Document:

Exhibit 10.4

 

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

 

	Principal
    Amount: $250,000.00	Issue
    Date: March 16, 2020
	Purchase
        Price: $230,000.00

        Original
        Issue Discount: $20,000.00

        
	 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED, CARDAX, INC., a Delaware corporation (hereinafter called the “Borrower” or “Company”)
(Trading Symbol: CDXI), hereby promises to pay to the order of __________________, or registered assigns (the “Holder”)
the sum of US$250,000.00, together with any interest as set forth herein, on September 16, 2020 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of ten percent (10%) (the “Interest Rate”)
per annum from the date that the Note is fully funded by the Holder (the “Issue Date”), until the same becomes due
and payable, whether at maturity or upon acceleration or by prepayment or otherwise. In connection with the issuance of this convertible
promissory note (the “Note”), the Borrower shall, on the Issue Date, issue 27,777 shares of common stock (the “Returnable
Shares”) to Holder as a commitment fee, provided, however, the Returnable Shares must be returned to the Borrower’s
treasury if the Note is (i) fully repaid or fully converted and (ii) and satisfied on or prior to the date which is six (6) calendar
months following the Issue Date, subject further to the terms and conditions of this Note.

 

This
Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal on this Note
which is not paid when due shall bear interest at the rate of the lesser of (i) fifteen percent (15%) per annum or (ii) the maximum
amount allowed by law from the due date thereof until the same is paid (the “Default Interest”). Interest shall commence
accruing on the Issue Date and shall be computed on the basis of a 365/366-day year and the actual number of days elapsed. All
payments due hereunder (to the extent not converted into the Company’s common stock, $0.001 par value per share (the “Common
Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.

 

    	 

     

    

 

All
payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken
into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business
day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York
are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which
this Note was originally issued (the “Purchase Agreement”).

 

This
Note carries an original issue discount of $20,000.00 (the “OID”), to cover the Holder’s accounting fees, due
diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which
is included in the principal balance of this Note. Thus, the purchase price of this Note shall be $230,000.00, computed as follows:
the Principal Amount minus the OID.

 

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

 

This
Note shall remain convertible before and after the Maturity Date hereof until this Note is repaid or converted in full.

 

The
following terms shall also apply to this Note:

 

    	 

     

    

 

Article
I. CONVERSION RIGHTS

 

1.1
Conversion Right. The Holder shall have the right, in its sole and absolute discretion, from time to time, and at any time
on or following the date of this Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default
Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal
amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and
non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other
securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as
defined below) determined as provided herein (a “Conversion”); provided, however, that in no event shall
the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the
sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised
or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this
Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1)
of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder
(up to a maximum of 9.99%) upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and
the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by
the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion
of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then
in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”),
delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted
by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 11:59
p.m., New York, New York time on such conversion date (the “Conversion Date”).

 

The
term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion, plus (2) at the Holder’s option, accrued and unpaid interest, if any,
on such principal amount at the interest rates provided in this Note to the Conversion Date, provided however, that the Borrower
shall have the right to pay any or all interest in cash, plus (3) at the Holder’s option, Default Interest, if any,
plus (4) any Additional Principal, plus (5) at the Holder’s option, any amounts owed to the Holder pursuant to any
other provision of this Note, all subject to the 4.99% (or up to 9.99% if increased as provided above) limitation discussed above.

 

    	 

    	 

    

  

1.2
Conversion Price.

 

(a)
Calculation of Conversion Price. Subject to the adjustments described herein, the conversion price (the “Conversion
Price”) shall equal $4.50 (the “Fixed Price”) per share, provided, however, that at all times after the date
which is six (6) calendar months following the Issue Date, the Conversion Price shall equal the Alternate Conversion Price (as
defined herein) (the Conversion Price is subject to equitable adjustments for stock splits, stock dividends or rights offerings
by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events). The “Alternate Conversion Price”
shall mean 70% multiplied by the Market Price (as defined herein) (representing a discount rate of 30%). “Market Price”
means the average of the two (2) lowest Trading Prices (as defined below) for the Common Stock during the fifteen (15) Trading
Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” and “Trading
Prices” means, for any security as of any date, the volume weighted average price on the OTCQB or applicable trading market
(the “OTC Market”) as reported by a reliable reporting service (“Reporting Service”) designated by the
Holder or, if the OTC Market is not the principal trading market for such security, the trading price of such security on the
principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security
is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are
listed in the “pink sheets” by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such
security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by
the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price
is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the
Common Stock is tradable for any period on the OTC Market or on the principal securities exchange or other securities market on
which the Common Stock is then being traded. The Borrower shall be responsible for the fees of its transfer agent and all DTC
fees associated with any such issuance. In the event of any dispute or discrepancy, the records of the Holder shall be controlling
and determinative in the absence of manifest error. Holder shall be entitled to deduct $350.00 from the conversion amount in each
Notice of Conversion to cover Holder’s deposit fees associated with each Notice of Conversion.

