NEITHERTHEISSUANCE ANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICHTHESE SECURITIESARECONVERTIBLEHAVEBEENREGISTERED UNDERTHESECURITIES ACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIESLAWS.THESECURITIES MAY NOT BEOFFEREDFORSALE, SOLD,TRANSFERRED ORASSIGNED(I) IN THEABSENCE OF(A) ANEFFECTIVEREGISTRATIONSTATEMENT FOR THESECURITIESUNDER THESECURITIESACT OF1933, ASAMENDED, OR (B) ANOPINIONOF COUNSEL (WHICHCOUNSEL SHALLBESELECTEDBYTHEHOLDER),INAGENERALLYACCEPTABLEFORM,THATREGISTRATION IS NOTREQUIRED UNDER SAIDACT OR (II)UNLESS SOLDPURSUANTTORULE144ORRULE144AUNDERSAIDACT.NOTWITHSTANDINGTHEFOREGOING, THESECURITIES MAY BEPLEDGED INCONNECTIONWITHABONAFIDEMARGINACCOUNTOROTHERLOANORFINANCINGARRANGEMENTSECUREDBY THESECURITIES.
Principal Amount:$13,000.00 IssueDate: May 20, 2013Purchase Price: $13,000.00
CONVERTIBLE PROMISSORYNOTE
FOR VALUERECEIVED,NYXIO TECHNOLOGIES CORP.,aNevada corporation (hereinaftercalled the“Borrower”), herebypromises topaytothe orderofCONTINENTALEQUITIES, LLC, aNewYorklimited liabilityCorporation, orregisteredassigns(the “Holder”)thesumof ThirteenThousandDollars($13,000.00) togetherwithany interest as set forth herein, onMay 31, 2014 the “Maturity Date”),andto pay interest on the unpaid principal balance hereof at the rateof ten percent (10%)(the “Interest Rate”) per annum fromthedatehereof (the“Issue Date”)until thesame becomesdueandpayable, whetherat maturityor upon acceleration or byprepayment or otherwise. This Note maynotbeprepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twentytwo percent (22%) per annumfrom the due date thereof untilthe same is paid(“Default Interest”). Interest shall commence accruing on the date that the Note isfullypaid and shall be computed on thebasis of a365-dayyearand theactualnumberof days elapsed. Allpaymentsduehereunder (to the extent not converted into common stock,$0.001 par value pershare (the“CommonStock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.All payments shall be made atsuch address as the Holder shall hereafter give to the Borrower by written notice made inaccordance with the provisions of thisNote. Wheneveranyamount expressedto be duebythe terms ofthis Noteis dueonanydaywhichis not abusiness day, thesameshall instead be dueon the next succeedingday which is a businessdayand, in the case ofanyinterest paymentdate whichisnotthe date onwhichthisNote ispaid infull,the extensionofthedue datethereofshallnot betakenintoaccount for purposesofdetermining the amount of interest dueonsuch date. As used in this Note, the term “business day” shall mean anydayother than a Saturday, Sundayor adayon which commercial banks in thecity ofNew York, New York are authorized or required by law or executive order to remain closed. Each capitalizedterm usedherein, andnot otherwisedefined, shall havethemeaning ascribed thereto inthatcertain SecuritiesPurchase Agreementdated thedatehereof, pursuanttowhich thisNote was originally issued (the “Purchase Agreement”).
This Noteisfree fromalltaxes,liens,claimsand encumbranceswithrespecttotheissue thereofandshallnotbesubjecttopreemptiverightsorothersimilarrightsofshareholdersoftheBorrower and will not imposepersonal liabilityupon theholderthereof.
Thefollowingterms shall applyto thisNote:
ARTICLEI.CONVERSION RIGHTS
1.1 ConversionRight.TheHoldershallhavetherightfromtimetotime,andatanytimeduringtheperiodbeginningonthedatehereof(the“IssuanceDate”)andendingonthelaterof:(i) theMaturityDateand(ii)thedateofpaymentoftheDefaultAmount(asdefinedinArticleIII) pursuant to Section 1.6(a) orArticleIII,each inrespectofthe remainingoutstandingprincipalamount of this Noteto convertalloranypart of the outstandingandunpaidprincipal amount ofthis Noteinto fullypaid and non- assessableshares ofCommon Stock,as such CommonStock existsonthe IssueDate,oranysharesofcapitalstockorothersecuritiesoftheBorrower intowhichsuch Common Stock shallhereafter bechangedorreclassifiedat theconversion price (the “ConversionPrice”)determined asprovidedherein (a“Conversion”);provided,however, that in noeventshalltheHolder beentitledtoconvert any portion of this Note inexcessofthatportionofthisNote uponconversionofwhichthesumof(1) thenumber ofsharesofCommonStockbeneficiallyownedbytheHolderanditsaffiliates(otherthansharesof Common Stockwhich may be deemed beneficially ownedthroughtheownershipof theunconvertedportionoftheNotesortheunexercisedorunconvertedportionofanyothersecurity of theBorrower subject to a limitation onconversion or exerciseanalogousto the limitationscontainedherein) and (2)thenumberofsharesofCommonStockissuableupontheconversion oftheportionofthisNotewithrespecttowhichthedeterminationofthisprovisoisbeingmade,wouldresult inbeneficialownershipbythe Holderanditsaffiliates of more than 4.99% of theoutstanding sharesof CommonStock.Forpurposesoftheprovisototheimmediatelyprecedingsentence,beneficial ownership shall bedeterminedinaccordancewithSection13(d)oftheSecurities ExchangeAct of 1934,asamended(the “Exchange Act”), andRegulations 13D-Gthere under,exceptasotherwiseprovided inclause(1) of such proviso,provided,further,however,thatthelimitationsonconversionmaybewaivedbytheHolderupon,attheelectionof theHolder,not less than 61days’prior notice to theBorrower,and theprovisionsof theconversion limitationshallcontinue to apply until such 61st day(or suchlaterdate,as determinedby theHolder,asmaybespecified in such notice of waiver). The number ofshares of Common Stock to beissued uponeach conversion of this Note shall bedeterminedby dividing theConversion Amount(asdefinedbelow)bytheapplicableConversionPricethen ineffectonthedatespecifiedinthenotice ofconversion,intheformattachedhereto asExhibit A (the “Notice of Conversion”),deliveredto theBorrowerby the Holder inaccordance withSection 1.4below;provided that theNotice ofConversionis submittedbyfacsimileore-mail(orbyothermeans resulting in, or reasonablyexpectedtoresult in, notice) to theBorrowerbefore 6:00 p.m.,NewYork, New York time on such conversiondate (the “ConversionDate”).Theterm “Conversion Amount”means,withrespect toanyconversion of thisNote, the sum of (1) theprincipal amount of this Note to be converted in suchconversionplus(2)atthe Holder’s option,accruedandunpaid interest,ifany,onsuchprincipalamountattheinterestrates provided in this Note totheConversion Date,plus(3)at theHolder’soption,DefaultInterest,ifany, ontheamounts referred to in the immediatelypreceding clauses(1) and/or(2)plus(4)at theHolder’soption,any amountsowed to theHolderpursuanttoSections 1.3and1.4(g) hereof.
