Document:

Exhibit 10.4

 

GIGPEAK, INC.

AMENDED AND RESTATED

CHANGE IN CONTROL BONUS PLAN

1.          PURPOSE

The purpose of the GigPeak, Inc. Amended and Restated Change in Control Bonus Plan (the “Plan”) is to provide cash bonus payments to certain employees of GigPeak, Inc. (the “Company”) upon a change in control of the Company as further set forth herein.  The Plan is designed to promote the interests of the Company and its stockholders by providing an additional incentive to management and employees to maximize the value of the Company’s business and its common stock.

2.          DEFINITIONS

The following capitalized words as used herein shall have the following meanings:

(a)          “Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the entity specified, where control may be by management authority, contract or equity interest.

(b)          “Award” means the contingent right of a Participant to receive a cash payment under the Plan upon a Change in Control of the Company, subject to such terms and conditions as the Committee may establish under the terms of the Plan.

(c)          “Board” means the Board of Directors of the Company.

(d)          “Bonus Percentage” means the sum, rounded to the nearest 0.01%, of (i) four percent (4%) plus (ii) (A) 0.034 multiplied by (B) the premium of the amount paid to a stockholder in the Change in Control (or if a sale of all or substantially all of the assets of the Company, available for distribution to a stockholder of the Company from the proceeds of such sale) over the average closing price of a share of the Company’s common stock for the 90-day period ending immediately prior to the announcement of the Change in Control, for which such premium shall be expressed as a percentage.  The Bonus Percentage shall have a cap of five and one-half percent (5.5%).

(e)          A “Change in Control” shall be deemed to take place if hereafter any one or a combination of the following occur, provided such events or circumstances also constitute a change in ownership or effective control or a sale of substantially all of the assets of the Company under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”):  (i) any “Person” or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”), other than the Company or any of its Affiliates, becomes a beneficial owner (within the meaning of Rule 13d-3 as promulgated under the Act), directly or indirectly, in one or a series of transactions, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; (ii) the consummation of a merger or consolidation of the Company with any other Person (other than a member of the Company and/or its Affiliates), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (iii) within twelve (12) months after a tender offer or exchange offer for voting securities of the Company (other than by the Company) the individuals who were directors of the Company immediately prior thereto shall cease to constitute a majority of the Board; or (iv) there occurs a closing of a sale or other disposition by the Company of all or substantially all of the assets of the Company other than to one or more of the Company’s Affiliates.

(f)          “Committee” means the Compensation Committee of the Board, or such other committee or sub-committee of the Board as the Board may designate from time to time to administer the Plan.

(g)          “Company” means GigPeak, Inc. a Delaware Corporation.

(h)          “Participant” means an employee of the Company who has been granted an Award under the Plan.

(i)          “Plan” means the GigPeak, Inc. Change in Control Bonus Plan, as it may be amended from time to time.

(j)          “Sales Proceeds” means the aggregate fair market value of the gross consideration (cash and/or non-cash) received by the Company in a sale of its assets or its security holders in all other Changes in Control, but shall not include any amounts paid or payable for the following:  (i) any severance or other compensatory payments paid or payable to employees or consultants of the Company upon a Change in Control; (ii) any tax gross-up payments made in connection with Section 280G of the Code as may be paid or payable to employees or consultants of the Company upon a Change in Control in accordance with the terms of any plan, program or arrangement of the Company; (iii) any consulting, legal, accounting or other fees or costs paid in connection with the transaction triggering the Change in Control; and (iv) any other costs, fees or expenses as may be determined by the Committee in good faith immediately prior to the consummation of the Change in Control, taking into account such factors as the Committee deems appropriate.

3.          PLAN ADMINISTRATION

(a)          Committee Members.  The Plan shall be administered by the Committee.  The Committee shall have such powers and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the Plan.  No member of the Committee shall be liable for any action or determination made in good faith by the Committee with respect to the Plan or any Award thereunder.

(b)          Discretionary Authority.  Subject to the express limitations of the Plan, the Committee shall have authority in its discretion to determine the time or times at which Awards may be granted, the recipients of Awards, and all other terms of Awards under the Plan.  The Committee shall also have discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all other determinations necessary or advisable for the administration of the Plan.  The Committee may prescribe, amend, and rescind rules and regulations relating to the Plan.  All interpretations, determinations, and actions by the Committee shall be final, conclusive, and binding upon all parties.

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4.          PARTICIPATION

An employee who is, or a group of employees of the Company who are, designated by the Committee to participate in the Plan shall be deemed to be Participants in the Plan.  The Committee may designate additional Participants from time to time as it shall determine in its sole discretion including such pool, group or division of employees of the Company as it deems appropriate.

5.          GRANT OF AWARDS

The Committee shall determine the Participants to whom Awards are granted under the Plan and the terms of payment under an Award in accordance with the terms of the Plan.

