Document:

Employment Agreement

EXHIBIT 10.1

December 31, 2015

Jamieson Karson

C/O Soupman, Inc.

1110 South Avenue

Suite 100

Staten Island, NY 10314

Dear Mr. Karson,

The following sets forth our agreement for you (referred to in this Agreement as “Executive”) to serve as Chief Executive Officer and Chairman of the Board of Directors of Soupman, Inc.

Employment Terms

Position:

Chief Executive Officer and Chairman of the Board of Directors

 

Reports to:

Soupman, Inc. Board of Directors

Duties:

All customary duties of a Chief Executive Officer and Chairman of the Board of Directors but not limited to overseeing and adding significant value to the following Management Items:

 

- Oversee Executive Leadership

- Build Senior Management Team

- Conduct Media Interviews

- Assist with Capital Raise with Investors, Bankers 

   and Strategic Partners

- Investor Relations

- New and Current Strategic Partner Relations

- Board Membership

- Business Strategy and Tactics 

Term:

January 1, 2016 through December 31, 2018 (the “Term’)

Compensation:

In Agreement for providing services and devoting full-time to the above "Management Items," and meeting with management as necessary whether by telephone or in person, Executive shall receive the compensation as stated below.  Management will meet 

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1110 South Avenue – Staten Island, NY 10314 - Telephone: (212) 768-SOUP   Fax: (212) 768-7055

with Executive weekly at the office in the NY metro area of his choice. In addition, Executive will travel as necessary for the position.

Executive shall receive 416,667 shares of Soupman, Inc. restricted common stock monthly each month during the Term as long as he is employed by the Company. The total shares granted during the Term, is 15,000,012 shares. 

Executive shall receive an annual salary of $184,000 payable as follows: (1) $12,000 each month during the Term; and (2) $10,000 on January 1, April 1, July 1, and October 1 of each year during the Term.

Stock Performance Incentives:

- A one- time bonus of 400,000 shares of Soupman, Inc. restricted common stock (Ticker: SOUP) if the company’s stock trades at 25 cents or higher for 10 trading days in a 30 day period during the term of this agreement. 

- A one- time bonus of 100,000 shares  of Soupman, Inc. restricted common stock (Ticker: SOUP) if the company’s stock trades at $1.00 or higher for 10 trading days in 30 day period during the term of this agreement. 

- A one-time bonus of 50,000 shares of Soupman, Inc. restricted common stock (Ticker: SOUP) if the company stock trades at $2.00 or higher for 10 trading days in a 30 day period during the term of this agreement. 

- A one- time bonus of 25,000 shares of Soupman, Inc. restricted common stock (Ticker: SOUP) if the company’s stock trades at $4.00 or higher for 10 trading days in a 30 day period during the term of this agreement  

In the event of any recapitalization of Soupman, Inc., including any stock dividend, stock split or reverse stock split, the awards set forth above will be adjusted accordingly. .

Sales Incentive Program:

For every new incremental $1million in sales annually Executive will be awarded 5,000 shares of Soupman, Inc. stock. The maximum 

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1110 South Avenue – Staten Island, NY 10314 - Telephone: (212) 768-SOUP   Fax: (212) 768-7055

amount of shares to earn is 500,000 shares based on a cap of $100 million in sales for this bonus. 

Expenses:

The Company shall reimburse employee for all reasonable and/pre-approved business expenses. 

Health Insurance:

The Company shall pay for Executive’s health insurance during the Term which shall be consistent to that provided other Executive’s at the Company.

                  

Share Restrictions

All of the shares of the Company’s common stock to be issued hereunder are “restricted securities” as defined in the Securities and Exchange Act of 1933, as amended, and Rule 144 as promulgated thereunder, are as such are subject to the Company’s Trading Policy and its blackout periods for insiders. 

