NEITHER THEISSUANCEANDSALE OFTHESECURITIESREPRESENTEDBYTHIS CERTIFICATE NORTHESECURITIESINTOWHICHTHESESECURITIESARE CONVERTIBLEHAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED(I) IN THE ABSENCE OF (A) ANEFFECTNE REGISTRATION STATEMENTFOR THESECURITIES UNDER THE SECURITIESACT OF1933, AS AMENDED, OR(B) AN OPINION OFCOUNSEL (WHICH COUNSEL SHALLBESELECTED BY THEHOLDER), INA GENERALLY ACCEPTABLE FORM, THATREGISTRATION IS NOT REQUIRED UNDERSAID ACT OR (II)UNLESS SOLD PURSUANT TO RULE 144 OR RULE144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAYBE PLEDGED IN CONNECTION WITHA BONAFIDEMARGINACCOUNT OR OTHER LOANOR FINANCING ARRANGEMENTSECURED BYTHE SECURITIES.
| Principal Amount:$10,000.00 | Issue Date:July25,2014 |
CONVERTIBLE PROMISSORY NOTE
FOR VALUERECEIVED,WELLPOWER,INC.,a Nevadacorporation(hereinaftercalled the"Borrower"),herebypromisestopaytotheorderofMelvyn Maller,or registered assigns(the "Holder")thesum of$10,000.00 togetherwithany interestas set forth herein, onJuly 25, 2015 (the "Maturity Date"), and to pay interest on the unpaid principalbalance hereof at the rateof eight percent(8%) (the "InterestRate")perannumfrom the date hereof (the "Issue Date") until the samebecomesdue and payable, whetherat maturity or upon acceleration or byprepayment or otherwise. Subject to Section 1.8 below, this Note may beprepaid in whole orin part at any time. Any amount of principalor intereston this Notewhich is not paid when due shall bearinterestat thelowerof the rate of eighteen percent (18%) perannum or the highest interestrate permitted bylawfrom theduedatethereof untilthe sameispaid (the"Default InterestRate"). Interestshall commenceaccruingon theIssue Date,shall be computedon the basis of a 365-day year and the actualnumberof days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the "Common Stock") in accordance withthetermshereof) shall bemade in lawful moneyof theUnitedStatesof America.All payments shall be madeat such address as the Holdershall hereaftergive to the Borrower by written notice madeinaccordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, thesame shall instead be due on the next succeeding day which is a business day and, in the case of any interest paymentdate whichis notthedateon whichthis Note is paid in full, the extension of thedue date thereof shall not be takeninto account for purposes of determining the amount of interest due on such date. As usedin thisNote,the term"business day" shall mean any day other than a Saturday, Sunday or aday onwhich commercial banksinthe city of New York, New York are authorized or required by law or executive order to remain closed. Delivery of this Note is subject to Holder's execution of Holder's representationsset forth as Exhibit B.
This Noteisfreefromalltaxes, liens, claimsandencumbranceswithrespect totheissue thereofandshallnotbesubjecttopreemptive rightsorothersimilar rights ofshareholders ofthe Borrowerand willnotimpose personalliability upon theholder thereof.