 

Each
time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9) transaction (including but not limited to the
issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, in which any 3rd
party has the right to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise)
at a discount to market greater than the Alternate Conversion Price in effect at that time (prior to all other applicable adjustments
in the Note), then the Alternate Conversion Price shall be automatically adjusted to such greater discount percentage (prior to
all applicable adjustments in this Note) until this Note is no longer outstanding. Each time, while this Note is outstanding,
the Borrower enters into a Section 3(a)(9) transaction (including but not limited to the issuance of new promissory notes or of
a replacement promissory note), or Section 3(a)(10) transaction, in which any 3rd party has a look back period greater
than the look back period in effect under the Note at that time, then the Holder’s look back period shall automatically
be adjusted to such greater number of days until this Note is no longer outstanding. The Borrower shall give written notice to
the Holder, with the adjusted Alternate Conversion Price and/or adjusted look back period (each adjustment that is applicable
due to the triggering event), within five (5) business days of an event that requires any adjustment described in the two immediately
preceding sentences.

 

    	 

     

    

 

The
Conversion Price is subject to full ratchet anti-dilution in the event that the Company issues any common stock at a per share
price lower than the Conversion Price (each a “Dilutive Price”) then in effect, provided, however, that Holder shall
have the sole discretion in deciding whether to utilize such Dilutive Price instead of the Conversion Price otherwise in effect
at the time of the respective conversion.

 

(b)
Adjustment to Conversion Price. At any time after the Issue Date, (i) if the Conversion Price is less than one cent ($0.01),
or (ii) if the Borrower fails to comply with the reporting requirements of the Exchange Act (the reporting requirements necessary
to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to the timely fulfillment of its
filing requirements pursuant to Section 15(d) of the Exchange Act, the requirements for XBRL filings, the requirements for disclosure
of financial statements on its website), then the Holder shall be entitled to increase, by 10% for each occurrence, cumulative
or otherwise, but under no circumstances greater than 20%, the discount to the Conversion Price, which shall apply for all future
conversions under the Note until such matter(s) are resolved.

 

(c)
[Intentionally Omitted].

 

(d)
[Intentionally Omitted].

 

(e)
Par Value Adjustments. To the extent the Conversion Price then in effect falls below the par value per share of the Common
Stock, the Borrower, at its sole and absolute discretion, may solicit the consent of its stockholders to reduce the par value
to an amount that is less than or equal to the Conversion Price then in effect; provided, however, that if the Conversion Price
then in effect in connection with a Conversion is below the par value, the Conversion Price for such Conversion shall be set to
the par value and the Conversion Amount for such Conversion shall be increased to include Additional Principal, where “Additional
Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number
of Conversion Shares issuable upon such Conversion to equal the same number of Conversion Shares as would have been issued had
the Conversion Price not been set to the par value pursuant to this Section 1.2(e).

 

(f)
[Intentionally Omitted].

 

(g)
Pro Rata Conversion; Disputes. In the event of a dispute as to the number of shares
of Common Stock issuable to the Holder in connection with a conversion of this Note, the Borrower shall issue to the Holder the
number of shares of Common Stock not in dispute and resolve such dispute in accordance with
Section 4.13.

 

    	 

     

    

 

1.3
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all
times to have authorized and reserved five (5) times the number of shares that is actually issuable upon full conversion of the
Note (based on the Alternate Conversion Price of the Note at all times) (the “Reserved Amount”). Initially, the Company
will instruct the Transfer Agent to reserve 327,230 shares of common stock in the name of the Holder for issuance upon
conversion hereof. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.
In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number
of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at
the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized
and reserved, free from preemptive rights, for conversion of the outstanding Notes. If, at any time the Borrower does not maintain
the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

 

The
Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable
upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and
agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares
of Common Stock in accordance with the terms and conditions of this Note.

 

1.4
Method of Conversion.

 

(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
on or following the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 11:59 p.m., New York, New York time) and (B) subject to Section
1.4(b), surrendering this Note at the principal office of the Borrower.

 

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

 

    	 

    	 

    

 

(c)
[Intentionally Omitted].

 

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

 

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

 

(f)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue
and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by
the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower
to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by
the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 11:59 p.m., New York, New York time,
on such date.

 

    	 

     

    

 

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

 

(h)
Delivery of Common Stock by Book Entry. Whenever reference in this Note is made to the issuance or delivery of certificates
representing Common Stock, the Borrower shall issue or deliver such Common Stock in book entry form in lieu of physical certificates
unless requested otherwise by the Holder.

 

(i)
[Intentionally Omitted].

 

(j)
Rescindment of a Notice of Conversion. If (i) the Borrower fails to respond to Holder within two (2) business days from
the Conversion Date confirming the details of Notice of Conversion, (ii) the Borrower fails to provide the shares of the Common
Stock requested in the Notice of Conversion within three (3) business days from the Conversion Date specified therein, (iii) the
Holder is unable to procure a legal opinion required to have the shares of the Common Stock issued unrestricted and/or deposited
to sell for any reason related to the Borrower’s standing, (iv) the Holder is unable to deposit the shares of the Common
Stock requested in the Notice of Conversion for any reason related to the Borrower’s standing, (v) at any time after a missed
Deadline, at the Holder’s sole discretion, or (vi) if OTC Markets changes the Borrower’s designation to ‘Limited
Information’ (Yield), ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull & Crossbones), ‘OTC’,
‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign) or other trading restriction on the day of or any
day after the Conversion Date, then the Holder maintains the option and sole discretion to rescind the applicable Notice of Conversion
(“Rescindment”) pursuant to which such Conversion Shares were issuable with a “Notice of Rescindment.”

 

    	 

     

    

 

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

 

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

 

The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be reasonably accepted by the Borrower so that the sale or transfer is
effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the
Borrower does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an
exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant
to Section 3.2 of the Note.

 

    	 

     

    

 

1.6
Effect of Certain Events.

 

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

 

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

 

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

 

    	 

     

    

 

(d)
Adjustment Due to Dilutive Issuance. If, at any time when the Note is issued and outstanding, the Borrower issues or sells,
or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, except for shares of Common Stock issued directly
to vendors or suppliers of the Borrower in satisfaction of amounts owed to such vendors or suppliers (provided, however, that
such vendors or suppliers shall not have an arrangement to transfer, sell or assign such shares of Common Stock prior to the issuance
of such shares), any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable
expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect
on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately
upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the
Borrower in such Dilutive Issuance.

 

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

 

    	 

    	 

    

 

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

 

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

 

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

 

1.7
[Intentionally Omitted].

 

1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted
portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower
to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares
of Common Stock prior to the third (3rd) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder with respect to such unconverted portions of
this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been
surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall
retain all of its rights and remedies for the Borrower’s failure to convert this Note.

 

    	 

    	 

    

  

1.9
Prepayment. Subject to the terms of this Note, and provided that an Event of Default has not occurred under this Note,
the Borrower may prepay the amounts outstanding hereunder pursuant to the following terms and conditions:

 

(a)
At any time during the period beginning on the Issue Date and ending on the date which is six (6) calendar months following the
Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the
Holder, to prepay the outstanding Note in full by making a payment to the Holder of an amount in cash equal to the sum of: (i)
the then outstanding principal amount of this Note plus (ii) accrued and unpaid interest on the unpaid principal amount
of this Note plus (iii) Default Interest, if any, in accordance with Article III, plus (iv) at the Holder’s
option, any amounts owed to the Holder pursuant to any other provision of this Note, plus (vi) up to $500.00 to reimburse
Holder for the fees associated with the Returnable Shares, which shall be reimbursed by the Borrower upon receipt of appropriate
documentation from the Holder.

 

(b)
After the expiration of six (6) calendar months following the Issue Date, the Borrower shall have no right of prepayment.

 

Any
notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder at its registered
addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which
shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment amount to or upon the
order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional
Prepayment Date.

