NEITHER THEISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THISCERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLEHAVE BEEN REGISTEREDUNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,TRANSFERRED OR ASSIGNED INTHE ABSENCE OF {A) AN EFFECTIVEREGISTRATION STATEMENT FORTHE SECURITIES UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR {B) AN OPINION OF COUNSEL{WHICH COUNSELSHALL BE SELECTEDBY THE HOLDER), IN AGENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIREDUNDER SAID ACT.NOTWITHSTANDING THE FOREGOING,THE SECURITIES MAY BEPLEDGED IN CONNECTION WITH A BONAFIDE MARGIN ACCOUNT OROTHER LOAN OR FINANCINGARRANGEMENT SECURED BY THESECURITIES.
Principal Amount: $68,000.00 Issue Date: March 14, 2019 Purchase Price: $68,000.00
CONVERTIBLE PROMISSORY NOTE
FOR VALUERECEIVED,HEMP NATURALS,INC., a Delaware corporation (hereinafter called the“Borrower”), hereby promises to pay to the order ofPOWER UPLENDING GROUP LTD., a Virginia corporation, or registered assigns(the “Holder”) the sum of $68,000.00 together with any interest as set forth herein, on March 14, 2020 (the “Maturity Date”), andto pay interest on theunpaid principal balance hereof atthe rate of twelvepercent (12%)(the “Interest Rate”) perannum fromthe date hereof (the “Issue Date”)untilthe same becomes due and payable, whether atmaturity or upon acceleration or by prepayment or otherwise.This Note maynot be prepaid in whole or inpart except as otherwiseexplicitly set forth herein. Any amount of principal or interest onthis Notewhich is notpaid when dueshall bear interest at the rate of twentytwo percent (22%) per annum fromthe due date thereof until the same is paid (“Default Interest”). Interest shall be computed on the basis of a 365 day year andthe actual number ofdays elapsed.Interest shall commence accruing on the IssueDate butshall not be payableuntil the Note becomes payable (whether at Maturity Date or uponacceleration or by prepayment). All payments due hereunder (to the extentnot converted into common stock,$0.0001 par valueper share (the “Common Stock”) in accordance with theterms hereof) shallbe made inlawful money ofthe United States of America. All payments shall bemade at such address asthe Holder shall hereafter giveto the Borrower by written noticemade in accordance withthe provisions ofthis Note.Each capitalized term used herein, and not otherwisedefined, shall have the meaning ascribed theretoin that certain Securities Purchase Agreement dated the datehereof, pursuant to whichthis Note was originally issued (the “Purchase Agreement”).
ThisNoteis free from all taxes, liens, claims and encumbrances with respectto the issue thereof and shall not be subject topreemptiverights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The following terms shall apply to this Note:
ARTICLE I. CONVERSIONRIGHTS
1.1 Conversion Right.The Holder shall have the right from time to time, and at anytime during the period beginning on thedate which isone hundred eighty (180) days following the date ofthis Note and ending on the later of: (i) the Maturity Date and (ii) thedate ofpayment of the Default
Amount (as defined in ArticleIII), each inrespect ofthe remaining outstanding amount of thisNote to convert all or anypart of the outstanding and unpaidprincipal amount of thisNote into fullypaid andnon-assessable shares of Common Stock, as such Common Stock exists onthe Issue Date, or any shares ofcapital stock or other securities of the Borrower into whichsuch CommonStock shall hereafter be changed or reclassified at the conversionprice (the “Conversion Price”) determined asprovided herein (a “Conversion”);provided,however, that in no event shall the Holder be entitled toconvert any portion of this Note in excess of that portion of this Note upon conversion ofwhich the sum of(1) thenumber ofshares ofCommon Stock beneficially owned by the Holder and its affiliates (otherthan shares of CommonStock which may bedeemed beneficially owned through the ownership ofthe unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation onconversion orexercise analogous tothe limitationscontained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion ofthis Note with respect to which the determination of this proviso is being made, would result inbeneficial ownership by theHolder and its affiliates ofmore than 4.99% of the outstanding shares of Common Stock. For purposes ofthe proviso to the immediately preceding sentence,beneficial ownership shallbe determined in accordance with Section 13(d) ofthe Securities Exchange Act of 1934, as amended(the “Exchange Act”), andRegulations 13D-G thereunder, except as otherwiseprovided in clause (1) ofsuch proviso.Thebeneficial ownership limitations on conversion as set forth inthe sectionmay NOT be waivedby the Holder. The number of shares of Common Stock tobeissued upon eachconversionof thisNote shall be determined by dividing the Conversion Amount (as defined below)by the applicable Conversion Pricethen ineffecton the datespecified inthe notice ofconversion, inthe formattached hereto asExhibit A(the “Notice of Conversion”), deliveredto the Borrower bythe Holder in accordance with Section 1.4 below;provided thatthe Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) totheBorrower before 6:00 p.m., NewYork, New York time onsuch conversion date (the “Conversion Date”); however, if theNotice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be thenext business day.The term “Conversion Amount”means, withrespect to anyconversion ofthis Note, the sum of (1) the principal amount of thisNote to be converted insuch conversionplus (2) at theHolder’s option, accrued and unpaid interest, if any, on such principalamount at theinterest ratesprovided inthis Note to the Conversion Date,plus(3) at the Holder’s option,Default Interest, ifany, on theamounts referred to inthe immediately preceding clauses (1) and/or (2)plus (4) at theHolder’s option, any amounts owed to the Holder pursuant to Sections 1.4 hereof.
