NEITHER THEISSUANCEANDSALEOFTHESECURITIESREPRESENTEDBYTIDS CERTIFICATE NOR THESECURITIESINTO WHICHTHESESECURITIESARE CONVERTIBLE HAVE BEENREGISTERED UNDERTHE SECURITIESACT OF 1933, AS AMENDED, ORAPPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFEREDFORSALE, SOLD, TRANSFERRED ORASSIGNED (I) IN THE ABSENCE OF (A)AN EFFECTIVE REGISTRATIONSTATEMENT FORTHE SECURITIES UNDERTHE SECURITIES ACT OF 1933, AS AMENDED,OR (B) AN OPINION OFCOUNSEL (WHICH COUNSEL SHALL BESELECTED BY THE HOLDER), IN AGENERALLY ACCEPTABLEFORM,THAT REGISTRATIONIS NOT REQUIRED UNDER SAID ACT OR(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE144A UNDER SAID ACT. NOTWITHSTANDINGTHE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTIONWITHA BONA FIDE MARGIN ACCOUNTOR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BYTHE SECURITIES.
| Principal Amount:$75,000.00 | Issue Date:November12th,2014 |
12% CONVERTIBLENOTE
FORVALUERECEIVED, ALKAMEHOWINGS,INC.,aNevadacorporation("Borrower"or"Company"),herebypromises topayto the order of Eastmore Capital, LLC,a Delaware limited liability company,orits registered assigns (the"Holder"),on November 11th,2015 (subjecttoextensionas set forthbelow,the "Maturity Date"),the sum of $75,000.00 as set forth herein, and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%) per annum (the"Interest Rate") from the date of issuance hereof until this Note plus any and all accrued interest is paid in full. Interest shall be computed on the basis of a 365-day year and the actual number ofdays elapsed. Any amount of principal orinterest on this Note which is not paid when due shall bear interest at the rate of twenty-four (24%) per annumfromthe duedatethereof until the same is paid ("Default Interest"). All paymentsduehereundershall bemade in lawful money of the United Statesof America.All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressedto be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and,in the case of any interest payment date which is not the date on which this Note is paid in full, the extensionof the due date thereofshall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term"business day" shall mean any day other than a Saturday,Sunday or a day on which commercial banksin the city of NewYork,New York are authorized or required by law or executive orderto remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement entered into by and between the Company and Holder dated on or about the date hereof,pursuant to which this Note was originally issued (the "Purchase Agreement"). The Holder may, by written notice to theBorrower at least five (5) days before the Maturity Date (as may have been previously extended),extend the Maturity Date to up to one (1) year following the date of the original Maturity Date hereunder.
This Noteisfreefromalltaxes,liens,claimsand encumbranceswithrespecttotheissue thereofandshallnotbesubjecttopreemptiverightsor othersimilar rightsof shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The followingterms shallapplytothisNote:
ARTICLE I.CONVERSION RIGHTS
1.1.ConversionRight.TheHoldershallhavethe right,initssoleandabsolute discretion,atany timeand from timetotimetoconvertall or any part of the outstanding amount due under this Note into fully paid and non-assessableshares of Common Stock,as suchCommon Stock exists onthe Issue Date,orany shares ofcapital stockorothersecuritiesofthe Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the"Conversion Price") determinedas providedherein (a"Conversion");provided,however, thatin no eventshall theHolder be entitled toconvert any portion ofthis Noteinexcess of thatportion ofthis Note upon conversionof which the sumof(1) the number of shares of Common Stock beneficially owned bythe Holderand itsaffiliates (other than shares of Common Stockwhichmaybedeemed beneficially owned through the ownershipofthe unconverted portion of the Notes or the unexercised or unconverted portion of any other security oftheBorrower subject toalimitation on conversion or exercise analogous tothe limitations contained herein) and (2) the number of shares ofCommon Stock issuableupon the conversionof the portionof this Notewithrespect to whichthe determination of thisprovisois being made, would resultin beneficialownership by theHolder and its affiliates of more than 4.9%of the outstanding shares of Common Stock. For purposesof the proviso to the immediately preceding sentence,beneficial ownership shall bedetermined in accordance withSection l3(d) of the Securities Exchange Actof 1934,as amended (the "Exchange Act"),and Regulation l3D-Gthereunder,except asotherwise provided in clause(1) of such proviso,provided,further,however,that