 

Upon
confirmation by Holder that the prepayment has been received by the Holder and that all amounts outstanding under this Note are
paid in full, the Holder shall return the Returnable Shares back to the Company’s treasury.

 

If
the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder within
two (2) business days following the Optional Prepayment Date, then the Borrower shall forever forfeit its right to prepay any
part of the Note pursuant to this Section 1.9 and the Holder shall no longer be required to return the Returnable Shares to the
Borrower under any circumstances.

 

    	 

     

    

 

Notwithstanding
anything to the contrary set forth herein, the parties agree that the Holder shall not be entitled to convert this Note once the
Optional Prepayment Notice is delivered to the Holder, unless the Borrower fails to pay the applicable prepayment amount due to
the Holder within two (2) business days following the Optional Prepayment Date.

 

Article
II. CERTAIN COVENANTS

 

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

 

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

 

2.3
Borrowings; Liens. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder’s written consent, (i) create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable
instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence
or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness
to trade creditors financial institutions or other lenders incurred in the ordinary course of business, (c) borrowings, the proceeds
of which shall be used to repay this Note, or (d) other borrowings that are in aggregate less than $500,000.00 except as agreed
by the Borrower and the Holder, or (ii) enter into, create or incur any liens, claims or encumbrances 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,
securing any indebtedness occurring after the date hereof.

 

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

 

    	 

     

    

 

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

 

2.6
3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement
structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(l0) of the Securities
Act (a “3(a)(l0) Transaction”).

 

2.7
Preservation of Existence, etc. The Borrower shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries (other than dormant
Subsidiaries that have no or minimum assets) to become or remain, duly qualified and in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification
necessary.

 

2.8
Non-circumvention. The Borrower hereby covenants and agrees that the Borrower will not, by amendment of its Certificate
or Articles of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action
as may be required to protect the rights of the Holder.

 

2.9
Charter. So long as the Borrower shall have any obligations under this Note, the Borrower shall not amend its charter documents,
including without limitation its certificate of incorporation and bylaws, in any manner that materially and adversely affects
any rights of the Holder.

 

2.10
Repayment from Proceeds. While any portion of this Note is outstanding, if the Company receives cash proceeds from any
source or series of related or unrelated sources, including but not limited to, from payments from customers, the issuance of
equity or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line
of credit of the Borrower or the sale of assets, in an aggregate amount of three million dollars ($3,000,000) or greater, the
Borrower shall, within five (5) business days of Borrower’s receipt of such proceeds, inform the Holder of such receipt,
following which the Holder shall have the right in its sole discretion to require the Borrower to immediately apply all or any
portion of such proceeds to repay all or any portion of the outstanding amounts owed under this Note. Failure of the Borrower
to comply with this provision shall constitute an Event of Default. In the event that such proceeds are received by the Holder
prior to the Maturity Date, the required prepayment shall be subject to the terms of Section 1.9 herein.

 

    	 

    	 

    

 

Article
III. EVENTS OF DEFAULT

 

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

 

3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon within two (2)
business days following of the due date under this Note, whether at maturity, upon acceleration or otherwise. Any amount of principal
on this Note which is not paid when due shall bear interest at the rate of fifteen percent (15%) per annum from the due date thereof
until the same is paid (“Default Interest”).

 

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

 

3.3
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement.

 

    	 

     

    

 

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

 

3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors
or commence proceedings for its dissolution, or apply for or consent to the appointment of a receiver or trustee for it or for
a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed for the Borrower or
for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after
such appointment.

 

3.6
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower, or the Borrower admits in writing its inability to pay its debts generally as they mature, or have
filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable or the Borrower
admits in writing its inability to pay its debts generally as they mature, or have filed against it an involuntary petition for
bankruptcy relief, all under international, federal or state laws as applicable.

 

3.7
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.8
Cessation of Operations. Any cessation of operations by Borrower (such that the Borrower becomes a “shell”
company), provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern”
shall not be an admission that the Borrower cannot continue as an operating business.

 

3.9
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).

 

3.10
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements (as defined
herein), after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered
a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to
apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under
said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between,
among or by: (1) the Borrower, and (2) the Holder, including, without limitation, promissory notes; provided, however, the term
“Other Agreements” shall not include this Note. Each of the loan transactions will be cross-defaulted with each other
loan transaction and with all other existing and future debt of Borrower to the Holder.