Non-Competition:

Executive agrees that if his employment is terminated for cause or if he voluntarily leaves the employ of the Company for any reason, for a period of six months from the date of such termination of employment, he will not directly or indirectly, as owner, partner, joint venture, stockholder, employee, broker, agent, principal, trustee, corporate officer or director, licensor or in any capacity whatsoever engage in, become financially interested in, be employed by, render consulting services to, or have any connection with, any business which is involved in the marketing or selling of primarily soup products as its core business in competition with the Company ("Competitive Business"), in any geographic area where, during the time of his employment, the business of the Company or any of its subsidiaries is being  conducted in any manner whatsoever, or hire or attempt to hire for any Competitive Business any employee of the Company or any subsidiary thereof, or solicit, call on or induce others to solicit or call on, directly or indirectly, any customers  of the Company for the purpose of inducing them to purchase or lease a soup product or service which may compete with any soup product or service of the Company; provided, however, that Executive may own any securities of any corporation which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time two percent of any class of stock or securities of such company.

Notwithstanding the foregoing, Executive may from time to time be called upon to provide advisory or consulting services to The Grilled Cheese Truck, Inc. (“GCT”) and/or to its chairman, Robbie 

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1110 South Avenue – Staten Island, NY 10314 - Telephone: (212) 768-SOUP   Fax: (212) 768-7055

Lee. The Company agrees that Executive shall be permitted to provide such services to GCT and be paid reasonable compensation therefore by GCT, without it being deemed a breach of this Agreement, provided that: (1) any such services provided to GCT shall not conflict with the business or objectives of Soup; (2) to the extent of any perceived conflict, Executive shall immediately withdraw from such assignment and notify GCT to such effect; (3) the time required for Executive to render any such services to GCT shall not impede Executive’s responsibilities hereunder; and (4) Executive shall disclose to the Board the nature and scope of any assignment.   

If any portion of the restrictions set forth in paragraph above should, for any reason whatsoever, be declared invalid by a court of competent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected. 

Executive declares that the foregoing territorial and time limitations are reasonable and properly required for the adequate protection of the business of the Company.  In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Executive agrees to the reduction of either said territorial or time limitation to such area or period which said court shall have deemed reasonable.

The existence of any claim or cause of action by Executive against the Company or any subsidiary other than under this Agreement shall not constitute a defense to the enforcement by the Company or any subsidiary of the foregoing restrictive covenants, but such claim or cause of action shall be litigated separately.

Non-Disclosure of Confidential Information: Inventions:

Executive shall not, during the term of this Agreement, and at any time following termination of this Agreement, directly or indirectly, disclose or permit to be known, to any person, firm or corporation, any confidential information acquired by him during the course of or as an incident to his employment hereunder, relating to the Company or any of its subsidiaries, the directors of the Company or its subsidiaries, any client of the Company or any of its subsidiaries, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the foregoing, or in which any of the foregoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing.  Such confidential information shall include, but shall not be limited to, 

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proprietary information, trade secrets, know-how, market studies and forecasts, competitive analyses, the substance of agreements with clients and others, client lists, recipes, soup suppliers, and any other documents embodying such confidential information. Confidential information shall not include information which (i) is or becomes part of the public domain without breach of this Agreement (ii) was known by Executive on a non-confidential basis prior to disclosure by the Company (iii) is independently received by Executive without the use of confidential information or (iv) is explicitly approved for release by written authorization of the Company.  It shall not be a breach of the terms of this Agreement if Executive discloses confidential information that it is legally required to disclose provided that Executive promptly notifies the Company of such requirement and, if requested by the Company, reasonably cooperates in the Company’s efforts to prevent or limit such disclosure. 

All information and documents relating to the Company, its affiliates as hereinabove described (or other business affairs) shall be the exclusive property of the Company, and Executive shall use his best efforts to prevent any publication or disclosure thereof.  Upon termination of Executive's employment with the Company, all documents, records, reports, writings and other similar documents containing confidential information, including copies thereof, then in Executive's possession or control shall be returned and left with the Company. 

Any inventions, discoveries, concepts or ideas, or expressions thereof, whether or not subject to patents, copyrights, trademarks or service mark protections, and reduced to practice, which are conceived or developed by Executive while employed with the Company which relate to or result from the actual business, work, research or investigation of the Company shall be the sole and exclusive property of the Company.  Executive will do all things reasonably requested by the Company to assign to and vest in the Company the entire right, title and interest to any such inventions, discoveries, concepts, ideas or expressions thereof.