6.          PAYMENT OF AWARDS

(a)          Change in Control.  Payments to Participants under the Plan shall be made only upon the consummation of a Change in Control provided that the Participant remains employed by the Company at the time of such consummation in accordance with Section 7 hereof.  Payments to Participants shall be equal to an amount based on a percentage of the Bonus Pool (as defined below).

(b)          Bonus Pool; Limitation on Payments.  The aggregate amount of payments available for distribution to Participants with respect to any Change in Control (the “Bonus Pool”) shall be determined by multiplying the Sales Proceeds by the Bonus Percentage, but shall be no greater than $9,745,957.  To the extent that the aggregate payments under the Bonus Pool would otherwise exceed five and one-half percent (5.5%) of the Sales Proceeds, the Committee shall reduce all payments to Participants payable under the Bonus Pool in a manner that it determines to be equitable and appropriate under the circumstances in its sole discretion.

(c)          Time and Form of Payment.  All payments to Participants hereunder shall be made in single, lump-sum cash payments upon the consummation of the Change in Control transaction and in any event no later than March 15th of the year following consummation of the transaction.

(d)          Tax Withholding.  All payments under this Plan shall be subject to applicable Federal and state income and employment taxes and any other amounts that the Company is required by law to deduct and withhold from such payment.

7.          EMPLOYMENT REQUIREMENT

(a)          Termination prior to Change in Control.  Any payment to a Participant under the Plan shall be conditioned upon such Participant’s continued employment with the Company until the consummation of the Change in Control. A Participant shall not be entitled to the payment under an Award if his or her employment is terminated at any time or for any reason prior to the consummation of a Change in Control, including by reason of death, disability, retirement, voluntary or involuntary termination, or termination with or without cause.

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(b)          Termination following a Change in Control.  The termination of a Participant’s employment upon or following the consummation of a Change in Control shall not affect the Participant’s right to payment under an Award, regardless of the reason for such termination.

8.          UNFUNDED STATUS

All rights of Participants to benefits under the Plan are unfunded obligations of the Company. Plan benefits shall be paid from the general assets of the Company, and each of the Participants shall have the status of an unsecured general creditor of the Company with respect to all interests under the Plan.

9.          TIMING OF PAYMENT

Notwithstanding anything to the contrary herein, if at the time of a Participant’s separation from service the Participant is a “specified employee,” as hereinafter defined, any and all amounts payable under the Plan on account of that separation from service that constitute deferred compensation subject to Section 409A of the Code, as determined by the Company in its reasonable good faith discretion, and that would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of that six month period.  For purposes of the Plan, the phrase “termination of employment“ and correlative phrases mean a “separation from service” as defined in Treas. Regs.§1.409A-1(h), and the term “specified employee” means an individual determined by the Company to be a specified employee under Treas. Regs.§1.409A-1(i).

10.          GENERAL PROVISIONS

(a)          Effective Date.  This Plan amends and restates the GigPeak, Inc. Change in Control Bonus Plan that became effective on November 17, 2016.  The Plan is effective as of February 11, 2017.

(b)          Amendment and Termination.  The Company may, by action of the Board, amend or terminate the Plan at any time, provided that any resulting reduction in a Participant’s right to payment under a previously granted Award shall be compensated for by a replacement plan or arrangement of comparable or greater value to the affected Participant.

(c)          Other Benefits; No Right to Employment.  No payments hereunder shall count toward, be substituted in lieu of, or be considered in determining payments or benefits due to an Participant under applicable law or under any other plan, program or agreement of the Company. Nothing in the Plan shall be deemed to give any Participant the right to remain employed by the Company or to limit, in any way, the right of the Company to terminate, or to change the terms of, a Participant’s employment at any time.

(d)          Governing Law.  The Plan shall be governed by and construed in accordance with the laws of California, without regard to otherwise applicable choice-of-law rules.

4Exhibit
4.1

 

 

NEITHER THIS NOTE
NOR THE SECURITIES THAT MAY BE ISSUED BY THE COMPANY UPON CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED:
(I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE SECURITIES
LAWS; OR (II) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER
THE 1933 ACT OR; (III) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

 

8% CONVERTIBLE PROMISSORY
NOTE

 

Maturity
Date of November 6, 2017  *the “Maturity Date” 

 

$200,000
February 6, 2017  *the
“Issuance Date”

 

FOR VALUE RECEIVED, QPAGOS,
a Nevada Corporation (the “Company”) doing business in Col. Juarez, hereby promises to pay to the order of JSJ Investments
Inc., an accredited investor and Texas Corporation, or its assigns (the “Holder”), the principal amount of Two Hundred
Thousand Dollars ($200,000) (“Note”), on demand of the Holder at any time on or after November 6, 2017 (the “Maturity
Date”), and to pay interest on the unpaid principal balance hereof at the rate of Eight Percent (8%) per annum (the “Interest
Rate”) commencing on the date hereof (the “Issuance Date”).

