Document:

Exhibit 10.1

 

NON-EXCLUSIVE
SUB-DISTRIBUTION AGREEMENT

THIS
NON-EXCLUSIVE SUB-DISTRIBUTION AGREEMENT (this “Agreement”) is entered into effect as of the 3rd day of
April, 2020 (the “Effective Date”) by and between KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware
corporation (“Distributor”), and FAVS BUSINESS, LLC, a Georgia limited liability company (“Sub-Distributor”).
Distributor and Sub-Distributor are each referred to herein as a “Party” and collectively, the “Parties.”

RECITALS

WHEREAS,
Bidi Vapor, LLC, a Florida limited liability company (“Manufacturer”), is in the business of developing electronic
nicotine delivery systems and related components (all such products whether now or hereafter made available for sale by Manufacturer
being hereinafter referred to as “Products”).

WHEREAS,
Distributor has entered into that certain Exclusive Distribution Agreement dated March 9, 2020 (as the same may be amended or
otherwise modified from time to time, the “Distribution Agreement”) with Manufacturer pursuant to which Manufacturer
has granted Distributor an exclusive worldwide right to distribute the Products for sale and resale to both retail level customers
(“Retail Customers”) and non-retail level customers, including without limitation, to wholesale customers and
sub-distributors (“Non-Retail Customers”).

WHEREAS,
subject to the terms and conditions of this Agreement, Sub-Distributor wishes to be appointed, and Distributor is willing to appoint
Sub-Distributor, as a non-exclusive sub-distributor of the Products solely to Non-Retail Customers (“Non-Retail Customers”)
located within the Continental United States (the “Territory”; all Non-Retail Customers located within the
Territory being hereinafter referred to as “Authorized Customers”).

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual representations and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Distributor and Sub-Distributor,
intending to be legally bound, hereby agree as follows:

1.                 
APPOINTMENT; NO EXCLUSIVITY; MARKETING AND SUPPORT.

A.               
Appointment; No Exclusivity. Subject to the terms and conditions set forth in this Agreement, Distributor hereby appoints
Sub-Distributor as a non-exclusive sub-distributor of the Products solely to Authorized Customers. Sub-Distributor accepts the
appointment as one of Distributor’s non-exclusive sub-distributors of the Products solely to Authorized Customers and agrees
to buy for resale, upon the terms and conditions set forth herein, Products in such quantities as Sub-Distributor shall need to
properly service the market comprised solely of Authorized Customers. Distributor represents and warrants that the appointment
of and sale of Products to Sub-Distributor under this Agreement does not violate any obligations or contracts of Distributor.
As a condition of appointment hereunder, Sub-Distributor agrees not to represent or sell other products which Distributor may
reasonably determine to be competitive with the Products, without written approval from Distributor, to be given or withheld in
Distributor’s sole and absolute discretion. For purposes of clarification, during the term of this Agreement (i) Distributor
shall be free to sell any Products to any Non-Retail Customer located within the Territory (i.e., Sub-Distributor’s rights
hereunder are non-exclusvie) and (ii) Sub-Distributor will not directly sell any Products to any Retail Customer anywhere in the
world or to any Non-Retail Customer located outside of the Territory.

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B.                
Marketing and Support. Distributor will be solely responsible to provide Sub-Distributor with all branding, logos and marketing
materials to be utilized by Sub-Distributor in connection with Sub-Distributor’s marketing and promotion of the Products;
provided, however, Sub-Distributor shall bear all expenses related to reproduction and distribution of the same. Sub-Distributor
agrees to use its best efforts to promote, develop a market, sell, and distribute the Products to Authorized Customers. Among
such other actions as may be necessary to generate sales of the Products, Sub-Distributor will perform at its expense and to the
reasonable satisfaction of Distributor the following duties:

		i.	Sub-Distributor
                                         will engage in sales promotion activities in which Products shall be designated by their
                                         correct names and identified as Products of Manufacturer being marketed by Sub-Distributor
                                         as an independent distributor.

		ii.	Sub-Distributor
                                         will process all sales by Sub-Distributor to Authorized Customers.

		iii.	Sub-Distributor
                                         shall at all times conduct its business in a manner that will reflect favorably on Manufacturer,
                                         Distributor and the Products and will not engage in any deceptive, misleading, illegal
                                         or unethical business practice. In performing its obligations hereunder, Sub-Distributor
                                         agrees not to make any representations or give any warranties or guarantees to any person
                                         with respect to the Products, other than in compliance with Section 7.A. hereof or otherwise
                                         expressly authorized in writing by Distributor.

		iv.	Sub-Distributor
                                         will comply with all applicable laws and regulations and will not assist or participate
                                         in any violation of laws or regulations applicable to Manufacturer, Distributor or Sub-Distributor.

 

Sub-Distributor
shall be responsible for all expenses incurred by it in connection with the implementation and performance of its duties and obligations
under this Agreement, including, without limitation: (i) salaries or compensation for its personnel; (ii) costs and expenses associated
with establishing and maintain its sales organization and offices; and (iii) marketing, advertising and promotion expenses.

2.                 
PURCHASE ORDERS; PRICING.

A.               
Purchase Orders. Sub-Distributor shall order Products in accordance with the terms and conditions of this Agreement. Each
order for the purchase of Products (a “Purchase Order”) must be submitted to Distributor by Sub-Distributor
by email or Distributor’s electronic data interchange (EDI) system. Each Purchase Order shall specify (i) the quantity of
Products being ordered, (ii) the applicable Wholesale Minimum Price for the Products ordered, (iii) the price to be paid by Sub-Distributor
to Distributor for the Products ordered, (iv) payment terms granted by Distributor, and (v) the requested receipt date and delivery
instructions for the applicable Products ordered. Receipt dates must be during the term of this Agreement, except Sub-Distributor
may request, subject to Distributor’s acceptance in Distributor’s sole and absolute discretion, a Purchase Order with
a requested receipt date after the expiration or termination of this Agreement, in which case, if accepted by Distributor, the
terms and conditions of this Agreement shall apply to such shipment, but under no circumstances should such shipment be deemed
to be or construed as being a renewal or extension of this Agreement or the exclusivity rights granted to Sub-Distributor herein.
The Parties agree that to the extent that any of the terms and conditions of this Agreement conflict or are inconsistent with
the terms or conditions of any Purchase Order submitted by Sub-Distributor, the terms and conditions of this Agreement shall prevail
and control to the extent of any such conflict or inconsistency, unless the Purchase Order containing such conflicting or inconsistent
terms and conditions is countersigned by Distributor, in which case the terms and conditions set forth in such Purchase Order
shall prevail and control to the extent of any such conflict or inconstancy.

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B.                
Acceptance of Purchase Order. A Purchase Order submitted by Sub-Distributor shall be deemed to have been accepted by, and
shall be binding upon, Distributor when it is countersigned by Distributor or if it is not rejected by Distributor, in whole or
in part, by written notice to Sub-Distributor sent within five (5) business days of its receipt by Distributor. Notwithstanding
anything contained herein to the contrary, Distributor may only reject, cancel, or delay any Purchase Order placed by Sub-Distributor,
whether or not such Purchase Order has been previously accepted by Distributor, pursuant to Section 3.B. below. In the event Distributor
is unable to fill all of a Purchase Order for any reason, it shall promptly notify Sub-Distributor and Sub-Distributor shall have
the right, in its discretion, to cancel the subject Purchase Order. Sub-Distributor may change or cancel any of its Purchase Orders
without penalty so long as Sub-Distributor provides written notice to Distributor and the Products have not yet been shipped;
provided that Sub-Distributor shall pay to Distributor a fee of twenty five percent (25%) of the aggregate purchase price of the
Products that are subject to any Purchase Order which has been materially changed or canceled by Sub-Distributor.

C.               
Invoices and Payment Terms. Distributor shall send Sub-Distributor invoices via mail or email for each shipment. Sub-Distributor
shall notify Distributor in writing if Sub-Distributor disputes any charges set forth on an invoice within fifteen (15) calendar
days after receipt of such invoice, specifying in reasonable detail the items disputed and basis for the dispute. Thereafter,
the Parties will work in good faith to resolve such dispute as quickly as is reasonably possible. If any such dispute is not resolved
within thirty (30) calendar days after Sub-Distributor’s receipt of the applicable invoice, then Distributor may suspend
any further shipments of Products under this Agreement until such time as the dispute is resolved and all amounts agreed upon
by the Parties to be due are paid in full. All undisputed amounts on each invoice are due and payable within thirty (30) calendar
days from the date of Sub-Distributor’s receipt of the invoice. Payments due hereunder must be made, at Sub-Distributor’s
option, by ACH, wire transfer, certified check or such other method as may be agreed to by the Parties. Distributor reserves the
right to change or modify payment terms upon thirty (30) calendar days’ written notice to Sub-Distributor at any time following
a default by Sub-Distributor of its payment obligations under this Agreement with such changes or modifications to be effective
for Purchase Orders submitted after such thirty (30) calendar day period. Invoices will be issued upon shipment of the Product
to Sub-Distributor or to Sub-Distributor’s customer via direct shipment.