Termination of Employment:  

If the Company elects to terminate Executive’s employment as CEO without cause, or not by reason or his death or disability, the Company shall award and pay to Executive (the “Severance Payment”): (1) within thirty (30) days following such termination, whichever is less, 10,000,000 shares of common stock or the balance of the stock due per this agreement, which shall be fully 

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vested  and (ii) an amount equal to his base salary and health insurance premium for a period of six (6) months which shall not extend past the Term of the contract.  

The Company may terminate the Executive by reason of his death, disability or for cause at any time.  For the purposes hereof, “cause” shall mean and be limited to (i) Executive's conviction (which, through lapse of time or otherwise, is not subject to appeal) of any crime or offense involving money or other property of the Company or its subsidiaries or which constitutes a felony in the jurisdiction involved; (ii) Executive's performance of any act or his failure to act, for which if he were prosecuted and convicted, a crime or offense involving money or property of the Company or its subsid­iaries, or which would constitute a felony in the jurisdiction involved would have occurred, (iii) Executive's breach of any of the representa­tions, warranties or covenants set forth in this Agreement, or (iv) Executive's continu­ing, repeated, willful failure or refusal to perform his duties re­quired by this Agree­ment, provided that Executive shall have first received written notice from the Company stating with specificity the nature of such failure and refusal and affording Executive an opportunity, as soon as practicable, to correct the acts or omissions com­plained of. “Disability" shall mean the inability of Executive, due to illness, accident or any other physical or mental incapacity, to perform his duties in a normal manner for a period of three (3) consecutive months or for a total of six (6) months (whether or not consecu­tive) in any twelve (12) month period during the term of this Agreement. Except as provided in the next sentence, if Executive voluntarily leaves the Company without good reason on his own accord, the Company shall not be obligated to pay Executive the Severance Payment.  Notwithstanding the foregoing, if the Company shall terminate, by a vote of the Board of Directors or otherwise, the employment of any senior member of the Company’s current management team without the prior consent of Executive, Executive shall be permitted to terminate his employment with the Company for good reason and receive the Severance Payment. 

Sale of the Company: 

If there is a sale of the Company, whether through a stock sale or asset sale, or a change of control in the ownership structure of the Company through a recapitalization or otherwise, and the Company’s obligations under this agreement are not assumed, whether expressly or by operation of law,  in connection with the sale or change of control transaction, all stock grants to be awarded 

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to Executive for services through December 31, 2018 shall immediately become due and payable and shall vest immediately.

Indemnity: 

The Company represents and warrants that it maintains comprehensive liability insurance including Director and Officer Liability insurance in sufficient amounts, but not less than $2,000,000, in full force and effect, and that it shall continue to maintain all such insurance in full force and effect. The Company shall indemnify Executive against any and all claims, expenses, and amounts of any kind or nature whatsoever arising from Executive acting in his role as Chairman of the Board and CEO so long as they are a result of performing his role and duties for the Company.

This agreement when signed needs to be approved by the Board of Directors to be valid.

SOUPMAN, INC. 

/s/ Robert N. Bertrand

Robert N. Bertrand

President 

		
	 
	Agreed and Accepted;

	 
	 

	 
	 

	 
	/s/ Jamieson Karson

	 
	Jamieson Karson

	 
	Chief Executive Officer and Chairman

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1110 South Avenue – Staten Island, NY 10314 - Telephone: (212) 768-SOUP   Fax: (212) 768-7055NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.

 

Original
Issue Date: [__]

 

$[___]

 

CONVERTIBLE
DEBENTURE

DUE
November 30, 2020

 

THIS
CONVERTIBLE DEBENTURE is a duly authorized and validly issued Convertible Debenture of PF Hospitality Group, Inc., a Nevada corporation
(the “Company”), having its principal place of business at 399 NW 2nd Ave., Suite 216, Boca Raton, FL 33432,
designated as its Convertible Debenture due November 30, 2020 (this “Debenture”).