1.2ConversionPrice.Theconversionprice(the“ConversionPrice”)shallequaltheVariableConversionPrice (asdefinedherein)(subjecttoequitableadjustmentsforstocksplits,stockdividendsorrightsofferingsbytheBorrowerrelatingtotheBorrower’s securitiesor the securities ofanysubsidiaryof the Borrower, combinations,recapitalization, reclassifications, extraordinary distributionsandsimilarevents).The"VariableConversionPrice"shallmean57.5% multipliedby theMarket Price(asdefined herein)(representingadiscountrateof42.5%).“MarketPrice”means theaverageofthelowestthree (3)TradingPrices (asdefinedbelow)for theCommonStockduringthethirty(30)TradingDay periodendingonthelatestcompleteTradingDay prior to theConversion Date. “TradingPrice”means, foranysecurityasofanydate,the closing bidprice on the Over-the-CounterBulletin Board,orapplicable tradingmarket(the“OTCBB”)asreportedby areliablereportingservice (“ReportingService”) designatedby theHolder(i.e. Bloomberg)or, if the OTCBB is not theprincipal tradingmarket for suchsecurity, theclosing bidpriceof such security on the principal securitiesexchange or tradingmarket wheresuchsecurity is listedortradedor,ifnoclosingbidpriceofsuchsecurity isavailable inanyof the foregoing manners, theaverageofthe closing bidprices ofanymarketmakers for such security that are listed in the “pinksheets”bytheNationalQuotationBureau, Inc. Ifthe Trading Pricecannotbecalculatedfor suchsecurity on suchdate inthemannerprovidedabove, the TradingPriceshall be the fairmarket valueas mutuallydeterminedby theBorrowerandthe holders of a majority in interest of theNotes beingconvertedforwhich thecalculation of the Trading Price isrequired in order to determine the ConversionPriceof suchNotes. “TradingDay”shallmeananyday onwhich the Common Stock istradable foranyperiodontheOTCBB, orontheprincipal securitiesexchangeorothersecuritiesmarketonwhich the Common Stock isthenbeing traded.
1.3AuthorizedShares.TheBorrowercovenantsthatduringtheperiodtheconversion rightexists,theBorrowerwillreservefromitsauthorizedandunissuedCommonStockasufficientnumberofshares,freefrom preemptiverights,toprovidefortheissuanceofCommon Stock upon thefullconversion ofthis Note issuedpursuantto thePurchaseAgreement. TheBorrowerisrequiredat alltimes tohave authorizedandreserved twotimesthenumberofsharesthat isactuallyissuable upon full conversion ofthe Note(based on theConversionPrice of theNotesineffect from time totime)(the“Reserved Amount”). TheReservedAmount shall be increased from time to time inaccordancewith the Borrower’s obligationspursuanttoSection4(g) of thePurchaseAgreement. TheBorrowerrepresentsthatuponissuance, suchshareswillbedulyandvalidly issued, fullypaidand non-assessable.Inaddition, iftheBorrowershall issue any securities or makeanychangeto itscapitalstructure which would change thenumberofsharesof Common Stock intowhich theNotesshall beconvertibleat the thencurrentConversionPrice,theBorrowershallatthesametimemakeproperprovisionsothatthereafter thereshallbeasufficientnumber ofsharesofCommon Stockauthorizedandreserved,freefrompreemptiverights,for conversionoftheoutstandingNotes. TheBorrower(i)acknowledgesthat ithasirrevocablyinstructed itstransferagent to issuecertificatesfor theCommon Stockissuableuponconversion of thisNote,and (ii) agrees that itsissuanceof this Note shallconstitute full authorityto itsofficers andagents who arecharged with the duty of executing stockcertificatestoexecuteand issuethe necessarycertificatesforshares of CommonStockinaccordance with theterms andconditions of this Note.
If, atanytimetheBorrower doesnotmaintaintheReservedAmountitwillbeconsideredanEvent ofDefault under Section 3.2 oftheNote.
1.4 Method ofConversion.
(a) MechanicsofConversion.SubjecttoSection1.1,thisNotemaybeconverted bytheHolderinwholeorinpartatanytimefromtimetotimeaftertheIssueDate,by
(A)submittingtotheBorroweraNoticeofConversion(byfacsimile,e-mailorotherreasonable meansofcommunicationdispatchedontheConversionDatepriorto6:00p.m.,New York,NewYorktime)and(B)subjecttoSection 1.4(b),surrenderingthisNoteattheprincipalofficeoftheBorrower.
(b) SurrenderofNoteUponConversion.Notwithstandinganythingtothecontraryset forthherein,uponconversionofthisNoteinaccordancewiththeterms hereof,theHoldershallnotberequiredtophysicallysurrenderthisNotetotheBorrowerunlesstheentireunpaid principalamount of this Note is soconverted.The Holder and the Borrower shall maintainrecords showing theprincipalamount soconvertedand thedatesofsuchconversions or shalluse suchother method,reasonably satisfactory to theHolderandtheBorrower,soasnot torequire physical surrender of this Noteuponeachsuchconversion.In theeventof any disputeordiscrepancy,suchrecordsof theBorrowershall,primafacie,becontrollinganddeterminative in theabsence ofmanifesterror. Notwithstanding theforegoing, ifany portion of this Note isconvertedasaforesaid,theHoldermaynottransferthisNote unlesstheHolder firstphysicallysurrenders this Note totheBorrower, whereupon theBorrower willforthwithissueanddeliver upon theorderoftheHolderanewNoteofliketenor,registeredastheHolder(uponpaymentby theHolderofanyapplicabletransfer taxes) mayrequest,representingin theaggregate theremainingunpaidprincipalamountofthisNote.The Holderandanyassignee,byacceptance of thisNote, acknowledgeandagreethat,byreasonof theprovisionsofthisparagraph,followingconversionofaportionofthisNote,theunpaidand unconvertedprincipalamountofthisNoterepresented by this Notemaybeless than theamountstated on the face hereof.
(c) PaymentofTaxes.TheBorrowershallnotberequiredtopayanytaxwhichmaybepayableinrespectof anytransferinvolvedintheissueanddeliveryofsharesofCommonStockorothersecuritiesor property onconversionofthis Note in anameotherthan thatofthe Holder(orinstreetname),andtheBorrowershall not berequiredto issue ordeliver anysuchsharesorothersecuritiesorpropertyunlessanduntilthepersonorpersons(otherthan theHolderor thecustodian in whosestreetname suchshares are to beheldfor the Holder’saccount)requestingtheissuancethereofshallhavepaidtotheBorrowertheamountofany such taxorshall have establishedto the satisfaction oftheBorrower that such taxhasbeenpaid.
(d) DeliveryofCommonStockUponConversion.UponreceiptbytheBorrowerfromtheHolderofafacsimiletransmissionore-mail(orotherreasonablemeansofcommunication)ofaNotice ofConversionmeeting therequirements for conversionasprovided in thisSection1.4, theBorrower shall issueand deliver orcause tobeissuedanddelivered to or upon theorderof the Holdercertificatesfor the Common Stockissuable upon suchconversionwithinthree (3) businessdaysafter such receipt (the“Deadline”) (and, solely in thecase ofconversionoftheentire unpaidprincipalamounthereof,surrenderofthisNote)in accordance with the terms hereofandthePurchaseAgreement.
(e) ObligationofBorrowertoDeliverCommonStock.UponreceiptbytheBorrowerofaNoticeofConversion,theHoldershallbedeemedtobetheholderofrecordoftheCommonStockissuableuponsuchconversion,theoutstandingprincipalamountandtheamount ofaccruedandunpaidinterest on thisNote shall bereduced toreflect suchconversion,
and,unlesstheBorrowerdefaultsonitsobligationsunderthisArticleI,all rightswithrespecttotheportionofthisNotebeingsoconvertedshallforthwithterminateexcepttherighttoreceivetheCommonStockorothersecurities,cash orotherassets, ashereinprovided,onsuchconversion. If the Holder shall havegiven a Notice of Conversion asprovided herein, theBorrower’sobligationto issueand deliverthecertificates forCommon Stock shall beabsoluteandunconditional,irrespectiveoftheabsenceofanyactionbytheHoldertoenforcethesame, anywaiver orconsent withrespect to any provisionthereof, the recovery of anyjudgmentagainst any personoranyactiontoenforcethe same,anyfailureor delayin theenforcementof any otherobligation of theBorrowerto the holder ofrecord, or anysetoff, counterclaim,recoupment, limitation ortermination, or anybreach oralleged breach by theHolder of anyobligationto theBorrower,andirrespectiveof any othercircumstance whichmight otherwise limit suchobligation of theBorrowerto the Holder inconnection with such conversion. TheConversion DatespecifiedintheNoticeofConversionshallbetheConversionDatesolongastheNotice ofConversion isreceivedbytheBorrower before6:00 p.m.,NewYork, NewYorktime, onsuchdate.