1.2 Conversion Price. Theconversion price (the “Conversion Price”) shall equal the Variable Conversion Price (asdefined herein) (subject to equitable adjustmentsby the Borrower relating tothe Borrower’s securities or the securities of any subsidiary ofthe Borrower,combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable ConversionPrice" shallmean 55% multiplied bythe Market Price(as defined herein) (representing adiscount rate of45%). “Market Price” means thelowestone (1) Trading Price (as defined below) for the Common Stock during the twenty(20) Trading Day period endingon the latest complete Trading Day priorto the ConversionDate. “Trading Price”means, forany security as of any date, the closing bid price on the OTCQB,OTCQX, PinkSheets electronic quotation system or applicable trading market (the “OTC”) as reportedby a reliable reporting service (“Reporting Service”) designated by theHolder (i.e. Bloomberg) or, if theOTC is not the principal trading market for suchsecurity, the closing bidprice of suchsecurity on the principal securitiesexchange or trading market where such security is listed ortraded or, ifno closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for suchsecurity that are listed in the “pinksheets”. If the Trading Price cannot be calculated for such security on suchdate inthe manner provided above,the Trading Price shall bethe fairmarket value asreasonably determined by theBorrower. “Trading Day” shall mean any day on which the
Common Stock istradable for any period on the OTC, or onthe principal securities exchange or othersecurities market on which the Common Stock is then being traded.
1.3 Authorized Shares. The Borrower covenants that during theperiod the conversion rightexists, 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 fullconversion ofthis Note issued pursuant tothe Purchase Agreement.The Borrower is required at alltimes to have authorized and reserved ten timesthe number of shares that wouldbe issuable upon full conversion of theNote (assumingthat the 4.99% limitation set forth in Section 1.1 is not in effect)(based on the respective ConversionPrice of the Note(as defined inSection 1.2) ineffect fromtime totime, initially2,979,189)(the “Reserved Amount”). The Reserved Amount shall be increased (or decreased withthe writtenconsent of the Holder) fromtime to time in accordance with the Borrower’s obligations hereunder. The Borrower representsthat upon issuance, such shares will beduly and validly issued, fullypaid and non-assessable.In addition, ifthe Borrower shall issue any securities or make any changeto its capital structure which would change the numberofshares ofCommon Stock into which the Notes shall beconvertible at the then current Conversion Price, theBorrower shall at the sametime make proper provision so thatthereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, forconversion of theoutstanding Note. The Borrower (i) acknowledges that it has irrevocably instructed itstransfer agent toissue certificates for the Common Stock issuable upon conversion of thisNote, and (ii) agreesthat its issuance of thisNote shall constitute full authority to its officers and agents who are charged with the duty ofexecuting stock certificatesto execute and issue the necessary certificates forshares ofCommon Stock inaccordance with the terms andconditions of this Note.
If, atany time the Borrower does not maintain the Reserved Amount it will beconsidered an Event of Default under Section 3.2 of the Note.
(a) Mechanics ofConversion. Asset forth inSection 1.1 hereof, from time to time, and at anytime during the period beginning onthe date which is one hundredeighty (180) days following the date of this Note and ending on the later of: (i)the Maturity Date and (ii) the date of payment ofthe Default Amount, this Note may beconverted by the Holder inwhole or inpart at anytime from time to time after the Issue Date, by (A) submitting to the Borrower aNotice of Conversion (byfacsimile, e-mail or other reasonable means of communication dispatched onthe Conversion Date prior to 6:00p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Noteat the principal office of the Borrower (upon payment in full of any amounts owed hereunder).