 

FOR
VALUE RECEIVED, the Company promises to pay to [__] or its registered assigns (the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of $[___] on November 30, 2020 (the “Maturity Date”)
or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions
hereof. This Debenture is subject to the following additional provisions:

 

Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms
not otherwise defined herein shall have the meanings set forth below and (b) the following terms shall have the following meanings:

 

“Alternate
Consideration” shall have the meaning set forth in Section 5(b).

 

    	 

     

    

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof
any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary
thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered,
(d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company
or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence
in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“Buy-In”
shall have the meaning set forth in Section 4(c)(v).

 

“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 Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Debenture and
the Securities issued together with the Debenture), (b) the Company merges into or consolidates with any other Person, 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 50% 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 50% of the aggregate voting power of the acquiring entity immediately
after the transaction, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through (c) above.

 

“Conversion”
shall have the meaning ascribed to such term in Section 4.

 

“Conversion
Date” shall have the meaning set forth in Section 4(a).

 

“Conversion
Price” shall have the meaning set forth in Section 4(b).

 

“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.

 

“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with
the terms hereof.

 

“Debenture
Register” shall have the meaning set forth in Section 2(b).

 

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“Default
Conversion Price” means 50% of the lowest traded price during the 20 Trading Day-period immediately prior to the applicable
Conversion Date.

 

“DTC”
means the Depository Trust Company.

 

“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.

 

“DWAC”
means Deposit Withdrawal at Custodian as defined by the DTC.

 

“Event
of Default” shall have the meaning set forth in Section 6(a).

 

“Fundamental
Transaction” shall have the meaning set forth in Section 5(b).

 

“Indebtedness”
means any liabilities for borrowed money or amounts owed by the Company (other than trade accounts payable incurred in the ordinary
course of business).

 

“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Debenture and accrued and unpaid
interest hereon, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

 

“New
York Courts” shall have the meaning set forth in Section 9(d).

 

“Notice
of Conversion” shall have the meaning set forth in Section 4(a).

 

“Note
Balance” means the sum of the cash payments paid by the Holder to the Company on the principal amount of this Debenture,
accrued and/or guaranteed interest, and any other amounts incurred by the Company to the Holder in respect of such cash payments.

 

“Original
Issue Date” means the date of the first issuance of the Debenture, regardless of any transfers of the Debenture and
regardless of the number of instruments which may be issued to evidence the Debenture.

 

“Permitted
Indebtedness” means (a) the Indebtedness existing on the Original Issue Date, (b) lease obligations and purchase money
indebtedness, incurred in connection with the acquisition of capital assets and lease obligations with respect to newly acquired
or leased assets and (c) indebtedness to a commercial lender, provided that any indebtedness incurred under this clause (c), (i)
is expressly subordinate to the Debentures pursuant to a written subordination agreement with the Holder that is acceptable to
Holder in its sole and absolute discretion and (ii) matures at a date later than the Maturity Date.

 

    	3

     

    

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien;
and (c) Liens incurred in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not
secured by assets of the Company or its Subsidiaries other than the assets so acquired or leased.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

 

“Successor
Entity” shall have the meaning set forth in Section 5(b).

 

Section
2. Prepayment and Interest.

 

a)
Payment of Interest. The Company shall pay interest to the Holder on the aggregate unconverted Note Balance at the rate
of 10% per annum, Interest which accrues after the 12 month anniversary of this Debenture shall be accrued and added to the Note
Balance.

 

b)
Interest Calculations. Subject to Section 2(a), interest shall be calculated on the basis of a 360-day year, consisting
of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder,
has been made. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of this Debenture (the “Debenture Register”).

 

c)
Late Fee. Subject to Section 6(b) of this Debenture, all overdue accrued and unpaid interest to be paid hereunder shall
entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law (the
“Late Fees”) which shall accrue daily from the date such interest is due hereunder through and including the
date of actual payment in full.