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D.               
Prices; Price Reductions. Distributor has a legitimate interest in ensuring that a minimum price be maintained for all sales
by Sub-Distributor of its Products. Accordingly, Distributor will establish minimum pricing for all sales by Sub-Distributor of
its Products to Authorized Customers (“Wholesale Minimum Price”) and Sub-Distributor will not sell any Products
to Authorized Customers below the applicable Wholesale Minimum Price. The initial Wholesale Minimum Price for the Products are
included as Exhibit A attached hereto. Sub-Distributor agrees to pay Distributor the price per Product identified in Exhibit
A attached hereto. Distributor retains the right to make changes to Wholesale Minimum Pricing and Sub-Distributor pricing
upon providing not less than three (3) days’ prior written notice to Sub-Distributor. Any price reduction to the Wholesale
Minimum Pricing or Sub-Distributor pricing with respect to affected Products shall apply to Purchase Orders that have not yet
been accepted or deemed accepted by Distributor and Purchase Orders thereafter submitted by Sub-Distributor. Any price increase
to the Wholesale Minimum Pricing or Sub-Distributor pricing with respect to affected Products shall apply to Purchase Orders thereafter
submitted by Sub-Distributor; provided that Sub-Distributor shall have the right, at its option, to cancel, in whole or in part,
any outstanding Purchase Orders for affected Products not yet accepted by Distributor. Prices do not include, and Distributor
shall not be responsible for any required federal, state or local sales or other taxes, duties, export or custom charges, VAT
charges, brokerage or other fees.

E.                
Past Due Amounts. If any undisputed amount due Distributor by Sub-Distributor, for any reason, becomes past due, Distributor
shall provide written notice to Sub-Distributor and, if such amounts remain outstanding for fifteen (15) calendar days following
receipt of such notice, Distributor may at its option and without further notice withhold further shipments or deliveries of Products
under this Agreement until such past due invoices are paid in full.

F.                
Taxes. Sub-Distributor shall be responsible for any national, state or local sales, use, value added, or other tax, tariff,
duty or assessment levied or imposed by the United States or any foreign governmental authority arising out of or related to any
of the transactions contemplated by this Agreement, including sales of Product to Sub-Distributor, other than taxes based upon
Distributor’s income. Sub-Distributor must pay directly, or reimburse Distributor for the amount of such sales, use, value
added or other tax, tariff, duty or assessment which Distributor is at any time obligated to pay or collect with respect to or
arising out of the sale of Products under this Agreement.

		3.	SHIPMENTS;
                                         PRODUCTS.

A.       Shipment
Terms; Title and Risk of Loss. All Products purchased by Sub-Distributor under this Agreement will be packaged for shipment
in Distributor’s and/or Manufacturer’s standard containers, marked for shipment to either Sub-Distributor or the applicable
Authorized Customer at the address specified by Sub-Distributor in the Purchase Order (the applicable destination being hereinafter
referred to as the “Destination”). All costs of shipment shall be paid by Distributor. Title and risk of loss
will pass F.O.B. Destination. Distributor shall ship Products on or before the requested receipt date designated in a Purchase
Order (provided that such receipt date is not less than twenty (20) business days after the Purchase Order is received by Distributor)
and shall promptly notify Sub-Distributor when Distributor knows or has reason to believe that a shipment will not be delivered
by the requested receipt date. Any expense for any special packaging or any special delivery requested by Sub-Distributor shall
be borne by Sub-Distributor.

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B.       Distributor’s
Right to Delay or Cancel. Notwithstanding Distributor’s obligations in this Agreement, Distributor may refuse, cancel
or delay any shipment of Products when Sub-Distributor is delinquent in any payment for more than (30) calendar days, or when
Sub-Distributor is in material breach of its obligations under this Agreement which has not been cured pursuant to Section 11.A.

C.       Acceptance
of Shipments. Sub-Distributor shall have ten (10) business days from the date of arrival of the shipment of the Products at
the applicable Destination to inspect the Products and notify Distributor in writing of any discrepancies with respect to such
Products, including but not limited to any discrepancies in the quantity or quality of the Products. Products with respect to
which Sub-Distributor does not notify Distributor of any discrepancies in writing shall be deemed accepted by Sub-Distributor.

D.
       Adding or Deleting Products; Manufacturing Changes to the Products. Distributor
shall have the right at any time upon seven (7) calendar days’ prior written notice to Sub-Distributor to add or delete
Products. Should Distributor want to make any changes to the Products, it shall first notify the Sub-Distributor at least seven
(7) calendar days before the change is implemented, and such changes shall be agreed to by the Parties in writing before shipment
of any Products which include any such changes. Notwithstanding the foregoing, for changes required by regulatory or certification
authorities or otherwise deemed necessary by Distributor for any reason, including health, safety, welfare, technology intellectual
property, trade secret, competitive, materials sourcing, or other matters, Distributor will notify Sub-Distributor at least three
(3) calendar days before the change is implemented, but Sub-Distributor’s approval of such changes shall not be required.

		4.	INTELLECTUAL
                                         PROPERTY RIGHTS.

A.               
Manufacturer’ Marks. Subject to the terms and conditions of this Agreement and the Distribution Agreement, during the
term of this Agreement, Distributor hereby grants to Sub-Distributor a revocable, sublicensable, non-transferable, non-exclusive,
limited license to use Manufacturer’s logos, trademarks, and trade names, together with all branding and marketing materials
created by or on behalf of Manufacturer in connection with the Products (collectively the “Manufacturer IP”),
solely in connection with the marketing, advertisement and sale of the Products to Authorized Customers. Such license shall immediately
terminate upon the expiration or termination of this Agreement. Sub-Distributor shall strictly comply with all standards of use
for the Manufacturer IP and must at all times display appropriate trademark and copyright notices as instructed by Distributor.
Sub-Distributor acknowledges and agrees that the Manufacturer IP and other intellectual property provided to Sub-Distributor by
Distributor, if any, are the sole and exclusive property of Manufacturer and/or Distributor, as applicable. Sub-Distributor shall
not acquire any right, title or interest under this Agreement in any patent, copyright, Manufacturer IP or other intellectual
property right of any kind of either Manufacturer or Distributor. No implied license, patent, copyright or other intellectual
property right of Manufacturer or Distributor is granted under this Agreement or otherwise. During the term of this Agreement
and thereafter, Sub-Distributor shall not do anything that will in any manner infringe, impeach, dilute or lessen the value of
the Manufacturer IP, patents, copyrights or other intellectual property of either Manufacturer or Distributor or the goodwill
associated therewith or that will tend to prejudice the reputation of the Manufacturer or Distributor or the sale of any Products.

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B.       Sub-Distributor
Marks. Subject to the terms and conditions of this Agreement, during the term of this Agreement, Sub-Distributor hereby grants
Distributor a non-exclusive, royalty free license to use Sub-Distributor’s logos, trademarks, and trade names (the “Sub-Distributor
Marks”) on Distributor’s web sites and marketing materials. Such license shall immediately terminate upon the
expiration or termination of this Agreement. Distributor shall strictly comply with all standards of use for the Sub-Distributor
Marks and must at all times display appropriate trademark and copyright notices as instructed by Sub-Distributor. Distributor
acknowledges and agrees that the Sub-Distributor Marks and other intellectual property provided to Distributor by Sub-Distributor,
if any, are the sole and exclusive property of Sub-Distributor. Distributor shall not acquire any right, title or interest under
this Agreement in any patent, copyright, Sub-Distributor Marks or other intellectual property right of any kind of Sub-Distributor.
No implied license, patent, copyright or other intellectual property right of Sub-Distributor is granted under this Agreement
or otherwise. During the term of this Agreement and thereafter, Distributor shall not do anything that will in any manner infringe,
impeach, dilute or lessen the value of the Sub-Distributor Marks, patents, copyrights or other intellectual property of Sub-Distributor
or the goodwill associated therewith or that will tend to prejudice the reputation of the Sub-Distributor.

 

		5.	CONFIDENTIAL
                                         INFORMATION.

A.               
Confidential Information. The Parties acknowledge and agree that during the term of this Agreement, each may receive confidential
information from the other Party. “Confidential Information” shall mean (i) information relating to a Party’s
and its affiliates’ products or business including, but not limited to, the business plans, financial records, customers,
suppliers, products, product samples, strategies, inventions, procedures, sales aids or literature, technical data, advice or
knowledge, contractual agreements, pricing, price lists, product white papers, plans, designs, specifications, and know-how or
other intellectual property, that may be at any time furnished, communicated or delivered by either Party to the other Party whether
in oral, tangible, electronic or other form and (ii) all other non-public information provided by one Party to the other including,
but not limited, to financial, technical and business information, and all non-promotional materials furnished by one Party to
another.