the limitations onconversion may bewaived bythe Holder upon,at theelection of the Holder,not lessthan61 days'priornotice to the Borrower,and the provisionsof the conversionlimitation shall continue to apply until such 61 st day (or such later date,as determined by the Holder, as may bespecified insuch notice of waiver).The numberof shares ofCommon Stock to beissued upon each conversion of this Note shallbedetermined by dividing the Conversion Amount (asdefined below) by the applicable Conversion Price then in effect onthe datespecified inthenoticeof conversion, in the formattached heretoas ExhibitA(the"Notice of Conversion"),delivered tothe Borrower by the Holderin accordance with Section 1.4 below;provided that the Noticeof Conversionis submitted by facsimileor e-mail (or by other meansresultingin, or reasonably expected to result in,notice)to the Borrower before 11:59 p.m.,New York,New York time on such conversion date (the"Conversion Date"). The term"Conversion Amount"means, with respect toany conversionof this Note,the sum of (1)the principalamount of this Note tobeconverted in suchconversion,plus (2) accruedand unpaid interest,if any,on suchprincipal amount being converted at the interest rates provided inthis Note to theConversionDate,plus (3) at the Holder's option,Default Interest,if any,on the amounts referredto in the immediately preceding clauses(1) and/or (2)plus (4) atthe Holder's option,any amounts owed to theHolder pursuant to Sections 1.3and 1.4(g) hereof.
1.2.ConversionPrice.
a)Calculation ofConversionPrice.Theconversionpricehereunder(the"Conversion Price") shallequalthelowerof:(i) theclosing salepriceoftheCommonStockonthe
Principal MarketontheTradingDayimmediatelyprecedingtheClosingDate,and(ii) 50%ofthe lowestsale price for theCommon Stock on the PrincipalMarketduring the twenty(20)consecutive Trading Days immediately preceding theConversion Date.However, if Company's shareprice at any time losesthebid (ex:0.0001 ontheaskwithzero market makers on the bid onlevel 2),then the ConversionPrice may,in the Holder's sole and absolute discretion,be reduced to a fixed conversion price of 0.00001 (iflowerthan theconversion price otherwise)andshall notbe subject to the limitation of the Conversion Price Floor. If suchCommon Stockis not traded on the OTCBB,OTCQB,Nasdaq or NYSE,then such sale price shall be the sale price of such security on the principal securities exchangeor tradingmarketwheresuchsecurity islistedor traded or,if nosale price ofsuchsecurity isavailable in anyof the foregoing manners,the average of theclosing bid prices of any market makersforsuch security that are listed inthe"pink sheets"by theNational Quotation Bureau,Inc. Ifsuch salepricecannot be calculated forsuchsecurityonsuch datein the manner provided above,such priceshall bethe fair market value as mutually determined by the Borrowerandthe Holder. If the Borrower's Commonstock is chilled for deposit at DTC,becomes chilled at any point while this Note remains outstanding or deposit or other additional fees are payabledue to a Yield Sign, Stop Sign or other tradingrestrictions,or if the closing sale price at any time fallsbelow 0.001, then such50% figure specified inclause 1.2(a)(ii)above shallbe reduced to 35%. Additionally,the Borrower acknowledges that itwill takeall reasonablesteps necessaryor appropriate,including providing a board ofdirectorsresolution authorizing the issuance of common stock andan opinion of counsel confirmingthe rights of Holder to sell shares of Common Stock issuable or issued toHolder on conversionof thisNote pursuant to Rule 144 as promulgated by the SEC ("Rule 144"),as such Rule may be in effect from time to time. If the Borrower does not promptly provide a board of directors' resolution and an opinion from Company counsel,and so long as the requested sale may be made pursuant to Rule 144,the Company agrees to accept an opinion of counsel to the Holder which opinion will be issued at the Company's expense and the conversion dollar amount will be reduced by $750.00 to cover the cost of such legal opinion."Trading Day"shall mean anyday on which the Common Stock is tradable for any period on the OTCQB,or on the principal securitiesexchange or other securities market on whichthe Common Stock is then being traded.Additionally,if the Company ceases to be a reporting company pursuant to the1934 Act or if the Note cannot be converted into free trading shares after 181 days from the issuance date,an additional 15% discount will be attributed to the Conversion Price and the calculation of the Conversion Price shall not be subject to the limitation of the Conversion Price Floor.