(b) Surrender ofNote Upon Conversion. Notwithstanding anything tothe contrary set forthherein, upon conversion ofthis 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 principalamount of thisNote is soconverted. TheHolder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such othermethod, reasonably satisfactory to the Holder andthe Borrower, so as notto require physical surrender ofthis Note upon each such conversion.
(c) Delivery of Common Stock UponConversion. Upon receiptby the Borrowerfrom the Holder of a facsimiletransmission or e-mail (or other reasonablemeans of communication) of aNotice of Conversion meeting therequirements forconversion asprovided in this
Section 1.4, the Borrower shall issue and deliver or causeto be issued and delivered to or upon the order ofthe Holder certificates forthe Common Stock issuable upon suchconversion within two (2) business days after such receipt (the “Deadline”) (and, solely inthe case of conversion of the entire unpaidprincipal amount hereof, surrender ofthis Note) in accordance withthe termshereof and the Purchase Agreement.Upon receipt bytheBorrower of aNoticeofConversion, the Holder shall bedeemed to be the holderof record of the Common Stock issuable upon suchconversion, the outstanding principal amount and the amount of accrued andunpaid interest on thisNote shall be reducedto reflect such conversion, and, unless the Borrower defaults on its obligations hereunder, all rights with respectto the portion of thisNote being soconverted shallforthwith terminate except the rightto receive theCommon Stock orother securities, cash or other assets, asherein provided, on such conversion.If the Holder shall havegiven aNotice of Conversion asprovided herein, the Borrower’s obligation to issue and deliverthe certificates for Common Stock shall be absolute and unconditional, irrespective ofthe absence ofany action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery ofany judgmentagainst anyperson orany action toenforce the same, any failure or delay in the enforcement of any other obligation ofthe Borrower tothe holder ofrecord, orany setoff, counterclaim, recoupment, limitation or termination, or anybreach or allegedbreach bythe Holder of any obligation to the Borrower, and irrespective of anyother circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection withsuch conversion.
(d) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuableupon conversion,provided the Borroweris participating in the Depository Trust Company (“DTC”)Fast Automated SecuritiesTransfer (“FAST”) program, upon request of the Holder and its compliance withthe provisions set forth herein, the Borrower shall use its besteffortstocauseitstransfer agent to electronically transmit the Common Stock issuable upon conversionto the Holderby crediting the account of Holder’s Prime Broker with DTC through its Deposit and Withdrawal at Custodian (“DWAC”) system.
(e) Failureto Deliver Common StockPrior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline dueto action and/or inaction of the Borrower, the Borrower shall pay tothe Holder
$2,000 per day incash, foreach day beyond the Deadline that the Borrower failsto deliver such CommonStock (the “Failto Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; andnot theresult ofany failure to pay such transfer agent)despite thebest efforts ofthe Borrower toeffect delivery ofsuch Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which ithas accrued or, atthe option ofthe Holder (by written noticeto the Borrower bythe firstday of the month following the month in which it has accrued), shall be added to the principal amount ofthis Note, in which event interest shall accruethereon in accordance with the terms ofthis Note and such additional principalamount shall be convertible intoCommon Stock inaccordance with the terms ofthis Note. The Borrower agrees that the rightto convert is a valuable right tothe Holder. The damages resulting from a failure,attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly,the parties acknowledge that the liquidated damages provision contained inthis Section 1.4(e) are justified.
1.5 Concerning the Shares. The shares of Common Stock issuable uponconversion ofthis Notemay not be sold or transferred unless:(i) such shares are sold pursuant to an effectiveregistration statement underthe Act or (ii)the Borrower or its transfer agent shall havebeen furnished with an opinion of counsel(which opinion shall be in form, substance and scope customary for opinions
ofcounsel incomparable transactions) tothe effect that the shares to be sold or transferred may be sold ortransferred pursuant to an exemption from such registration (such asRule 144 or a successor rule) (“Rule 144”); or (iii) such shares aretransferred to an “affiliate” (as defined inRule 144) of the Borrowerwho agrees tosell or otherwisetransfer the shares only inaccordance with this Section 1.5 and who is anAccredited Investor (as defined inthe Purchase Agreement).