B.                
Exceptions. The “Receiving Party” shall not have any obligations to preserve the confidential nature of
any Confidential Information that (a) Receiving Party can demonstrate by competent evidence was rightfully in the Receiving Party’s
possession before receipt from the “Disclosing Party”; (b) is or becomes a matter of public knowledge through
no fault of the Receiving Party; (c) is rightfully received by Receiving Party from a third party without, to the best of Receiving
Party’s knowledge, a duty of confidentiality; (d) is independently developed by Receiving Party without use of the Confidential
Information; or (e) is disclosed by Receiving Party with Disclosing Party’s prior written approval.

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C.               
Use of Confidential Information; Standard of Care. The Receiving Party shall maintain the Confidential Information in confidence
and disclose the Confidential Information only to its employees, subcontractors and consultants who have a need to know such Confidential
Information in order to fulfill the business affairs and transactions between the Parties contemplated by this Agreement and who
are under confidentiality obligations no less restrictive as, or who have been advised of the confidentiality obligations set
forth in, this Agreement. The Receiving Party shall remain responsible for breaches of this Agreement arising from the acts of
its employees, subcontractors and consultants to whom it provides the Disclosing Party’s Confidential information. The Receiving
Party shall protect Confidential Information by using the same degree of care as Receiving Party uses to protect its own information
of a like nature, but no less than a reasonable degree of care, to prevent the unauthorized use, disclosure, dissemination, or
publication of the Confidential Information. The Receiving Party agrees not to use the Disclosing Party’s Confidential Information
for its own purpose other than in connection with the transactions contemplated by this Agreement or for the benefit of any third
party, without the prior written approval of the Disclosing Party. The Receiving Party shall promptly return or certify destruction
of all copies of Confidential Information upon request by the Disclosing Party or upon the expiration or earlier termination of
this Agreement.

D.               
Equitable Relief. The Receiving Party hereby agrees and acknowledges that any breach or threatened breach of this Agreement
regarding the treatment of the Confidential Information may result in irreparable harm to the Disclosing Party for which there
may be no adequate remedy at law. In addition to other remedies provided by law or at equity, in such event the Disclosing Party
shall be entitled to seek an injunction, without bond, preventing any further breach of this Agreement by the Receiving Party.

6.                 
INSURANCE. Distributor shall maintain, during the term of this Agreement, Commercial General Liability Insurance with minimum
limits, including under any General Liability Umbrella Policies, of not less than $2,000,000 combined single limit for bodily
injury and property damage on Products purchased by Sub-Distributor for resale. Distributor shall use commercially reasonable
efforts to provide Sub-Distributor with thirty (30) calendar days’ prior written notice of any change or cancellation in
any applicable insurance policies.

Sub-Distributor
shall maintain, during the term of this Agreement, Commercial General Liability Insurance with minimum limits, including under
any General Liability Umbrella Policies, of not less than $2,000,000 combined single limit for bodily injury and property damage.
Sub-Distributor shall use commercially reasonable efforts to provide Distributor with thirty (30) calendar days’ prior written
notice of any change or cancellation in any applicable insurance policies.

7.                 
WARRANTY; RECALL.

A.               
Warranty. Distributor warrants to Sub-Distributor, for a period of one year from the date of delivery by Distributor to the
intended recipient thereof, that any Products delivered by Distributor pursuant to this Agreement shall conform in all material
respects to the written specifications for such Products, a copy of which is attached hereto as Exhibit B, and shall be
free of defects in materials and workmanship. Distributor further warrants to Sub-Distributor that it has title to the Products
to be conveyed hereunder and has the right to sell the same and that at the time of delivery, such Products shall be free of any
security interest or other lien or any other encumbrances whatsoever (the warranties provided in the preceding two sentences being
hereinafter referred to as the “Limited Warranty”). Except for the Limited Warranty, Distributor makes no warranties
or representations to Sub-Distributor or any other person with respect to the Products or any services provided to Sub-Distributor
or any other person. Distributor may not change any of the terms of the Limited Warranty at any time, without written consent
from Sub-Distributor unless Distributor notifies Sub-Distributor in writing at least one hundred and twenty (120) calendar days
prior to any such change. Any such change shall not apply to any Products sold to or ordered by Sub-Distributor prior to the change.
Sub-Distributor will not alter the Limited Warranty, warranty disclaimers and limitation of liability without the prior written
authorization of Distributor, nor extend or make any additional warranty or representation regarding the Products unless expressly
authorized by Distributor.

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THE
LIMITED WARRANTY REFERRED TO IN THIS SECTION IS THE ONLY WARRANTY, EXPRESS OR IMPLIED, THAT DISTRIBUTOR MAKES WITH RESPECT TO
THE PRODUCTS. DISTRIBUTOR SPECIFICALLY DISCLAIMS ALL OTHER IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

B.                
Warranty Claims. The Limited Warranty is effective only if Sub-Distributor gives prompt written notice to Distributor of any
alleged breach of the Limited Warranty, which notice shall specifically describe the problem and shall state the date of sale
and name and location of the recipient of the Product originally shipped by Distributor. Notwithstanding anything to the contrary
contained herein, Distributor shall have no obligation under the Limited Warranty unless it receives such notice within thirty
(30) days following the expiration of the warranty period. In the event of any breach of the Limited Warranty Distributor’s
sole obligation is to replace each non-conforming Product within a reasonable period of time and to pay for the costs of shipment
to the original recipient of the Product or as otherwise specified by Sub-Distributor.

 

C.               
Recall. In the event that: (i) any applicable federal, state or foreign regulatory authority should issue a request, directive
or order that a Product be recalled; (ii) a court of competent jurisdiction orders such a recall; or (iii) Distributor determines
that the Product represents a risk of injury or customer deception or is otherwise defective and that the recall of a Product
is appropriate (“Recall”), Distributor shall have sole right and responsibility for implementing the Recall.
Sub-Distributor will provide cooperation and assistance to Distributor in connection therewith, as may be reasonably requested
by Distributor. Distributor shall be solely responsible for all expenses affecting such Recall (including any reasonable out-of-pocket
expenses incurred by Sub-Distributor in connection with such cooperation, as directed in writing by Distributor).

 

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		8.	INDEMNIFICATION.

 

A.               
Indemnity Obligations for Intellectual Property Infringement. Distributor agrees to defend, indemnify and hold harmless Sub-Distributor
from and against any and all claims, losses, damages, suits, expenses (including reasonable attorneys’ fees) and costs (collectively
“Claims”) brought or alleged by a third party that the Manufacturer IP or any Products sold to Sub-Distributor
infringe any U.S. patent, trademark or copyright. Sub-Distributor shall reasonably cooperate with Distributor, its insurance company
and its legal counsel in its defense of such Claims. If the use or sale of any Products furnished under this Agreement is enjoined
as a result of a Claim, Distributor shall either obtain on behalf of the Sub-Distributor the right to continue to use or sell
such Products, substitute an equivalent product reasonably acceptable to Sub-Distributor in its place, or reimburse Sub-Distributor
the purchase price of the Products, costs incurred by Sub-Distributor as a result of such cancellation, and any and all losses
or costs incurred as a result of Sub-Distributor’s breach of any purchaser order or other agreement with its customers.
Notwithstanding the foregoing, this indemnity shall not apply or cover any Claims based upon any infringement or alleged infringement
of any patent, trademark or copyright resulting from the alteration or unauthorized use of any Manufacturer IP or Products by
Sub-Distributor or a Sub-Distributor representative or the combination of any Products with any other products or the combination
of any Manufacturer IP with any other mark, if such infringement claim would have been avoided but for such alteration, combination
or unauthorized use by Sub-Distributor or any Sub-Distributor representative. Sub-Distributor shall also have the right to participate
in the defense of any such action and have the right to hire its own legal counsel at Sub-Distributor’s expense. This indemnity
shall not cover any Claims in which Sub-Distributor fails to provide Distributor with prompt written notice of the Claim which
lack of notice materially prejudices the defense of the Claim.

B.                
Sub-Distributor agrees to defend, indemnify and hold harmless Distributor from and against any and all Claims brought or alleged
by a third party based upon any infringement or alleged infringement of any patent, trademark or copyright resulting from the
alteration or unauthorized use of any Manufacturer IP or Products by Sub-Distributor or a Sub-Distributor representative or the
combination of any Products with any other products or the combination of any Manufacturer IP with any other mark, if such infringement
claim would have been avoided but for such alteration, combination or unauthorized use by Sub-Distributor or any Sub-Distributor
representative. Distributor shall reasonably cooperate with Sub-Distributor, its insurance company and its legal counsel in its
defense of such Claims. Distributor shall also have the right to participate in the defense of any such action and have the right
to hire its own legal counsel at Sub-Distributor’s expense. This indemnity shall not cover any Claims in which Distributor
fails to provide Sub-Distributor with prompt written notice of the Claim which lack of notice materially prejudices the defense
of the Claim.