 

    	 

     

    

 

3.11
[Intentionally Omitted].

 

3.12
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $100,000.00, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.13
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent and (i) the Borrower
fails to obtain written approval from the Holder prior to the effective date of such replacement, which consent shall not be unreasonably
withheld, delayed, or conditioned, or (ii) the Borrower fails to provide, prior to the effective date of such replacement, a fully
executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including
but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor
transfer agent to Borrower and the Borrower.

 

3.14
Bid Price. If the Borrower loses the “bid” price for its Common Stock ($0.0001
on the “Ask” with zero market makers on the “Bid” per Level 2) and/or a market (including the OTCBB,
OTCQB or an equivalent replacement quotation system) for its Common Stock.

 

3.15
Failure To Deliver Returnable Shares. The Borrower fails to deliver the Returnable Shares to the Holder within five (5)
business days of the Issue Date.

 

3.16
[Intentionally Omitted].

 

3.17
[Intentionally Omitted].

 

3.18
Prohibition on Debt and Variable Securities. So long as the Note is outstanding, the Issuer shall not, without written
consent of the Investor, issue (i) any debt (including, but not limited to any loan, bond, note, debenture, lien, mortgage, debt
security, convertible security, or variable rate security), excluding debt that (a) is incurred by a subsidiary or special purpose
entity owned directly or indirectly in whole or in part by the Company for the purpose of financing the purchase of the Company’s
products and services in the ordinary course of the Company’s business, or (b) is not required to be reflected as a liability
on the face of the Company’s consolidated balance sheet in accordance with U.S. generally accepted accounting principles),
or (ii) any Variable Security. Notwithstanding the foregoing, the Issuer shall be permitted to issue up to an aggregate amount
of $500,000.00 in debt or Variable Security debt, except as agreed by the Borrower and the Holder. A Variable Security shall mean
any security issued by the Issuer that (i) has or may have conversion rights of any kind, contingent, conditional or otherwise
in which the number of shares that may be issued pursuant to such conversion right varies with the market price of the common
stock; (ii) is or may become convertible into common stock (including without limitation convertible debt, warrants or convertible
preferred stock), with a conversion or exercise price that varies with the market price of the common stock, even if such security
only becomes convertible or exercisable following an event of default, the passage of time, or another trigger event or condition;
or (iii) was issued or may be issued in the future in exchange for or in connection with any contract, security, or instrument,
whether convertible or not, where the number of shares of common stock issued or to be issued is based upon or related in any
way to the market price of the common stock, including, but not limited to, common stock issued in connection with a Section 3(a)(9)
exchange, a Section 3(a)(10) settlement, or any other similar settlement or exchange.

 

    	 

    	 

    

 

3.19
OTC Marketplace Segments. If (i) the Common Stock of the Borrower or the Borrower itself has any notation on the OTC Markets
Group website (www.otcmarkets.com) other than “Current Information,” including but not limited to “Limited
Information” (Yield Sign) or “No Information” (Stop Sign), or if the Common Stock of the Borrower is shown only
as quoted on the “grey markets,” and (ii) by reason thereof, the Holder is unable to obtain a standard “144
legal opinion” from an attorney reasonably acceptable to the Holder, its brokerage firm, and the Company’s transfer
agent in order to facilitate the Holder’s conversion of any of the Borrower’s obligations hereunder into shares of
the Common Stock and thereupon deposit such shares into the Holder’s brokerage account.

 

3.20
[Intentionally Omitted].

 

3.21
Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose,
or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of material
non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date (if such material is intentionally released
to the public) or the next trading day (if the release was unintentional).

 

3.22
[Intentionally Omitted].

 

3.23
[Intentionally Omitted].

 

3.24
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act (including but not limited to becoming delinquent in its filings under Section 15(d) of the Exchange Act) and/or the Borrower
shall cease to be subject to the reporting requirements of the Exchange Act, and either of such failures shall continue uncured
for five (5) business days.

 

3.25
Delisting or Suspension of Trading of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock
on any level of the OTC Markets or an equivalent replacement quotation system, or any tier of Nasdaq, the NYSE, or an equivalent
replacement exchange (including but not limited to a trading halt or suspension from trading).