 

d)
Prepayment. At any time upon ten (10) days written notice to the Holder, the Company may prepay any portion of the principal
amount of this Debenture and any accrued and unpaid interest. If the Company exercises its right to prepay any portion of the
Debenture, the Company shall make payment to the Holder of an amount in cash equal to the sum of the then outstanding principal
amount of this Debenture being prepaid and accrued interest thereon multiplied by 130%. The Holder may continue to convert the
Debenture from the date notice of the prepayment is given until the date of the prepayment.

 

    	4

     

    

 

Section
3. Registration of Transfers and Exchanges.

 

a)
Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.

 

b)
Investment Representations. This Debenture has been issued subject to certain investment representations of the original
Holder and may be transferred or exchanged only in compliance with applicable federal and state securities laws and regulations.

 

c)
Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and
any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture
is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

 

Section
4. Conversion.

 

a)
Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture
(including principal and accrued but unpaid interest on any principal being converted, if any) shall be convertible, in whole
or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion
limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion,
the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein
the principal amount (and any accrued interest) of this Debenture to be converted and the date on which such conversion shall
be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion,
the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of
Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Conversion form be required by the Company. To effect conversions hereunder, the Holder shall not be required to physically surrender
this Debenture to the Company unless the entire principal amount of this Debenture, plus all accrued and unpaid interest thereon,
has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture
(and accrued interest thereon, if applicable) in an amount equal to the applicable conversion. The Holder and the Company shall
maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection
to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute
or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder,
and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the
amount stated on the face hereof. Notwithstanding any provision in this Debenture to the contrary, the Company will not be required
to effect any conversion of this Debenture to the extent any such conversion would result in the Company effecting aggregate conversions
of principal and accrued interest on this Debenture in an amount greater than the Note Balance.

 

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b)
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to 65% of the lowest traded price
of the Common Stock for the twenty Trading Days prior to such Conversion Date subject to adjustment herein (the “Conversion
Price”). The Conversion Price will be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction that proportionately decreases or increases the Common Stock during such measuring period.
Notwithstanding anything herein to the contrary, at any time after the occurrence of any Event of Default the Holder may, at such
Holder’s option and otherwise in accordance with the provisions for conversion herein, convert all or any part of this Debenture
into Common Stock at the Default Conversion Price. Nothing herein shall limit a Holder’s right to pursue actual damages
or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right to pursue all remedies available
to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.
The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof
or under applicable law.

 

c)
Mechanics of Conversion.

 

i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion
hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be
converted by (y) the Conversion Price.

 

ii.
Delivery of Certificate Upon Conversion. Not later than ten (10) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the date on which such Conversion Shares are registered on a Registration Statement or
eligible to be sold under Rule 144 without the need for current public information and the Company has received an opinion of
counsel to such effect reasonably acceptable to the Company (the reasonable cost of which shall be borne by the Company), shall
be free of restrictive legends and trading restrictions representing the number of Conversion Shares being acquired upon the conversion
of this Debenture. All certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered
electronically through the Depository Trust Company or another established clearing corporation performing similar functions.
If the Conversion Date is prior to the date on which such Conversion Shares are registered on a Registration Statement or eligible
to be sold under Rule 144 without the need for current public information, the Conversion Shares shall bear a restrictive legend
in substantially the following form, as appropriate:

 

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

 

Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company shall obtain a legal opinion to allow for such sales under Rule 144 (the reasonable cost
of which shall be borne by the Company).

 

iii.
Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not
delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall
promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, (but subject to Section
4(a) of this Debenture)), irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any
obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance
of such Conversion Shares (but subject to Section 4(a) of this Debenture); provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder
of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion
based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law,
agreement or for any other reason (except as otherwise provided in the Transaction Documents), unless an injunction from a court,
on notice to Holder, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained,
and the Company posts a surety bond for the benefit of the Holder which bond shall remain in effect until the completion of arbitration/litigation
of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence
of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If
the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the
Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after
such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered
or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event
of Default pursuant to Section 6 hereof for the Company’s failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law. Nothing herein shall limit
any party’s offset rights as set forth in Section 8 hereof. Similarly, regardless of whether Conversion Shares are delivered
upon conversion, the Company shall have the right to pursue all remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief, and to enforce damages pursuant to any other Section
hereof or under applicable law.