C.               
Distributor’s Additional Indemnity Obligations. Notwithstanding anything herein to the contrary, in addition to all
other rights and remedies available at law or in equity, Distributor hereby agrees to defend, indemnify and hold harmless Sub-Distributor
from and against any and all third party Claims (i) arising out of any defects in any Products existing at the time such Products
are sold by Distributor to Sub-Distributor, or (ii) arising out of the negligent acts or omissions or willful misconduct of Distributor,
its employees, agents or representatives with respect to the Products or its performance of this Agreement. Sub-Distributor shall
reasonably cooperate with Distributor, its insurance company and its legal counsel in its defense of such Claims. Sub-Distributor
shall also have the right to participate in the defense of any such action and have the right to hire its own legal counsel at
Sub-Distributor’s expense. This indemnity shall not cover any Claims in which Sub-Distributor fails to provide Distributor
with prompt written notice of the Claim which lack of notice materially prejudices the defense of the Claim.

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D.               
Sub-Distributor’s Indemnity Obligations to Distributor. Sub-Distributor hereby agrees to defend, indemnify and hold
harmless Distributor, its affiliates and their respective officers directors, employees and agents from and against any and all
Claims (i) arising out of the negligent acts or omissions or willful misconduct of Sub-Distributor, its employees, agents or representatives
with respect to its performance of this Agreement, sale of Products, or otherwise, (ii) arising out of the alteration or modification
of the Products or Distributor IP by Sub-Distributor or its employees, agents or representatives, or (iii) alleging that the Sub-Distributor’s
Marks infringe or otherwise violate the intellectual property rights of a third party. This indemnity shall not cover any Claims
in which Distributor fails to provide Sub-Distributor with prompt written notice which lack of notice prejudices the defense of
the Claim. Distributor shall also have the right to participate in the defense of any such action and have the right to hire its
own legal counsel at Distributor’s expense.

E.                
Settlement of Claims. In no event shall a party seeking or entitled to indemnification from a Party hereunder settle, compromise,
agree to a judgment or take any similar action with respect to any Claim without the written consent of the Party from whom indemnification
is sought.

9.                 
LIMITATION OF LIABILITY.

EXCEPT
FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER SECTION 8 OF THIS AGREEMENT AND CONFIDENTIALITY OBLIGATIONS UNDER SECTION
5 OF THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BY LIABLE UNDER THIS AGREEMENT TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL,
INDIRECT, STATUTORY, SPECIAL, OR PUNITIVE DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF USE, LOSS OF TIME, INCONVENIENCE,
LOSS BUSINESS OPPORTUNITIES, DAMAGE TO GOOD WILL OR REPUTATION, OR LOSS OF DATA, REGARDLESS OF WHETHER SUCH LIABILITY IS BASED
ON BREACH OF CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR SUCH DAMAGES
COULD HAVE BEEN REASONABLY FORESEEN.

10.             
TERM. This Agreement shall commence on the Effective Date and shall end on the first anniversary of the Effective Date (the
“Initial Term”) unless earlier terminated pursuant to Section 11 hereof. The Initial Term shall automatically
renew for successive renewal terms of one (1) year each (each, a “Renewal Term”), unless either Party provides
the other Party with written notice of its intention not to renew the Initial Term or any Renewal Term, as applicable, at least
sixty (60) days prior to the expiration of the then current Initial Term or Renewal Term.

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11.             
TERMINATION.

A.               
Termination for Breach. Either Party may terminate this Agreement at any time in the event of a material breach by the other
Party that remains uncured after thirty (30) calendar days following written notice thereof. Such termination shall be effective
immediately and automatically upon the expiration of the applicable notice period, without further notice or action by either
Party. Termination shall be in addition to any other remedies that may be available to the non-breaching Party.

B.                
Termination for Financial Insecurity. Either Party may terminate this Agreement and any outstanding Purchase Orders (to the
extent Products have not already been delivered to the carrier for shipment) immediately at its option upon written notice if
the other Party: (i) becomes or is declared insolvent or bankrupt; (ii) is the subject of a voluntary or involuntary bankruptcy
or other proceeding related to its liquidation or solvency, which proceeding is not dismissed within sixty (60) calendar days
after its filing; (iii) ceases to do business in the normal course; or (iv) makes an assignment for the benefit of creditors.
This Agreement shall terminate immediately and automatically upon any determination by a court of competent jurisdiction that
either Party is excused or prohibited from performing in full all obligations hereunder, including, without limitation, rejection
of this Agreement pursuant to 11 U.S.C. §365.

C.               
Termination for Failure to Meet Minimum Purchase Commitments. Distributor may terminate this Agreement at any time upon written
notice to Sub-Distributor if Sub-Distributor fails to satisfy any of the following minimum purchase obligations: (i) purchase
by Sub-Distributor of not less than 500,000 Units from Distributor on or before April 30, 2020, and (ii) purchase by Sub-Distributor
of not less than 1,000,000 Units from Distributor for each subsequent fiscal quarter throughout the balance of the term. At Distributor’s
option, Distributor may elect to suspend a decision to terminate this Agreement as permitted under this Section 11.C. for an indefinite
period, but may, in the meantime upon written notice to Sub-Distributor, terminate Sub-Distributor’s rights under Section
1.A. above. A used herein, a “Unit” means each Product as may ultimately be packaged and sold by Distributor
to a Retail Customer.

D.               
Cross Termination with the Distribution Agreement. Sub-Distributor acknowledges and agrees that the appointment by Distributor
of Sub-Distributor of the distribution rights set forth in this Agreement are dependent upon the continuation of the Distribution
Agreement. In the event the Distribution Agreement expires or is otherwise terminated for any reason, this Agreement shall immediately
and automatically terminate without any further action of the Parties.

E.                
Obligations upon Termination. Upon termination of this Agreement, Sub-Distributor shall cease to be an authorized sub-distributor
of the Products and (i) all unaccepted Purchase Orders may be cancelled by Sub-Distributor or Distributor without liability, and
(ii) Sub-Distributor may, at its option, resell and deliver to Distributor, free and clear of all liens and encumbrances, any
or all Products that (A) are subject to Purchase Orders accepted by Distributor whether or not the applicable Products have been
shipped as of the date of termination and (B) were manufactured, shipped or received as of the date of termination, in each case
that are in new condition and in the original factory packaging at the original purchase price of any such Products that Sub-Distributor
elects to resell to Distributor less a restocking charge of 50% of such amount payable by Distributor upon receipt of such Products.
Restocking is waived in the event the Distributor terminates Sub-Distributor, other than if termination is a Termination pursuant
to 11.A., 11.B. or 11.C.. Within ninety (90) calendar days of termination of this Agreement, Sub-Distributor shall remove and
not thereafter use any sign, display, or other advertising or marketing means containing Manufacturer IP, except as provided in
this section. Sub-Distributor may continue to use in-store materials containing the Manufacturer IP as reasonably required for
the resale of the Products which may be remaining in Sub-Distributor’s possession after termination, which materials Sub-Distributor
may continue to utilize until all remaining Products have been sold or one hundred eighty (180) calendar days after termination,
whichever comes first, after which Sub-Distributor shall cease the use of any such Manufacturer IP.

    	11 

    	 

    

12.             
COMPLIANCE WITH LAWS. Sub-Distributor acknowledges and understands that the Products may be subject to restrictions upon export
from the United States and upon resale after export. Sub-Distributor therefore represents and warrants that it shall comply fully
with all relevant regulations of the U.S. Department of Commerce, with the U.S. Export Administration Act, and with any other
import and/or export control laws or regulations of the United States or any other jurisdiction.

13.             
GENERAL TERMS.

A.               
Independent Contractors. Nothing in this Agreement, and no course of dealing between the Parties, shall be construed to create
or imply an employment or agency relationship or a partnership or joint venture relationship between the Parties or between one
Party and the other Party’s employees or agents. Neither Distributor nor Sub-Distributor has the authority to bind the other,
to incur any liability or otherwise act on behalf of the other. Each Party shall be solely responsible for payment of its employees’
salaries (including withholding of income taxes and social security), workers compensation, and all other employment benefits.

B.                
Assignment. Neither this Agreement, nor any right or interest herein, may be assigned, in whole or in part, by Sub-Distributor
without the express written consent of Distributor. Any assignment without such consent shall be null and void. For purposes hereof,
any assignment that is carried out as part of a merger, restructuring, or reorganization, or sale or transfer of all or substantially
all Sub-Distributor’s assets shall require the express written consent of Distributor. This Agreement shall be binding upon
and inure to the benefit of the Parties hereto, their successors and legal representatives. Except as set forth in Section 8,
there are no third-party beneficiaries to this Agreement.

C.               
Notices. Unless otherwise agreed to by the Parties, all notices shall be deemed effective when received and made in writing
by either (i) certified mail, return receipt requested, (ii) nationally recognized overnight courier, or (iii) fax with confirmation,
addressed to the party to be notified at the following address or to such other address as such Party shall specify by like notice
hereunder:

If
to Distributor:

Kaival
Brands Innovations Group, Inc.

