion herein occurs
simultaneous with the Qualified Offering.

(iii)
“Exempt Issuance” shall mean the issuance of (a) shares of Common Stock or options to employees, officers
or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Shares issued hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Agreement, unless an amendment thereto effects or changes
the conversion price thereof or provides the holder thereof with a term which is more favorable than the term on effect as of the
date hereof (in which case such amendment would not be considered an Exempt Issuance), and (c) securities issued pursuant to acquisitions
or strategic transactions approved by the Board of Directors of the Company.

(iv)
“Qualified Offering” shall mean an offering of Common Stock (and other securities potentially) resulting
in the listing for trading of the Common Stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

(v)
“VWAP” means the thirty (30) day volume weighted average of the closing price of a share of Common Stock
as listed or quoted on the market in which the shares of the Company are then traded or listed.

(a) Optional
Conversion. The Holder may, in its sole discretion, determine to convert all or part of the outstanding Principal Amount due
hereunder and any accrued interest thereon into fully paid and nonassessable shares of Common Stock at the Conversion Price. The
number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal
to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share
of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer
agent fees, legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of shares
of the Company's Common Stock to the Holder arising out of or relating to the conversion of this Note; provided, however,
that the Holder shall pay any transfer taxes.

(b) 
Mandatory Conversion. Simultaneous with the consummation of a Qualified Offering, the outstanding Principal Amount
due hereunder and all accrued interest hereon shall automatically be converted into fully paid and nonassessable shares of Common
Stock at the Conversion Price. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant
to this Section 3(b) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall
not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction
of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The
Company shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred or charged
in connection with the issuance of shares of the Company's Common Stock to the Holder arising out of or relating to the conversion
of this Note; provided, however, that the Holder shall pay any transfer taxes.

(c)
Conversion Notice.

(i)
To convert any portion of this Note into shares of Common Stock on any date (a "Conversion Date") pursuant
to Section 3(a), the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 5:30 p.m.,
Pacific Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion
Notice") to the Company. On or before the tenth business day following the date of receipt of a Conversion Notice (the
"Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common
Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided
that the transfer agent for the Company is participating in the Depository Trust Company's ("DTC") Fast Automated
Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the
Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if a restrictive
legend is required to be placed on the certificates of Common Stock, issue and deliver to the address as specified in the Conversion
Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which
the Holder shall be entitled, with a restrictive legend imposed thereon.

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

(d) 
Limitations on Conversions or Trading.

(i)
Beneficial Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the
right to convert any portion of this Note or receive shares of Common Stock as payment of interest hereunder to the extent that
after giving effect to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would
beneficially own (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect
to such conversion or receipt of shares as payment of interest. Since the Holder will not be obligated to report to the Company
the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result
in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any
other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation
to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal
amount of this Note is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion
Notice for a principal amount of this Note that, without regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact
and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance
with Section 3(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding
under this Note. The provisions of this Section may be waived by Holder upon written notification to the Company.

(e)   Dilutive
Issuance. If the Company, at any time while this Note is 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 of any option to
purchase or other disposition), any Common Stock or other securities convertible into, exercisable
for, or that otherwise entitle any person or entity the right to acquire, shares of Common
Stock,
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, or exchange prices or otherwise, 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. If the Company enters into a variable rate transaction the
Company shall be deemed to have issued Common Stock pursuant to this provision at the lowest possible price per
share at which such securities could be issued in connection with such variable rate transaction. Such adjustment shall be
made whenever such Common Stock or other securities are issued. Notwithstanding the foregoing, no adjustment will be made
under this Section 3(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 3(e) shall be calculated as if all such securities were issued
at the initial closing.

(f)  
Other Provisions.

(i)
The Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of
Common Stock issuable upon conversion of all outstanding amounts under this Note.

(ii)
All calculations under this Section 3 shall be rounded off to the nearest $0.001.

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

(4)
EVENTS OF DEFAULT. 