The following termsshall applytothisNote:
ARTICLE I
CONVERSION RIGHTS
1.1 ConversionRight.TheHoldershall havetherightfromtimetotime,andatany timetheNoteisstill outstanding,to convert all or any part of theoutstanding and unpaid principal andinterest onthis Note intofully paid andnon-assessable sharesof Common Stock, as such CommonStockexists on the IssueDate, or anysharesofcapital stockor other securities of theBorrower intowhich suchCommon Stockshall hereafter be changedor reclassified at the conversionprice (the "Conversion Price")determined as provided herein(a "Conversion");provided,however, that inno event shall the Holder be entitled to convert any portion ofthis Note in excess ofthat portion ofthisNote uponconversionof whichthesum of (1)thenumber of sharesofCommon Stock beneficially owned by the Holder andits affiliates (other than shares of CommonStock which maybe deemed beneficiallyowned through the ownership of the unconverted portion of the Note orthe unexercised or unconverted portion ofany othersecurity ofthe Borrower subject to alimitation on conversion or exercise analogous tothe limitations containedherein) and (2) thenumber of shares of Common Stockissuable upon the conversion of the portion of this Note withrespecttowhich thedetermination of thisproviso is beingmade, would result in beneficial ownershipby the Holder andits affiliates of morethan 4.99% of the outstanding shares of Common Stock.For purposes of theprovisotothe immediately preceding sentence, beneficialownershipshall be determined in accordance withSection 13(d) of the Securities ExchangeAct of1934,as amended (the "Exchange Act"), and Regulations13D-G thereunder, exceptas otherwiseprovidedinclause (1)of such proviso,provided, further,however,thatthelimitationson conversionmay be waivedby theHolder upon, at theelection of the Holder,not less than61 days'prior noticetothe Borrower, and theprovisions of the conversion limitation shall continue toapply until such 61st day(orsuch later date,as determined by the Holder,asmaybe specifiedinsuchnotice ofwaiver). Thenumber ofshares of CommonStock tobeissued upon each conversionof this Note shall bedetermined by dividing theConversionAmount (as defined below) by theapplicable ConversionPrice then in effectonthe date specifiedinthe notice ofconversion, inthe formattached heretoasExhibit A (the "Notice of Conversion"), delivered tothe Borrower by the Holderin accordancewith Section 1.4 below; provided thatthe Notice ofConversion issubmitted byfacsimile (or byother meansresulting in,or reasonablyexpected toresultin, notice)to theBorrower before 5:00 p.m., New York,NewYorktime on suchconversion date (the "Conversion Date"). The term "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversionplus(2) at the Borrower's option, accrued and unpaid interest, ifany, onsuch principalamountat the interest rates provided in this Noteto the ConversionDate,provided, however, thatthe Company shallhave theright to pay any or allinterestin cash.
1.2 ConversionPrice.
(a) CalculationofConversionPrice.Theconversionprice(the"ConversionPrice")shallequal thelowerof(i)$.09 or (ii) theVariableConversionPrice(as defined herein)(subject to equitable adjustments for stock splits, stock dividends orrights offerings by the Borrowerrelating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,extraordinary distributions and similar events). The "Variable ConversionPrice" shall mean 50% multipliedby the MarketPrice (as defined herein)(representing adiscount rateof 50%). "MarketPrice" means thelowest individual dailyVWAP(as defined below) forthe Common Stockduring theten(10) Trading Day period ending oneTradingDay priorto the date the Conversion Notice is receivedby the Holderfrom the Borrower(the"Conversion Date"). "VWAP" meansthe volumeweighted averageprice (the aggregate sales price ofalltrades ofCommonStock during aTrading Day dividedbythetotalnumberofshares of Common Stock traded during suchTradingDay) of the Common Stock during a Trading Day as reported onBloomberg, L.P., Quotestream, orother applicable service.
1.3 AuthorizedShares.TheBorrower covenantsthatduringtheperiodthe conversionrightexists,theBorrowerwillreservefromitsauthorizedandunissuedCommon Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of CommonStock upon thefull conversionof this Note. The Borrower is requiredat all times to have authorized and reserved five times the number of shares that is actually issuable uponfull conversion of the Nate (based on the Conversion Priceof the Nate in effect from time to time) (the "Reserved Amount"). The Borrowerrepresents that upon issuance, such shares will be duly andvalidly issued,fully paid andnon-assessable. In addition, if theBorrowershallissueany securities or makeany change to its capital structure which would change the numberof shares of Common Stock into which the Note shall be convertible at the then current Conversion Price, the Borrowershall at the same timemakeproperprovisionsothatthereafterthere shall bea sufficient numberofsharesofCommon Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i) acknowledges that ithas irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note (in the form attached hereto as Exhibit C), and (ii)agrees that its issuanceof thisNote shall constitute full authority to its officers and agentswhoarecharged with the duty of executingstock certificatestoexecute and issue thenecessarycertificates for shares of Common Stock in accordance with the terms and conditions of this Note.
1.4 MethodofConversion.
(a) MechanicsofConversion.SubjecttoSection1.1,thisNotemaybe convertedbytheHolderinwholeorinpartatanytimefromtime totimeaftertheIssueDate,by (A) submitting to the Borrowera Noticeof Conversion(by facsimile orother reasonable means of communication dispatchedon theConversionDate priorto 5:00 p.m., New York,New York time) and(B) subject to Section 1.4(b),surrendering thisNote atthe principal office ofthe Borrower.