 

    	 

     

    

 

3.26
Failure to Repay Prior Note. The Borrower shall fail to provide to Holder, within three (3) business days after the date
that the Holder funds the Purchase Price for this Note, evidence of the Borrower’s full repayment of the entire balance
owed under the convertible promissory note issued by the Company on April 18, 2019, in the original principal amount of $150,000.

 

3.27
Unavailability of Rule 144. If, at any time on or after the date which is six (6) months after the Issue Date, the Holder
is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder
and the Borrower’s transfer agent in order to facilitate the Holder’s conversion of any portion of the Note into free
trading shares of Common Stock pursuant to Rule 144.

 

Upon
the occurrence of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20, 3.21, 3.22, 3.23, 3.24, 3.25, 3.26, and/or 3.27, which continues for a period of five
(5) days after delivery of written notice to the Borrower by the Holder (the “Default Notice”) (provided, however,
that no cure period shall apply for any Event of Default under Sections 3.1, 3.2, 3.18, and/or 3.24), the Holder shall no longer
be required to return the Returnable Shares to the Borrower under any circumstances and the Note shall become immediately due
and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the
sum of (x) the then outstanding principal amount of this Note multiplied by 125%, plus (y) accrued and unpaid
interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus
(z) Default Interest, if any (the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default
Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment
or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses,
of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

 

The
Holder shall have the right at any time to convert the Default Amount, in whole or in part, at the Conversion Price in effect
at the time of conversion, subject to the beneficial ownership limitations contained in the Note.

 

If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Borrower for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

    	 

    	 

    

 

Article
IV. MISCELLANEOUS

 

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

 

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

 

If
to the Borrower:

 

Cardax,
Inc.

2800
Woodlawn Drive, Suite 129

Honolulu,
HI 96822

E-mail:
investors@cardaxpharma.com

 

If
to the Holder:

 

______________________________

______________________________

______________________________

______________________________

 

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

 

    	 

     

    

 

4.4
Assignability. The Holder may assign or transfer this Note to any transferee at its sole discretion. This Note shall be
binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and
assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act).
Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree
that following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this
Note may be less than the amount stated on the face hereof. The Borrower shall not assign any of its rights or obligations under
this Note without the signed written consent of the Holder.

 

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

 

4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware without
regard to principles of conflicts of laws. The parties hereby warrant and represent that the selection of Delaware law as governing
under this Note (i) has a reasonable nexus to each of the Parties and to the transactions contemplated by the Note; and (ii) does
not offend any public policy of Delaware, Florida, or of any other state, federal, or other jurisdiction. Any action brought
by either party against the other arising out of or related to this Note, or any other agreements between the parties, shall be
commenced only in the state or federal courts of general jurisdiction located in the Palm Beach County, Florida, except that all
such disputes between the parties shall be subject to alternative dispute resolution through binding arbitration at the Holder’s
sole discretion and election (regardless of which party initiates the legal proceedings). The parties to this Note hereby
irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. The parties agree that, in connection with any
such arbitration proceeding, each shall submit or file any claim which would constitute a compulsory counterclaim within the same
proceeding as the claim to which it relates. Any such claim that is not submitted or filed in such proceeding shall be waived
and such party will forever be barred from asserting such a claim. Both parties agree to submit to the jurisdiction of such courts
or to such arbitration panel, as the case may be.

 

    	 

     

    

 

If
the Holder elects alternative dispute resolution by arbitration, the arbitration proceedings shall be conducted in the Palm Beach
County, Florida and administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and
Mediation Procedures in effect on the Issue Date, except as modified by this Note. The Holder’s election to arbitrate shall
be made in writing, delivered to the other party, and filed with the American Arbitration Association. The American Arbitration
Association must receive the demand for arbitration prior to the date when the institution of legal or equitable proceedings would
be barred by the applicable statute of limitations, unless legal or equitable proceedings between the parties have already commenced,
and the receipt by the American Arbitration Association of a written demand for arbitration also shall constitute the institution
of legal or equitable proceedings for statute of limitations purposes. The parties shall be entitled to limited discovery at the
discretion of the arbitrator(s) who may, but are not required to, allow depositions. The parties acknowledge that the arbitrators’
subpoena power is not subject to geographic limitations. The arbitrator(s) shall have the right to award individual relief which
he or she deems proper under the evidence presented and applicable law and consistent with the parties’ rights to, and limitations
on, damages and other relief as expressly set forth in this Note. The award and decision of the arbitrator(s) shall be conclusive
and binding on all parties, and judgment upon the award may be entered in any court of competent jurisdiction. The Holder reserves
the right, but shall have no obligation, to advance the Issuer’s share of the costs, fees and expenses of any arbitration
proceeding, including any arbitrator fees, in order for such arbitration proceeding to take place, and by doing so will not be
deemed to have waived or relinquished its right to seek the recovery of those amounts from the arbitrator, who shall provide for
such relief in the final award, in addition to the costs, fees, and expenses that are otherwise recoverable. The foregoing agreement
to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction thereof.