Any restrictive legend on certificates representing shares of Common Stock issuable upon conversion ofthis Note shall be removed and the Borrowershall issue to the Holder anew certificate therefore free of any transfer legend ifthe Borrower or itstransfer agent shall havereceived anopinion ofcounsel fromHolder’s counsel, in form,substance and scope customary for opinions of counsel incomparable transactions, tothe effectthat (i) a public sale ortransfer of such Common Stock may be made without registration under the Act, which opinion shall be acceptedby the Company so that the sale or transfer iseffected; or (ii) inthe case ofthe Common Stock issuable uponconversion ofthis Note, such security is registered for sale by theHolder under an effectiveregistration statement filedunder the Act; or otherwise may be sold pursuantto an exemption from registration. In the eventthat the Company does not reasonably accept the opinion of counselprovided by the Holder with respect tothe transfer of Securities pursuant to an exemption from registration (such as Rule 144), at the Deadline, it willbe considered anEvent of Default pursuant to Section 3.2 of the Note.
| 1.6 | Effect of Certain Events. |
(a) Effect ofMerger, Consolidation, Etc. Atthe option ofthe Holder, thesale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuationby the Borrower of atransaction or series of related transactions inwhich more than 50% ofthe voting power ofthe Borrower is disposed of, orthe consolidation, merger orother business combination of the Borrower with or into any other Person (as defined below) orPersons when theBorrower isnot the survivor shall be deemed tobe an Event of Default (as defined in Article III) pursuant to whichthe Borrower shall be required topay to the Holder upon theconsummation of and as a conditionto such transaction an amount equal to the Default Amount (as definedin Article III). “Person” shall mean any individual, corporation, limited liabilitycompany, partnership, association,trust or other entity or organization.
(b) Adjustment Dueto Merger, Consolidation, Etc.If, at any timewhen this Note is issued andoutstanding and priorto conversion of allof the 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 oftheBorrower shall bechangedinto the same or a differentnumber of shares ofanother class orclasses ofstock or securities of theBorrower oranother entity, or incase of any sale or conveyance of all or substantially all ofthe assets ofthe Borrower other than inconnection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of thisNote, upon the basis and upon theterms and conditions specified herein and inlieu of the shares ofCommon Stock immediately theretofore issuable upon conversion, such stock, securities or assets which theHolder would have been entitledto receive in such transaction had thisNotebeenconvertedin full immediately prior to such transaction (without regard to any limitations onconversion set forth herein), and inany such caseappropriate provisions shall bemade with respect tothe rights and interests ofthe Holder ofthis Noteto theend that the provisions hereof (including, without limitation, provisions foradjustment of theConversion Price and ofthe number of sharesissuable upon conversion of the Note) shall thereafterbe applicable, as nearly asmay bepracticable inrelation to any securities or assetsthereafter deliverable upon theconversion hereof.The Borrowershall not affect any transaction described in this Section 1.6(b) unless (a) it first gives,tothe extentpracticable,ten (10)
days prior written notice (but inany event atleast five(5) days prior written notice) of the record date of the special meeting of shareholdersto approve, or ifthere isno such record date, theconsummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitledto convert this Note) and(b) the resulting successor or acquiringentity (if not the Borrower) assumes by written instrumentthe obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c) Adjustment Dueto Distribution. Ifthe Borrower shall declare ormake any distribution ofits assets (or rights toacquire its assets)to holders ofCommon Stock as adividend, stock repurchase, by way ofreturn ofcapital or otherwise(including any dividend or distribution to the Borrower’s shareholders incash orshares (or rights to acquire shares) ofcapital stock of asubsidiary (i.e., a spin-off)) (a “Distribution”),then the Holder of thisNote shall beentitled, upon any conversion of thisNote after thedate of record fordetermining shareholders entitledto such Distribution,to receive the amount of such assets which would have been payable to the Holder withrespect to theshares of Common Stock issuable upon suchconversion had suchHolder beenthe holder of such shares ofCommon Stock on the record date for the determination of shareholdersentitled to such Distribution.