(b) SurrenderofNoteuponConversion.Notwithstanding anythingtothe contrarysetforthherein,uponconversionofthisNotein accordance withthe terms hereof,the Holdershall not berequiredtophysically surrenderthisNote to theBorrower unless theentire unpaid principal amountof this Noteis so converted. The Holderand the Borrowershall maintain recordsshowing the principalamountso convertedand the dates of such conversions or shall usesuch other method,reasonablysatisfactory tothe Holderandthe Borrower, soas not to requirephysical surrender of thisNateuponeachsuch conversion.Intheeventof anydispute ordiscrepancy, such recordsof the Borrowershall,prima facie,be controllingand determinativein the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, theHoldermay nottransfer this Note unlessthe Holder firstphysically surrendersthis Noteto theBorrower, whereupon theBorrower will forthwithissue and deliver upon theorder of the Holdera new Note of like tenor, registeredas theHolder (upon paymentby the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principalamount of this Note.TheHolder andanyassignee, byacceptanceof thisNote, acknowledge and agree that,byreasonof the provisions ofthis paragraph, following conversion ofa portion ofthis Note, theunpaid andunconverted principal amountof this Note represented by this Notemay beless than the amount stated on theface hereof.
(c) Payment ofTaxes. TheBorrowershallnotberequiredtopayanytax whichmaybepayableinrespect ofany transfer involvedin the issue and delivery of shares of Common Stock or other securitiesor property on conversion ofthis Notein a name other than that of the Holder (or in street name), and the Borrower shall not berequired toissue or deliver any such sharesor other securities or propertyunless and until the person or persons(other than theHolder or the custodianin whose street name suchsharesare tobe heldfor theHolder's account) requesting theissuance thereof shall have paid to theBorrowertheamount ofany such taxor shall haveestablished to the satisfaction of the Borrower that such tax has beenpaid.
(d) DeliveryofCommonStockuponConversion.Uponreceiptbythe BorrowerfromtheHolderofafacsimiletransmission(or other reasonable means of communication)of a Notice of Conversion meetingthe requirements for conversion as provided in this Section 1.4, theBorrower shall issue anddeliveror cause to be issued and delivered to or uponthe order ofthe Holder certificates fortheCommon Stock issuable upon such conversion withinthree(3) business daysafter such receipt (and,solely in the case of conversionof the entireunpaid principal amount hereof, surrenderof thisNote) (such secondbusiness day being hereinafterreferred to as the"Deadline") in accordance with the terms hereof.
(e) ObligationofBorrowertoDeliverCommonStock.Uponreceiptbythe BorrowerofaNoticeofConversion,theHoldershallbedeemed to be theholder of record of the Common Stock issuableuponsuch conversion,the outstanding principalamountand the amount of accrued and unpaid interestonthis Note shall be reduced to reflect such conversion, and, unless theBorrower defaultson its obligationsunder this Article I, all rights withrespectto the portion ofthisNote being so converted shall forthwith terminate exceptthe rightto receive the Common Stockor other securities, cash or other assets, as herein provided, on such conversion. If the Holdershallhave given a Notice of Conversionas provided herein, theBorrower's obligation toissue and deliver thecertificates forCommon Stockshall beabsoluteand unconditional, irrespective ofthe absence ofany action by the Holder to enforce the same,any waiver or consent with respect toany provision thereof, therecovery of any judgment against any person or any actionto enforce the same, anyfailure or delay in the enforcement of any other obligation of the Borrower to theholder of record, or anysetoff, counterclaim, recoupment, limitation ortermination, or any breach or alleged breach by the Holderof anyobligationto the Borrower, and irrespective ofany other circumstance which might otherwise limit such obligation ofthe Borrower to the Holder in connection with such conversion.The Conversion Date specified in the Notice ofConversionshall be the ConversionDate solongas the Noticeof Conversion is received by the Borrowerbefore 5:00 p.m.,New York,New Yorktime, onsuch date.
(f) DeliveryofCommonStockbyElectronic Transfer. In lieu of deliveringphysicalcertificates representing theCommonStockissuableuponconversion, provided the Borrower's transferagent is participating inthe DepositoryTrustCompany ("DTC") Fast Automated Securities Transfer ("FAST") program,uponrequest of the Holder and its compliance with the provisionscontained in Section 1.1 andinthis Section1.4, the Borrower shall useits bestefforts tocauseits transfer agent to electronically transmit the Common Stock issuable uponconversion totheHolder bycrediting the account of Holder's PrimeBroker with DTC throughits Deposit Withdrawal AgentCommission ("DWAC")system.
