Document:

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

 

	Principal
    Amount: $505,000.00	Issue
    Date: October 28, 2014
	Purchase
    Price: $505,000.00	 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, MASS HYSTERIA ENTERTAINMENT COMPANY, INC., a Nevada corporation (hereinafter called the
“Borrower”), hereby promises to pay to the order of KBM WORLDWIDE, INC., a New York corporation, or
registered assigns (the “Holder”) the sum of $505,000.00 together with any interest as set forth herein, on July
30, 2015(the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight
percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same
becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid
in whole or in part. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the
rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”).
Interest shall commence accruing on the Issue Date, shall be computed on the basis of a 365-day year and the actual number of
days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.00001 par value per share (the
“Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of
America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made
in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on
any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in
the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this
Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks
in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase
Agreement”).

 

    	 

    	 

    

 

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

 

The
following terms shall apply to this Note:

 

Article
I. CONVERSION RIGHTS

 

1.1
Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the
date which is one hundred eighty (180) days following the date of this Note and ending on the later of:(i) the Maturity Date and
(ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in
respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal
amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date,
or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or
reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”);
provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of
that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the
Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a
limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock.
For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations
on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the
Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon
each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice
of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice
of Conversion is submitted by facsimile (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower
before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion
Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted
in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount
at the interest rates provided in this Note to the Conversion Date, provided, however, that the Company shall have the right to
pay any or all interest in cash plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred
to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof.

 

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1.2
Conversion Price.

 

(a)
Calculation of Conversion Price. The Conversion Price shall be the Variable Conversion Price (as defined herein) (subject,
in each case, to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s
securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events). The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (as
defined herein) (representing a discount rate of 50%). “Market Price” means the average of the lowest three (3) Trading
Prices (as defined below) for the Common Stock during the thirty (30) Trading Day period ending on the latest complete Trading
Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on
the Over-the-Counter Bulletin Board, Pink Sheets electronic quotation system or applicable trading market (the “OTC”)
as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if
the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in
the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided
above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in
interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion
Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the
OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

 

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

 

1.3
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note and exercise of the stock purchase warrant (the “Warrant”) issued
pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number
of shares that is actually issuable upon full conversion of the Note and exercise of the Warrant (based on the Conversion Price
of the Notes in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time
to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make
any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible
at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall
be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding
Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common
Stock issuable upon conversion of this Note and exercise of the Warrant, and (ii) agrees that its issuance of this Note shall
constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

 

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If,
at any time a Holder of this Note submits a Notice of Conversion or notice of exercise pursuant to the Warrant (“Exercise
Notice”), and the Borrower does not have sufficient authorized but unissued shares of Common Stock available to effect such
conversion or exercise in accordance with the provisions of this Article I (a “Conversion Default”), the Borrower
shall issue to the Holder all of the shares of Common Stock which are then available to effect such conversion or exercise. The
portion of this Note or Warrant which the Holder included in its Conversion Notice or Exercise Notice and which exceeds the amount
which is then convertible into available shares of Common Stock (the “Excess Amount”) shall, notwithstanding anything
to the contrary contained herein, not be convertible into Common Stock in accordance with the terms hereof until (and at the Holder’s
option at any time after) the date additional shares of Common Stock are authorized by the Borrower to permit such conversion,
at which time the Conversion Price in respect thereof shall be the lesser of (i) the Conversion Price on the Conversion Default
Date (as defined below) and (ii) the Conversion Price on the Conversion Date thereafter elected by the Holder in respect thereof.
In addition, the Borrower shall pay to the Holder payments (“Conversion Default Payments”) for a Conversion Default
in the amount of (x) the sum of (1) the then outstanding principal amount of this Note plus (2) accrued and unpaid
interest on the unpaid principal amount of this Note through the Authorization Date (as defined below) plus (3) Default
Interest, if any, on the amounts referred to in clauses (1) and/or (2), multiplied by (y) .24, multiplied by (z)
(N/365), where N = the number of days from the day the holder submits a Notice of Conversion giving rise to a Conversion Default
(the “Conversion Default Date”) to the date (the “Authorization Date”) that the Borrower authorizes a
sufficient number of shares of Common Stock to effect conversion of the full outstanding principal balance of this Note. The Borrower
shall use its best efforts to authorize a sufficient number of shares of Common Stock as soon as practicable following the earlier
of (i) such time that the Holder notifies the Borrower or that the Borrower otherwise becomes aware that there are or likely will
be insufficient authorized and unissued shares to allow full conversion thereof and (ii) a Conversion Default. The Borrower shall
send notice to the Holder of the authorization of additional shares of Common Stock, the Authorization Date and the amount of
Holder’s accrued Conversion Default Payments. The accrued Conversion Default Payments for each calendar month shall be paid
in cash or shall be convertible into Common Stock (at such time as there are sufficient authorized shares of Common Stock) at
the applicable Conversion Price, at the Borrower’s option, as follows:

 

(a)
In the event Holder elects to take such payment in cash, cash payment shall be made to Holder by the fifth (5th) day
of the month following the month in which it has accrued; and

 

(b)
In the event Holder elects to take such payment in Common Stock, the Holder may convert such payment amount into Common Stock
at the Conversion Price (as in effect at the time of conversion) at any time after the fifth day of the month following the month
in which it has accrued in accordance with the terms of this Article I (so long as there is then a sufficient number of authorized
shares of Common Stock).

 

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The
Holder’s election shall be made in writing to the Borrower at any time prior to 6:00 p.m., New York, New York time, on the
third day of the month following the month in which Conversion Default payments have accrued. If no election is made, the Holder
shall be deemed to have elected to receive cash. Nothing herein shall limit the Holder’s right to pursue actual damages
(to the extent in excess of the Conversion Default Payments) for the Borrower’s failure to maintain a sufficient number
of authorized shares of Common Stock, and each holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section
1.4(b), surrendering this Note at the principal office of the Borrower.

 

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

 

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

 

(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission (or
other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this
Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates
for the Common Stock issuable upon such conversion within three (3) business days after such receipt (and, solely in the case
of conversion of the entire unpaid principal amount hereof, surrender of this Note) (such second business day being hereinafter
referred to as the “Deadline”) in accordance with the terms hereof and the Purchase Agreement (including, without
limitation, in accordance with the requirements of [Section 2(g)] of the Purchase Agreement that certificates for shares of Common
Stock issued on or after the effective date of the Registration Statement upon conversion of this Note shall not bear any restrictive
legend).

 

(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue
and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by
the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.

 

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

 

(g)
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is more than three (3) business days after the Deadline (other than a failure due to the circumstances
described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per
day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be
paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written
notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal
amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional
principal amount shall be convertible into Common Stock in accordance with the terms of this Note.

 

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

 

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

  

The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act and the shares are so sold or transferred, (ii) such Holder provides the Borrower or its transfer
agent with reasonable assurances that the Common Stock issuable upon conversion of this Note (to the extent such securities are
deemed to have been acquired on the same date) can be sold pursuant to Rule 144 or (iii) in the case of the Common Stock issuable
upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed
under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular
date that can then be immediately sold.

 

1.6
Effect of Certain Events.

 

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

 

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

 

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

 

(d)
Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or
sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances
in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares
of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be
reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

 

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

 

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

 

    	11

    	 

    

 

(e)
Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities
or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record
holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares
of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such
record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.

 

(f)
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.

 