1.7 Prepayment. Notwithstanding anything tothe contrary containedin this Note, at anytime during the periods set forth onthe table immediately following thisparagraph (the “Prepayment Periods”), theBorrower shall havethe right,exercisable onnot more than three (3) Trading Daysprior written notice to the Holder of the Note to prepaythe outstanding Note (principal and accrued interest), in full, inaccordancewith thisSection 1.7. Any notice ofprepayment hereunder (an “Optional Prepayment Notice”) shall be deliveredto the Holder of the Note at its registered addresses and shall state:(1) that the Borrower is exercising its right toprepay the Note, and (2)the date ofprepayment which shall benot more than three (3)Trading Days fromthe date ofthe Optional Prepayment Notice. Onthe date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall makepayment ofthe Optional Prepayment Amount (as defined below) to Holder, or upon the direction of the Holder as specified by theHolder in a writing to the Borrower (which directionshall to be sent to Borrower by theHolder atleast one (1)business day prior tothe Optional Prepayment Date).If the Borrower exercises itsright to prepay the Note, the Borrower shall make payment to the Holder of an amount incash equal to the percentage (“Prepayment Percentage”) as set forth inthe table immediately following thisparagraph opposite the applicable Prepayment Period, multipliedbythe sumof: (w) thethen outstanding principal amount ofthis Noteplus (x) accrued andunpaid interest on the unpaid principal amount ofthis Note to the Optional Prepayment Dateplus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x)plus (z) any amounts owed tothe Holder pursuant toSection 1.4 hereof (the “Optional PrepaymentAmount”). If the Borrower delivers an Optional Prepayment Notice and failsto pay the Optional Prepayment Amount dueto the Holder of the Note within two (2) business days following theOptional Prepayment Date,the Borrower shall forever forfeit its righttoprepay theNote pursuant tothisSection 1.7.
| Prepayment Period | Prepayment Percentage |
| 1. The period beginning onthe Issue Date and ending onthe date which is thirty (30) days following the Issue Date. | 120% |
2. Theperiod beginning onthe date which isthirty-one (31) days following the Issue Date andending on the date which is sixty (60) days following the Issue Date. | 125% |
3. The period beginning on the date which is sixty-one (61) days following the Issue Date andending on the date which is ninety (90) days following the Issue Date. | 130% |
4. The period beginning on the datethat isninety-one (91)day from the Issue Date and ending one hundredtwenty (120) days following the Issue Date. | 135% |
| 5. The periodbeginning onthe date that is one hundred twenty-one (121)day from the Issue Date and ending onehundred fifty (150) days following the Issue Date. | 140% |
| 6. The periodbeginning onthe date that is one hundred fifty-one (151) day from theIssue Date and ending one hundred eighty (180) days following the Issue Date. | 145% |
After the expiration of one hundredeighty (180)days followingthe Issue Date, the Borrower shall have no right of prepayment.
ARTICLE II. CERTAIN COVENANTS
2.1Sale ofAssets. So long asthe Borrower shall have anyobligation under thisNote, 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 courseof business. Anyconsent to the disposition ofany assets maybe conditioned on aspecified use of the proceeds ofdisposition.
ARTICLE III.EVENTS OF DEFAULT
If any of the following events ofdefault (each, an “Event of Default”) shall occur:
3.1 Failureto Pay Principal and Interest.The Borrower failsto paythe principal hereof or interestthereon when due onthis Note, whether atmaturity or upon acceleration and such breach continues for a period of five (5) days after written noticefrom the Holder.
3.2 Conversionand the Shares.The Borrower failsto issue shares of Common Stock to theHolder (or announces or threatens in writingthat it will not honor its obligation todo so) upon exerciseby the Holder of the conversion rights of theHolder in accordance with the terms ofthis Note, failsto transfer or cause its transfer agentto transfer(issue) (electronically or in certificated form) any certificate for shares of Common Stock issuedto the Holder upon conversion of or otherwise pursuant to thisNote as and when required by this Note, the Borrower directs itstransfer agent not totransfer or delays, impairs, and/orhinders its transfer agent in transferring (or issuing) (electronically or incertificated form)any certificate forshares of CommonStock to be issuedto the Holder upon conversion of or otherwise pursuant to this Note as and when required bythis Note, or fails to remove (or directs itstransfer agent not to remove orimpairs, delays, and/or hinders itstransfer 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 conversionof or otherwise pursuant to this Note as and when required by this Note(or makes any writtenannouncement, statement or threat that it does not intend to honor the obligations described in thisparagraph) and any such failure shall continueuncured (or any written announcement, statement orthreat not to honor its obligations shall not be rescinded in writing) for two (2) business days after the Holder shall have delivered aNotice of Conversion. It is an obligation ofthe Borrower to remain current in itsobligations to itstransfer agent. Itshall be an event ofdefault of thisNote, if a conversion of thisNote is delayed, hindered or frustrated dueto a balance
owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any fundsto the Borrower’s transfer agent inorder to process aconversion, such advancedfunds shall bepaid by the Borrower to the Holder withinforty-eight (48) hours of a demand from the Holder.
3.3 Breach of Covenants. The Borrower breaches anymaterial covenant or othermaterial term orcondition contained inthis Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period oftwenty (20)days after written notice thereof to the Borrower from the Holder.
3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement orcertificate given inwriting pursuant hereto or in connection herewith (including, without limitation,the Purchase Agreement), shall be false or misleading in any material respect when made and thebreachof which has (or with thepassageof time will have) a material adverseeffect on the rights of the Holderwith respect to this Note orthe Purchase Agreement.