4460
Old Dixie Highway

Grant,
Florida 32949

Attn:
Eric Mosser

Email:
eric@kaivalbrands.com

Fax:
833-452-8252

 

    	12 

    	 

    

If
to Sub-Distributor:

FAVS
Business, LLC

2605
Mountain Industrial Boulevard, Suite 8

Tucker,
Georgia 30084

Attn:
Vinay Thaker

Email:
favsllc@gmail.com

Fax:
770-864-9406

 

Either
Party, by written notice to the other pursuant to this section, may change its address or designees for receiving such notices.

D.               
Force Majeure. Neither Party shall liable hereunder for any failure or delay in the performance of its obligations under this
Agreement if such failure or delay is on account of causes beyond its control, including labor disputes, civil commotion, war,
fires, floods, inclement weather, governmental regulations or controls, casualty, government authority, strikes, or acts of God,
in which event the non-performing party shall be excused from its obligations for the period of the delay and for a reasonable
time thereafter. Each Party shall use reasonable efforts to notify the other Party of the occurrence of such an event within three
(3) business days of its occurrence.

E.                
Governing Law; Venue; Jury Waiver. This Agreement shall be governed by the laws of the State of Florida, without giving effect
to the principles of conflicts of law of such state and shall be binding upon the Parties hereto in the United States and worldwide.
Any claims or legal actions by one Party against the other arising under this Agreement or concerning any rights under this Agreement
shall be commenced and maintained in any state or federal court located in Orange County, Florida. Both Parties hereby submit
to the jurisdiction and venue of any such court. THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO WAIVE
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTERCLAIM OR ACTION ARISING FROM THE TERMS OF THIS AGREEMENT.

F.                
Attorney’s Fees. If either Party incurs any legal fees associated with the enforcement of this Agreement or any rights
under this Agreement, the prevailing Party shall be entitled to recover its reasonable attorney’s fees and any court, arbitration,
mediation, or other litigation expenses from the other Party.

G.               
Survival. The provisions of this Agreement which by their sense and context should survive any termination of expiration of
this Agreement, including without limitation sections 5 (confidentiality), 7 (warranty), 8 (indemnification), 9 (limitation of
liability), 12 (compliance with laws) and 13 (general terms) shall so survive.

H.               
Authorized Signatories. It is agreed and warranted by the Parties that the individuals singing this Agreement on behalf of
the respective Parties are authorized to execute such an agreement. No further proof of authorization shall be required.

    	13 

    	 

    

I.                  
Severability. If any provision or portion of this Agreement shall be held by a court of competent jurisdiction to be illegal,
invalid, or unenforceable, the remaining provisions or portions shall remain in full force and effect.

J.                 
No Strict Construction. This Agreement shall not be construed more strongly against either party regardless of which party
is more responsible for its preparation.

K.               
Counterparts. This Agreement may be executed by facsimile and in one or more counterparts, each of which will be deemed to
be an original, but all of which together will constitute one and the same instrument, without necessity of production of the
others.

L.                
Entire Agreement; Modification; Waiver. This Agreement is the entire agreement between the Parties with respect to the subject
matter and supersedes any prior agreement or communications between the Parties hereto, whether written or oral. This Agreement
may be modified only by a written amendment signed by authorized representatives of both Parties. No waiver of any term or right
in this Agreement shall be effective unless in writing, signed by an authorized representative of the waiving Party. The failure
of either Party to enforce any provision of this Agreement shall not be construed as a waiver or modification of such provision,
or impairment of its right to enforce such provision thereafter.

 

[SIGNATURES
ON FOLLOWING PAGE]

 

    	14 

    	 

    

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives as
of the Effective Date.

DISTRIBUTOR

 

KAIVAL
BRANDS INNOVATIONS GROUP, INC.

 

By:
/s/ Eric Mosser

Name:
Eric Mosser

Title:
Chief Operating Officer

 

 

SUB-DISTRIBUTOR

 

FAVS
BUSINESS, LLC

 

 

By:
/s/ Vinay Thaker

Name:
Vinaiy Thaker

Title:
Manager

 

 

 

ACKNOWLEDGMENT
AND CONSENT

 

By
signing below, Manufacturer hereby acknowledges and consents to Distributor entering into this Agreement with Sub-Distributor.

 

 

BIDI
VAPOR, LLC

 

By:/s/
Nirajkumar Patel

Name:
Nirajkumar Patel

Title:
Manager

 

 

    	15EX-4.1

  

 Exhibit 4.1

 
 NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF THIS NOTE OR SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THIS NOTE OR SUCH SECURITIES, AS APPLICABLE, MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED IN THE
MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.
 SECURED CONVERTIBLE PROMISSORY NOTE 
 

	Effective Date: March 31, 2020	U.S. $17,100,000.00

 

 

FOR VALUE RECEIVED, CytoDyn Inc., a Delaware corporation
(“Borrower”), promises to pay to Iliad Research and Trading, L.P., a Utah limited partnership, or its successors or assigns (“Lender”), $17,100,000.00 and any
interest, fees, charges, and late fees on the date that is twenty-four (24) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms set forth herein and to pay interest on the Outstanding Balance at
the rate of ten percent (10%) per annum from the Purchase Price Date until the same is paid in full. This Secured Convertible Promissory Note (this “Note”) is issued and made effective as of March 31, 2020 (the “Effective
Date”). This Note is issued pursuant to that certain Securities Purchase Agreement dated March 31, 2020, as the same may be amended from time to time, by and between Borrower and Lender (the “Purchase Agreement”). All
interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note. Certain capitalized
terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.
 This Note carries an OID of $2,100,000.00. The purchase price for this Note shall be $15,000,000.00 (the “Purchase Price”), computed as follows: $17,100,000.00 original principal balance, less the OID. The
Purchase Price shall be payable by Lender to Borrower by wire transfer of immediately available funds.

1.        
     Payment; Prepayment.
 1.1.               Payment. Provided there is an Outstanding Balance, on each Redemption Date (as defined below),
Borrower shall pay to Lender an amount equal to the Redemption Amount (as defined below) due on such Redemption Date in accordance with Section 9. All payments owing hereunder shall be in lawful money of the United States of America or
Conversion Shares (as defined below), as provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and
charges, if any, then to (c) accrued and unpaid interest, and thereafter, to (d) principal. 
 1.2.               Prepayment. Notwithstanding the foregoing, so long as Borrower has not received a Conversion Notice
(as defined below) from Lender where the applicable Conversion Shares have not yet been delivered and so long as no Event of Default (as defined below) has occurred and is continuing, then Borrower shall have the right, exercisable on not less than
fifteen (15) Trading Days prior written notice to Lender to prepay the Outstanding Balance of this Note, in part or in full, in accordance with this Section 1. Any notice of prepayment hereunder (an “Optional Prepayment Notice”)
shall be delivered to Lender at its registered address and shall state: (i) that Borrower is exercising its right to prepay this Note, and (ii) the date of prepayment, which shall be not less than fifteen (15) Trading Days from the date of the
Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of Lender as may be specified by
Lender in writing to Borrower. If Borrower exercises its right to prepay this Note, Borrower shall make payment to Lender of an amount in cash equal to 115% multiplied by the then Outstanding Balance of this Note being prepaid (the
“Optional Prepayment Amount”). In the event Borrower delivers the Optional Prepayment Amount to Lender prior to the Optional Prepayment Date or without delivering an Optional Prepayment Notice to Lender as set forth herein without
Lender’s prior written consent, the Optional Prepayment Amount shall not be deemed to have been paid to Lender until the Optional Prepayment Date. In the event Borrower delivers the Optional Prepayment Amount without an Optional Prepayment
Notice, then the Optional Prepayment Date will be deemed to be the date that is fifteen (15) Trading Days from the date that the Optional Prepayment Amount was delivered to Lender and Lender shall be entitled to exercise its conversion rights set
forth herein during such fifteen (15) day period. In addition, if Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to Lender within two (2) Trading Days following the Optional Prepayment Date,
Borrower shall forever forfeit its right to prepay this Note.
 

 
	 

 
	 

 2.              Security. This Note is secured by that certain Security Agreement of even date herewith, as the same
may be amended from time to time (the “Security Agreement”), executed by Borrower in favor of Lender encumbering certain of Borrower’s assets, as more specifically set forth in the Security Agreement, all the terms and
conditions of which are hereby incorporated into and made a part of this Note.
 3.              Lender Optional Conversion.

3.1.        
       Conversions. Lender has the right at any time after the date that is six (6) months from the Purchase Price Date until the Outstanding Balance has been paid in full, until any Optional Prepayment
Date (even if Lender has received an Optional Prepayment Notice) or at any time thereafter with respect to any amount that is not prepaid, at its election, to convert (each instance of conversion is referred to herein as a
“Conversion”) all or any part of the Outstanding Balance into shares (“Conversion Shares”) of fully paid and non-assessable common stock, $0.001 par value per share (“Common Stock”), of
Borrower as per the following conversion formula: the number of Conversion Shares equals the amount being converted (the “Conversion Amount”) divided by the Conversion Price (as defined below). Conversion notices in the form
attached hereto as Exhibit A (each, a “Conversion Notice”) may be effectively delivered to Borrower by facsimile, email, mail, overnight courier, or personal delivery, and all Conversions shall be cashless and not require
further payment from Lender. Borrower shall deliver the Conversion Shares from any Conversion to Lender in accordance with Section 10 below. 