1.7
Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market
on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant
to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock
that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is
then traded (the “Maximum Share Amount”), which shall be 4.99% of the total shares outstanding on the Closing Date
(as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share
Amount has been issued (the date of which is hereinafter referred to as the “Maximum Conversion Date”), if the Borrower
fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s
ability to issue shares of Common Stock in excess of the Maximum Share Amount (a “Trading Market Prepayment Event”),
in lieu of any further right to convert this Note, and in full satisfaction of the Borrower’s obligations under this Note,
the Borrower shall pay to the Holder, within fifteen (15) business days of the Maximum Conversion Date (the “Trading Market
Prepayment Date”), an amount equal to 150% times the sum of (a) the then outstanding principal amount of this
Note immediately following the Maximum Conversion Date, plus (b) accrued and unpaid interest on the unpaid principal amount
of this Note to the Trading Market Prepayment Date, plus (c) Default Interest, if any, on the amounts referred to in clause
(a) and/or (b) above, plus (d) any optional amounts that may be added thereto at the Maximum Conversion Date by the Holder
in accordance with the terms hereof (the then outstanding principal amount of this Note immediately following the Maximum Conversion
Date, plus the amounts referred to in clauses (b), (c) and (d) above shall collectively be referred to as the “Remaining
Convertible Amount”). In the event that the sum of (x) the aggregate number of shares of Common Stock issued upon conversion
of this Note and the other Notes issued pursuant to the Purchase Agreement plus (y) the aggregate number of shares of Common
Stock that remain issuable upon conversion of this Note and the other Notes issued pursuant to the Purchase Agreement, represents
at least one hundred percent (100%) of the Maximum Share Amount (the “Triggering Event”), the Borrower will use its
best efforts to seek and obtain Shareholder Approval (or obtain such other relief as will allow conversions hereunder in excess
of the Maximum Share Amount) as soon as practicable following the Triggering Event and before the Maximum Conversion Date. As
used herein, “Shareholder Approval” means approval by the shareholders of the Borrower to authorize the issuance of
the full number of shares of Common Stock which would be issuable upon full conversion of the then outstanding Notes but for the
Maximum Share Amount.

 

    	12

    	 

    

 

1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a
Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for
such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because
of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect
to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a
holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect
to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the
Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted.
In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive
Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance
with Section 1.3) for the Borrower’s failure to convert this Note.

 

    	13

    	 

    

 

1.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on
the table immediately following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”),
the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the order of the Holder
as specified by the Holder in writing to the Borrower, at least one (1) business day prior to the Optional Prepayment Date. If
the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional
Prepayment Amount”) equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately
following this paragraph opposite the applicable Prepayment Period, multiplied by the sum of: (w) the then outstanding principal
amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment
Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to
pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment
Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

	Prepayment Period	 	Prepayment

 Percentage	 
	 	 	 	 
	             1. The period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue Date.	 	 	135	%
	 	 	 	 	 
	             2. The period beginning on the date which is ninety-one (91) days following the Issue Date and ending on the date which is one hundred eighty (180) days following the Issue Date	 	 	150	%
	 	 	 	 	 
	             3. The period beginning on the date which is one hundred eighty-one (181) days following the Issue Date and ending on the date which is two hundred seventy (270) days following the Issue Date	 	 	160	%

  

After
the expiration of two hundred seventy (270) following the date of the Note, the Borrower shall have no right of prepayment.

 

    	14

    	 

    

 

Article
II. CERTAIN COVENANTS

 

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

 

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

 

2.3
Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, create, incur, assume or suffer to exist any liability for borrowed money, except (a) borrowings in existence
or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness
to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which
shall be used to repay this Note.

 

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

 

2.5
Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation,
including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits
or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the
date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

 

2.6
Contingent Liabilities. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, which shall not be unreasonably withheld, assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except
by the endorsement of negotiable instruments for deposit or collection and except assumptions, guarantees, endorsements and contingencies
(a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof,
and (b) similar transactions in the ordinary course of business.

 

    	15

    	 

    

 

Article
III. EVENTS OF DEFAULT

 

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

 

3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon a Trading Market Prepayment Event pursuant to Section 1.7, upon acceleration or otherwise.

 

3.2
Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder
in accordance with the terms of this Note, or the exercise of the Warrant in favor of the Holder, fails to transfer or cause its
transfer agent to transfer (issue)(electronically or in certificated form) any certificate for shares of Common Stock issued to
the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or the Warrant pursuant to
the Warrant), the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in
transferring (or issuing)(electronically or in certificated form) any certificate for shares of Common Stock to be issued to the
Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or the Warrant pursuant to the
Warrant), or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent
from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by
this Note (or the Warrant pursuant to the Warrant)(or makes any written announcement, statement or threat that it does not intend
to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder
shall have delivered a Notice of Conversion (or Exercise Notice pursuant to the Warrant). It is an obligation of the Borrower
to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this
Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder,
the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall
be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

 

3.3
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement and Warrant and such breach continues for
a period of ten (10) days after written notice thereof to the Borrower from the Holder.