 

THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

The
prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event
that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Note or any other related transaction document by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.

 

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

 

    	 

     

    

 

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

 

4.9
Notice of Corporate Events. Except as otherwise provided below, the Holder shall have no rights as a Holder of Common Stock
unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders).
In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including
by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property,
or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution
or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date
specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date
on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The
Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously
with the notification to the Holder in accordance with the terms of this Section 4.9 including, but not limited to, name changes,
recapitalizations, etc. as soon as possible under law.

 

4.10
Usury. Notwithstanding any provision in this Note or the related transaction documents to the contrary, the total liability
for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions,
or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction
governing this Note or any other applicable law. In the event the total liability of payments of interest and payments in the
nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed
to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest
payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Note, all sums in excess of those
lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any
party hereto, be applied to the reduction of the outstanding principal balance due hereunder immediately upon receipt of such
sums by the Holder hereof, with the same force and effect as though the Company had specifically designated such excess sums to
be so applied to the reduction of the principal balance then outstanding, and the Holder hereof had agreed to accept such sums
as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect, by notice
in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest,
rather than accept such sums as a prepayment of the principal balance then outstanding. It is the intention of the parties that
the Company does not intend or expect to pay, nor does the Holder intend or expect to charge or collect any interest under this
Note greater than the highest non-usurious rate of interest which may be charged under applicable law.

 

    	 

    	 

    

  

4.11
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required. No provision of this Note shall alter or impair the obligation
of the Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place,
and rate, and in the form, herein prescribed.

 

4.12
Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

 

4.13
Dispute Resolution. In the case of a dispute as to the determination of the Conversion Price, Conversion Amount, any prepayment
amount or Default Amount, Issue, Closing or Maturity Date, the closing bid price, or fair market value (as the case may be) or
the arithmetic calculation of the Conversion Price or the applicable prepayment amount(s) (as the case may be), the Borrower or
the Holder shall submit the disputed determinations or arithmetic calculations via e-mail (i) within two (2) Business Days after
receipt of the applicable notice giving rise to such dispute to the Borrower or the Holder or (ii) if no notice gave rise to such
dispute, at any time after the Holder or the Borrower learned of the circumstances giving rise to such dispute. If the Holder
and the Borrower are unable to agree upon such determination or calculation within two (2) Business Days of such disputed determination
or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder, then the Borrower shall, within
two (2) Business Days, submit via e-mail (a) the disputed determination of the Conversion Price, the closing bid price, or fair
market value (as the case may be) to an independent, reputable investment bank selected by the Borrower and approved by the Holder
or (b) the disputed arithmetic calculation of the Conversion Price, Conversion Amount, any prepayment amount or Default Amount,
to an independent, outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower shall
cause at its expense the investment bank or the accountant to perform the determinations or calculations and notify the Borrower
and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations.
Such investment bank’s or accountant’s determination or calculation shall be binding upon all parties absent demonstrable
error.

 

    	 

    	 

    

  

4.14
Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any convertible debt or convertible equity security with any term(s) more favorable to the holder of such security or with
any term(s) in favor of the holder of such security that were not similarly provided to the Holder in this Note, except for any
securities issued in connection with an underwritten public offering, then the Borrower shall notify the Holder of such additional
or more favorable term(s) and such term(s), at the Holder’s option, shall become a part of the transaction documents with
the Holder. The types of terms contained in another security that may be more favorable to the holder of such security include,
but are not limited to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original
issue discounts, stock sale price, private placement price per share, and warrant coverage.

 

4.15
Piggyback Registration Rights. The Borrower shall include on the next registration statement the Borrower files with SEC
(or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion
of this Note. Notwithstanding the foregoing, this Section 4.15 shall not apply to the Company’s registration statement on
Form S-1 No. 333-233281.

 

4.16
Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within four (4) Trading Days after any such receipt or delivery,
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to such Holder within two (2) Trading Days of delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to the Company or its Subsidiaries.

 

4.17
Right of First Refusal. If at any time while this Note is outstanding, the Borrower has a bona fide offer of convertible
debt financing in amount equal to or greater than $250,000 from any 3rd party, that the Borrower intends to act upon, then the
Borrower must first offer such opportunity to the Holder to provide such financing to the Borrower on the same terms as each respective
3rd party’s terms. Should the Holder be unwilling or unable to provide such capital or financing to the Borrower within
five (5) trading days from Holder’s receipt of written notice of the offer (the “Offer Notice”) from the Borrower,
then the Borrower may obtain such financing from that respective 3rd party upon substantially the same terms and conditions offered
by the Borrower to the Holder, which transaction must be completed within 30 days after the date of the Offer Notice; provided,
however, if the Borrower does not receive the financing from the respective 3rd party within 30 days after the date of the respective
Offer Notice, then the Borrower must again offer the financing opportunity to the Holder as described above, and the process detailed
above shall be repeated. The Offer Notice must be sent via e-mail to __________________.

 

[signature
page to follow]

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer as of the date first above
written.

  

	 	CARDAX, INC.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	 

    	 

    

 

EXHIBIT
A

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert $_________________principal amount of the Note (defined below) together with $________________
of accrued and unpaid interest thereto, totaling $_____________ into that number of shares
of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of
Cardax, Inc., a Delaware corporation (the “Borrower”), according to the conditions of the convertible note of the
Borrower dated as of March 16, 2020 (the “Note”), as of the date written below. No fee will be charged to the Holder
for any conversion, except for transfer taxes, if any.

 

Box
Checked as to applicable instructions:

 

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

 

	 	Name:
    _________________________________
	 	Address:
    _________________________________
	 	Form:
    [  ] Physical Certificate [  ] Book Entry (Default if no box checked)

 

	 	Date
    of Conversion:	 	
	 	 	 	 
	 	Applicable
    Conversion Price:	$	
	 	 	 	 
	 	Number
    of Shares of Common Stock to be Issued 	 	 
	 	Pursuant to Conversion of the Notes:	 	
	 	 	 	 
	 	Amount
    of Principal Balance Due remaining 	 	 
	 	Under
    the Note after this conversion:	 	
			 	 
	 	Accrued
    and unpaid interest remaining:	$	
	 	 	 	 
	 	Default
    Amounts & Penalties remaining (if applicable): 	$	

 

__________________

 

	 	By:	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	Date:Exhibit

Exhibit 4.2 
DESCRIPTION OF THE CAPITAL STOCK 
The 5,200,000 shares of capital stock authorized by Security Federal Corporation's articles of incorporation are divided into two classes, consisting of 5,000,000 shares of common stock (par value $.01 per share) and 200,000 shares of serial preferred stock (par value $.01 per share). As of March 20, 2020, there were 3,252,884 shares of our common stock issued and outstanding and no shares of our preferred stock issued and outstanding.
Common Stock
General. Each share of common stock has the same relative rights and is identical in all respects with each other share of the common stock. Each holder of common stock is entitled to one vote for each share held on all matters voted upon by stockholders, subject to certain limitations.
Liquidation or Dissolution. In the unlikely event of the liquidation or dissolution of Security Federal Corporation, the holders of the common stock will be entitled to receive - after payment or provision for payment of all debts and liabilities of Security Federal Corporation (including all deposits in the Bank and accrued interest thereon) and after distribution of the liquidation account established in the mutual to stock conversion of Security Federal Bank - all assets of Security Federal Corporation available for distribution, in cash or in kind. If preferred stock is outstanding, the holders thereof may have a priority over the holders of common stock in the event of liquidation or dissolution. 
No Preemptive Rights. Holders of the common stock are not entitled to preemptive rights with respect to any shares which may be issued.
Preferred Stock
Our articles of incorporation permit our Board of Directors to authorize the issuance of up to 200,000 shares of preferred stock, par value $0.01, in one or more series, without shareholder action.

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