(g) FailuretoDeliverCommonStockPrior toDeadline.Withoutinany waylimitingtheHolder'srighttopursueotherremedies, including actualdamagesand/or equitable relief,the partiesagree that if deliveryof the Common Stockissuable upon conversion ofthis Noteismorethan three (3)business days after the Deadline (otherthan afailure due to the circumstances described in Section 1.3above, which failure shallbe governed by such Section)the Borrowershall payto the Holder $100 per dayin cash,for each day beyond the Deadline thatthe Borrower fails todeliver such Common Stock. Such cash amount shallbe paid to Holder by the fifth day ofthemonth followingthe month in which it has accrued or,atthe option of the Holder (bywrittennotice totheBorrower by thefirst dayofthe month following the month in which it hasaccrued),shall beadded totheprincipal amountof this Note, in which event interest shall accrue thereon inaccordance withthe terms of thisNote and suchadditional principal amount shall be convertible intoCommon Stock in accordance with theterms ofthis Note.In addition, the ConversionPrice for the conversion underlyingthe deliveryof Common Stock that wasdelayed morethanthree(3) business days after the Deadline shallbe adjusted to the lower of(i) theConversionPrice as of such ConversionNoticeDate and (ii) the Conversion Priceif the Conversion Notice was received on the datethat the Conversion Sharesare actually received by the Holder.
1.5Concerning theShares.ThesharesofCommonStockissuableuponconversion ofthisNotemaynotbesoldortransferredunless(i) such shares aresold pursuant toan effective registration statement under the Act or (ii)the Borrower or its transfer agent shall have been furnished withan opinion of counsel(whichopinion shall be in form, substanceand scope customaryfor opinions ofcounsel incomparable transactions) to the effect thattheshares tobe sold or transferred may besold ortransferred pursuant toanexemption fromsuchregistration or (iii)such sharesare sold ortransferred pursuant to Rule 144 underthe Act (ora successor rule) ("Rule144") or (iv) such sharesare transferred to an "affiliate" (asdefined in Rule 144)of the Borrowerwhoagrees tosell or otherwise transfertheshares only in accordance with thisSection 1.5 andwho isanAccredited Investor (as defined underthe Act).Subject tothe removal provisions set forthbelow, until such time asthe shares ofCommon Stockissuable upon conversion ofthisNote have been registeredundertheActor otherwise maybesold pursuant to Rule 144without any restriction as tothe numberof securities as ofa particular datethat can thenbeimmediately sold,eachcertificate forsharesofCommonStock issuable upon conversion of this Note that has notbeen soincluded in an effective registration statement orthat has not beensold pursuantto aneffective registrationstatementor anexemption that permitsremoval of thelegend, shall beara legend substantially in the followingform,as appropriate:
"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT ECURED BY THE SECURITIES."
The legendsetforthaboveshallberemovedandtheBorrowershallissuetotheHoldera newcertificatethereforefreeofanytransferlegendif(i)theBorroweroritstransferagentshall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel incomparabletransactions, totheeffect that apublic saleortransfer ofsuchCommon Stock maybe madewithout registration under theActandthe sharesare sosoldortransferred, (ii)suchHolderprovidesthe Borrower or itstransferagentwith reasonable assurancesthatthe Common Stockissuableupon conversion ofthisNote (tothe extentsuchsecuritiesaredeemed tohave been acquired on the samedate) canbe soldpursuant toRule 144 or(iii) in the caseof the CommonStockissuable uponconversionof this Note,suchsecurityisregisteredforsale by the Holderunderaneffectiveregistration statement filed undertheAct orotherwisemaybesold pursuanttoRule 144 without any restriction astothenumberofsecurities asof a particular date that can then be immediatelysold.