(f) DeliveryofCommonStockbyElectronicTransfer.Inlieuofdeliveringphysical certificatesrepresentingtheCommonStock issuableuponconversion, providedtheBorrowerisparticipatingintheDepository TrustCompany(“DTC”)FastAutomatedSecurities Transfer (“FAST”)program, uponrequest of theHolder and itscompliance with the provisionscontainedin Section 1.1and in this Section 1.4, theBorrower shalluse itsbest efforts tocause itstransferagent toelectronically transmit theCommon Stockissuable uponconversion to theHolderbycrediting theaccountofHolder’sPrimeBrokerwith DTCthrough itsDepositWithdrawalAgent Commission (“DWAC”)system.
(g) FailuretoDeliverCommonStockPriortoDeadline.WithoutinanywaylimitingtheHolder’s rightto pursueotherremedies, includingactualdamages and/orequitable relief,thepartiesagreethatifdelivery oftheCommon Stockissuableuponconversion of thisNote is notdeliveredby theDeadline (other than afailuredue tothecircumstancesdescribedinSection 1.3above, whichfailureshall begoverned by suchSection) theBorrowershall pay to the Holder $2,000perdayin cash, foreachdaybeyondtheDeadline that theBorrowerfails todeliversuchCommon Stockthroughwillfulordeliberateactson thepartoftheBorrower.Such cashamount shall bepaid to Holder bythefifthdayofthemonth following the month inwhichithasaccruedor, at the option of theHolder(bywritten notice to theBorrowerby thefirst day of the month following themonth inwhichit hasaccrued), shall beadded to theprincipalamount ofthisNote, inwhichevent interest shallaccruethereoninaccordancewith thetermsofthisNoteand suchadditional principal amount shall beconvertible into Common Stock inaccordancewith theterms of thisNote. TheBorroweragreesthat theright toconvert is avaluablerightto theHolder. Thedamages resultingfromafailure,attempttofrustrate,interferencewith suchconversionright are difficult ifnotimpossibletoqualify. Accordingly theparties acknowledge that theliquidateddamages provisioncontainedinthisSection 1.4(g)arejustified.
1.5ConcerningtheShares. ThesharesofCommonStockissuableuponconversionofthisNotemaynotbesoldortransferredunless(i)suchsharesare soldpursuanttoan effectiveregistrationstatement undertheActor(ii)theBorroweroritstransferagent shallhavebeenfurnished withan opinion ofcounsel (which opinion shall be inform, substanceandscope customary for opinionsofcounselincomparabletransactions)totheeffectthattheshares to besold ortransferredmay besold ortransferredpursuant toanexemptionfrom such
registrationor(iii)suchsharesaresoldortransferredpursuanttoRule144undertheAct(orasuccessorrule)(“Rule144”)or(iv)suchsharesaretransferredtoan“affiliate”(asdefinedinRule144)oftheBorrowerwhoagrees tosellorotherwisetransfertheshares onlyinaccordancewith thisSection 1.5andwho isanAccreditedInvestor (asdefined in thePurchaseAgreement). Exceptasotherwiseprovidedin thePurchaseAgreement(and subject to theremovalprovisionssetforth below),until such timeas thesharesof Common Stockissuableuponconversionofthis Notehave beenregisteredunder theActor otherwisemay be sold pursuant to Rule 144 without any restrictionas to thenumber ofsecuritiesas of aparticulardate that can then beimmediatelysold,eachcertificateforsharesof Common Stockissuableupon conversion of this Note thathas notbeen soincludedinaneffective registrationstatement or thathas notbeensoldpursuanttoaneffectiveregistration statement oran exemption thatpermitsremoval ofthelegend,shall bear a legend substantially in the followingform, asappropriate:
“NEITHER THEISSUANCE ANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIES INTOWHICHTHESESECURITIES AREEXERCISABLEHAVEBEEN REGISTEREDUNDERTHESECURITIESACTOF1933,AS AMENDED,ORAPPLICABLE STATESECURITIESLAWS.THE SECURITIES MAYNOT BEOFFERED FORSALE,SOLD,TRANSFERREDORASSIGNED(I)IN THEABSENCEOF (A)ANEFFECTIVEREGISTRATION STATEMENTFORTHESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED,OR(B)AN OPINIONOFCOUNSEL(WHICHCOUNSELSHALLBESELECTEDBYTHE HOLDER), IN AGENERALLYACCEPTABLE FORM,THATREGISTRATION ISNOT REQUIREDUNDERSAIDACTOR (II)UNLESSSOLDPURSUANTTORULE144 ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING,THESECURITIESMAY BEPLEDGEDINCONNECTIONWITHABONA FIDEMARGINACCOUNTOR OTHERLOAN ORFINANCINGARRANGEMENTSECUREDBYTHE SECURITIES.”
ThelegendsetforthaboveshallberemovedandtheBorrowershallissuetotheHolderanewcertificatethereforefreeofanytransferlegendif(i)theBorroweroritstransfer agentshallhavereceivedan opinion of counsel, inform,substanceand scopecustomary for opinions ofcounselincomparable transactions, to theeffectthat a public sale ortransferof such Common Stock may be made withoutregistrationunderthe Act,which opinionshall be acceptedby theCompany sothatthesaleortransfer iseffectedor(ii)inthecaseof theCommonStockissuableupon conversion of thisNote, such securityisregistered forsalebythe Holder under aneffectiveregistration statement filedunderthe Act orotherwisemaybesoldpursuant to Rule144 withoutany restrictionas to the number ofsecurities as of a particulardate that can then beimmediately sold. In theevent that theCompany does not accept the opinion ofcounselprovidedby theBuyerwithrespecttothetransferofSecuritiespursuanttoanexemptionfromregistration,suchas Rule 144 orRegulation S,at theDeadline, it will beconsidered anEventofDefaultpursuant toSection 3.2 of theNote.
1.6EffectofCertainEvents.
(a) EffectofMerger,Consolidation,Etc.AttheoptionoftheHolder, thesale,conveyanceor disposition ofall or substantiallyall of theassetsof theBorrower,the effectuationbytheBorrowerofatransactionorseriesofrelatedtransactionsinwhichmorethan50%ofthevotingpoweroftheBorrower isdisposedof,or theconsolidation,merger or otherbusiness
combinationoftheBorrowerwithorintoanyotherPerson(as definedbelow)orPersonswhentheBorrowerisnotthesurvivorshalleither:(i) bedeemedtobeanEventofDefault(asdefinedinArticle III)pursuant towhich theBorrower shallberequired topay to the Holder upon theconsummationofandas aconditionto suchtransactionan amountequal totheDefaultAmount(asdefined in Article III) or (ii) betreated pursuant toSection1.6(b)hereof. “Person” shallmeanany individual,corporation, limitedliability company,partnership,association,trust or other entityororganization.
(b) AdjustmentDuetoMerger,Consolidation,Etc.If,atanytimewhenthisNoteisissuedandoutstandingandpriortoconversionofalloftheNotes,thereshallbeany merger,consolidation,exchangeofshares, recapitalization,reorganization,or othersimilar event,as aresult of whichsharesofCommon Stock of theBorrower shall bechangedinto the same or adifferent number of shares ofanother class or classes of stockorsecuritiesof theBorrower oranotherentity,or in case ofanysale orconveyanceofallorsubstantiallyall of theassets of theBorrower other than inconnection with a planofcomplete liquidation of theBorrower, then theHolder of this Note shallthereafterhavetherighttoreceive upon conversion of thisNote,upon thebasisanduponthetermsand conditionsspecifiedherein andinlieuofthesharesofCommon Stock immediatelytheretoforeissuableupon conversion, such stock, securities orassetswhichtheHolder would have beenentitledto receive in suchtransaction had this Note beenconvertedinfullimmediatelyprior tosuchtransaction (withoutregard toanylimitationsonconversionset forthherein),andinanysuchcaseappropriateprovisionsshallbemade withrespecttotherights andinterestsof theHolder ofthis Note to theend that the provisionshereof(including,without limitation,provisionsforadjustment of theConversion Priceand ofthe numberof sharesissuableuponconversionoftheNote)shallthereafterbeapplicable,asnearlyasmaybepracticable inrelation to anysecurities or assetsthereafterdeliverable upon theconversionhereof.TheBorrower shall notaffectanytransactiondescribedin thisSection1.6(b) unless(a) itfirstgives,to the extentpracticable, thirty(30)daysprior writtennotice(but inanyevent atleastfifteen(15)daysprior writtennotice)oftherecord dateofthespecialmeetingofshareholders toapprove, or ifthere is no suchrecorddate,theconsummationof, suchmerger, consolidation,exchange ofshares,recapitalization,reorganizationorothersimilarevent orsaleofassets (duringwhich time theHolder shall beentitled toconvertthisNote)and (b) theresulting successor or acquiring entity(if not theBorrower) assumesby writteninstrument theobligations of thisSection1.6(b).The aboveprovisions shallsimilarlyapply tosuccessiveconsolidations, mergers,sales,transfersorshareexchanges.
(c)AdjustmentDue toDistribution.IftheBorrowershalldeclareormakeanydistributionofitsassets(orrightstoacquireitsassets)toholdersofCommonStockasadividend, stockrepurchase,byway of return ofcapitalorotherwise(includinganydividendor distribution to theBorrower’s shareholders incash orshares (or rights toacquireshares)ofcapital stock ofa subsidiary(i.e., a spin-off))(a“Distribution”),then theHolderof this Note shall beentitled, upon any conversion of this Noteafterthe date ofrecord for determiningshareholders entitled to such Distribution, to receivetheamountofsuchassetswhich would havebeen payable to theHolder withrespect to theshares of CommonStockissuableupon suchconversionhadsuch Holderbeen the holder of suchsharesof Common Stock on therecorddatefor thedetermination of shareholders entitled tosuch Distribution
(d) AdjustmentDue toDilutiveIssuance.If,atany timewhenany Notesare issuedand outstanding,theBorrower issuesor sells,or inaccordance withthisSection 1.6(d)hereofisdeemedtohaveissuedorsold,anysharesofCommonStock for noconsiderationorfor
aconsiderationpershare(beforedeductionofreasonableexpensesorcommissionsorunderwritingdiscountsorallowancesinconnectiontherewith)lessthantheConversionPriceineffectonthedateofsuchissuance(ordeemedissuance)ofsuchsharesofCommon Stock(a“Dilutive Issuance”),thenimmediately upontheDilutiveIssuance,the ConversionPricewillbereduced to theamountoftheconsideration per sharereceivedbytheBorrower in such DilutiveIssuance.
TheBorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorgrantsanywarrants, rightsoroptions(notincludingemployeestockoptionplans), whetherornotimmediately exercisable,tosubscribeforor topurchaseCommon Stock or othersecuritiesconvertibleintoorexchangeable for Common Stock(“ConvertibleSecurities”)(such warrants,rightsandoptionstopurchaseCommonStock orConvertible Securitiesare hereinafterreferredtoas “Options”)andtheprice pershare forwhich Common Stock isissuable upon theexercise of such Options isless than theConversionPrice then ineffect, then theConversion Price shall beequal to suchprice pershare.Forpurposesof the precedingsentence, the“priceper share forwhich Common Stock isissuableupon theexerciseof such Options” isdeterminedby dividing (i) the totalamount, ifany,received orreceivablebytheBorrowerasconsideration for the issuance or grantingofallsuch Options, plus theminimumaggregate amount ofadditionalconsideration,ifany,payable to theBorrowerupon the exercise ofall such Options, plus, in thecaseofConvertibleSecurities issuable upon the exercise of such Options, the minimumaggregateamountofadditionalconsiderationpayableupon the conversion orexchange thereofatthe time suchConvertibleSecurities firstbecome convertible or exchangeable,by(ii) the maximumtotal number ofsharesof Common Stockissuable upon the exercise ofallsuch Options(assuming full conversion ofConvertible Securities, ifapplicable). Nofurther adjustment to theConversionPrice will be made upon theactualissuanceofsuch Common Stock upon the exerciseofsuchOptions orupontheconversion orexchangeofConvertibleSecurities issuable uponexercise ofsuchOptions.
Additionally,theBorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorsellsanyConvertible Securities,whetherornotimmediatelyconvertible(otherthanwherethesameare issuableupontheexercise of Options), and the price per share forwhich Common Stock isissuableupon suchconversionorexchangeis lessthantheConversionPrice then ineffect, thentheConversionPriceshall beequal to suchprice pershare. For thepurposes of the precedingsentence, the“price per share forwhich Common Stock isissuableupon such conversion orexchange” isdeterminedbydividing (i) thetotalamount,ifany,receivedorreceivableby theBorroweras consideration for the issuance or sale ofall suchConvertible Securities, plus theminimumaggregate amount of additionalconsideration, ifany, payable to theBorrower upon theconversionorexchangethereof at the time suchConvertibleSecuritiesfirstbecome convertible orexchangeable,by(ii) the maximumtotal number ofshares of Common Stockissuableupon theconversionorexchangeofall suchConvertibleSecurities. Nofurther adjustmentto theConversionPricewillbemade upontheactualissuanceofsuchCommonStockuponconversionor exchangeof suchConvertible Securities
(e) PurchaseRights.If,atany timewhenanyNotesareissued andoutstanding,theBorrowerissuesanyconvertiblesecurities orrightsto purchase stock,warrants,securitiesor other property (the“PurchaseRights”)pro ratato therecord holdersofanyclassof Common Stock, then theHolderof this Note will beentitledtoacquire,upon the termsapplicableto suchPurchaseRights,theaggregate PurchaseRights whichsuchHolder couldhaveacquiredifsuch
Holderhadheldthe number ofsharesof Common Stockacquirableuponcompleteconversion ofthisNote(withoutregardtoanylimitationsonconversioncontainedherein)immediatelybeforethedateonwhicharecordistakenforthegrant, issuanceorsaleofsuchPurchaseRights or,if no suchrecord istaken,thedateasofwhich therecordholdersof Common Stockare to bedeterminedfor thegrant,issueorsale of suchPurchase Rights.
(f)Notice of Adjustments. Upon theoccurrenceofeach adjustmentorreadjustmentof theConversion Priceasaresult of theevents describedin thisSection 1.6, theBorrower, at its expense, shall promptly compute suchadjustmentorreadjustmentandprepareand furnish to theHolder acertificatesettingforth suchadjustmentorreadjustmentand showing indetailthefacts uponwhichsuchadjustmentorreadjustment isbased. TheBorrower shall, upon thewrittenrequest atany time of the Holder, furnishto such Holder a like certificatesetting forth (i) such adjustment orreadjustment,(ii) theConversion Priceatthe time ineffectand (iii) the number ofshares of Common Stockandtheamount,ifany, of othersecurities or propertywhichatthetime would be received uponconversionoftheNote.
1.7 TradingMarketLimitations.Unlesspermittedbytheapplicablerulesandregulationsoftheprincipalsecurities marketonwhichtheCommonStockisthenlistedortraded,innoeventshalltheBorrowerissueuponconversionoforotherwisepursuanttothis Noteand the other Notesissuedpursuant to thePurchase Agreement more than the maximum number ofsharesofCommonStockthattheBorrower canissuepursuanttoany rule oftheprincipalUnitedStatessecuritiesmarketon whichtheCommonStockisthentraded(the “MaximumShareAmount”),whichshallbe4.99%ofthetotalsharesoutstandingontheClosingDate(asdefined in the PurchaseAgreement),subject toequitableadjustment from time to time for stocksplits,stock dividends,combinations,capitalreorganizations and similareventsrelatingto the Common Stockoccurringafterthedatehereof.Once the MaximumShare Amounthasbeenissued, if theBorrowerfails toeliminate anyprohibitionsunderapplicable lawor therulesorregulations ofany stockexchange,interdealer quotationsystem or other self-regulatoryorganizationwithjurisdictionovertheBorroweror anyofitssecuritiesontheBorrower’s ability to issuesharesof Common Stock inexcess of the MaximumShareAmount, inlieu ofanyfurtherright toconvertthisNote, thiswill beconsideredanEventofDefaultunderSection3.3 oftheNote.