 

		1.	Payments of Principal and Interest.

 

		a.	Pre-Payment and Payment of Principal and Interest. The Company may pay this Note in full, together
with any and all accrued and unpaid interest, plus any applicable pre-payment premium set forth herein and subject to the terms
of this Section 1.a, at any time on or prior to the date which occurs 180 days after the Issuance Date hereof (the “Prepayment
Date”). In the event the Note is not prepaid in full on or before the Prepayment Date, it shall be deemed a “Pre-Payment
Default” hereunder. Until the Ninetieth (90th) day after the Issuance Date the Company may pay the principal at a cash redemption
premium of 120%, in addition to outstanding interest, without the Holder’s consent; from the 91st day to the One Hundred
and

 

Twentieth (120th) day after the Issuance Date, the Company may pay the principal at a cash redemption premium of 130%, in addition to outstanding
interest, without the Holder’s consent; from the 181st day to the Maturity Date, the Company may pay the principal at a
cash redemption premium of 140%, in addition to outstanding interest, without the Holder’s consent. At
any time on or after the Maturity Date, the Company may repay the then outstanding principal plus accrued interest and Default
Interest (defined below), if any, to the Holder.

 

		b.	Demand of Repayment. The principal and interest balance of this Note shall be paid to the Holder
hereof on demand by the Holder at any time on or after the Maturity Date. The Default Amount (defined herein), if applicable, shall
be paid to Holder hereof on demand by the Holder at any time such Default Amount becomes due and payable to Holder.

 

		c.	Interest. This Note shall bear interest (“Interest”) at the rate of Eight Percent (8%)
per annum from the Issuance Date until the same is paid, or otherwise converted in accordance with Section 2 below, in full and
the Holder, at the Holder’s sole discretion, may include any accrued but unpaid Interest in the Conversion Amount. Interest
shall commence accruing on the Issuance Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed
and shall accrue daily and, after the Maturity Date, compound quarterly. Upon an Event of Default, as defined in Section 10 below,
the Interest Rate shall increase to Eighteen Percent (18%) per annum for so long as the Event of Default is continuing (“Default
Interest”).

 

		d.	General Payment Provisions. This Note shall be paid in lawful money of the United States of America
by check or wire transfer to such account as the Holder may from time to time designate by written notice to the Company 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 (as defined below), 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. For purposes of this Note,
“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State of
Texas are authorized or required by law or executive order to remain closed.

 

		2.	Conversion of Note. In accordance with the terms of subsection 2(b) below, the Conversion Amount
                                                               (see Paragraph 2(a)(i)) of this Note shall be convertible into shares of the Company’s common stock (the “Common
                                                               Stock”) according to the terms and conditions set forth in this Paragraph 2.

 

		a.	Certain Defined Terms. For purposes of this Note, the following terms shall have the following
meanings:

 

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		i.	“Conversion Amount” means the sum of (a) the principal amount of this Note to be converted
with respect to which this determination is being made, (b) Interest; and (c) Default Interest, if any, if so included at the Holder’s
sole discretion.

 

		ii.	“Conversion Price” will be a 40% discount to the average of the three (3) lowest trading
prices during the previous ten (10) trading days to the date of Conversion.

 

		iii.	“Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 

		iv.	“Shares” means the Shares of the Common Stock of the Company into which any balance
on this Note may be converted upon submission of a “Conversion Notice” to the Company substantially in the form attached
hereto as Exhibit 1.

 

		b.	Holder’s Conversion Rights. The Holder shall be entitled to convert all of the outstanding
and unpaid principal and accrued interest of this Note into fully paid and non-assessable shares of Common Stock in accordance
with the stated Conversion Price commencing on the date that is 180 days from the date hereof, except that upon the occurrence
of an Organic Change, as defined in Section 3 below, or an Event of Default, as defined in Section 10(a) below, the Note will become
immediately convertible. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection
with that number of shares of Common Stock which would be in excess of the sum of the number of shares of Common Stock issuable
upon the conversion of the Note with respect to which the determination of this provision is being made on a Conversion Date, which
would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock
of the Company on such Conversion Date. For the purposes of the provision 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, and Regulation 13d-3 thereunder.
Subject to the foregoing, the Holder shall not be limited to aggregate conversions of 4.99% (“Conversion Limitation 1”).
The Holder shall have the authority to determine whether the restriction contained in this Section 2(b) will limit any conversion
hereunder. The Holder may waive the conversion limitation described in this Section 2(b), in whole or in part, upon and
effective after 61 days prior written notice to the Company to increase or decrease such percentage to any other amount as determined
by Holder in its sole discretion (“Conversion Limitation 2”).