b)WithoutinanywaylimitingtheHolder'srighttopursueother remedies,includingactual damagesand/or equitable relief,the parties agree thatif delivery ofthe Common Stock issuable upon conversion ofthis Note is not delivered bythe Deadline (asdefined below)the Borrower shall payto the Holder $1,000.00 perday incash,foreach day beyondthe Deadline that the Borrower fails to deliversuchCommon Stock. Such cash amountshall be paid to Holder bythe fifth day of the month followingthe monthin which it has accrued or, at the option of the Holder,shallbe added to theprincipalamount of thisNote,in which event interest shallaccrue thereon in accordance with thetermsof thisNote and such additional principal amount shall be convertibleinto Common Stock in accordance with the terms ofthis Note. The Borrower agrees thattheright to convert thisNoteis avaluable rightto theHolder. The damagesresulting froma failure, attempt to frustrate,or interference with such conversionright are difficultif not impossible to quantify. Accordingly the parties acknowledgethatthe liquidateddamagesprovision containedin this Section are justified.
1.3.AuthorizedShares.TheBorrowercovenantsthattheBorrowerwillatall timeswhilethisNoteisoutstandingreserve fromits authorizedand unissued CommonStock a sufficient number of shares,free from preemptive rights,to provide for the issuance of Common Stockupon the full conversionof thisNote.The Borroweris requiredat all timesto have authorized and reserved three (3) timesthenumber of shares that isactually issuable upon full conversion of this Note (based on the Conversion Price ofthe Notes ineffect from time to time)(the"Reserved Amount"). Initially,the Companywillinstruct the Transfer Agent to reserveonemillion five hundred eighty seven thousand three hundred and two (1,587,302) shares of common stock inthe name of theHolderforissuance upon conversion hereof. The Borrower represents thatupon issuance,such shares will beduly and validly issued,fully paidand non-assessable. In addition,if the Borrowershall issue any securities or make any change to its capital structure whichwould changethenumber of shares ofCommonStock into which this Note shallbe convertible atthethen current Conversion·Price,theBorrower shallat the same time make properprovision so that thereafter there shall be asufficient numberof sharesof Common Stock authorized and reserved,free from preemptive rights,for conversionof this Note in full. The Borrower (i)acknowledges that it has irrevocably instructed its transfer agent to issue certificates for theCommon Stock issuable upon conversion ofthis Note,and (ii) agrees that its issuance ofthis Note shallconstitute full authority to itsofficersandagents whoarecharged with the duty ofexecuting stockcertificates to execute andissue the necessary certificates for shares of Common Stock in accordancewith the termsand conditions of this Note.
If, atanytimetheBorrowerdoesnotmaintaintheReservedAmountitwill beconsideredanEventof Defaultunder Section3.2 of the Note.
1.4.MethodofConversion.
a)MechanicsofConversion.Subjectto Section 1.1,thisNote maybe convertedbytheHolderinwholeorinpartat any timeand fromtimetotime after theIssueDate, by submitting to the Borrower a Noticeof Conversion (by facsimile,e-mail or other reasonable means ofcommunication dispatchedon the Conversion Date priorto 11:59p.m.,New York,New York time).