1.8 StatusasShareholder.Upon submission ofa Notice ofConversionbyaHolder,(i) theshares coveredthereby (otherthantheshares,ifany,whichcannotbeissuedbecausetheirissuancewouldexceed such Holder’sallocatedportion of theReservedAmount or MaximumShare Amount) shall bedeemed converted intoshares ofCommon Stockand(ii) theHolder’s rightsas aHolder of suchconvertedportion of this Note shallcease andterminate, exceptingonlytherighttoreceivecertificatesforsuchsharesof CommonStockandtoanyremedies provided herein orotherwiseavailable at law or inequityto suchHolder because of afailureby theBorrowerto comply with theterms of thisNote. Notwithstanding theforegoing, if aHolderhasnotreceived certificates forallsharesof Common Stockprior to the tenth (10th)businessdayafterthe expiration of theDeadline withrespectto a conversion ofany portion of this Note foranyreason,then(unless theHolder otherwise elects to retain its statusas a holder ofCommon Stock by sonotifyingtheBorrower)theHoldershallregaintherights ofaHolder of this Note withrespect to suchunconverted portions of this NoteandtheBorrower shall,assoonaspracticable, return suchunconvertedNote to theHolderor, if the Note has not beensurrendered, adjustitsrecords toreflect that such portion ofthis Notehasnotbeenconverted.Inall cases, theHoldershallretainall of itsrights andremedies (including, without limitation, (i)
therighttoreceiveConversionDefaultPayments pursuanttoSection1.3totheextentrequiredtherebyforsuchConversionDefaultandanysubsequentConversionDefaultand(ii)therighttohavetheConversionPricewithrespecttosubsequentconversions determinedinaccordancewithSection 1.3) fortheBorrower’sfailureto convertthis Note.
1.9Prepayment.Notwithstandinganythingtothecontrary containedinthisNote,atanytimeduringtheperiodbeginningontheIssueDateandendingonthedatewhichissixty
(60)daysfollowingtheissuedate,theBorrowershallhavetheright,exercisableonnotlessthanthree(3)TradingDays priorwrittennoticetotheHolderoftheNotetoprepaytheoutstandingNote(principaland accruedinterest),infull,inaccordancewiththisSection1.9.Anynoticeofprepaymenthereunder(an“OptionalPrepaymentNotice”) shall bedeliveredtotheHolderofthe Noteat itsregistered addressesand shallstate: (1) that theBorrower isexercising itsright to prepay theNote, and(2) thedateofprepaymentwhichshall be not more thanthree (3) TradingDaysfromthedateoftheOptionalPrepayment Notice. Onthedatefixedforprepayment(the“OptionalPrepaymentDate”), theBorrowershall makepayment of the OptionalPrepaymentAmount(asdefined below) to or upon the order of theHolderasspecifiedby theHolder inwritingtotheBorrowerat leastone (1)businessdayprior tothe OptionalPrepayment Date. If theBorrowerexercises itsright to prepay the Note, theBorrowershall makepayment to theHolder ofanamountin cash (the“OptionalPrepaymentAmount”)equal to130%,multiplied by the sumof: (w)the thenoutstanding principalamountof this Noteplus(x) accruedand unpaidinterest on theunpaidprincipalamount of this Note to the OptionalPrepaymentDateplus(y)DefaultInterest,ifany, ontheamountsreferred toinclauses (w)and(x)plus(z)anyamountsowedto theHolder pursuanttoSections1.3and1.4(g)hereof. If theBorrower deliversanOptionalPrepaymentNoticeandfailstopay theOptionalPrepaymentAmountdue tothe Holder of theNote within two(2)business daysfollowingthe OptionalPrepaymentDate,theBorrower shallforeverforfeititsright to prepay theNotepursuant to thisSection 1.9.
NotwithstandinganythingtothecontrarycontainedinthisNote, atanytimeduringtheperiodbeginningonthedatewhichissixty-one(61)daysfollowingtheissuedateandending onthedatewhichiseight-nine (89)daysfollowing theissue date,theBorrower shallhavetheright,exercisableonnot less thanthree (3) TradingDayspriorwrittennoticeto theHolderoftheNote to prepay theoutstandingNote(principaland accruedinterest), in full, inaccordance with thisSection 1.9. Any OptionalPrepayment Notice shall bedeliveredto theHolder of the Noteat itsregisteredaddressesandshall state: (1) that theBorrower isexercisingitsrighttoprepay theNote,and(2)thedateofprepaymentwhichshallbenotmorethanthree
(3) TradingDays from the dateoftheOptional Prepayment Notice.On theOptionalPrepaymentDate,theBorrowershallmakepaymentoftheSecondOptionalPrepaymentAmount(asdefinedbelow)to or upontheorder ofthe Holderasspecified bytheHolder in writing to theBorrowerat leastone (1)businessday prior to the OptionalPrepayment Date.If theBorrower exercises itsright to prepaytheNote,theBorrower shall makepayment to theHolder ofanamountincash (the“Second OptionalPrepayment Amount”) equal to 140%,multipliedby the sumof: (w) the thenoutstanding principalamountofthis Noteplus(x) accruedand unpaidinterestontheunpaid principalamountof this Note tothe OptionalPrepayment Dateplus(y)DefaultInterest,ifany,on theamountsreferred to inclauses(w)and(x)plus(z) anyamountsowedto theHolderpursuant toSections1.3and 1.4(g) hereof.IftheBorrower deliversan OptionalPrepayment Noticeandfailstopay theSecondOptionalPrepaymentAmountdue to theHolder of the Note withintwo(2)business daysfollowing theOptionalPrepaymentDate, theBorrowershallforever forfeit itsright toprepay the Notepursuant to thisSection1.9.
NotwithstandinganythingtothecontrarycontainedinthisNote, atanytimeduringtheperiodbeginningonthedatewhichisninety(90)daysfollowingtheissuedateand,theBorrowershallhave theright,exercisableonnotlessthanthree(3)TradingDaysprior writtennotice to theHolder of the Note toprepay theoutstanding Note(principalandaccrued interest),in full, inaccordance with thisSection 1.9.AnyOptionalPrepayment Noticeshall bedeliveredto theHolder ofthe Noteatitsregisteredaddressesandshallstate:(1)thattheBorroweris exercisingitsright to prepay theNote,and (2)thedateofprepayment whichshall be not more thanthree (3) TradingDaysfrom thedateofthe OptionalPrepaymentNotice.Onthe OptionalPrepaymentDate,theBorrowershallmakepaymentofthe ThirdOptionalPrepayment Amount(as defined below) to or upon the order of theHolderas specifiedbytheHolderinwriting to theBorrowerat least one (1)business dayprior to the OptionalPrepaymentDate. If theBorrowerexercises itsrightto prepaythe Note, theBorrower shall makepayment to theHolder ofanamountincash(the “ThirdOptionalPrepaymentAmount”) equal to 150%,multipliedbythesumof:(w)the thenoutstandingprincipalamount ofthis Noteplus(x) accruedandunpaid interest on theunpaidprincipalamount of this Note to theOptionalPrepaymentDateplus(y)Default Interest, ifany, on theamountsreferred to in clauses (w)and (x)plus(z)anyamountsowedto theHolderpursuant toSections1.3and1.4(g) hereof.IftheBorrowerdelivers an OptionalPrepaymentNoticeandfails topaytheThird OptionalPrepayment Amount due to theHolder of theNote within two(2) businessdaysfollowing theOptionalPrepaymentDate,theBorrower shallforeverforfeititsright to prepay theNotepursuant to thisSection1.9.
Aftertheexpirationofonehundredeighty(180)followingthedateoftheNote,theBorrower shallhavenoright ofprepayment.
1.10DTC Status.TheCompany’sCommonStockarecurrentlyeligibleforDTCbook-entrydelivery, settlementanddepositoryservicesandaccordinglyarenotsubjecttoadeposit transferrestriction(“DepositChill”).Intheevent,theCompany’sCommonStockbecomes subject to a Deposit Chill, theVariable ConversionRate shall beamended to 35%multipliedby theMarket Price (asdefinedherein)(representingadiscount rate of65%).