3.5 Receiver orTrustee. The Borrower orany subsidiary oftheBorrower shall make an assignment for the benefit of creditors, or apply for orconsent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
3.6 Bankruptcy. Bankruptcy, insolvency, reorganization orliquidation proceedings or other proceedings, voluntary or involuntary, for reliefunder any bankruptcylawor any law for the relief of debtors shall be instituted by or against the Borrower orany subsidiary of the Borrower.
3.7 Delisting of Common Stock. The Borrower shall failto maintain the listing of the Common Stock on at least one ofthe OTC (which specifically includes the quotation platforms maintained bythe OTC Markets Group) or anequivalent replacement exchange, the NasdaqNational Market, theNasdaq SmallCap Market, the NewYork Stock Exchange, or the American Stock Exchange.
3.8 Failure to Comply with theExchange Act. TheBorrower shall failto comply with the reporting requirements ofthe Exchange Act; and/orthe Borrower shall cease to be subject tothe reporting requirementsof the Exchange Act.
3.9 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10 Cessation of Operations. Any cessation of operationsby Borrower orBorrower admits it isotherwise generally unable topay its debts assuch debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “goingconcern” shall not be anadmission that theBorrower cannot payits debts asthey become due.
3.11 Financial Statement Restatement. The restatement ofany financial statements filedbythe Borrower with the SEC at any time after 180 days after theIssuanceDate for any date or perioduntil this Note is no longer outstanding, if the result ofsuch restatement would,by comparison to the un-restated financial statement, haveconstituted amaterial adverse effect onthe rights of the Holder with respect to this Note or the Purchase Agreement.
3.12 Replacement ofTransfer Agent. In the event thatthe Borrower proposesto replace its transfer agent, the Borrower failsto provide,prior to the effective date of suchreplacement, a fullyexecuted Irrevocable Transfer AgentInstructions in a form asinitially delivered pursuantto 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.
3.13 Cross-Default. Notwithstanding anything to the contrary contained inthis Note orthe other related orcompanion documents, abreach ordefault by the Borrower ofany covenant or other term or condition contained in any of theOther Agreements,after the passage of allapplicable notice and cure orgrace periods, shall, at the option of the Holder,be considered adefault under thisNote andthe Other Agreements, in whichevent the Holder shall beentitled (but inno event required) to apply all rights and remedies of the Holder under the terms of thisNote and the Other Agreementsby reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements andinstruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissorynotes; provided, however, the term “Other Agreements” shall not include the related orcompanion documents to this Note. Each ofthe loan transactions will be cross-defaulted with each other loantransaction and with allother existing and future debt of Borrower to the Holder.
Upon the occurrence and during thecontinuation ofany Event of Default specified in Section 3.1 (solelywith respect tofailure to paythe principalhereof orinterest thereonwhen due at theMaturity Date), the Note shall become immediately due and payable and the Borrowershall payto theHolder, in full satisfaction of its obligations hereunder, an amountequal to the Default Amount (as definedherein). UPON THEOCCURRENCE ANDDURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED INSECTION 3.2,THE NOTESHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THEBORROWER SHALL PAY TO THEHOLDER, INFULL SATISFACTION OF ITS OBLIGATIONSHEREUNDER,ANAMOUNT EQUALTO: (Y) THEDEFAULT AMOUNT (AS DEFINED HEREIN); MULTIPLIED BY(Z) TWO(2). Upon
theoccurrence and during the continuation of any Event of Default specified inSections 3.1 (solely with respect to failureto pay the principal hereof or interestthereon whendue on thisNote or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13,and/or 3.14 exercisable through the delivery of written noticeto the Borrower by such Holders (the “Default Notice”), and uponthe occurrence of anEvent ofDefault specified the remaining sections ofArticles III (other than failureto pay the principal hereof or interest thereon atthe Maturity Date specified in Section 3,1 hereof),the Note shall become immediately due and payable and the Borrower shall pay tothe Holder, in full satisfaction of its obligations hereunder, an amountequal to the greater of(i) 150%times thesum of (w)the then outstanding principal amount of thisNoteplus (x) accrued andunpaid interest onthe unpaid principalamountofthis Note to the date ofpayment (the “Mandatory Prepayment Date”)plus (y) Default Interest, if any, on the amountsreferred to inclauses (w)and/or (x)plus (z) any amounts owed to the Holderpursuant to Section 1.4(e) hereof (the then outstanding principal amount of thisNote to thedate ofpaymentplus the amounts referred to inclauses (x), (y)and (z) shallcollectively be known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable,all without demand, presentment ornotice, all ofwhich hereby areexpressly waived, together with all costs, including, without limitation, legal fees and expenses, ofcollection, andthe Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
Ifthe Borrower failsto pay the Default Amount within five (5)business days ofwritten notice that such amount is due and payable,then the Holder shall havethe right atany time, solong asthe Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu ofthe DefaultAmount, thenumber of
shares ofCommon Stock ofthe Borrower equal to the Default Amount dividedby the Conversion Price then in effect.