 

    	16

    	 

    

  

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

 

3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.

 

3.6
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.

 

3.8
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC
(which specifically includes the Pink Sheets electronic quotation system) or an equivalent replacement exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 

3.9
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

3.10
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

    	17

    	 

    

  

3.12
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).

 

3.13
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.14
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice
to the Holder.

 

3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

 

3.16
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after
the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under
this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights
and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement
or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the
Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory
notes; provided, however, the term “Other Agreements” shall not include the agreements and instruments defined as
the Documents. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing
and future debt of Borrower to the Holder.

 

    	18

    	 

    

 

Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable
and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum
(as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE
SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER,
AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation
of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8,
3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the
“Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III
(other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the
Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations
hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount
of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the
“Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or
(x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal
amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively
be known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity
value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default
Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion
Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of
a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied
by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event
of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts
payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are
expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder
shall be entitled to exercise all other rights and remedies available at law or in equity.

 

If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect.

 

    	19

    	 

    

  

Article
IV. MISCELLANEOUS

 

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

 

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

  

If
to the Borrower, to:

 

MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.

2920
West Olive Avenue - Suite 208

Burbank,
CA 91505

Attn:
DANIEL GRODNIK, Chief Executive Officer

facsimile:

 

With
a copy by fax only to (which copy shall not constitute notice):

 

[enter
name of law firm]

Attn:
[attorney name]

[enter
address line 1]

[enter
city, state, zip]

facsimile:
[enter fax number]

 

    	20

    	 

    

  

If
to the Holder:

 

KBM
WORLDWIDE, INC..

80
Cuttermill Road – Suite 410

Great
Neck, NY 11021

Attn:
Seth Kramer, President

e-mail:
info@kbmworldwide.com

 

With
a copy by fax only to (which copy shall not constitute notice):

 

Naidich
Wurman Birnbaum & Maday LLP

Attn:
Judah A. Eisner, Esq.

Attn:
Bernard S. Feldman, Esq.

facsimile:
516-466-3555

e-mail:
dyork@nwbmlaw.com

  

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

 

4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined
in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a bonafide margin account or other lending arrangement.

 

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

 

4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of
Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower
and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s
fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

    	21

    	 

    

  

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

 

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

 

4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of
Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the
Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other
information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose
of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any
share of any class or any other securities or property, or to receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all
of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail
a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of
such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public
announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification
to the Holder in accordance with the terms of this Section 4.9.

 

    	22

    	 

    

  

4.10
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this October 28, 2014.

 

MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.

 

	By:	/s/
    Daniel Grodnik	 
	 	DANIEL GRODNIK	 
	 	Chief Executive
Officer	 

 

    	23

    	 

    

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert $__________ principal amount of the Note (defined below) into that number
of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set
forth below, of MASS HYSTERIA ENTERTAINMENT COMPANY, INC., a Nevada corporation (the “Borrower”) according to the
conditions of the convertible note of the Borrower dated as of October 28, 2014 (the “Note”), as of the date
written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box
Checked as to applicable instructions:

 

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

 

KBM
WORLDWIDE, INC.

80
Cuttermill Road – Suite 410

Great
Neck, NY 11021

Attention:
Certificate Delivery

e-mail:
info@kbmworldwide.com

 

	 	Date
    of Conversion:	                                     
	 	Applicable
    Conversion Price: 	$                                                                 
	 	Number
    of Shares of Common Stock to be Issued	
	 	Pursuant
    to Conversion of the Notes: 	                                     
	 	Amount
    of Principal Balance Due remaining	 
	 	Under
    the Note after this conversion:	                                     

 

	 	KBM
    WORLDWIDE, INC.	 
	 	 	 