ARTICLEII.CERTAINCOVENANTS
2.1 DistributionsonCapitalStock. SolongastheBorrowershallhave anyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsent(a)pay,declareorsetapartforsuchpayment,anydividendorotherdistribution (whetherincash,property orother securities) onsharesofcapitalstockother thandividends onsharesof CommonStock solely in theformofadditionalshares of Common Stock or (b) directly or indirectly orthroughanysubsidiary makeany otherpayment or distribution inrespect of itscapital stockexceptfordistributionspursuanttoany shareholders’rightsplanwhich isapprovedby amajority oftheBorrower’s disinteresteddirectors.
2.2 RestrictiononStockRepurchases.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsentredeem,repurchaseorotherwiseacquire(whetherforcashorinexchange forpropertyorothersecurities
orotherwise) in anyonetransaction orseriesofrelatedtransactionsanysharesofcapital stockoftheBorroweror anywarrants, rightsor options topurchaseoracquireanysuchshares.
2.3 Borrowings.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent, create,incur,assumeguarantee, endorse, contingentlyagree topurchaseorotherwise becomeliable upon theobligationofanyperson,firm,partnership,jointventure or corporation,exceptby theendorsement ofnegotiableinstrumentsfordeposit orcollection, orsufferto exist any liability forborrowed money,except(a) borrowingsinexistenceorcommittedonthedate hereofandofwhichtheBorrower hasinformedHolderinwritingpriortothedatehereof,(b)indebtednesstotradecreditors orfinancialinstitutionsincurred in theordinarycourse ofbusiness or(c)borrowings,theproceeds ofwhichshallbeusedto repay this Note.
2.4 SaleofAssets.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,sell,leaseorotherwisedisposeofanysignificant portion ofitsassetsoutsidetheordinary course ofbusiness.Anyconsentto thedisposition of anyassetsmaybeconditioned on aspecified use of theproceedsof disposition.
2.5 Advancesand Loans.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withoutthe Holder’swrittenconsent,lendmoney, givecreditormakeadvancestoanyperson,firm,jointventure orcorporation, including,without limitation,officers, directors,employees,subsidiariesand affiliatesof theBorrower,exceptloans,credits oradvances(a)inexistence or committed on thedatehereofand which theBorrower hasinformed Holder inwriting prior tothedatehereof,(b) made inthe ordinarycourse ofbusinessor(c)not inexcess of $100,000.
ARTICLEIII.EVENTS OFDEFAULT
Ifanyof the following events ofdefault(each,an“Event of Default”) shalloccur:
3.1 FailuretoPayPrincipalorInterest.TheBorrowerfailstopaytheprincipalhereoforinterestthereon whendueonthisNote,whetherat maturity,uponaccelerationorotherwise.
3.2 ConversionandtheShares.TheBorrowerfailstoissuesharesofCommonStocktotheHolder(orannouncesorthreatensinwritingthatitwillnothonoritsobligationtodoso)uponexercisebytheHolderoftheconversionrightsoftheHolder inaccordancewith theterms ofthisNote, failstotransferorcauseitstransfer agent totransfer(issue)(electronicallyorincertificated form) anycertificate for shares of Common Stockissuedto theHolder uponconversion ofor otherwisepursuant to this Noteasandwhen required by thisNote, theBorrowerdirects itstransfer agent not totransferordelays, impairs,and/orhinders itstransfer agent intransferring (orissuing) (electronically or incertificated form)anycertificate forshares of Common Stock to beissued to theHolderupon conversion of orotherwisepursuantto this NoteasandwhenrequiredbythisNote,orfails toremove (ordirectsitstransferagent not toremove orimpairs,delays,and/orhinders itstransferagent fromremoving)anyrestrictive
legend(ortowithdrawanystoptransferinstructionsinrespectthereof)onanycertificateforanysharesofCommonStockissuedtotheHolderuponconversionoforotherwisepursuanttothisNoteasandwhenrequiredbythisNote(or makesanywrittenannouncement,statementorthreatthatitdoesnotintendto honortheobligations describedinthisparagraph)andanysuchfailure shallcontinueuncured(oranywritten announcement,statementorthreatnottohonoritsobligations shall not berescindedinwriting) forthree (3)business daysafter theHolder shallhave delivered a NoticeofConversion.It isanobligation of theBorrowertoremain current in itsobligationsto itstransfer agent.It shall beanevent ofdefaultof thisNote, if a conversion ofthis Note isdelayed,hindered orfrustrateddue to abalanceowedbytheBorrower to itstransferagent. Ifat the option of theHolder,the Holderadvancesanyfunds to theBorrower’stransfer agentinordertoprocess aconversion,suchadvancedfunds shallbepaidbytheBorrowerto theHolderwithinfortyeight(48) hours of a demand from theHolder.
3.3 BreachofCovenants.TheBorrowerbreachesanymaterial covenantorothermaterialtermorconditioncontainedinthisNoteandanycollateraldocumentsincludingbutnotlimitedtothePurchaseAgreementandsuchbreachcontinuesforaperiodoften(10)daysafter written noticethereofto theBorrowerfrom theHolder.
3.4 BreachofRepresentationsandWarranties.AnyrepresentationorwarrantyoftheBorrowermadehereinorinanyagreement,statementorcertificategiveninwritingpursuantheretoorinconnection herewith(including,withoutlimitation,thePurchaseAgreement),shallbefalse or misleadingin anymaterial respect when madeand thebreach ofwhichhas (or with thepassageof timewillhave)a materialadverse effect on the rights of theHolder withrespect to this Noteor thePurchaseAgreement.
3.5 ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershallmakean assignmentforthebenefitofcreditors,orapplyfororconsenttotheappointmentofareceiveror trustee for it or for asubstantialpartof its propertyorbusiness,or such areceiverortrusteeshallotherwise beappointed.
3.6 Judgments.Anymoneyjudgment,writorsimilarprocessshallbeenteredorfiledagainsttheBorroweroranysubsidiaryoftheBorroweror anyofitspropertyorotherassetsformorethan $50,000,and shallremainunvacated,unbonded orunstayedforaperiodoftwenty
(20)daysunlessotherwiseconsentedtobytheHolder,whichconsentwillnotbeunreasonablywithheld.
3.7 Bankruptcy. Bankruptcy, insolvency, reorganizationor liquidationproceedingsorotherproceedings,voluntaryorinvoluntary,forreliefunderanybankruptcylaworanylawforthereliefofdebtorsshall beinstitutedbyoragainst theBorroweroranysubsidiary of the Borrower.
3.8 DelistingofCommon Stock. TheBorrowershallfailto maintain thelistingoftheCommonStockonatleastoneofthe“OTCQB”tieroftheOTCMarkets,Inc.quotationsystem,OTCBBoranequivalentreplacement exchange,theNasdaq NationalMarket,theNasdaq SmallCapMarket, theNew YorkStockExchange,ortheAmerican StockExchange.
3.9 FailuretoComplywiththeExchangeAct.TheBorrowershallfailtocomplywiththereportingrequirementsoftheExchangeAct; and/ortheBorrowershallceasetobesubjectto thereportingrequirementsoftheExchangeAct.
3.10 Liquidation.Anydissolution,liquidation,orwindingupofBorroweroranysubstantial portion ofitsbusiness.
3.11 Cessation ofOperations.AnycessationofoperationsbyBorrowerorBorroweradmitsitisotherwisegenerallyunabletopayitsdebtsassuchdebtsbecomedue,provided,however,thatanydisclosureof theBorrower’sability to continue as a“goingconcern”shall not be anadmission that theBorrowercannotpayitsdebts astheybecomedue.
3.12 MaintenanceofAssets.ThefailurebyBorrowertomaintainanymaterial intellectualpropertyrights, personal,realpropertyorotherassetswhich arenecessarytoconduct its business(whethernow orin thefuture).
3.13 FinancialStatement Restatement. Therestatementofanyfinancial statementsfiledbytheBorrowerwiththeSECforanydateorperiodfromtwoyears priortotheIssueDateofthisNoteanduntilthisNoteisnolongeroutstanding,iftheresultofsuchrestatementwould,bycomparisontotheunrestatedfinancialstatement,haveconstitutedamaterial adverseeffecton therights of theHolder withrespect to this Note or thePurchaseAgreement.
3.14 ReverseSplits. TheBorrowereffectuatesareversesplitofitsCommon Stockwithouttwenty(20)days prior writtennoticetothe Holder.