ARTICLE IV. MISCELLANEOUS
4.1 Failure orIndulgence Not Waiver. No failure ordelay onthe part ofthe Holder in the exercise of any power, right or privilege hereunder shalloperate as a waiverthereof, nor shall any single orpartial exercise of any such power, right or privilege preclude other or further exercisethereof or of any other right, power orprivileges. All rights and remedies existing hereunder are cumulativeto, and not exclusive of, any rights or remedies otherwise available.
4.2 Notices. Allnotices, 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 orcertified, return receipt requested, postage prepaid, (iii) deliveredby reputable air courier service with charges prepaid, or (iv) transmitted byhand delivery,telegram, or facsimile, addressed as set forth below orto such other address as such party shall have specifiedmost recentlyby written notice.Any notice orother communication required or permittedto be givenhereunder shall be deemedeffective (a) upon hand delivery or delivery byfacsimile, withaccurate confirmation generated by the transmitting facsimile machine, at the address or numberdesignated 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 suchnotice is tobe received) or (b) on the second business day following the date of mailing by expresscourier service, fullyprepaid, addressed to such address, or upon actual receipt of suchmailing, whichever shall first occur. The addresses for suchcommunications shall be:
If to the Borrower, to: HEMP NATURALS, INC.
16950 North Bay Road, Suite 1803
Sunny Isles Beach, Florida 33160
Attn: Levi Jacobson,Chief Executive Officer Fax:
Email:If to the Holder:
POWER UP LENDING GROUP LTD.
111 Great Neck Road, Suite 214 Great Neck, NY 11021
Attn: CurtKramer, ChiefExecutive Officere-mail:
With acopy by fax only to (which copy shall notconstitute notice): Naidich Wurman LLP
111 Great Neck Road, Suite 216 Great Neck, NY 11021
Attn: Allison Naidich
facsimile: 516-466-3555 e-mail:
4.3 Amendments. This Note and any provision hereof may only beamended by an instrument in writing signed bythe Borrower and the Holder. Theterm “Note” and all reference thereto, asused throughoutthis instrument, shall mean this instrument (andthe other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as soamended or supplemented.
4.4 MostFavored Nation. During the period where anymonies are owedto theHolder pursuantto thisNote, ifthe Borrower engages in any future financing transactions with a third party investor, the Borrower will provide the Holder withwritten notice (the “MFNNotice”) thereof promptly but in no event less than 10 daysprior to closing any financingtransactions. Included withthe MFN Notice shall be a copy of all documentation relating to suchfinancing transactionandshall include, upon written request of the Holder, any additional information related to such subsequent investment asmay be reasonably requested by the Holder. In theevent the Holder determinesthat the terms of the subsequent investment are preferable to the terms ofthe securities of the Borrower issuedto the Holder pursuant to the terms of the Purchase Agreement, the Holderwill notify the Borrower in writing. Promptly after receipt of such written notice from the Holder, theBorrower agrees to amend and restate the Securities(which may includethe conversion terms ofthis Note), to be identicalto the instruments evidencing the subsequent investment.Notwithstanding theforegoing, this Section 4.4 shall not apply in respect of(i) an Exempt Issuance, or (ii) an underwrittenpublic offering of Common Stock."ExemptIssuance” means the issuance of: (a)shares ofCommon Stock or options toemployees, officers, consultants, advisors ordirectors of the Borrower pursuantto any stock or option plan duly adopted forsuch purpose by amajority ofthe members ofthe Board ofDirectors or amajority of the members of acommittee ofdirectors established forsuch purpose, (b) securities upon the exercise or exchange of or conversion of thisNote and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date hereof, and (c) securities issued pursuant to acquisitions or strategictransactions approvedby a majority of the disinterested directors of the Borrower,provided that any such issuance shall only beto a Person which is,itself orthrough its subsidiaries, an operatingcompany in a business synergistic with thebusiness ofthe Borrower and in which the Borrower receivesbenefits in addition to theinvestment of funds, but shall notinclude a transaction in which the Borrower is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.