	 	By:		 
	 	Name:	Seth Kramer	 
	 	Title:
    	President	 
	 	 	 	 
	 	Date:	_____________	 

 

    	24NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

	 	Right
    to Purchase 1,262,500,000 shares of Common Stock of MASS HYSTERIA ENTERTAINMENT COMPANY, INC.(subject to adjustment as provided
    herein)

 

Issue
Date: October 28, 2014

 

COMMON
STOCK PURCHASE WARRANT

 

THIS
CERTIFIES THAT, for value received, KBM WORLDWIDE, INC., a New York
corporation, or its registered assigns, is entitled to purchase from MASS HYSTERIA ENTERTAINMENT COMPANY, INC., a Nevada
corporation (the “Company”), at any time or from time to time during the period specified in Paragraph 2 hereof, 1,262,500,000
fully paid and non-assessable shares of the Company’s Common Stock, par value $0.00001 per share (the “Common Stock”),
at an exercise price per share equal to $0.0003 (the “Exercise Price”). The term “Warrant Shares,” as
used herein, refers to the shares of Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price are subject
to adjustment as provided in Paragraph 5 hereof. The term “Warrants” means this Warrant and the other warrants issued
pursuant to that certain Securities Purchase Agreement, dated the date hereof, by and among the Company and the Buyer listed on
the execution page thereof (the “Securities Purchase Agreement”).

 

This
Warrant is subject to the following terms, provisions, and conditions:

 

1. Manner
of Exercise; Issuance of Certificates; Payment for Shares. Subject
to the provisions hereof, this Warrant may be exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant, together with a completed exercise agreement in the form attached hereto (the “Exercise Agreement”), to
the Company during normal business hours on any business day at the Company’s principal executive offices (or such
other office or agency of the Company as it may designate by notice to the holder hereof), and upon payment to the Company in
cash, by certified or official bank check or by wire transfer for the account of the Company of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder’s designee, as the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement shall have been delivered, and payment shall
have been made for such shares as set forth above. Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding five (5) business days, after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or
such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the
holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised.
In addition to all other available remedies at law or in equity, if the Company fails to deliver certificates for the Warrant
Shares within five (5) business days after this Warrant is exercised, then the Company shall pay to the holder in cash a
penalty (the “Penalty”) equal to 2% of the number of Warrant Shares that the holder is entitled to multiplied by
the Market Price (as hereinafter defined) for each day that the Company fails to deliver certificates for the Warrant Shares.
For example, if the holder is entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the Company shall pay to
the holder $4,000 for each day that the Company fails to deliver certificates for the Warrant Shares. The Penalty shall be
paid to the holder by the fifth day of the month following the month in which it has accrued.

 

    	 

    	 

    

 

2.
Period of Exercise. This Warrant is exercisable at any time or from time to time on or after the date on which this Warrant
is issued and delivered pursuant to the terms of the Securities Purchase Agreement and before 6:00 p.m., New York, New York time
on the fifth (5th) anniversary of the date of issuance (the “Exercise Period”).

 

3.
Certain Agreements of the Company. The Company hereby covenants and agrees as follows:

 

(a)
Shares to be Fully Paid. All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and non-assessable and free from all taxes, liens, and charges with respect to the issue thereof.

 

(b)
Reservation of Shares. During the Exercise Period, the Company shall at all times have authorized, and reserved for the purpose
of issuance upon exercise of this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of this Warrant.

 

(c)
Certain Actions Prohibited. The Company will not, by amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in
the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by
the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the Company
(i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise
Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant.

 

    	 

    	 

    

 

(d)
Successors and Assigns. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition
of all or substantially all the Company’s assets.

 

4.
Market Price. Market Price of a share of Common Stock as of a particular date (the “Determination Date”) shall
mean:

 

(a)
If the Company’s Common Stock is traded on an exchange or is quoted on the NASDAQ Global Market, NASDAQ Global Select Market,
the NASDAQ Capital Market, the New York Stock Exchange or the American Stock Exchange, LLC, then the average of the highest three
(3) closing bid prices for the Common Stock during the ten (10) trading day period ending one trading day prior to the Determination
Date;

 

(b)
If the Company’s Common Stock is not traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market,
the NASDAQ Capital Market, the New York Stock Exchange or the American Stock Exchange, Inc., but is traded on the OTC Bulletin
Board or in the over-the-counter market or Pink Sheets, then the average of the highest three (3) closing bid prices for the Common
Stock during the ten (10) trading day period ending one trading day prior to the Determination Date;

 

(c)
Except as provided in clause (d) below, if the Company’s Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing of the American
Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to
pass on the matter to be decided; or

 

(d)
If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company’s charter, then all amounts to be payable per share to holders of the Common Stock
pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of
the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.

 

5.
Anti-dilution Provisions. During the Exercise Period, the Exercise Price and the number of Warrant Shares shall be subject
to adjustment from time to time as provided in this Paragraph 5.

 

In
the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall
be rounded up to the nearest cent.

 

    	 

    	 

    

 

(a)
Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock. Except as otherwise provided in Paragraphs 5(c)
and 5(e) hereof, if and whenever on or after the date of issuance of this Warrant, the Company issues or sells, or in accordance
with Paragraph 5(b) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration
per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith)
less than the Market Price on the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance,
the Exercise Price will be reduced to a price determined by multiplying the Exercise Price in effect immediately prior to the
Dilutive Issuance by a fraction, (i) the numerator of which is an amount equal to the sum of (x) the number of shares of Common
Stock actually outstanding immediately prior to the Dilutive Issuance, plus (y) the quotient of the aggregate consideration, calculated
as set forth in Paragraph 5(b) hereof, received by the Company upon such Dilutive Issuance divided by the Market Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which is the total number of shares of Common Stock Deemed
Outstanding (as defined below) immediately after the Dilutive Issuance.

 

(b)
Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Paragraph 5(a) hereof,
the following will be applicable:

 

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

 

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

 

    	 

    	 

    

 

(iii)
Change in Option Price or Conversion Rate. If there is a change at any time in (i) the amount of additional consideration payable
to the Company upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Company upon
the conversion or exchange of any Convertible Securities; or (iii) the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock (other than under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or sold.

 

(iv)
Treatment of Expired Options and Unexercised Convertible Securities. If, in any case, the total number of shares of Common Stock
issuable upon exercise of any Option or upon conversion or exchange of any Convertible Securities is not, in fact, issued and
the rights to exercise such Option or to convert or exchange such Convertible Securities shall have expired or terminated, the
Exercise Price then in effect will be readjusted to the Exercise Price which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock issued upon exercise or conversion thereof), never been
issued.

 

(v)
Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will be the amount received by the Company therefor, before
deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the
Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Convertible Securities are issued
or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received
by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which
case the amount of consideration received by the Company will be the Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued in connection with any acquisition, merger or consolidation in which
the Company is the surviving corporation, the amount of consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving corporation as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined in good faith
by the Board of Directors of the Company.

 

    	 

    	 

    

 

(vi)
Exceptions to Adjustments of Exercise. No adjustment to the Exercise Price will be made (i) upon the exercise of any warrants,
options or convertible securities granted, issued and outstanding on the date of issuance of this Warrant; (ii) upon the grant
or exercise of any stock or options which may hereafter be granted or exercised under any employee benefit plan, stock option
plan or restricted stock plan of the Company now existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the independent members of the Board of Directors of the Company or a majority of
the members of a committee of independent directors established for such purpose; or (iii) upon the exercise of the Warrants.

 

(c)
Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares,
then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company at any time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the
date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately
increased.

 

(d)
Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Paragraph 5, the
number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

 

(e)
Consolidation, Merger, or Sale. In case of any consolidation of the Company with, or merger of the Company into any other corporation,
or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a
plan of complete liquidation of the Company, then as a condition of such consolidation, merger or sale or conveyance, adequate
provision will be made whereby the holder of this Warrant will have the right to acquire and receive upon exercise of this Warrant
in lieu of the shares of Common Stock immediately theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure that the provisions of this Paragraph 5 hereof
will thereafter be applicable as nearly as may be in relation to any shares of stock or securities thereafter deliverable upon
the exercise of this Warrant. The Company will not effect any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the Company) assumes by written instrument the obligations under
this Paragraph 5 and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to acquire.

 

    	 

    	 

    

 

(f)
Distribution of Assets. In case the Company shall declare or make any distribution of its assets (including cash) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or otherwise, then, after the date of record for determining
shareholders entitled to such distribution, but prior to the date of distribution, the holder of this Warrant shall be entitled
upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, to receive the amount
of such assets which would have been payable to the holder had such holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such distribution.

 

(g)
Upon the occurrence of any event which requires any adjustment of the Exercise Price, then, and in each such case, the Company
shall give notice thereof to the holder of this Warrant, which notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares purchasable at such price upon exercise, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the
Chief Financial Officer of the Company.

 

(h)
No Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional share which would otherwise be issuable in an amount equal to the same
fraction of the Market Price of a share of Common Stock on the date of such exercise.

 

(i)
Other Notices. In case at any time:

 

(i)
the Company shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained earnings) to the holders of the Common Stock;

 

(ii)
the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class
or other rights;

 

(iii)
there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger
of the Company with or into, or sale of all or substantially all its assets to, another corporation or entity; or

 

(iv)
there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in each such case, the
Company shall give to the holder of this Warrant (a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription
rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation
thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common
Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at least 30 days prior to the record date or the date
on which the Company’s books are closed in respect thereto. Failure to give any such notice or any defect therein shall
not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.

 

    	 

    	 

    

 

(j)
Certain Events. If any event occurs of the type contemplated by the adjustment provisions of this Paragraph 5 but not expressly
provided for by such provisions, the Company will give notice of such event as provided in Paragraph 5(g) hereof, and the Company’s
Board of Directors will make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock acquirable
upon exercise of this Warrant so that the rights of the holder shall be neither enhanced nor diminished by such event.

 

(k)
Certain Definitions.

 

(i)
“Common Stock Deemed Outstanding” shall mean the number of shares of Common Stock actually outstanding (not including
shares of Common Stock held in the treasury of the Company), plus (x) pursuant to Paragraph 5(b)(i) hereof, the maximum total
number of shares of Common Stock issuable upon the exercise of Options, as of the date of such issuance or grant of such Options,
if any, and (y) pursuant to Paragraph 5(b)(ii) hereof, the maximum total number of shares of Common Stock issuable upon conversion
or exchange of Convertible Securities, as of the date of issuance of such Convertible Securities, if any.

 

(ii)
“Common Stock,” for purposes of this Paragraph 5, includes the Common Stock, par value $0.00001 per share, and
any additional class of stock of the Company having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only shares of Common Stock in respect of which this
Warrant is exercisable, or shares resulting from any subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the character referred to in Paragraph 5(e) hereof, the
stock or other securities or property provided for in such Paragraph.

 

6.
Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge
to the holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company
shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of
any certificate in a name other than the holder of this Warrant.

 

7.
No Rights or Liabilities as a Shareholder. This Warrant shall not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Company. No provision of this Warrant, in the absence of affirmative action by the holder hereof
to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to
any liability of such holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.

 

    	 

    	 

    

 

8.
Transfer, Exchange, and Replacement of Warrant. 

 

(a)
This Warrant and the rights granted to the holder hereof are transferable, in whole or in part, upon surrender of this Warrant,
together with a properly executed assignment in the form attached hereto, at the office or agency of the Company referred to in
Paragraph 8(e) below, provided, however, that any transfer or assignment shall be subject to the conditions set forth in Paragraph
8f) hereof and to the applicable provisions of the Securities Purchase Agreement. Until due presentment for registration of transfer
on the books of the Company, the Company may treat the registered holder hereof as the owner and holder hereof for all purposes,
and the Company shall not be affected by any notice to the contrary.

 

(b)
Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the office or agency of the Company referred to in Paragraph 8(e) below, for new Warrants of like tenor representing in the
aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants
to represent the right to purchase such number of shares as shall be designated by the holder hereof at the time of such surrender.

 

(c)
Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

(d)
Cancellation; Payment of Expenses. Upon the surrender of this Warrant in connection with any transfer, exchange, or replacement
as provided in this Paragraph 8, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other
than securities transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the holder or transferees)
and charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Paragraph 8.

 

(e)
Register. The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address
of the person in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner
of this Warrant.

 

    	 

    	 

    

 

(f)
Exercise or Transfer Without Registration. If, at the time of the surrender of this Warrant in connection with any exercise, transfer,
or exchange of this Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares issuable hereunder), shall not
be registered under the Securities Act of 1933, as amended (the “Securities Act”) and under applicable state securities
or blue sky laws, the Company may require, as a condition of allowing such exercise, transfer, or exchange, (i) that the holder
or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel, which opinion and counsel
are acceptable to the Company, to the effect that such exercise, transfer, or exchange may be made without registration under
said Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver
to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited
investor” as defined in Rule 501(a) promulgated under the Securities Act; provided that no such opinion, letter or status
as an “accredited investor” shall be required in connection with a transfer pursuant to Rule 144 under the Securities
Act. The first holder of this Warrant, by taking and holding the same, represents to the Company that such holder is acquiring
this Warrant for investment and not with a view to the distribution thereof.

 

9.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be: 

 

If
to the Company, to:

 

MASS HYSTERIA
ENTERTAINMENT COMPANY, INC.

2920 West
Olive Avenue - Suite 208

Burbank,
CA 91505

Attn: DANIEL
GRODNIK, Chief Executive Officer

facsimile:
[enter fax number]

 

With
a copy by fax only to (which copy shall not constitute notice):

 

[enter
name of law firm]

Attn:
[attorney name]

[enter
address line 1]

[enter
city, state, zip]

facsimile:
[enter fax number]

 

If
to the Holder:

 

KBM
WORLDWIDE, INC.

80
Cuttermill Road – Suite 410

Great
Neck, NY. 11021

Attn:
Seth Kramer, President

facsimile:
[enter fax number]

 

With
a copy by fax only to (which copy shall not constitute notice):

 

Naidich
Wurman Birnbaum & Maday, LLP

Attn:
Judah A. Eisner, Esq.

Attn:
Bernard S. Feldman, Esq.

facsimile:
516-466-3555

e-mail:
dyork@nwbmlaw.com

 

    	 

    	 

    

 

10.
Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Warrant shall be brought only in the state courts of New York or in the federal courts located in the state of New York
and county of Nassau. The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens. The Company and Holder waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this
Warrant or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other
Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any other manner permitted by law.

 

11.
Miscellaneous. 

 

(a)
Amendments. This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the
holder hereof.

 

(b)
Descriptive Headings. The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the provisions hereof.

 

(c)
Cashless Exercise. Notwithstanding anything to the contrary contained in this Warrant, this Warrant may be exercised by presentation
and surrender of this Warrant to the Company at its principal executive offices with a written notice of the holder’s intention
to effect a cashless exercise, including a calculation of the number of shares of Common Stock to be issued upon such exercise
in accordance with the terms hereof (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that number of shares of Common Stock determined by multiplying
the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference
between the then current Market Price per share of the Common Stock and the Exercise Price, and the denominator of which shall
be the then current Market Price per share of Common Stock. For example, if the holder is exercising 100,000 Warrants with a per
Warrant exercise price of $0.75 per share through a cashless exercise when the Common Stock’s current Market Price per share
is $2.00 per share, then upon such Cashless Exercise the holder will receive 62,500 shares of Common Stock.

 

    	 

    	 

    

 

(d)
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holder,
by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy
at law for a breach of its obligations under this Warrant will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Warrant, that the holder shall be entitled, in addition to all other available
remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Warrant and to enforce specifically the terms and provisions thereof, without the necessity
of showing economic loss and without any bond or other security being required.

 

IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

 

MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.

 

	By:	/s/
    Daniel Grodnik	 
	 	DANIEL GRODNIK	 
	 	Chief Executive
    Officer

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