1.6 EffectofCertainEvents.
(a) EffectofMerger,Consolidation,Etc. Atthe optionof theHolder,the sale,conveyanceordispositionofallorsubstantiallyalloftheassets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the votingpower of the Borroweris disposed of, or the consolidation, merger or other business combination of theBorrowerwith orintoany otherPerson (asdefinedbelow)or Persons whenthe Borroweris not the survivor shall either:(i)be deemed tobean Eventof Default (as defined in ArticleII) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transactionan amount equal to the DefaultAmount (as defined in Article II)or (ii)betreatedpursuantto Section l.6(b)hereof. "Person"shall mean any individual, corporation, limitedliability company, partnership, association, trust or other entity or organization.
(b) AdjustmentDuetoMerger,Consolidation,Etc. If,atanytimewhen thisNoteisissuedandoutstandingandpriorto conversion ofall of the Note, there shall be any merger,consolidation, exchange of shares, recapitalization, reorganization, orother similar event, asa resultof which shares of CommonStock of the Borrower shall be changedintothe sameora differentnumber ofshares of another class or classes of stock or securities of the Borrower or anotherentity, or in case of any saleor conveyance of all or substantially all of the assets of the Borrower other than in connection witha plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditionsspecified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Notebeen converted infullimmediatelypriorto suchtransaction (without regardto any limitationsonconversion set forth herein), and in any suchcase appropriateprovisions shall be made with respect to the rights and interests ofthe Holder of this Note to the end that the provisionshereof (including, without limitation, provisions for adjustmentoftheConversion Price and of the number ofshares issuable upon conversion oftheNote) shallthereafter be applicable, as nearly as may bepracticable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described inthis Section l.6(b) unless (a) itfirstgives,to the extentpracticable, thirty (30)daysprior written notice(butin anyevent at least fifteen (15) days prior writtennotice) of therecord date of the specialmeeting of shareholders to approve, or if there is no such record date, the consummationof, such merger, consolidation, exchange of shares, recapitalization, reorganization or othersimilarevent or sale of assets (during whichtime the Holder shallbe entitled to convert this Note) and (b) the resulting successor or acquiringentity (ifnotthe Borrower) assumes by written instrument the obligations ofthis Section l.6(b). The above provisions shall similarly applytosuccessiveconsolidations, mergers,sales, transfers orshare exchanges.
(c) AdjustmentDuetoDistribution.IftheBorrowershalldeclareormakeanydistributionof itsassets(orrightsto acquireits assets)to holders ofCommon Stock as a dividend, stockrepurchase, by wayof returnofcapitalor otherwise(including any dividend or distribution to the Borrower's shareholders in cash or shares(or rights toacquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then theHolder of this Note shall be entitled, upon any conversion of this Note after the dateof record for determining shareholders entitled to such Distribution,to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares ofCommon Stock on the recorddate forthe determination ofshareholders entitled to such Distribution.
(d) NoticeofAdjustments.Upontheoccurrenceofeachadjustmentor readjustmentoftheConversionPriceasaresult of theeventsdescribed inthis Section 1.6, the Borrower,at itsexpense, shall promptly computesuch adjustmentor readjustment and prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail thefacts upon which such adjustment or readjustment is based. The Borrower shall, uponthe writtenrequestat any time of the Holder, furnish to such Holdera like certificate setting forth(i)suchadjustment or readjustment, (ii) theConversionPriceat thetime in effect and (iii)the number ofshares of Common Stockandthe amount, if any,ofother securities or property which at the time would be received upon conversion of the Note.
1.7 StatusasShareholder.Uponsubmission ofaNoticeofConversionbyaHolder, (i)thesharescoveredthereby shallbe deemedconverted into sharesof Common Stock and (ii) the Holder's rights as a Holderof suchconverted portion ofthis Note shall cease andterminate, excepting only the right to receive certificates for such shares of Common Stock and to any remediesprovided herein or otherwise available atlawor in equityto such Holder because of a failurebythe Borrowerto comply with the terms ofthis Note. Notwithstanding the foregoing,if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration ofthe Deadline withrespect to aconversion ofany portion of thisNote for anyreason, then (unless theHolder otherwise elects to retain itsstatusas a holder ofCommon Stock by sonotifyingtheBorrower) the Holder shall regain the rights ofaHolder of this Notewith respectto such unconverted portions ofthisNote andthe Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjustits recordsto reflect thatsuch portion of this Notehas not been converted.In allcases, theHolder shall retain all ofits rights andremedies (including, without limitation, (i) the right to receive Conversion DefaultPayments pursuantto Section 1.3 to the extent required thereby forsuchConversion Default andanysubsequent Conversion Default and(ii)the right to have the ConversionPrice withrespecttosubsequentconversionsdeterminedin accordancewith Section 1.3) fortheBorrower'sfailuretoconvertthis Note.
1.8 Prepayment.Notwithstanding anythingtothecontrarycontainedinthisNote, theBorrowershallhavetheright,exercisableonnotless thanten(10)TradingDays prior written notice to the Holderof the Noteto prepay the outstanding Note (principal and accrued interest), infull or in part. Notwithstandingthe preceding sentence, the Holder shall have the opportunity to convertthe outstanding principal and interest on the Note pursuant to this Agreement at any time prior to payment by the Borrower on such principal and interest.
ARTICLE II
EVENTS OFDEFAULT
Ifanyofthefollowingeventsofdefault(each,an"EventofDefault")shalloccur:
2.1 FailuretoPayPrincipalorInterest.TheBorrowerfailstopaythe principal hereoforinterest thereonwhendueonthisNote,whetheratmaturity, upon acceleration or otherwise.
2.2 ConversionandtheShares.TheBorrowerfailstoissuesharesofCommon StocktotheHolder (orannouncesorthreatens in writing that itwill nothonor its obligation to do so) uponexercise by the Holder of theconversion rightsof the Holder in accordancewiththe termsof this Note, fails to transfer or cause itstransferagent to transfer (issue)(electronically or incertificated form)anycertificatefor sharesofCommon Stockissued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrowerdirects itstransfer agentnot to transfer ordelays, impairs, and/orhinders itstransfer agent in transferring(or issuing)(electronicallyor in certificated form) any certificatefor shares of CommonStockto be issued to the Holderupon conversionof or otherwise pursuant to this Noteas and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs,delays, and/or hinders its transfer agentfrom removing) anyrestrictive legend (or to withdrawany stop transfer instructionsin respect thereof)on any certificate for any shares ofCommonStockissued to theHolderupon conversion ofor otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it doesnot intend tohonor the obligations described in this paragraph) and any such failure shall continue uncured (orany written announcement, statement or threat not to honor its obligations shall not berescinded inwriting) forthree (3)business days after the Holdershall have delivered aNotice ofConversion.
2.3 BreachofCovenants.The Borrowerbreaches anymaterial covenantorother materialtermorconditioncontainedinthisNoteandsuchbreachcontinues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.
2.4 BreachofRepresentationsandWarranties.Anyrepresentation orwarrantyof theBorrowermadehereinorinanyagreement,statement orcertificate given in writingpursuant hereto orin connectionherewith, shall befalse or misleading in anymaterialrespect whenmade and the breach of which has (or withthepassageof time will have) a material adverse effect on therightsof theHolderwithrespecttothisNote.
2.5 ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershall makeanassignmentforthebenefitofcreditors, orapply foror consent tothe appointment ofa receiver or trusteeforitorfor a substantial part ofits property or business, or suchareceiver or trustee shall otherwise beappointed.
2.6 Judgments.Anymoneyjudgment,writorsimilarprocessshallbeenteredor filedagainsttheBorroweroranysubsidiaryoftheBorrower orany ofits property orother assets for morethan$50,000, andshall remain unvacated, unbonded or unstayed for a period of twenty (20)days unless otherwise consented to by the Holder,which consent will not be unreasonably withheld.
2.7 Bankruptcy.Bankruptcy,insolvency, reorganizationor liquidationproceedings orotherproceedings, voluntaryorinvoluntary, forreliefunderanybankruptcylaworanylaw forthereliefofdebtors shall beinstituted by oragainst theBorrower oranysubsidiaryofthe Borrower.
2.8 DelistingofCommonStock.TheBorrowershallfailtomaintainthelistingof theCommonStockonatleastoneoftheOTCBBoranequivalentreplacement exchange, the NasdaqNationalMarket, the Nasdaq SmallCap Market, the New YorkStock Exchange, or the American Stock Exchange.
2.9 FailuretoComplywiththeExchangeAct.TheBorrowershallfailtocomply withthereportingrequirementsoftheExchangeAct;and/ortheBorrower shallceaseto be subject to thereporting requirementsof the ExchangeAct.
2.10 Liquidation.Anydissolution,liquidation,orwindingupofBorrowerorany substantialportionofitsbusiness.
2.11 CessationofOperations.Anycessation ofoperationsbyBorrowerorBorrower admitsitisotherwisegenerallyunabletopayitsdebts assuchdebtsbecome due, provided, however, that any disclosure of the Borrower'sability to continue as a "going concern" shall not be an admission that the Borrowercannot pay its debts as they become due.
2.12 MaintenanceofAssets.ThefailurebyBorrowertomaintainanymaterial intellectual propertyrights, personal,realproperty orother assets which are necessarytoconduct its business (whether now orinthe future).
2.13 FinancialStatementRestatement.Therestatement ofanyfinancialstatements filedbytheBorrowerwiththeSecuritiesandExchangeCommission("SEC")for any date or period fromtwo years prior tothe Issue Date ofthis Note and until thisNote is no longer outstanding, if theresult of such restatementwould,by comparisontotheunrestatedfinancial statement, haveconstituted amaterial adverse effect on therights of the Holderwith respect to this Note.
2.14 ReplacementofTransferAgent.IntheeventthattheBorrowerproposesto replaceitstransferagent,theBorrower failstoprovide,priortotheeffectivedate of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form attached hereto as Exhibit C (including but not limited to the provision to irrevocably reserve shares of Common Stock in theReservedAmount)signedby the successor transferagentto Borrowerandthe Borrower.
2.15 FailuretoAcceptOpinionofHolder.Borrower'sfailuretoaccepttheopinion ofcounselprovidedbytheHolderforno goodcausewithrespect tothetransfer of Securities pursuant to an exemption from registration, such as Rule144 or RegulationS.
2.16 Holder'sRightsuponEventofDefault.Upontheoccurrenceandcontinuance ofanyEventofDefault,Holderinitssoleandabsolutediscretionshallhave therighttodeclare all unpaid interest and principalimmediatelydueandpayable and exerciseallotherlegal rights in connectiontherewith, withoutpresentment, demand, or protest,all of which are hereby expressly waived.
ARTICLE III
MISCELLANEOUS
3.1 FailureorIndulgenceNotWaiver.NofailureordelayonthepartoftheHolder intheexerciseofanypower,rightorprivilege hereunder shall operate as a waiverthereof,nor shall anysingleorpartialexerciseofanysuch power, right orprivilege precludeotherorfurther exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunderare cumulative to, and not exclusiveof, any rights or remedies otherwise available.
3.2 Notices.Allnotices,demands,requests,consents,approvals,andother communications requiredor permittedhereundershallbe inwritingand,unlessotherwise specifiedherein, shall be(i) personallyserved, (ii)depositedin themail,registered orcertified, return receipt requested, postageprepaid, (iii) delivered by reputableair courier servicewith charges prepaid, or (iv)transmitted byhand delivery, telegram, or facsimile, addressed as set forth below or to suchother addressassuch partyshall have specifiedmost recently by written notice. Any notice orother communication required or permitted to be given hereunder shall be deemed effective (a) upon hand deliveryor delivery by facsimile, with accurate confirmation generatedbythe transmitting facsimile machine, at the address or number designatedbelow (if deliveredon a business day during normal business hours where such notice is to be received), or the firstbusiness day following such delivery (ifdelivered other thanon a business day during normal business hours where such notice isto be received) or (b) on the second business day followingthe dateof mailingby express courier service, fullyprepaid, addressed to such address,orupon actual receipt of suchmailing, whichever shall first occur. Theaddresses for such communicationsshall be:
IftotheBorrower,to:WellPower,Inc.
Attn: DanM.Patience
11111 KatyFreeway,Suite# 910
Houston, TX77079
IftotheHolder:MelvynMaller
17402 CitroniaStreet
Northridge, CA91325
3.3 Amendments.ThisNoteandanyprovisionhereofmayonlybeamendedbyan instrumentinwritingsigned bytheBorrowerandtheHolder. Theterm"Note" andall reference thereto, as usedthroughout this instrument,shall meanthis instrument asoriginallyexecuted,or if later amended or supplemented,thenasso amendedorsupplemented.
3.4�� Assignability.ThisNoteshallbebindingupontheBorroweranditssuccessors andassigns,andshallinuretobethebenefitoftheHolder andits successorsandassigns. Each transferee of thisNote must be an "accredited investor"(asdefined inRule 501(a)of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Notemay be pledged as collateralin connection with abonafidemarginaccount or other lending arrangement.
3.5 CostofCollection.IfdefaultismadeinthepaymentofthisNote,theBorrower shallpay the Holder hereofcosts ofcollection, includingreasonable attorneys' fees.
3.6 GoverningLaw.ThisNoteshallbegovernedbyandconstruedinaccordance withthelawsoftheStateofCaliforniawithoutregardtoprinciplesofconflictsoflaws. Any action brought by either partyagainst the other concerning the transactions contemplatedby this Note shall be broughtonly in the state courts of Californiaor in the federal courts located in the state and county of Los Angeles. The parties to this Note hereby irrevocably waive any objection to jurisdictionand venue of any action instituted hereunder and shall not assertanydefense basedon lack of jurisdiction or venueor based uponforum non conveniens.The Borrowerand Holder waive trial by jury. The prevailing partyshall be entitled to recoverfrom the other party its reasonableattorney'sfees and costs. In theevent that any provisionof this Noteor any other agreement delivered in connection herewith isinvalidor unenforceable under any applicable statute or ruleoflaw, thensuch provision shall bedeemed inoperativeto theextent thatit may conflict therewithand shall be deemed modified to conform with such statute or rule of law. Any such provision whichmay prove invalid orunenforceable under anylaw shallnot affect the validity or enforceability of any other provisionof any agreement. Each party hereby irrevocably waives personal serviceof process and consents toprocessbeing servedinanysuit, actionor proceedingin connectionwiththis Agreement or any other TransactionDocumentby mailing a copy thereof via registeredor certified mail or overnightdelivery(with evidenceof delivery) to such partyatthe address ineffect for notices to itunder thisAgreement and agrees thatsuch service shall constitute good and sufficient service of processand notice thereof. Nothing contained hereinshall bedeemed to limitin anyway any right toserve process in anyother manner permitted by law.
3.7 CertainAmounts.WheneverpursuanttothisNotetheBorrowerisrequiredto payanamountinexcessoftheoutstanding principal amount(or the portion thereofrequired to be paid at thattime) plus accruedand unpaidinterest plusin the case of Default, intereston such interest, the Borrower and theHolder agreethat the actual damages to theHolder from the receipt of cashpayment on this Note maybe difficult to determine and theamount tobeso paid by theBorrower represents stipulateddamages and nota penalty and is intendedtocompensate theHolder inpart for loss of the opportunity toconvert thisNote andtoearn areturn from the saleof shares of Common Stock acquireduponconversion of this Note at a price in excess of the price paid forsuchshares pursuant to this Note.The Borrower and the Holderhereby agree that such amount of stipulated damages isnot plainlydisproportionate tothepossible loss tothe Holder from thereceipt of acashpayment withoutthe opportunity to convert thisNote into shares of CommonStock.
3.8 PreservationofPersonalInformation.Totheextentnotinviolationof applicablelaws,Borrowershalltakeallreasonable steps to protect the personal informationof Holder (such as Holder's name and address) from publicity and shall refrain from including such information in filings with the SEC. In any case, Borrower shall inform Holder (or Holder's representative) prior to any required publishingof Holder's personalinformation.
3.9 NoticeofCorporateEvents.Exceptasotherwiseprovidedbelow,theHolderof thisNoteshallhavenorightsas aHolder of Common Stock unless and onlyto the extentthatit converts this Noteinto CommonStock.
3.10 Remedies.TheBorroweracknowledgesthatabreachbyitofitsobligations hereunderwillcause irreparableharmtothe Holder, by vitiating the intent andpurposeof the transaction contemplatedhereby. Accordingly, the Borroweracknowledges that theremedy at law for a breachof its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisionsof this Note, that the Holder shall be entitled,in addition to allotheravailable remediesat law or in equity,andin addition to the penalties assessable herein, to an injunctionor injunctions restraining,preventingor curing any breach of thisNoteand toenforce specifically the termsandprovisions thereof,withoutthe necessity of showing economic loss and without any bond or other security being required.
(Signature pageimmediatelyfollows)
IN WITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinitsnamebyits dulyauthorizedofficerasof Issue Date.
"BORROWER":
Well Power, Inc.
a Nevada corporation
By:/s/ Dan Patience
Name: Dan Patience
Title: President