 

		c.	Fractional Shares. The Company shall not issue any fraction of a share of Common Stock upon any
conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up to the nearest whole share except in the event that rounding up would violate the conversion
limitation set forth in section 2(b) above.

 

		d.	Conversion Amount. The Conversion Amount shall be converted pursuant to Rule 144(b)(1)(ii) and
Rule 144(d)(1)(ii) as promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, into
unrestricted shares at the Conversion Price.

 

		e.	Mechanics of Conversion. The conversion of this Note shall be conducted in the following manner:

 

		i.	Holder’s Conversion Requirements. To convert this Note into shares of Common Stock on any
date after the 180th day, set forth in the Conversion Notice by the Holder (the “Conversion Date”), the
Holder shall transmit by email, facsimile or otherwise deliver, for receipt on or prior to 11:59 p.m., Eastern Time, on such date
or on the next business day, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit 1 to the Company.

 

		ii.	Company’s Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company
shall as soon as practicable, but in no event later than one (1) Business Day after receipt of such Conversion Notice, send, via
email, facsimile or overnight courier, a confirmation of receipt of such Conversion Notice to such Holder indicating that the Company
will process such Conversion Notice in accordance with the terms herein. Within two (2) Business Days after the date the Conversion
Notice is delivered, the Company shall have issued and electronically transferred the shares to the Broker indicated in the Conversion
Notice; should the Company be unable to transfer the shares electronically, it shall, within two (2) Business Days after the date
the Conversion Notice was delivered, have surrendered to an overnight courier for delivery the next day to the address as specified
in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which
the Holder shall be entitled.

 

		iii.	Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon
a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the
Conversion Date.

 

		iv.	Timely Response by Company. Upon receipt by Company of a Conversion Notice, Company shall respond
within one business day to Holder confirming the details of the Conversion, and provide within two business days the Shares requested
in the Conversion Notice.

 

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		v.	Liquidated Damages for Delinquent Response. If the Company fails to deliver for whatever reason
(including any neglect or failure by, e.g., the Company, its counsel or the transfer agent) to Holder the Shares as requested
in a Conversion Notice within three (3) business days of the Conversion Date, the Company shall be deemed in “Default of
Conversion.” Beginning on the fourth (4th) business day after the date of the Conversion Notice, after the Company
is deemed in Default of Conversion, there shall accrue liquidated damages (the “Conversion Damages”) of Additional
Shares due to Holder equal to Twenty-Five percent (25%) of the number stated in the Conversion Notice and for every five (5) Trading
Days while a Default of Conversion is in effect and continuing the Company shall continue to incur a Conversion Penalty in the
amount of Twenty-Five percent (25%) of the number of shares stated in the Conversion Notice issuable to Holder (the “Additional
Shares”), which may be applied to the Conversion at the Holder’s election. The Additional Shares shall be issued and
the amount of the Note retired will not be reduced beyond that stated in the Conversion Notice. If the Additional Shares owed the
Holder cause the Shares requested by the Conversion Notice to exceed Conversion Limitation 1 or Conversion Limitation 2, as applicable,
the Holder may opt instead to have the Conversion Amount reduced by the value, as calculated using the Conversion Price, of the
Additional Shares owing to Holder pursuant to this Section 2(e)(v). At any time after a Default of Conversion the Holder may, at
their sole discretion, rescind the Conversion The Parties agree that, at the time of drafting of this Note, the Holder’s
damages as to the delinquent response are incapable or difficult to estimate and that the liquidated damages called for is a reasonable
forecast of just compensation.

 

		vi.	Liquidated Damages for Inability to Issue Shares. If the Company fails to deliver Shares requested
by a Conversion Notice due to an exhaustion of authorized and issuable common stock such that the Company must increase the number
of shares of authorized Common Stock before the Shares requested may be issued to the Holder, the discount set forth in the Conversion
Price will be increased by 5 percentage points (i.e. from 40% to 45%) for the Conversion Notice in question and all future Conversion
Notices until the outstanding principal and interest of the Note is converted or paid in full. These liquidated damages shall not
render the penalties prescribed by Paragraph 2(e)(v) void, and shall be applied in conjunction with Paragraph 2(e)(v) unless otherwise
agreed to in writing by the Holder. The Parties agree that, at the time of drafting of this Note, the Holder’s damages as
to the inability to issue shares are incapable or difficult to estimate and that the liquidated damages called for is a reasonable
forecast of just compensation.

 

		vii.	Rescindment of Conversion Notice. If: (i) the Company fails to respond to Holder within one business
day from the date of delivery of a Conversion Notice confirming the details of the Conversion, (ii) the Company fails to provide
the Shares requested in the Conversion Notice within three business days from the date of the delivery of the Conversion Notice,
(iii) the Holder is unable to procure a legal opinion required to have the Shares issued unrestricted and/or deposited to sell
for any reason related to the Company's standing with the SEC or FINRA, or any action or inaction by the Company, (iv) the Holder
is unable to deposit the Shares requested in the Conversion Notice for any reason related to the Company's standing with the SEC
or FINRA, or any action or inaction by the Company, (v) if the Holder is informed that the Company does not have the authorized
and issuable Shares available to satisfy the Conversion, or (vi) if OTC Markets changes the Company's designation to 'Limited Information'
(Yield), 'No Information' (Stop Sign), 'Caveat Emptor' (Skull and Crossbones), or 'OTC', or 'Grey Market' (Exclamation Mark Sign)
on the day of or any day after the date of the Conversion Notice, the Holder maintains the option and sole discretion to rescind
the Conversion Notice ("Rescindment") by delivering a notice of rescindment to the Company in the same manner that a
Conversion Notice is required to be delivered to the Company pursuant to the terms of this Note.

 

		viii.	Transfer Agent Fees and Legal Fees. The issuance of the certificates shall be without charge or
expense to the Holder. The Company shall pay any and all Transfer Agent fees, legal fees, and advisory fees required for execution
of this Note and processing of any Notice of Conversion, including but not limited to the cost of obtaining a legal opinion with
regard to the Conversion. The Holder will deduct fees as described in the attached Disbursement Memorandum from the principal payment
of the Note solely to cover the cost of obtaining any and all legal opinions required to obtain the Shares requested in any given
Conversion Notice. These fees do not make provision for or suffice to defray any legal fees incurred in collection or enforcement
of the Note as described in Paragraph 13. The Holder will deduct 3rd party due diligence fees due SRS Consulting Ltd.
As described in the attached Disbursement Memorandum from the principal payment of the Note.

 

		ix.	Conversion Right Unconditional. If the Holder shall provide a Notice of Conversion as provided
herein, the Company’s obligations to deliver Common Stock shall be absolute and unconditional, irrespective of any claim
of setoff, counterclaim, recoupment, or alleged breach by the Holder of any obligation to the Company.

  

		3.	Other Rights of Holder: Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another
Person or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly
or upon subsequent liquidation) stock, securities, cash or other assets with respect to or in exchange for Common Stock is referred
to herein as “Organic Change.” Prior to the consummation of any (i) Organic Change or (ii) other Organic Change following
which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting
from such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance reasonably
satisfactory to the Holder) to deliver to Holder in exchange for this Note, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Note, and reasonably satisfactory to the Holder. Prior to the consummation
of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the
Holder) to ensure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition the shares of
Common Stock immediately theretofore acquirable and receivable upon the conversion of the Note, such shares of stock, securities,
cash or other assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number
of shares of Common Stock which would have been acquirable and receivable upon the conversion of the Note as of the date of such
Organic Change (without taking into account any limitations or restrictions on the convertibility of the Note set forth in Section
2(b) or otherwise). All provisions of this Note must be included to the satisfaction of Holder in any new Note created pursuant
to this section.

 

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		4.	Representations and Warranties of the Company. In connection with the transactions provided for
herein, the Company hereby represents and warrants to the Holder the following:

 

		a.	Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority
to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on its business or properties.

 

		b.	Authorization. All corporate action has been taken on the part of the Company, its officers, directors
and stockholders necessary for the authorization, execution and delivery of this Agreement. The Company has taken all corporate
action required to make all of the obligations of the Company reflected in the provisions of this Agreement, valid and enforceable
obligations. The shares of capital stock issuable upon conversion of the Note have been authorized or will be authorized prior
to the issuance of such shares.

 

		c.	Fiduciary Obligations. The Company hereby represents that it intends to use the proceeds of the
Note primarily for the operations of its business and not for any personal, family, or household purpose. The Company hereby represents
that its board of directors, in the exercise of its fiduciary duty, has approved the execution of this Agreement based upon a reasonable
belief that the proceeds of the Note provided for herein is appropriate for the Company after reasonable inquiry concerning its
financial objectives and financial situation.

 

		d.	Data Request Form. The Company hereby represents and warrants to Holder that all of the information
furnished to Holder pursuant to the data request form (“DRF”) dated January 23, 2017 is true and correct in all material
respects as of the date hereof.

 

		5.	Covenants of the Company.

 

		a.	So long as the Company shall have any obligations under this Note, the Company shall not without
the Holder’s prior written consent 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 solely in the form of additional shares of Common Stock

 

		b.	So long as the Company shall have any obligations under this Note, the Company shall not without
the Holder’s prior written consent redeem, repurchase, or otherwise acquire (whether for cash or in exchange for property
or other securities) in any one transaction or series of transactions any shares of capital stock of the Company or any warrants,
rights, or options to acquire any such shares.

 

		c.	So long as the Company shall have any obligations under this Note, the Company shall not without
the Holder’s prior written consent sell, lease, or otherwise dispose of a significant portion of its assets outside the ordinary
course of business. Any consent to the disposition of any assets may be conditioned upon a specified use of the proceeds thereof.

 

		6.	Issuance of Common Stock Equivalents. If the Company, at any time after the Issuance Date, shall
issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (“Convertible Securities”),
other than the Note, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be
issued or sold (collectively, the “Common Stock Equivalents”) and the aggregate of the price per share for which additional
Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, plus the consideration received by
the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such
Common Stock Equivalent (the “Aggregate Per Common Share Price”) shall be less than the applicable Conversion Price
then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share
Common Price be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable
Conversion Price upon each such issuance or amendment shall be reduced to the Conversion Price as of such Common Stock Equivalent.
No adjustment of the applicable Conversion Price shall be made under this Section 6 upon the issuance of any Convertible Security
which is outstanding on the day immediately preceding the Issuance Date.

 

		7.	Reservation of Shares. The Company shall at all times, so long as any principal amount of the Note
is outstanding, reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Note, eight times the number of shares of Common Stock as shall at all times be sufficient to effect
the conversion of all of the principal amount, plus Interest and Default Interest, if any, of the Note then outstanding (“Share
Reserve”), unless the Holder stipulates otherwise in the “Irrevocable Letter of Instructions to the Transfer Agent.”
So long as this Note is outstanding, upon written request of the Holder or via telephonic communication, the Company’s Transfer
Agent shall furnish to the Holder the then-current number of common shares issued and outstanding, the then-current number of common
shares authorized, the then-current number of unrestricted shares, and the then-current number of shares reserved for third parties.

 

		8.	Voting Rights. The Holder of this Note shall have no voting rights as a note holder, except as
required by law, however, upon the conversion of any portion of this Note into Common Stock, Holder shall have the same voting
rights as all other Common Stock holders with respect to such shares of Common Stock then owned by Holder.

 

		9.	Reissuance of Note. In the event of a conversion or redemption pursuant to this Note of less than
all of the Conversion Amount represented by this Note, the Company shall promptly cause to be issued and delivered to the Holder,
upon tender by the Holder of the Note converted or redeemed, a new note of like tenor representing the remaining principal amount
of this Note which has not been so converted or redeemed and which is in substantially the same form as this Note, as set forth
above.

 

     4

     

    

 

 

		10.	Default and Remedies.

 

		a.	Event of Default. For purposes of this Note, an “Event of Default” shall occur upon:

 

		i.	the Company’s default in the payment of the outstanding principal, Interest or Default Interest
of this Note when due, whether at Maturity, acceleration or otherwise;

		ii.	the occurrence of a Default of Conversion as set forth in Section 2(e)(v);

		iii.	the failure by the Company for ten (10) days after notice to it to comply with any material provision
of this Note not included in this Section 10(a);

		iv.	the Company’s breach of any covenants (as referred to in section 5), warranties, or representations
made by the Company herein;

		v.	any of the information in the Data Request Form dated January 23, 2017 is false or misleading in
any material respect;

		vi.	the default by the Company in any Other Agreement entered into by and between the Company and Holder,
for purposes hereof “Other Agreement” shall mean, collectively, all agreements and instruments between, among or by:
(1) the Company, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including without limitation, promissory
notes;

		vii.	the cessation of operations of the Company or a material subsidiary;

		viii.	the Company pursuant to or within the meaning of any Bankruptcy Law; (a) commences a voluntary
case; (b) consents to the entry of an order for relief against it in an involuntary case; (c) consents to the appointment of a
Custodian of it or for all or substantially all of its property; (d) makes a general assignment for the benefit of its creditors;
or (e) admits in writing that it is generally unable to pay its debts as the same become due;

		ix.	court of competent jurisdiction entering an order or decree under any Bankruptcy Law that: (a)
is for relief against the Company in an involuntary case; (b) appoints a Custodian of the Company or for all or substantially all
of its property; or (c) orders the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in
effect for thirty (30) days;

		x.	the Company files a Form 15 with the SEC;

		xi.	the Company’s failure to timely file all reports required to be filed by it with the Securities
and Exchange
Commission; 
	 	xii.	the Company’s failure to timely file all reports, including all applicable extensions under Rule 1.2.65,
required to be filed by it with OTC Markets to remain a “Current Information” designated company;

		xiii.	the Company’s Common Stock is reported as “No Inside” by OTC Markets at any time
while any principal, Interest or Default Interest under the Note remains outstanding;

		xiv.	the Company’s failure to maintain the required Share Reserve pursuant to the terms of
                                                                  the Irrevocable
Letter of Instructions to the Transfer Agent; 
	 	xv.	 the Company directs its transfer agent not to transfer, or delays, impairs, 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 and stop transfer instructions) 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 its obligations pursuant to a Conversion Notice submitted by the Holder) and
any such failure shall continue uncured for three (3) Business Days after the Conversion Notice has been delivered to the Company
by Holder;

		xvi.	the Company’s failure to remain current in its
billing obligations with its transfer agent and such delinquency causes the transfer agent to refuse to issue Shares to Holder
pursuant to a Conversion Notice; xvii. the Company effectuates a reverse split of its Common Stock and fails to provide twenty
(20) days prior written notice to Holder of its intention to do so; or

		xviii.	OTC Markets changes the Company's designation to 'No Information' (Stop Sign), 'Caveat Emptor'
(Skull and Crossbones), or 'OTC', or 'Grey Market' (Exclamation Mark Sign).

		xix.	"Change of Control Transaction" means the occurrence
after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934) of effective control (whether through
legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 40% of the voting securities
of the Company, (b) the Company merges into or consolidates with any other Person, as that term is defined in the Securities Act
of 1933, as amended, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction own less than 60% of the aggregate voting power of the Company
or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another
Person and the stockholders of the Company immediately prior to such transaction own less than 60% of the aggregate voting power
of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more
than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members
of the Board of Directors on the Issuance Date (or by those individuals who are serving as members of the Board of Directors on
any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are
members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it
is bound.

		xx.	Altering the conversion terms of any notes that are currently outstanding.

 

     5

     

    

 

 

The Term “Bankruptcy
Law” means Title 11, U.S. Code, or any similar Federal or State Law for the relief of debtors. The term “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

		b.	Remedies. If an Event of Default occurs, the Holder may
in its sole discretion determine to request immediate repayment of all or any portion of the Note that remains outstanding; at
such time the Company will be required to pay the Holder the Default Amount (defined herein) in cash. For purposes hereof, the
“Default Amount” shall mean: the product of (A) the then outstanding principal amount of the Note, plus accrued Interest
and Default Interest, divided by (B) the Conversion Price as determined on the Issuance Date, multiplied by (C) the highest price
at which the Common Stock traded at any time between the Issuance Date and the date of the Event of Default. If the Company fails
to pay the Default Amount within five (5) Business Days of written notice that such amount is due and payable, then Holder shall
have the right at any time, so long as the Company remains in default (and so long and to the extent there are a sufficient number
of authorized but unissued shares), to require the Company, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Company equal to the Default Amount divided by the Conversion Price then in
effect.

 

		11.	Vote to Change the Terms of this Note. This Note and any provision hereof may only be amended by
an instrument in writing signed by the Company and the Holder.

 

		12.	Lost or Stolen Note. Upon receipt by the Company of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking
by the Holder to the Company in a form reasonably acceptable to the Company and, in the case of mutilation, upon surrender and
cancellation of the Note, the Company shall execute and deliver a new Note of like tenor and date and in substantially the same
form as this Note; provided, however, the Company shall not be obligated to re-issue a Note if the Holder contemporaneously requests
the Company to convert such remaining principal amount, plus accrued Interest and Default Interest, if any, into Common Stock.

 

		13.	Payment of Collection, Enforcement and Other Costs. If: (i) this Note is placed in the hands of
an attorney for collection or enforcement or is collected or enforced through any legal proceeding; or (ii) an attorney is retained
to represent the Holder of this Note in any bankruptcy, reorganization, receivership or other proceedings affecting creditors’
rights and involving a claim under this Note, then the Company shall pay to the Holder all reasonable attorneys’ fees, costs
and expenses incurred in connection therewith, in addition to all other amounts due hereunder.

 

		14.	Cancellation. After all principal, accrued Interest and Default Interest, if any, at any time owed
on this Note has been paid in full or otherwise converted in full, this Note shall automatically be deemed canceled, shall be surrendered
to the Company for cancellation and shall not be reissued.

 

		15.	Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.

 

		16.	Governing Law. This Note shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this Note shall be governed by, the laws of the State
of Texas, without giving effect to provisions thereof regarding conflict of laws. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in Texas for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by sending, through certified mail or overnight courier, a copy thereof to such party at the address for such
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 manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

		17.	Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided
in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including
a decree of specific performance and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy and nothing herein shall limit the Holder’s right to pursue actual damages
for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no
characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof
and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).

 

		18.	Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall
limit or modify any more general provision contained herein. This Note shall be deemed to be jointly drafted by the Company and
the Holder and shall not be construed against any person as the drafter hereof.

 

		19.	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 further exercise thereof or of any other right, power or privilege.

 

     6

     

    

 

 

		20.	Partial Payment. In the event of partial payment by the Holder, the principal sum due to the Holder
shall be prorated based on the consideration actually paid by the Holder such that the Company is only required to repay the amount
funded and the Company is not required to repay any unfunded portion of this Note, with the exception of any OID contemplated herein.

 

		21.	Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subjects herein. None of the terms of this Agreement can be waived or modified, except by an express
agreement signed by all Parties hereto.

 

		22.	Additional Representations and Warranties. The Company expressly acknowledges that the Holder,
including but not limited to its officer, directors, employees, agents, and affiliates, have not made any representation or warranty
to it outside the terms of this Agreement. The Company further acknowledges that there have been no representations or warranties
about future financing or subsequent transactions between the parties.

 

		23.	Notices. All notices and other communications given or made to the Company pursuant hereto shall
be in writing (including facsimile or similar electronic transmissions) and shall be deemed effectively given: (i) upon personal
delivery, (ii) when sent by electronic mail or facsimile, as deemed received by the close of business on the date sent, (iii) five
(5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next day delivery. All communications shall be sent either
by email, or fax, or to the email address or facsimile number set forth on the signature page hereto. The physical address, email
address, and phone number provided on the signature page hereto shall be considered valid pursuant to the above stipulations; should
the Company’s contact information change from that listed on the signature page, it is incumbent on the Company to inform
the Holder.

 

		24.	Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement and the rest of the Agreement shall be enforceable in accordance with
its terms.

 

		25.	Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum
rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will
not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal,
Interest or Default Interest on this Note.

 

		26.	Successors and Assigns. This Agreement shall be binding upon all successors and assigns hereto.

 

 

— SIGNATURE PAGE TO FOLLOW
—

 

     7

     

    

  

 

IN WITNESS WHEREOF, the
Company has caused this Note to be signed by its CEO, on and as of the Issuance Date.

 

	QPAGOS	 
	 	 
	Signature: 	 
	 	 
	By:	 
	 	 
	Title:	 
	 	 
	Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 
	Email:	 
	 	 
	Phone:	 
	 	 
	Facsimile:	 

 

JSJ Investments Inc.

 

Signature:

 

Sameer Hirji, President

JSJ Investments Inc.

10830 North Central Expressway,
Suite 152

Dallas TX 75231 888-503-2599

 

     8

     

    

 

 

Exhibit
1

 

Conversion
Notice

 

Reference is made to
the 8% Convertible Note issued by QPAGOS (the "Note"), dated February 6, 2017 in the principal amount of $200,000 with
8% interest. This note currently holds a principal balance of $200,000. The features of conversion stipulate a Conversion Price
equal to 40% discount to the average of the three (3) lowest trading prices during the previous ten (10) trading days to the date
of Conversion pursuant to the provisions of Section 2(a)(ii) in the Note.

 

In accordance with and
pursuant to the Note, the undersigned hereby elects to convert $______ of the principal/interest balance of the Note, indicated
below into shares of Common Stock (the "Common Stock"), of the Company, by tendering the Note specified as of the date
specified below.

 

Date of Conversion: __________

 

Please confirm the following
information:

Conversion Amount: $
____________________

Conversion Price: $ ____________________
( ____ % discount from $ ____________________)

Number of Common Stock
to be issued: _____________________________________________________________________

Current Issued/Outstanding:
_______________________________________________________________________________

 

If the Issuer is DWAC
eligible, please issue the Common Stock into which the Note is being converted in the name of the Holder of the Note and transfer
the shares electronically to:

 

[BROKER INFORMATION]

 

Holder Authorization:

JSJ Investments Inc.

	10830 North Central Expressway, Suite 152	*Do not send certificates to this address

Dallas, TX 75231

888-503-2599

 

Tax ID: 20-2122354

 

Sameer Hirji, President

 

		[DATE]	

 

     9

     

    

 

 

[CONTINUED ON NEXT PAGE]

 

PLEASE BE ADVISED, pursuant
to Section 2(e)(ii) of the Note, “Upon receipt by the Company of a copy of the Conversion Notice, the Company shall as soon
as practicable, but in no event later than one (1) Business Day after receipt of such Conversion Notice, SEND, VIA EMAIL, FACSIMILE
OR OVERNIGHT COURIER, A CONFIRMATION OF RECEIPT OF SUCH CONVERSION NOTICE TO SUCH HOLDER INDICATING THAT THE COMPANY WILL PROCESS
SUCH CONVERSION NOTICE in accordance with the terms herein. Within two (2) Business Days after the date of the Conversion Confirmation,
the Company shall have issued and electronically transferred the shares to the Broker indicated in the Conversion Notice; should
the Company be unable to transfer the shares electronically, they shall, within two (2) Business Days after the date of the Conversion
Confirmation, have surrendered to FedEx for delivery the next day to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder, for the number of shares of Common Stock to which the Holder shall be entitled.”

 

Signature:

 

	 	 
	 	 
	Gaston Pereira	 
	CEO	 
	QPAGOS	 

 

     10

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