 

    	7

     

    

 

v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available
to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery
Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the
Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to
the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements
under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion
Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of
the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture as
required pursuant to the terms hereof.

 

vi.
Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to 300% of the Required
Minimum for the sole purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as
herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder,
not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and
restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Debenture and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized,
validly issued, fully paid and nonassessable.

 

vii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the
Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.

 

    	8

     

    

 

viii.
Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Debenture
shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of
the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than
that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Conversion.

 

d)
Holder’s Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall
not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth
on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group
together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture
with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder
or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Debenture is convertible
(in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Debenture
is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to
be the Holder’s determination of whether this Debenture may be converted (in relation to other securities owned by the Holder
together with any Affiliates) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time
it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following:
(i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent
public announcement by the Company, including without limitation, information and reports posted on the OTC Disclosure and News
Service, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Debenture, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture
held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99%
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
upon conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall
continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the
Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary
or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor
holder of this Debenture.

 

    	9

     

    

 

Section
5. Certain Adjustments.

 

a)
Subsequent Rights Offerings. If at any time the Company grants, issues or sells any Common Stock Equivalents or rights
to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) 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 shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares
of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

b)
Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(e) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(b) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange
for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard
to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with
the same effect as if such Successor Entity had been named as the Company herein.

 

    	10

     

    

 

c)
Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued
and outstanding.

 

d)
Notice to the Holder.

 

i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5,
the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.

 

ii.
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed
at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder
at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K or post such notice
on the OTC Disclosure and News Service. The Holder shall remain entitled to convert this Debenture during the 20-day period commencing
on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly
set forth herein.

 

    	11

     

    

 

Section
6. Events of Default.

 

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

 

i.
any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts
owing to the Holder on the Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise) which default which default, solely in the case of an interest payment or other default
under clause (B) above, is not cured within 3 Trading Days;

 

ii.
the Company shall fail to observe or perform any other material covenant or agreement contained in the Debenture (other than a
breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed
in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after
notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has
become or should have become aware of such failure;

 

iii.
a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which
the Company or any Subsidiary is obligated (and not covered by clause (vi) below);

 

iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect
in any material respect as of the date when made or deemed made;

 

v.
the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

vi.
the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured
or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $50,000, whether such indebtedness now exists or shall hereafter be created and (b) results in such
indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

    	12

     

    

 

vii.
the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market or the OTC Pink and shall not
be eligible to resume listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock
through the Depository Trust Company System is no longer available or “chilled”;

 

viii.
the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose
of all or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction);

 

ix.
the Company shall fail for any reason to deliver certificates to the Holder prior to the third Trading Day after a Conversion
Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement,
of the Company’s intention to not honor requests for conversions of the Debenture in accordance with the terms hereof;

 

x.
the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act or otherwise
post any required periodic reports or current information on the OTC News and Disclosure Service in accordance with the applicable
guidelines of the OTC Pink such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);

 

xi.
if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian
or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;

 

xii.
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company
or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty
(60) days;

 

xiii.
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company
or any Subsidiary having an aggregate fair value or repair cost in excess of $50,000, and any such levy, seizure or attachment
shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;

 

    	13

     

    

 

xiv.
the Company shall fail to maintain sufficient reserved shares pursuant to Section 4(c)(vi) of this Debenture; or

 

xv.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

 

b)
Remedies Upon Event of Default. If any Event of Default occurs, then the outstanding principal amount of this Debenture,
plus accrued but unpaid interest (including, without limitation, any unpaid guaranteed interest), liquidated damages and other
amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election by notice in writing
to Company, immediately due and payable in cash at the Mandatory Default Amount. After the occurrence of any Event of Default
that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate
equal to the lesser of 2% per month (24% per annum) or the maximum rate permitted under applicable law. Upon the payment in full
of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection
with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and
all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the
Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent thereon.