3.15 Replacement ofTransferAgent.In theeventthattheBorrowerproposes toreplaceitstransferagent,theBorrowerfailstoprovide,priortotheeffectivedateofsuchreplacement,afullyexecutedIrrevocableTransferAgentInstructionsinaform asinitiallydeliveredpursuant to thePurchaseAgreement (including but not limited to theprovision toirrevocably reserveshares of Common Stock inthe Reserved Amount)signedby thesuccessortransferagent toBorrowerandtheBorrower.
3.16 Cross-Default.NotwithstandinganythingtothecontrarycontainedinthisNoteortheotherrelatedorcompaniondocuments,abreachordefaultbytheBorrowerofanycovenantorothertermorcondition containedin anyoftheOtherAgreements,after thepassageof allapplicable noticeandcureorgraceperiods,shall,at theoption oftheHolder, beconsidered adefaultunder this Noteand the Other Agreements, inwhich event theHolder shall beentitled (but in noevent required) to applyall rightsandremediesof the Holder under the terms of this NoteandtheOtherAgreementsbyreasonofadefaultunder saidOtherAgreementorhereunder.“Other Agreements”means,collectively,all agreementsandinstrumentsbetween, among orby: (1)theBorrower, and, or forthe benefitof, (2) theHolderandanyaffiliate of theHolder,including,without limitation,promissorynotes; provided,however, the term“OtherAgreements” shall not include therelatedor companiondocuments to thisNote. Each of theloantransactions will becross-defaulted witheach other loan transactionand withall other existingandfuturedebtofBorrower to theHolder.
Upon theoccurrenceandduringthecontinuationofanyEventofDefaultspecifiedinSection 3.1(solelywithrespecttofailuretopaytheprincipalhereoforinterestthereonwhendueattheMaturityDate),theNoteshallbecomeimmediatelydueandpayableandtheBorrowershallpay
to theHolder,infullsatisfactionofitsobligations hereunder,anamountequaltotheDefaultSum(asdefined herein).UPONTHEOCCURRENCEAND DURINGTHECONTINUATIONOFANYEVENTOFDEFAULT SPECIFIEDINSECTION3.2,THENOTESHALLBECOMEIMMEDIATELYDUEANDPAYABLEANDTHE BORROWERSHALLPAY TO THEHOLDER,INFULLSATISFACTION OFITS OBLIGATIONSHEREUNDER, ANAMOUNT EQUAL TO:(Y) THEDEFAULT SUM(AS DEFINEDHEREIN);MULTIPLIED BY (Z)TWO(2). Upon theoccurrence and during thecontinuation of anyEvent ofDefault specifiedinSections 3.1(solely withrespecttofailureto paytheprincipalhereoforinterestthereonwhen due onthis Note upon a TradingMarketPrepaymentEvent pursuant toSection1.7 or uponacceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15exercisablethrough the delivery ofwrittennotice to theBorrowerby suchHolders (the“Default Notice”),and upon theoccurrenceofanEvent ofDefault specified the remainingsections ofArticles III(other thanfailuretopaythe principalhereoforinterest thereon at the Maturity Date specified inSection 3,1hereof),the Note shallbecome immediatelydueand payableand theBorrowershall pay to the Holder, in fullsatisfaction of itsobligations hereunder,anamountequal to thegreater of (i)150%timesthesumof(w)thethenoutstanding principalamount ofthis Noteplus(x)accrued and unpaidinterest on theunpaidprincipalamount of this Note to thedateofpayment (the “Mandatory PrepaymentDate”)plus(y) DefaultInterest, ifany, on theamountsreferredto inclauses(w)and/or(x)plus(z) anyamountsowedto theHolderpursuant toSections1.3and1.4(g)hereof(the then outstandingprincipal amount of this Note to thedateofpaymentplustheamountsreferred to in clauses (x),(y)and(z) shallcollectivelybe knownas the“Default Sum”) or (ii) the “parity value”of theDefaultSumtobeprepaid, where parityvalue means(a)thehighestnumber ofsharesof Common Stock issuableuponconversionoforotherwise pursuant to suchDefault Sum inaccordancewithArticleI,treating the Trading Day immediately preceding the Mandatory PrepaymentDateas the “ConversionDate”for purposes of determining thelowestapplicableConversionPrice,unlesstheDefaultEventarisesasaresultof abreachinrespectof aspecific ConversionDate inwhich case such ConversionDate shall be theConversionDate),multiplied by(b) thehighestClosingPrice for the Common Stock duringthe periodbeginningonthedateoffirstoccurrence of theEvent ofDefault andending one day prior to the MandatoryPrepaymentDate (the“Default Amount”)and all otheramountspayablehereundershallimmediately become dueandpayable,allwithoutdemand, presentment ornotice, all ofwhich hereby are expressly waived,together withall costs, including,without limitation,legal feesand expenses, ofcollection,and theHolder shall beentitledtoexerciseall otherrightsandremediesavailable atlawor inequity.
IftheBorrowerfailstopaytheDefaultAmountwithinfive(5)businessdaysofwrittennoticethatsuchamountisdueand payable,thentheHoldershallhavetherightatanytime,solongas theBorrowerremainsindefault(andso longandto the extent thatthere aresufficientauthorized shares),to require theBorrower,uponwrittennotice,toimmediately issue,inlieuof theDefault Amount,the number ofsharesof CommonStock of theBorrowerequaltotheDefaultAmountdividedby the ConversionPricethen ineffect.
ARTICLEIV.MISCELLANEOUS
4.1 FailureorIndulgenceNotWaiver. NofailureordelayonthepartoftheHolderintheexerciseofanypower,rightorprivilegehereundershalloperateasawaiverthereof,norshallanysingleorpartialexerciseofanysuchpower,right or privilege preclude other orfurther exercisethereofor ofanyotherright,power or privileges.Allrightsand
remediesexistinghereunder arecumulativeto,andnotexclusiveof,anyrightsorremediesotherwise available.
4.2 Notices.Allnotices, demands,requests,consents,approvals,andothercommunicationsrequiredorpermittedhereundershallbeinwritingand,unlessotherwisespecifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,returnreceiptrequested,postageprepaid,(iii)delivered by reputable aircourier service withchargesprepaid,or (iv)transmittedbyhanddelivery,telegram,or facsimile,addressedas setforthbelowortosuchotheraddress assuchparty shallhavespecifiedmostrecentlybywritten notice.Anynoticeorothercommunicationrequiredor permittedtobe givenhereundershallbedeemed effective (a) uponhand deliveryor delivery byfacsimile, withaccurateconfirmationgeneratedbythetransmittingfacsimilemachine,at theaddress ornumberdesignatedbelow(ifdelivered on a businessday duringnormal business hours where suchnoticeis to bereceived),or thefirstbusinessdayfollowingsuchdelivery(ifdeliveredotherthan onabusinessdayduringnormal business hourswheresuch notice is to bereceived)or (b) on thesecondbusinessday following thedate ofmailingbyexpresscourier service, fully prepaid,addressed to suchaddress,or uponactualreceiptof suchmailing,whichever shallfirstoccur. Theaddressesfor such communications shall be:
Ifto the Borrower, to:
Nyxio Technologies Corp.2156 NEBroadway
Portland, Oregon 97232Attn:GiorgioJohnson,CEO
With a copybyfaxonlyto (which copyshall not constitute notice):Cane ClarkLLP
Attn: Joe Laxague
3273EastWarmSpringsRd.LasVegas,NV89120facsimile:(702)944-7100
Ifto theHolder:
ContinentalEquities,LLC331 W.57thStreet,Suite206New York,NY10019
Attn:AlanMasley
With acopybyfaxonlyto (which copyshall not constitute notice):Sommer&Schneider,LLP
Attn:JoelSchneider
1205Franklin Avenue, Suite110GardenCity,NewYork11530
4.3 Amendments.ThisNoteandanyprovisionhereofmayonlybeamendedbyaninstrumentinwritingsignedbytheBorrowerandtheHolder.Theterm“Note”andall referencethereto,asusedthroughoutthisinstrument,shallmeanthisinstrument(andthe otherNotes issuedpursuant to thePurchaseAgreement) as originallyexecuted,oriflateramendedorsupplemented,thenassoamendedor supplemented.