4.5 Assignability.This Note shall be binding upon the Borrowerand its successors and assigns, and shall inure to be thebenefit ofthe Holder and its successors and assigns.Each transferee ofthis Note must be an“accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission). Notwithstanding anything in this Noteto the contrary, thisNote may bepledged as collateral in connection with abona fide margin account or other lending arrangement; and may be assigned by the Holder without the consent of the Borrower.
4.6 Cost ofCollection. If default is made inthe payment ofthis Note, the Borrower shall pay the Holder hereof costsof collection, including reasonable attorneys’ fees.
4.7 Governing Law.This Note shall begoverned by andconstrued in accordance with the laws of the State of Virginia without regardto principles ofconflicts of laws. Any action brought by eitherparty againstthe other concerning the transactions contemplatedby thisNote shall bebrought only inthe state courts ofNew York or inthe federal courts located in the Eastern District of New York.
The parties tothis Note hereby irrevocably waive any objectionto jurisdiction and venue ofany action instituted hereunder and shall not assert any defensebased on lack ofjurisdiction orvenue orbased uponforum non conveniens. The Borrower and Holder waivetrial by jury. Theprevailing party shall be entitled to recover from the other party its reasonable attorney's feesand costs. In the event thatanyprovision ofthis Note or any other agreement delivered in connection herewith is invalid or unenforceable underany applicable statute orrule of law,then such provision shallbe deemed inoperative to theextent that itmay conflict therewith andshall bedeemed modified to conform with such statute or rule of law. Any suchprovision whichmay prove invalid or unenforceable under any law shallnot affectthe validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consentsto process being served in any suit, action or proceeding in connection withthis Note, any agreement or any otherdocument deliveredin connection with this Noteby mailing acopy thereof viaregistered orcertified mail orovernight delivery (with evidence of delivery) to suchparty at theaddress ineffect fornotices to itunder thisNote and agreesthat such service shallconstitute good and sufficient service of process and noticethereof. Nothingcontained herein shall bedeemed to limit in any wayany right toserve process in any other manner permitted by law.
4.8 Purchase Agreement. By its acceptance ofthis Note, eachparty agrees to be bound by the applicable terms of the Purchase Agreement.
4.9 Remedies. The Borrower acknowledges that a breachby it of itsobligations hereunder will cause irreparable harmto the Holder, by vitiatingthe intent and purpose ofthe transaction contemplatedhereby. Accordingly,the Borrower acknowledgesthat the remedy at law for abreach of its obligations underthis Note will be inadequate and agrees, inthe event of abreach orthreatened breachby the Borrower ofthe provisionsof this Note, thatthe Holder shall beentitled,in additionto 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 anybreach ofthis Note andto enforce specifically theterms and provisionsthereof, without the necessity of showing economic loss and without any bond or other security being required.
INWITNESS WHEREOF, Borrower has causedthis Noteto be signed in itsname by its duly authorized officer this on March 14, 2019
HEMP NATURALS, INC.
By:/s/ Levi Jacobson
Levi Jacobson
Chief Executive Officer
EXHIBIT A -- NOTICE OF CONVERSION
The undersigned hereby elects to convert $principal amount ofthe Note (defined below) into that number ofshares ofCommon Stock to be issued pursuant tothe conversion of the Note (“Common Stock”) as set forthbelow, ofHEMP NATURALS, INC., a Delaware corporation (the “Borrower”) according tothe conditions ofthe convertible note of the Borrower dated as of March 14, 2019 (the “Note”), as of the date writtenbelow. No fee willbe charged tothe Holder for any conversion,except for transfer taxes, if any.
BoxChecked as to applicable instructions:
[ ]The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversionto the account of the undersigned or its nomineewith DTCthrough its Deposit Withdrawal Agent Commission system (“DWACTransfer”).
Name of DTC Prime Broker:Account Number:
[ ] The undersigned hereby requests thatthe Borrower issue acertificate orcertificates for the number of shares of Common Stock set forth below (which numbers are based on theHolder’s calculation attached hereto) inthe name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
POWER UP LENDING GROUP LTD.
111 Great Neck Road, Suite 214 Great Neck, NY 11021 Attention: Certificate Delivery
Date of conversion:
Applicable Conversion Price: $ Number of shares of common stock to be issued pursuant to conversionof the Notes: Amount of Principal Balance due remainingunder the Note after this conversion:
POWER UP LENDING GROUP LTD.
By: Name: Curt Kramer
Title: Chief Executive Officer
Date:
