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 19339 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: $106,000.00Issue
Date: April 21, 2014

CONVERTIBLE
PROMISSORY NOTE

FOR
VALUE RECEIVED, a Labor Smart, Inc., a Nevada corporation (hereinafter called the "Borrower"), hereby
promises to pay to the order of Tailwind Partners 3, LLC a Utah limited liability company,
or registered assigns (the "Holder") the sum of $106,000.00 together with any interest as set forth
herein, on January 21, 2015 (the "Maturity Date"), and to pay interest on the unpaid principal balance
hereof at the rate of twelve percent (12%) (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 except as otherwise explicitly set forth herein.
Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty four percent
(24%) per annum from the due date thereof until the same is paid ("Default Interest"). Interest shall commence accruing
on the date that the Note is fully paid and 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, $0.001 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

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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 Ill) pursuant to Section 1.6(a) or Article Ill, 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 e-mail
(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(l) the principal amount of this Note to be converted in such
conversion pi (2) at the Borrower's option, accrued
and unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date, plus (3) at the Borrower's option, Default Interest,
if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2)
pi (4) at the Holder's option, any amounts owed to
the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

1.2 Conversion Price.

(a)
Calculation of Conversion Price. The conversion price (the "Conversion Price")
shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the
securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events). The 'Variable Conversion Price" shall mean 58% multiplied
by the Market Price (as defined herein). "Market Price" means the average of the lowest three (3)
Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading
Day prior to the Conversion Date. "Trading Price" means any intraday trading
price, designated by the Holder, of any shares of Common Stock as reporting on the OTC Markets
website, or applicable trading market (the 'OTCQB") as reported by a reliable reporting service ("Reporting
Service") designated by the Holder (i.e. www.otcmarkets.com, Bloomberg, etc.) or,
if the OTCQB is not the principal trading market for such security, the lowest intraday price of such security on the
principal securities exchange or trading market where such security is listed or traded or, if no

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intraday
price of such security is available in any of the foregoing manners, the closing price of the Common stock. 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 OTCQB, or on the principal securities exchange or other securities market on which the Common Stock
is then being traded.

(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 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 (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 pursuant to Section 4(g) of the Purchase Agreement. 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 (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.

If, at any time the Borrower does
not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4 Method of Conversion.

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(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, e-mail 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, prinla fade, 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.

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

(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from
the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion
meeting the requirements for conversion as provided in this Section 1 .4, the Borrower shall
issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock
issuable upon such conversion within three (3) business days after such receipt (the "Deadline")
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance
with the terms hereof and the Purchase Agreement.

(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 1, 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,

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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.

(f)
Delivery of Common Stock by Electronic Transfer. In lieu of delivering
physical certificates representing the Common Stock issuable upon conversion, provided
the Borrower 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 .I 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 not delivered by
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. The Borrower agrees
that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate,
interference with such conversion right are difficult if not impossible to qualify. Accordingly
the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g)
are justified.

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:

"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

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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.

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

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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.

(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 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 Maximurn Share Amount has been issued, 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, in lieu
of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.

1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (1) 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.

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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, (1) 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.

1.9 Prepayment.
Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and
ending on the date which is one hundred twenty (120) days following the issue date, 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 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 125%, 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 pj
(y) Default Interest, if any, on the amounts referred to in clauses (xv) 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.

Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is one hundred
twenty-one (121) days following the issue date and ending on the date which is one hundred
fifty (150) days following the issue date, 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 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 Optional Prepayment Date, the Borrower shall make payment of the Second
Optional Prepayment Amount (as defined below) to 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 "Second Optional Prepayment Amount") equal to 130%, multiplied by the
sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the amounts referred
to in clause (w) and (x) plus (z) any amounts owed to the Holder pursuant to Section 1.3 and 1.4(g) hereof.
If the Borrower delivers an Optional Prepayment Notice and fails to pay

the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business
days

    	8

    	 

    

following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on
the date which is one hundred fifty-one (151) days following the issue date and ending on the date which is one hundred
eighty (180) days following the issue date, 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 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 Optional Prepayment Date, the Borrower shall make payment of the Third
Optional Prepayment Amount (as defined below) to 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 "Third
Optional Prepayment Amount") equal to 135%, 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 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 Third 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.

After
the expiration of one hundred eighty (180) following the date of the Note, the Borrower shall have no right of prepayment
without the prior written consent of the Holder.

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 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,
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.

    	9

    	 

    

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.

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 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, 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, 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 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 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. 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 such
breach continues for a period of ten (10) days after written notice thereof to the
Borrower from the Holder.

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 or the Purchase Agreement.

    	10

    	 

    

 

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 OTCQB 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.

 

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).

 

3.13Financial
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.

 

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

 

3.15Replacement
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.

 

3.15Cross-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

 

    	11

    	 

    

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 related or companion documents to this Note. 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.

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 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.

    	12

    	 

    

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:

Labor Smart, Inc.

5604 Wendy
Bagwell Parkway Suite 223

Hiram, GA 30141

If to the Holder:

Tailwind
Partners 3, LLC 1384 Michigan Ave.

Salt Lake City, UT 84105

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 50 1(a) of the 1933 Act). Notwithstanding anything
in this Note to the contrary, this Note may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement.

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 Utah without regard to principles of conflicts of laws. Any action brought by

    	13

    	 

    

either
party against the other concerning the transactions contemplated by this Note shall be brought only in
the state courts of Utah or in the federal courts located in the state of Utah. 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.

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.

    	14

    	 

    

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 April 21, 2014

LaborSmart,
Inc.

/s/ Ryan Schadel, Chief Executive Officer

    	15

    	 

    

EXHIBIT
A

NOTICE OF CONVERSION

The undersigned hereby
elects to convert $_________________ principal amount of the Note (defined below) into that
number of shares of Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth
below, of Labor Smart, Inc., a Nevada corporation (the "Borrower") according to
the conditions of the convertible note of the Borrower dated as of April 21, 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:

Tailwind
Partners 3, LLC 1384 Michigan Ave.

Salt Lake City, UT 84105

Date of Conversion:

Applicable Conversion
Price:         $

Number
of Shares of Common Stock to be Issued Pursuant to Conversion of the Note:

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

Tailwind Partners 3, LLC

Name:

Title: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: $125,288.69	Issue Date: September 24, 2014
	Purchase Price: $125,288.69	 

 CONVERTIBLE PROMISSORY NOTE

FOR
VALUE RECEIVED, LABOR SMART, INC., a Nevada corporation (hereinafter called the "Borrower"),
hereby promises to pay to the order of CAREBOURN CAPITAL, L.P., a
Delaware limited partnership, or registered assigns (the "Holder") the sum of $125,288.69 together with any interest
as set forth herein, on June 24, 2014 (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof
at the rate of twelve percent (12%) (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 except as otherwise explicitly set forth herein. 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 date that the Note is fully paid and 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, $0.001 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").

    	 	1	 

    	 

    

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

The following terms shall apply to this Note:

ARTICLE I. CONVERSION RIGHTS

1.1Conversion Right. The Holder shall have
the right from time to time, and

at any time during the period
beginning on 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 1 3D-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 e-mail (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, 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.

    	 	2	 

    	 

    

1.2Conversion
Price.

(a)
Calculation of Conversion Price. The conversion price (the "Conversion Price") shall equal the Variable
Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends
or rights offerings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower,
combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion
Price" shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). "Market
Price" means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10)
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 OTC Markets OTCQB Marketplace, or applicable trading market (the "OTCQB")
as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or, if the
OTCQB 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" by the National Quotation Bureau, Inc. 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 OTCQB, or on the principal securities exchange or other securities market on which the Common Stock
is then being traded.

(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.

    	 	3	 

    	 

    

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 issued pursuant to the Purchase
Agreement. The Borrower is required at all times to have authorized and reserved three times the number of shares that is actually
issuable upon full conversion of the Note (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 pursuant
to Section 4(g) of the Purchase Agreement. 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 (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.

If, at any time the Borrower does
not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4Method 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, e-mail
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 fade,
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

    	 	4	 

    	 

    

represented
by this Note may be less than the amount stated on the face hereof.

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

(d)  
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission
or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided
in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline")
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.

(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.

(f)   
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the Borrower 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.

    	 	5	 

    	 

    

(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 not delivered by 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 $1,000 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. The
Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate,
interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the
liquidated damages provision contained in this Section 1.4(g) are justified.

1 .5Concerning 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:

"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 19339
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 19339 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

    	 	6	 

    	 

    

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, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) 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. In the event that the Company does not accept the opinion of counsel
provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or
Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

1.6Effect 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.

(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

    	 	7	 

    	 

    

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.

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

    	 	8	 

    	 

    

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.

(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.

1.7Trading 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

    	 	9	 

    	 

    

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, 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, in lieu of any further right to convert this Note, this will be considered an Event of Default under
Section 3.3 of the Note.

1.8Status 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, (1) 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.

1.9Prepayment. Prepayment is permitted
by the Company at any time by

paying an amount equal to the
outstanding principal amount of the Note together with accrued and unpaid interest thereon (the "Outstanding
Amount") multiplied by the following percentage (the "Multiplier"), which such Multiplier shall be
determined depending on the date of such prepayment: (i) beginning on the date of the Note and ending on the date which is
thirty (30) days following the date of the Note, 110%; (ii) beginning on the date which is thirty one (3 1) days from the
date of the Note and ending on the date which is sixty (60) days following the date of the Note, 115%; (iii) beginning
on the date which is sixty one (61) days from the date of the Note and ending on the date which is ninety (90) days following
the date of this Note, 120%; (iv) beginning on the date which is ninety one (9 1) days from the date of the Note and ending
on the one hundred twenty (120) days following the date of this Note, 125%; (v) beginning on the date which is one
hundred twenty one (121) days from the date of the Note and ending on the one hundred fifty (150) days following the
date of this Note, 130%; (vi) beginning on the date which is one hundred fifty one (15 1) days from the date of the
Note and ending on the one hundred eightieth (180) days following the date of this Note, 135%. After the expiration of one
hundred eighty (180) days following the

    	 	10	 

    	 

    

date
of the Note, the company shall have no right of prepayment.

ARTICLE II. CERTAIN COVENANTS

2.1Distributions
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.

2.2Restriction 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.

2.3Sale 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.

2.4Advances 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.

ARTICLE III. EVENTS OF DEFAULT

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

3.1Failure 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 acceleration or otherwise, following a five (5) day cure period.

3.2Conversion 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, 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, the Borrower

    	 	11	 

    	 

    

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 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 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. 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.

3.3Breach 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 such breach continues for a period
of ten (10) days after written notice thereof to the Borrower from the Holder.

3.4Breach 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 or the Purchase Agreement.

3.5Receiver 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.

3.6Judgments. 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.

3.7Bankruptcy.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.

3.8Delisting of Common Stock. The Borrower
shall fail to maintain the listing

of the Common Stock on at least one of
the OTCQB or an equivalent replacement exchange, the

    	 	12	 

    	 

    

Nasdaq
National Market, the Nasdaq SmaliCap Market, the New York Stock Exchange, or
the American Stock Exchange.

3.9Failure 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.

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 related or companion documents to this Note. 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.

    	 	13	 

    	 

    

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.

ARTICLE IV. MISCELLANEOUS

    	 	14	 

    	 

    

4.1Failure
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.

4.2Notices. 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:

LABOR SMART, INC.

5604
Wendy Bagwell, Suite 223

Hiram, GA 30141

Attn: Ryan Schadel, Chief
Executive Officer Facsimile: (PLEASE INSERT)

If to the Holder:

CAREBOURN CAPITAL, L.P. 8700 Black Oaks Lane
N

Maple Grove, Minnesota 55311 Attn: Chip Rice, Managing
Member facsimile: (763) 416- 1450

4.3Amendments. 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.

4.4Assignability. 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

    	 	15	 

    	 

    

as
collateral in connection with a bona fide margin account or other lending arrangement.

45Cost
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.

4.6Governing Law. This Note shall be
governed by and construed in

accordance with the laws of the
State of Illinois 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 Illinois or in the federal courts located
in the state of Illinois. 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.

4.7Certain 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.

4.8Purchase Agreement. By its acceptance
of this Note, each party agrees to

be bound by the applicable terms of the Purchase
Agreement.

4.9Notice 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

    	 	16	 

    	 

    

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.

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.

[SIGNATURE PAGE FOLLOWS]

    	 	17	 

    	 

    

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this September 24th, 2014.

Labor Smart, Inc.

Name: /s/ Ryan Schadel

Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	18

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