 

Section
7. Negative Covenants. As long as any portion of this Debenture remains outstanding, unless Holder holding at least 75% of
the aggregate principal amount of the then outstanding Debentures shall otherwise consent in writing, the Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly:

 

a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed
money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom;

 

b)other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

c)amend
its charter documents, including without limitation, the certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;

 

    	14

     

    

 

d)repay,
repurchase or offer to repay, repurchase or otherwise acquire any shares of its Common Stock or Common Stock Equivalents or any
other security, including preferred stock, or Indebtedness of the Company that is pari passu with, or junior or subordinate to
(unless otherwise permitted pursuant to a written subordination agreement with the Holders) other than as to repurchases of Common
Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not
exceed an aggregate of $50,000 for all officers and directors during the term of this Debenture);

 

e)enter
into any Fundamental Transaction or Change of Control Transaction without the consent of the Holders of 75% of the outstanding
principal amount of the Debentures;

 

f)
pay cash dividends or distributions on any equity securities of the Company;

 

g)enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission
or posting with the OTC Disclosure & News Service, unless such transaction is made on an arm’s-length basis and expressly
approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board
approval); or

 

h)enter
into any agreement with respect to any of the foregoing.

 

Section
8. INTENTIONALLY DELETED.

 

Section
9. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Company, at 399 N.W. 2nd Avenue, #216, Boca Raton, FL 33432 or such other facsimile
number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section
9(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the
facsimile number or address of the Holder as appearing on the books of the Company, or such other facsimile number or address
as the Holder may specify for such purposes by notice to the Company delivered in accordance with this Section 9(a). Any notice
or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto
prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day
that is not a Trading Day or later than 12:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party
to whom such notice is required to be given.

 

    	15

     

    

 

b)
Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation
of the Company to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company.

 

c)
Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute
and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution
for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen
or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof,
reasonably satisfactory to the Company.

 

d)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), 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 such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding 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 Debenture 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 applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Debenture or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action
or proceeding.

 

    	16

     

    

 

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

 

f)
Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall
remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. 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 shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal
of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though
no such law has been enacted.

 

g)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture
shall be cumulative and in addition to all other remedies available under this Debenture and any of the other Transaction Documents
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of
this Debenture. 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 and shall not, except as expressly provided herein,
be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition
to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Debenture.

 

    	17

     

    

 

h)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day.

 

i)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall
not be deemed to limit or affect any of the provisions hereof.

 

j)Amendment.
This Debenture may be modified or amended or provisions hereof waived with the written consent of the Company and the Holder(s)
of at least 75% of the then outstanding principal amount of all of the Debentures.

 

*********************

 

(Signature
Pages Follow)

 

    	18

     

    

 

IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above
indicated.

 

	 	PF
    HOSPITALITY GROUP, INC.
	 	 	 
	 	By:
    	 
	 	Name:	Vaughan
    Dugan
	 	Title:	Chief
    Executive Officer

 

    	19

     

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Original Issue Discount Convertible Debenture due November 30, 2020 of
PF Hospitality Group, Inc., a Nevada corporation (the “Company”), into shares of common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By
the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common
Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d)
of the Exchange Act.

 

The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with
any transfer of the aforesaid shares of Common Stock.

 

Conversion
calculations:

 

Date
to Effect Conversion:

 

Principal
Amount of Debenture to be Converted:

 

Conversion
Price:

 

Number
of shares of Common Stock to be issued:

 

Signature:

 

Name:

 

DWAC
Instructions:

 

Broker
No: ___________________

Account
No: __________________

 

    	20

     

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

This
Convertible Debenture due on November 30, 2020 in the original principal amount of $[__] is issued by PF Hospitality Group,
Inc., a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.

 

Dated:

 

	Date
    of Conversion (or for first entry, Original Issue Date)	 	Amount
    of Conversion	 	Aggregate
    Principal Amount Remaining Subsequent to Conversion (or original Principal Amount)	 	Company
    Attest
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

    	21

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