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

(i)
The Company's failure to pay to the Holder any amount of the then outstanding Original Principal Amount or Interest when
and as due under this Note;

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

(iii)
The Company shall default in any of its obligations under this Note;

(iv)
That upon any event of default (as defined herein) after the Issue Date, the Conversion Price shall equal the lower of (I)
the VWAP, if the conversion herein occurs prior a Qualified Offering, or (ii) sixty percent (65%) multiplied by the lowest closing
price of the Common Stock during the twenty (20) consecutive trading day period immediately preceding the date of the respective
conversion (the “Alternate Conversion Price”);

(v)
The Company (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) reserve the reserved amount at all times, or (iii) the Company 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 Company 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 Company to the Holder within forty-eight (48) hours of a demand from the Holder;

(vi)
 The Company shall fail to maintain the listing of the Common Stock on at least one of the Over the Counter Bulletin
Board, the OTCQB Market, any level of the OTC Markets, or any level of the Nasdaq Stock Market or the New York Stock Exchange (including
the NYSE American);

(vii)
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;

(viii)     
The failure by the Company 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);

(ix)
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;

(x)
In the event that the Company proposes to replace its transfer agent and the Company fails to provide, prior to the effective
date of such replacement, a fully executed irrevocable transfer agent letter (including but not limited to a provision to irrevocably
reserve shares of Common Stock in the reserved amount) signed by the successor transfer agent and the Company;

(xi)
The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC's services, such as limiting
a DTC participant's ability to make a deposit or withdrawal of the security at DTC) on any of the Borrower's securities;

(xii)
In addition to the Event of Default in this section, the Common Stock is otherwise not eligible for trading through the
DTC's Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs; and

(xiii)     
If, at any time on or after the date which is six (6) months after the Issue Date, except due to the Holder's actions
or inactions, 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.

(b)
Upon notice by Holder and during the continuation of any Event of Default specified in this section, this Note shall become
immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount
(the “Default Amount”) equal to the principal amount then outstanding plus accrued interest (including any default
interest) through the date of full repayment multiplied by 130%. Holder may, in its sole discretion, determine to accept payment
part in Common Stock and part in cash. Upon an uncured Event of Default, all amounts payable hereunder shall immediately become
due and payable, all without demand, presentment or notice, all of which hereby are expressly waived by the Company, together with
all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise
all other rights and remedies available at law or in equity, including, without limitation, those set forth herein.

(5)
REISSUANCE OF THIS NOTE.

(a)
Assignability. This Note will be binding upon the Company and its successors and will inure to the benefit of the
Holder and its successors and assigns and may be assigned by the Holder with prior written consent of the Company, which consent
shall not be unreasonably withheld.

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

(6) 
APPLICABLE LAW AND VENUE. This Note shall be governed by and interpreted in accordance with the laws of the State
of Nevada without regard to the principles of conflict of laws. The parties further agree that any action between them shall be
heard exclusively in federal or state court sitting in the Douglas County, Nevada, and expressly consent to the jurisdiction and
venue of the Supreme Court of Nevada, sitting in Douglas County for the adjudication of any civil action asserted pursuant to this
paragraph. The Company and the Holder waive trial by jury. 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 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 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.

(7)
WAIVER. Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in
writing.

 

[Remainder of Page Intentionally Omitted;
Signature Page Follows]

 

    	 

    	 

    

 

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

 

 

 

Red Cat Holdings, Inc.

 

 

By: _______________________________

Jeffrey M. M. Thompson

President and Chief Executive Officer 

      

    	 	 	 

     

    

 

	EXHIBIT A	 
	NOTICE OF CONVERSION	 
	
         

         

         

        Red Cat Holdings, Inc.

        1607 Ponce De Leon Avenue

        Suite 407

        San Juan, Puerto Rico 00909

        Attn: Jeffrey M. Thompson, President 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
        The undersigned hereby elects to convert [all] [a portion] of the
        $[ ] Convertible Note issued to [ ] on [ ], 202[ ] into shares of Common Stock of Red Cat Holdings, Inc. according to the conditions
        set forth in such Note as of the date written below.

         

        shares of Common Stock (pursuant to a Cashless Exercise in accordance
        with Section 1(b)(ii) of the Warrant) (check here if the undersigned desires to deliver an unspecified number of shares equal to
        the number sufficient to effect a Cashless Exercise [___]).
	 
	 	 
	By accepting this notice of conversion, you are acknowledging that the number of shares to be delivered represents less than 10% (ten percent) of the common stock outstanding.  If the number of shares to be delivered represents more than 9.99% of the common stock outstanding, this conversion notice shall immediately automatically extinguish and the Holder must be immediately notified.	 
	 	 	 	 	 	 	 	 	 	 
	Date of Conversion:			 
	Conversion Amount:			 
	Conversion Price:			 
	Shares
    to be Delivered:			 
	 	 	 	 
	EIN:	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
        By:________________________________

        Name:

        Title:

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