4.4 Assignability.ThisNoteshallbebindingupontheBorroweranditssuccessors andassigns, andshallinuretobethebenefitoftheHolder anditssuccessors and assigns.Eachtransfereeofthis Notemustbean“accreditedinvestor”(asdefined in Rule501(a) of the 1933 Act). Notwithstandinganythingin this Note to thecontrary, this Notemaybepledgedascollateralinconnection with abona fidemarginaccount or otherlendingarrangement.
4.5 Cost ofCollection.Ifdefault is madein thepayment ofthisNote,theBorrower shallpaythe Holderhereof costs ofcollection, includingreasonableattorneys’fees.
4.6 GoverningLaw.ThisNoteshallbegovernedbyand construedinaccordancewiththelawsoftheStateofNewYorkwithoutregardtoprinciplesofconflictsoflaws.Anyactionbroughtbyeitherpartyagainst the other concerning thetransactionscontemplatedbythis NoteshallbebroughtonlyinthestatecourtsofNew Yorkorinthefederalcourtslocatedinthe stateandcountyofNassau. Thepartiestothis Note hereby irrevocablywaiveanyobjectiontojurisdiction andvenue of anyaction institutedhereunderand shall not assert anydefense based onlackofjurisdictionorvenueorbaseduponforumnonconveniens.TheBorrowerand Holderwaive trialbyjury.The prevailing party shall beentitled torecoverfrom the other party itsreasonableattorney'sfeesandcosts. In the event that any provision of this Note or anyotheragreement deliveredinconnection herewithisinvalidorunenforceableunderanyapplicable statute or rule of law, then such provision shall bedeemed inoperative to the extent that it mayconflict therewithand shall bedeemed modified toconform with such statute or rule oflaw.Anysuchprovisionwhichmayprove invalidorunenforceableunder anylawshallnotaffect the validity or enforceabilityof anyother provisionof any agreement.Eachparty hereby irrevocablywaivespersonal service ofprocessandconsentstoprocessbeingservedin anysuit,action orproceedinginconnection withthisAgreementor anyotherTransactionDocumentbymailinga copythereof viaregisteredorcertifiedmailorovernightdelivery(withevidenceofdelivery) to such partyattheaddress ineffect fornoticesto itunder thisAgreementand agrees that suchservice shallconstitute goodandsufficient serviceofprocessand noticethereof. Nothingcontainedhereinshall bedeemedto limit inany way anyright to serveprocess in any othermannerpermitted by law.
4.7 CertainAmounts.Whenever pursuanttothisNotetheBorrowerisrequiredtopayanamountinexcessoftheoutstandingprincipalamount(ortheportion thereofrequiredtobepaid atthattime) plusaccruedandunpaid interestplusDefault Interestonsuchinterest,theBorrowerand the Holderagreethat theactualdamages to theHolderfrom thereceiptofcashpayment on this Note may be difficult todetermine and theamountto be sopaidby theBorrower representsstipulateddamagesand not a penaltyand isintendedtocompensatetheHolderin partfor lossof theopportunity toconvertthis Noteand to earn a returnfromthesale ofshares of Common Stockacquired upon conversion of this Noteataprice inexcess of theprice paid for such sharespursuant to thisNote.TheBorrower and the Holderherebyagreethat suchamount ofstipulateddamages is not plainlydisproportionate to the possible loss to the
Holder fromthereceiptofacashpaymentwithouttheopportunitytoconvertthisNoteintosharesof Common Stock.
4.8 PurchaseAgreement.ByitsacceptanceofthisNote, eachpartyagreestobeboundbytheapplicable terms ofthePurchase Agreement.
4.9 NoticeofCorporateEvents.Exceptasotherwise providedbelow,theHolderofthisNoteshallhavenorightsasaHolderofCommonStockunlessandonlytotheextentthatitconvertsthis NoteintoCommon Stock.TheBorrower shallprovidetheHolder withprior notification of any meeting of theBorrower’sshareholders (andcopies of proxymaterialsand otherinformationsent toshareholders). Inthe event ofanytakingby theBorrower of arecord of itsshareholders for thepurpose of determining shareholders who areentitled toreceive payment ofanydividendor other distribution,anyright tosubscribefor,purchaseorotherwiseacquire(including by wayofmerger,consolidation,reclassification orrecapitalization)any share ofanyclass or any othersecuritiesorproperty, ortoreceive any otherright, orfor thepurposeofdetermining shareholders whoareentitledtovote inconnectionwithanyproposedsale,leaseorconveyance ofall or substantiallyall of theassets of theBorroweroranyproposed liquidation, dissolution or winding up of theBorrower, theBorrowershall mail anotice to theHolder,atleast twenty (20) days prior to the recorddate specifiedtherein (or thirty (30)daysprior to theconsummationof thetransaction orevent,whichever isearlier), of the date onwhichanysuchrecordistobe taken forthepurposeof such dividend, distribution,right or otherevent, and abriefstatement regarding theamountandcharacterof suchdividend, distribution,rightor othereventtotheextentknownatsuchtime. TheBorrowershallmakeapublicannouncementofanyevent requiringnotification to theHolderhereunder substantially simultaneouslywith thenotification to the Holderinaccordancewith the terms of thisSection 4.9.
4.10 Remedies.TheBorrower acknowledgesthatabreachbyitofitsobligationshereunderwillcause irreparableharmtotheHolder,byvitiatingtheintentandpurposeof the transactioncontemplatedhereby. Accordingly, theBorroweracknowledgesthat theremedyatlawfor abreachofitsobligations underthisNotewill beinadequateandagrees,intheeventofa breach orthreatenedbreachby theBorrowerof the provisions of this Note,that theHoldershallbeentitled,inadditiontoallotheravailableremediesatlaworinequity,andinaddition to thepenaltiesassessableherein, toan injunction orinjunctionsrestraining, preventing orcuringanybreach of this Noteand to enforce specifically theterms andprovisions thereof, withoutthenecessityofshowing economiclossandwithoutanybondorothersecuritybeingrequired.
INWITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinitsnamebyitsdulyauthorizedofficerthisMay24th, 2013.
NYXIO TECHNOLOGIESCORP.
By:/s/ Giorgio Johnson
GiorgioJohnson
ChiefExecutive Officer
EXHIBITANOTICEOFCONVERSION
Theundersignedherebyelectstoconvert$principal amountoftheNote(definedbelow)intothatnumberofsharesofCommonStocktobeissued pursuanttotheconversionoftheNote(“CommonStock”)assetforthbelow,ofNYXIOTECHNOLOGIESCORP., aNevadacorporation (the“Borrower”) according to theconditionsof theconvertible note of theBorrower datedas of May 20, 2013 (the“Note”), as of thedatewrittenbelow.Nofee will becharged to theHolder forany conversion,exceptfortransfer taxes, ifany.
Box Checkedas to applicableinstructions:
[ ]TheBorrowershallelectronicallytransmittheCommonStockissuablepursuanttothisNotice ofConversiontotheaccountoftheundersignedoritsnomineewithDTCthroughitsDepositWithdrawalAgentCommissionsystem(“DWACTransfer”).
NameofDTC PrimeBroker:AccountNumber:
[ ]TheundersignedherebyrequeststhattheBorrowerissueacertificateorcertificatesforthenumberofsharesofCommonStocksetforthbelow(whichnumbers arebasedontheHolder’s calculationattachedhereto)inthename(s)specifiedimmediatelybelowor, ifadditional space is necessary, onanattachmenthereto:
Continental Equities,LLC331 W.57thStreet,Suite206New York, NY10019Attention: Certificate Delivery(212) 292-7455
DateofConversion: _______________
Applicable ConversionPrice:$_____________
NumberofSharesof Common Stock to beIssued
PursuanttoConversion oftheNotes:_____________
Amount ofPrincipal BalanceDueremaining
UndertheNote after thisconversion:______________
Continental Equities,LLC
By:_________________
Name: _______________
Title:President
Date:_______________
331 W.57th Street, Suite206New York, NY10019