3.2.        
       Conversion Price. Subject to adjustment as set forth in this Note, the price at which Lender has the right to convert all or any portion of the Outstanding Balance into Common Stock is $4.50 per
share of Common Stock (the “Conversion Price”). 
 4.              Defaults and Remedies.

4.1.          
     Defaults. The following are events of default under this Note (each, an “Event of Default”): (a) Borrower fails to pay any principal, interest, fees, charges, or any other amount when due and
payable hereunder; (b) Borrower fails to deliver any Conversion Shares in accordance with the terms hereof; (c) a receiver, trustee or other similar official shall be appointed over Borrower or a material part of its assets and such appointment
shall remain uncontested for twenty (20) calendar days or shall not be dismissed or discharged within sixty (60) calendar days; (d) Borrower generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any; (e) Borrower makes a general assignment for the benefit of creditors; (f) Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); (g) an involuntary bankruptcy
proceeding is commenced or filed against Borrower; (h) Borrower or any pledgor, trustor, or guarantor of this Note defaults or otherwise fails to observe or perform any covenant, obligation, condition or agreement of Borrower or such pledgor,
trustor, or guarantor contained herein or in any other Transaction Document (as defined in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase Agreement and other than the covenant with
respect to Unapproved Debt Issuances; (i) any representation, warranty or other statement made or furnished by or on behalf of Borrower or any pledgor, trustor, or guarantor of this Note to Lender herein, in any Transaction Document, or otherwise in
connection with the issuance of this Note is false, incorrect, incomplete or misleading in any material respect when made or furnished; (j) the closing of a Fundamental Transaction without Lender’s prior written consent; provided, that such
consent shall not be required in connection with the closing of a Fundamental Transaction where the Note is repaid in full at or prior to the closing of such Fundamental Transaction; (k) Borrower fails in any material respect to maintain the Share
Reserve as required under the Purchase Agreement; (l) Borrower effectuates a reverse split of its Common Stock without ten (10) Trading Days prior written notice to Lender; (m) any money judgment, writ or similar process is entered or filed against
Borrower or any subsidiary of Borrower or any of its property or other assets for more than $500,000.00, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented to by Lender; (n) Borrower
fails, in any material respect, to observe or perform any covenant set forth in Section 4 of the Purchase Agreement (other than the covenant with respect to Unapproved Debt Issuances); (o) Borrower shall make any Unapproved Debt Issuance; or (p)
Borrower, any affiliate of Borrower, or any pledgor, trustor, or guarantor of this Note breaches, in any material respect, any covenant or other term or condition contained in any Other Agreements. Notwithstanding the foregoing, the occurrence of
any event specified in Section 4.1(i) – (p) shall not be considered an Event of Default hereunder is such event is cured within forty-five (45) days of the occurrence of such event. 
 

 
	 

 
	 

 4.2.               Remedies. At any time and from time to time after Lender becomes aware of the occurrence of any
Event of Default that is continuing, Lender may accelerate this Note by written notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount. Notwithstanding the foregoing, at any time
following the occurrence of any Event of Default, Lender may, at its option, elect to increase the Outstanding Balance by applying the Default Effect (subject to the limitation set forth below) via written notice to Borrower without accelerating the
Outstanding Balance, in which event the Outstanding Balance shall be increased as of the date of the occurrence of the applicable Event of Default pursuant to the Default Effect, but the Outstanding Balance shall not be immediately due and payable
unless so declared by Lender (for the avoidance of doubt, if Lender elects to apply the Default Effect pursuant to this sentence, it shall reserve the right to declare the Outstanding Balance immediately due and payable at any time and no such
election by Lender shall be deemed to be a waiver of its right to declare the Outstanding Balance immediately due and payable as set forth herein unless otherwise agreed to by Lender in writing). Notwithstanding the foregoing, upon the occurrence of
any Event of Default described in clauses (c), (d), (e), (f), or (g) of Section 4.1, the Outstanding Balance as of the date of acceleration shall become immediately and automatically due and payable in cash at the Mandatory Default Amount, without
any written notice required by Lender. At any time following the occurrence of any Event of Default, upon written notice given by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of
Default occurred at an interest rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law (“Default Interest”). For the avoidance of doubt, Lender may continue making Conversions and Redemption
Conversions (as defined below) at any time following an Event of Default until such time as the Outstanding Balance is paid in full. Borrower further acknowledges and agrees that Lender may continue making Conversions following the entry of any
judgment or arbitration award in favor of Lender until such time that the entire judgment amount or arbitration award is paid in full. Borrower agrees that any judgment or arbitration award will, by its terms, be made convertible into Common Stock.
Borrower and Lender agree and stipulate that any judgment or arbitration award entered against Borrower shall be reduced by $1,000.00 and such $1,000.00 shall become the new Outstanding Balance of this Note and this Note shall expressly survive such
judgment or arbitration award. Additionally, following the occurrence of any Event of Default, Borrower may, at its option, pay any Conversion in cash instead of Conversion Shares by paying to Lender on or before the applicable Delivery Date (as
defined below) a cash amount equal to the number of Conversion Shares set forth in the applicable Conversion Notice multiplied by the highest intra-day trading price of the Common Stock that occurs during the period beginning on the date the
applicable Event of Default occurred and ending on the date of the applicable Conversion Notice. In connection with acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice
of any kind, and Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled
by Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any, as Lender receives full payment pursuant to this Section 4.2. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue in one or more arbitrations any other remedies available to it at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver Conversion Shares upon Conversion of the Note as required pursuant to the terms hereof.

5.        
     Volume Limitation. Lender agrees that any Conversion Shares it sells pursuant to a registration statement prior to the date that is six (6) months from the Purchase Price Date will be limited to 1,000,000
shares per calendar month (the “Volume Limitation”); provided, however, in the event any intra-day trading price of the Common Stock during the applicable time period meets or exceeds $4.50 per share then the Volume
Limitation shall not apply for the remainder of the calendar month or the five (5) Trading Days thereafter, whichever is longer. For the avoidance of doubt, the Volume Limitation shall: (a) automatically terminate on the date that is six (6) months
from the Purchase Price Date; (b) only apply to the sale of registered shares and not to the sale of any shares pursuant to Rule 144 or any other applicable exemption from registration; and (c) only apply to the sale of Conversion Shares in a given
calendar month and not apply to the number of Conversion Shares Lender may receive in a given calendar month. 
 6.             Unconditional Obligation; No Offset. Borrower acknowledges that this Note
is an unconditional, valid, binding and enforceable obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and
assigns, and agrees to make the payments or Conversions called for herein in accordance with the terms of this Note.
 7.             Waiver. No waiver of any provision of this Note shall be effective unless
it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not
similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
 

 
	 

 
	 

 8.             Rights Upon Issuance of Securities. 

8.1.        
       Subsequent Equity Sales. Except with respect to Excluded Securities, if Borrower or any subsidiary thereof, as applicable, at any time this Note is outstanding, shall sell, issue or grant any Common
Stock, option to purchase Common Stock, right to reprice, preferred shares convertible into Common Stock, or debt, warrants, options or other instruments or securities to Lender or any third party which are convertible into or exercisable or
exchangeable for shares of Common Stock (collectively, the “Equity Securities”) in any new offering where Borrower sells securities that have registration rights, are registered or become registered under the Securities Act, at an
effective price per share less than the then effective Conversion Price (such issuance is referred to herein as a “Dilutive Issuance”), then, the Conversion Price shall be automatically reduced and only reduced to equal such lower
effective price per share. If the holder of any Equity 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 Dilutive Issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Conversion Price, such issuance shall be deemed to have
occurred for less than the Conversion Price on the date of such Dilutive Issuance, and the then effective Conversion Price shall be reduced and only reduced to equal such lower effective price per share. Such adjustments described above to the
Conversion Price shall be permanent (subject to additional adjustments under this section), and shall be made whenever such Equity Securities are issued. Borrower shall notify Lender, in writing, no later than three (3) Trading Days following the
issuance of any Equity Securities subject to this Section 8.1, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price, or other pricing terms (such notice, the “Dilutive Issuance
Notice”). For purposes of clarity, whether or not Borrower provides a Dilutive Issuance Notice pursuant to this Section 8.1, upon the occurrence of any Dilutive Issuance, on the date of such Dilutive Issuance the Conversion Price shall be
lowered to equal the applicable effective price per share regardless of whether Borrower or Lender accurately refers to such lower effective price per share in any subsequent Redemption Notice or Conversion Notice.

8.2.        
       Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision hereof, if Borrower at any time on or after the Effective Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately
reduced. Without limiting any provision hereof, if Borrower at any time on or after the Effective Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 8.2 shall become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this Section 8.2 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such
event.

9.        
     Borrower Redemptions. Beginning on the date that is six (6) months after the Purchase Price Date, Lender shall have the right, exercisable at any time in its sole and absolute discretion, to redeem any
amount of this Note up to the Maximum Monthly Redemption Amount (such amount, the “Redemption Amount”) per calendar month by providing written notice to Borrower (each, a “Redemption Notice”). For the avoidance
of doubt, Lender may submit to Borrower one (1) or more Redemption Notices in any given calendar month so long as the aggregate amount being redeemed in such month does not exceed the Maximum Monthly Redemption Amount. Upon receipt of any Redemption
Notice, Borrower shall pay the applicable Redemption Amount in cash to Lender within three (3) Trading Days of Borrower’s receipt of such Redemption Notice. 

10.        
   Method of Conversion Share Delivery. On or before the close of business on the fifth (5th) Trading Day following the date of delivery of a Conversion Notice (the “Delivery Date”), Borrower
shall, provided it is DWAC Eligible at such time, deliver or cause its transfer agent to deliver the applicable Conversion Shares electronically via DWAC to the account designated by Lender in the applicable Conversion Notice. If Borrower is
not DWAC Eligible, it shall deliver to Lender or its broker (as designated in the Conversion Notice), via reputable overnight courier, a certificate representing the number of shares of Common Stock equal to the number of Conversion Shares to which
Lender shall be entitled, registered in the name of Lender or its designee. For the avoidance of doubt, Borrower has not met its obligation to deliver Conversion Shares by the Delivery Date unless Lender or its broker, as applicable, has actually
received the certificate representing the applicable Conversion Shares no later than the close of business on the relevant Delivery Date pursuant to the terms set forth above. Moreover, and notwithstanding anything to the contrary herein or in any
other Transaction Document, in the event Borrower or its transfer agent refuses to deliver any Conversion Shares to Lender on grounds that such issuance is in violation of Rule 144 under the Securities Act of 1933, as amended (“Rule
144”), Borrower shall deliver or cause its transfer agent to deliver the applicable Conversion Shares to Lender with a restricted securities legend, but otherwise in accordance with the provisions of this Section 10. In conjunction
therewith, Borrower will also deliver to Lender a written explanation from its counsel or its transfer agent’s counsel explaining why the issuance of the applicable Conversion Shares violates Rule 144.

11.        
   Conversion Delays. If Borrower fails to deliver Conversion Shares in accordance with the timeframes stated in Section 10, Lender, at any time prior to selling all of those Conversion Shares, may rescind in whole or in
part that particular Conversion attributable to the unsold Conversion Shares, with a corresponding increase to the Outstanding Balance (any returned amount will tack back to the Purchase Price Date for purposes of determining the holding period
under Rule 144). In addition, for each Conversion, in the event that Conversion Shares are not delivered by the sixth (6th) Trading Day (inclusive of the day of the Conversion), a late fee equal to 1.5% of the applicable Conversion Share
Value rounded to the nearest multiple of $100.00 (but in any event the cumulative amount of such late fees for each Conversion shall not exceed 200% of the applicable Conversion Share Value) will be assessed for each day beginning on the sixth
(6th) Trading Day (inclusive of the day of the Conversion) until Conversion Share delivery is made; and such late fee will be added to the Outstanding Balance (such fees, the “Conversion Delay Late Fees”). 

12.         
  Approved Debt Issuance. The Outstanding Balance will automatically be increased by five percent (5%) for each Approved Debt Issuance made by Borrower (without the need for Lender to provide any notice to Borrower of such
increase), which increase will be effective as of the date of each applicable Approved Debt Issuance. For the avoidance of doubt, this Section 11 does not apply to any new debt which provides funded proceeds equal to or greater than $15,000,000.00.

 

 
	 

 
	 

 13.           Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction
Documents, if at any time Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of
the number of shares of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “Maximum Percentage”), then Borrower shall not issue to Lender shares of Common
Stock which would exceed the Maximum Percentage. Lender agrees, upon request, to provide Borrower with the number of shares of Common Stock it owns at the time of any proposed Conversion hereunder. For purposes of this section, beneficial ownership
of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. The shares of Common Stock issuable to Lender that would cause the Maximum Percentage to be exceeded are referred to herein as the “Ownership
Limitation Shares”. Borrower will reserve the Ownership Limitation Shares for the exclusive benefit of Lender. Lender shall notify Borrower in writing of the number of the Ownership Limitation Shares that may be issued to Lender
without causing Lender to exceed the Maximum Percentage. Upon receipt of such notice, Borrower shall be unconditionally obligated to immediately issue such designated shares to Lender, with a corresponding reduction in the number of the Ownership
Limitation Shares. Upon notice to Borrower from Lender the term “4.99%” above shall be replaced with “9.99%”. Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with
“9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by Lender as set forth below. By written notice to Borrower, Lender may increase, decrease or
waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates
and assigns of Lender.

14.        
   Payment of Collection Costs. If this Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or
legal proceeding, or Lender otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note, then Borrower shall pay the costs incurred by Lender for such collection, enforcement or action including, without
limitation, attorneys’ fees and disbursements. Borrower also agrees to pay for any costs, fees or charges of its transfer agent that are charged to Lender pursuant to any Conversion or issuance of shares pursuant to this Note.

15.        
   Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right to have any such opinion provided by its counsel; provided that such opinion shall be
reasonably acceptable to Borrower. 

16.        
   Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the
internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than
the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.

17.        
   Resolution of Disputes. 
 17.1.            Arbitration of Disputes. By its acceptance of this Note, each party agrees to be bound by the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
 17.2.            Calculation Disputes. Notwithstanding the Arbitration Provisions, in the case of a dispute as to any Calculation (as
defined in the Purchase Agreement), such dispute will be resolved in the manner set forth in the Purchase Agreement.
 18.           Cancellation. After repayment or conversion of the entire Outstanding Balance, this
Note shall be deemed paid in full, shall automatically be deemed canceled, and shall not be reissued.

19.        
   Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.

20.        
   Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by
Lender without the consent of Borrower.

21.         
  Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Note and the documents and instruments entered into in connection herewith.
 

 
	 

 
	 

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

23.        
   Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of this Note, Lender’s damages would be uncertain and difficult (if not impossible) to
accurately estimate because of the parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Lender and Borrower agree that any fees, balance adjustments, Default
Interest or other charges assessed under this Note are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Lender’s and Borrower’s expectations that any such liquidated damages
will, if allowed under applicable law, tack back to the Purchase Price Date for purposes of determining the holding period under Rule 144).

24.        
   Waiver of Jury Trial. EACH OF LENDER AND BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE
RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH
PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.
 25.           Voluntary Agreement. Borrower has carefully read this Note and has asked any questions needed for Borrower to
understand the terms, consequences and binding effect of this Note and fully understand them. Borrower has had the opportunity to seek the advice of an attorney of Borrower’s choosing, or has waived the right to do so, and is executing this
Note voluntarily and without any duress or undue influence by Lender or anyone else.
 26.           Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to
achieve the objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.
 [Remainder of page intentionally left blank; signature page follows]
 

 
	 

 
	 

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

	 	BORROWER:
		 	 
	 	CytoDyn Inc.
	 	 	 
	 	By:	 	/s/ Craig S. Eastwood
	 	Name: 	 	Craig S. Eastwood
	 	Title:	 	Chief Financial Officer

 

 
 ACKNOWLEDGED, ACCEPTED AND
AGREED:
 LENDER:
 

	Iliad Research and Trading, L.P.	 
	 	 	 
	By: Iliad Management, LLC, its General Partner	 
	 	 	 
	 	 	By:	Fife Trading, Inc., its Manager	 
	 	 	 
	 	 	By: 	/s/ John Fife	 
	 	John M. Fife, President	 

 
 [Signature Page to Secured Convertible
Promissory Note]
 
 
 

 
	 

 
	 

 ATTACHMENT 1

DEFINITIONS

 
 For purposes of this Note, the following terms shall have the following meanings:
 A1.               “Approved Debt Issuance” means a Debt Issuance (as
defined in the Purchase Agreement) for which Borrower received Lender’s written consent prior to the applicable issuance.
 A2.               “Approved Stock Plan” means any equity compensation
plan which has been approved by the shareholders of Borrower and is in effect as of the Purchase Price Date, pursuant to which Borrower’s securities may be issued to any employee, officer or director for services provided to
Borrower.

A3.        
       “Bloomberg” means Bloomberg L.P. (or if that service is not then reporting the relevant information regarding the Common Stock, a comparable reporting service of national reputation
selected by Lender and reasonably satisfactory to Borrower).
 A4.               “Closing Bid Price” and “Closing Trade Price” means the last closing
bid price and last closing trade price, respectively, for the Common Stock on its principal market, as reported by Bloomberg, or, if its principal market begins to operate on an extended hours basis and does not designate the closing bid price or
the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of the Common Stock prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal market is not the principal
securities exchange or trading market for the Common Stock, the last closing bid price or last trade price, respectively, of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of the Common Stock in the over-the-counter market on the electronic bulletin board for the Common Stock as reported by Bloomberg,
or, if no closing bid price or last trade price, respectively, is reported for the Common Stock by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for the Common Stock as reported by OTC Markets Group,
Inc., and any successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Trade Price (as the case may be)
of the Common Stock on such date shall be the fair market value as mutually determined by Lender and Borrower. If Lender and Borrower are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved in
accordance with the procedures in Section 17.2. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

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

A6.        
       “Default Effect” means multiplying the Outstanding Balance as of the date the applicable Event of Default occurred by (a) 15% for each occurrence of any Major Default, (b) 10% of each
occurrence of an Unapproved Debt Issuance, or (b) 5% for each occurrence of any Minor Default, and then adding the resulting product to the Outstanding Balance as of the date the applicable Event of Default occurred, with the sum of the foregoing
then becoming the Outstanding Balance under this Note as of the date the applicable Event of Default occurred; provided that the Default Effect may only be applied three (3) times hereunder with respect to Major Defaults and three (3) times
hereunder with respect to Minor Defaults; and provided further that the Default Effect shall not apply to any Event of Default pursuant to Section 4.1(b) hereof. There shall be no limit on the number of times the Default Effect may be applied with
respect to Unapproved Debt Issuance Defaults.
 A7.               “DTC” means the Depository Trust Company or any successor thereto.

A8.        
       “DTC Eligible” means, with respect to the Common Stock, that such Common Stock is eligible to be deposited in certificate form at the DTC, cleared and converted into electronic shares by
the DTC and held in the name of the clearing firm servicing Lender’s brokerage firm for the benefit of Lender.
 A9.               “DTC/FAST Program” means the DTC’s Fast
Automated Securities Transfer program.

A10.        
    “DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.
 A11.            “DWAC Eligible” means that (a) Borrower’s Common Stock is
eligible at DTC for full services pursuant to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system; (b) Borrower has been approved (without revocation) by DTC’s underwriting department;
(c) Borrower’s transfer agent is approved as an agent in the DTC/FAST Program; (d) the Conversion Shares are otherwise eligible for delivery via DWAC; (e) Borrower has previously delivered all Conversion Shares to Lender via DWAC; and (f)
Borrower’s transfer agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.
 A12.             “Excluded Securities” means any shares of Common Stock, options,
warrants or convertible securities issued or issuable in connection with any Approved Stock Plan, or any other securities outstanding as of the Effective Date.

A13.        
    “Free Trading” means that (a) the shares or certificate(s) representing the applicable shares of Common Stock have been cleared and approved for public resale by the compliance departments of
Lender’s brokerage firm and the clearing firm servicing such brokerage, and (b) such shares are held in the name of the clearing firm servicing Lender’s brokerage firm and have been deposited into such clearing firm’s account for
the benefit of Lender.
 Attachment 1 to Secured Convertible Promissory Note, Page 1
 

	 

 
	 

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

A15.        
    “Major Default” means any Event of Default occurring under Sections 4.1(a), 4.1(k), or 4.1(n) of this Note.

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

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

A18.        
    “Maximum Monthly Redemption Amount” means $950,000.00. 

A19.        
    “Minor Default” means any Event of Default that is not a Major Default or an Unapproved Debt Issuance Default.

A20.        
    “OID” means an original issue discount.
 A21.            “Other Agreements” means, collectively, (a) all existing and future agreements and instruments between,
among or by Borrower (or an affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement or a material agreement that affects Borrower’s ongoing business operations.

A22.        
    “Outstanding Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as the case may be, pursuant to the terms hereof for payment, Conversion, offset, or otherwise,
plus the OID, accrued but unpaid interest, collection and enforcements costs (including attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes and fees related to Conversions, and any other fees or charges (including
without limitation Conversion Delay Late Fees) incurred under this Note.
 A23.            “Purchase Price Date” means the date the Purchase Price is delivered by Lender to Borrower.

A24.        
    “Trading Day” means any day on which the New York Stock Exchange is open for trading.
 A25.            “Unapproved Debt Issuance” means a Debt Issuance for which Borrower did
not receive Lender’s written consent prior to the applicable issuance. 
 A26.            “Unapproved Debt Issuance Default” means an Event of Default occurring under Section 4.1(o) of this Note.

A27.        
    “VWAP” means the volume weighted average price of the Common Stock on the principal market for a particular Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg.

[Remainder of page intentionally left blank]

Attachment 1 to Secured Convertible Promissory Note, Page 2
 

 
	 

 
	 

 EXHIBIT
A
 Iliad Research and Trading, L.P.

303 East Wacker Drive, Suite 1040
 Chicago, Illinois 60601
  
 Date: __________________
  

CytoDyn Inc.
 Attn: Nader Pourhassan, CEO

1111 Main Street, Suite 660
 Vancouver, Washington
98660
  

CONVERSION NOTICE
  
 The above-captioned Lender hereby gives notice to CytoDyn Inc., a Delaware corporation (the
“Borrower”), pursuant to that certain Secured Convertible Promissory Note made by Borrower in favor of Lender on March 31, 2020 (the “Note”), that Lender elects to convert the portion of the Note balance set
forth below into fully paid and non-assessable shares of Common Stock of Borrower as of the date of conversion specified below. Said conversion shall be based on the Conversion Price set forth below. In the event of a conflict between this
Conversion Notice and the Note, the Note shall govern, or, in the alternative, at the election of Lender in its sole discretion, Lender may provide a new form of Conversion Notice to conform to the Note. Capitalized terms used in this notice without
definition shall have the meanings given to them in the Note.
  

		A.	Date of Conversion: ____________

		B.	Conversion #: ____________

		C.	Conversion Amount: ____________

		D.	Conversion Price: _______________

		E.	Conversion Shares: _______________ (C divided by D)

		F.	Remaining Outstanding Balance of Note: ____________*

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

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

 
 

	Broker:	 	 	Address:	 
	DTC#:	 	 	 	 
	Account #:	 	 	 	 
	Account Name:	 	 	 	 

 

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

_____________________________________
 _____________________________________
 
 

 
	 

 
	 

 Sincerely,

 
 Lender:

 
 

	Iliad Research and Trading, L.P.	 
	 	 	 
	By: Iliad Management, LLC, its General Partner	 
	 	 	 
	 	 	By:	Fife Trading, Inc., its Manager	 
	 	 	 
	 	 	By: 	 	 
	 	John M. Fife, President	 

 

 
	 

 
	 

 

AMENDMENT NO. 1 TO
 SECURED CONVERTIBLE PROMISSORY NOTE 

This Amendment No. 1 to Secured Convertible Promissory Note (“Amendment”) is made this 3rd day of April, 2020 by and between
CYTODYN INC., a Delaware corporation (“Borrower”) and ILIAD RESEARCH AND TRADING, L.P., a Utah limited partnership, or its successors or assigns (“Lender”).

 

A.                 Borrower has executed and
delivered the Secured Convertible Promissory Note, effective March 31, 2020, in the original principal amount of U.S. $17,100,000.00, in favor of Lender (the “Original Note”), a copy of which is attached as Exhibit
A.
 B.                 Under
the terms and conditions of this Amendment, the parties wish to amend certain provisions of the Original Note as set forth herein.
 C.                 Capitalized terms not defined herein shall have the meaning given such terms in the Original Note.

NOW, THEREFORE, the parties agree as follows:

1.        
        Lender Optional Conversion. Section 3.1 of the Original Note shall be amended by adding the following sentence to the end of Section 3.1:

Notwithstanding the foregoing, Lender may elect to convert all or any part of the Outstanding Balance into shares during the first six (6)
months following the Purchase Price Date, provided that during such period no Conversion results in the issuance of more than 1,000,000 Conversion Shares in any calendar month.

2.        
        Volume Limitation. Section 5 of the Original Note shall be amended by deleting subsection 5(c) in its entirety and adding “and” between subparagraphs (5(a) and 5(b).

3.        
        Other Terms. Except as expressly modified or amended by this Amendment, all other terms of the Note shall remain in full force and effect. 

4.        
        Miscellaneous. This Amendment shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Amendment
shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. This Amendment shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and assigns. 
 [Remainder of page
intentionally left blank; signature page follows]
 
 
	 

 
	 

 IN WITNESS WHEREOF, Borrower
has caused this Amendment No. 1 to Secured Convertible Promissory Note to be duly executed as of the Effective Date.
  

	 	BORROWER:
		 	 
	 	CytoDyn Inc.
	 	 	 
	 	By:	 	/s/ Craig S. Eastwood
	 	Name:	 	Craig S. Eastwood
	 	Title:	 	Chief Financial Officer

 

 
 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:
 

	Iliad Research and Trading, L.P.	 
	 	 	 
	By: Iliad Management, LLC, its General Partner	 
	 	 	 
	 	 	By:	Fife Trading, Inc., its Manager	 
	 	 	 
	 	 	By: 	/s/ John Fife	 
	 	John M. Fife, President

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