b)BookEntryuponConversion.Notwithstandinganythingtothe contrarysetforthherein,uponconversionofthisNoteinaccordancewiththe terms hereof,the Holder shall notbe requiredto physicallysurrender this Note tothe Borrower unless the entire unpaid principal amountof this Note is so converted. The Holder and the Borrowershallmaintain records showing the principal amountso converted and thedates of such conversions or shall use such othermethod,reasonablysatisfactoryto the Holder andthe Borrower,so as not to require physical surrenderof this Note uponeach such conversion. In the event of any dispute or discrepancy,such recordsof the Borrowershall,primafacie,be controlling anddeterminative in the absence of manifest error. Notwithstandingthe foregoing, if anyportion of this Note isconverted as aforesaid, the Holdermay not transferthis Note unless the Holderfirst physicallysurrenders this Note to the Borrower,whereupon the Borrowerwill forthwith issue and deliver upon the orderof theHolder a new Note of like tenor,registered as the Holder (uponpayment by the Holder of any applicable transfer taxes) may request,representing inthe aggregate the remaining unpaid principal amount of this Note.The Holder and any assignee,by acceptance of this Note,acknowledge and agreethat,by reasonof the provisions of thisparagraph,following conversion of a portion of this
Note,theunpaid andunconvertedprincipalamountofthisNoterepresentedbythisNotemaybe lessthantheamountstated onthe face hereof.
c)PaymentofTaxes.TheBorrowershallnotberequiredtopayanytax whichmaybepayablein respect of anytransferinvolvedin theissue and delivery ofsharesof CommonStockorothersecurities or propertyon conversion ofthisNote in aname otherthan that of the Holder (or in street name),andthe Borrower shallnotbe required toissue ordeliver anysuchsharesor other securitiesorproperty unlessand until the person orpersons (other thanthe Holder or the custodian inwhose streetname such shares areto beheldfortheHolder's account) requesting theissuance thereofshall have paidto theBorrower theamount of any such tax orshall have establishedto thesatisfactionof theBorrower thatsuchtax has beenpaid.
d)DeliveryofCommonStockuponConversion.Uponreceiptbythe BorrowerfromtheHolderofafacsimiletransmissionore-mail(orotherreasonablemeans of communication) of a Notice ofConversionmeeting the requirements for conversion as provided in this Section 1.4,theBorrower shall issue anddeliveror causeto beissuedand delivered toor upon the order of the Holder certificatesfor the Common Stock issuable upon such conversion within three (3) businessdaysafter such receipt (the"Deadline")(and,solely inthe case of conversion of the entireunpaid principal amount hereof,surrender of this Note)in accordance with the terms hereof and thePurchaseAgreement.
e)ObligationofBorrowertoDeliverCommonStock.Uponreceiptby theBorrowerofadulyandproperlyexecuted Noticeof Conversion, theHolder shall be deemedto be the holder of recordofthe CommonStockissuable upon suchconversion, theoutstanding principal amount and the amount of accrued and unpaid interest on thisNote shall be reduced to reflect such conversion, and,unless theBorrowerdefaults on its obligations under this ArticleI,all rights with respect tothe portion of thisNote being so converted shallforthwith terminateexcept theright to receivethe Common Stockor other securities,cashor other assets,as hereinprovided,on such conversion.IftheHolder shallhave given a Notice of Conversionasprovided herein,the Borrower's obligation to issueand deliver the certificatesfor Common Stock shallbe absolute and unconditional, irrespective of the absence of any action by the Holder toenforce the same,any waiver or consentwithrespect to any provision thereof, the recovery of any judgment against any person or any actionto enforce thesame, any failure or delay in the enforcement ofanyother obligation of theBorrower to the holder of record, or any setoff,counterclaim, recoupment,limitation or termination,or any breachor alleged breach by the Holder of anyobligation to the Borrower, andirrespective of anyother circumstance which might otherwise limit such obligation oftheBorrower to theHolderin connection withsuch conversion. The ConversionDate specified in the Notice ofConversionshall betheConversionDate so long as the Noticeof Conversion is received by the Borrower before 11:59 p.m.,New York,NewYork time,on such date.
f)DeliveryofCommonStockbyElectronicTransfer.In lieuof deliveringphysicalcertificatesrepresentingtheCommonStockissuableuponconversion,provided theBorrower is participating in the Depository Trust Company("DTC") Fast Automated Securities Transfer ("FAST") program,upon request of the Holder and its compliance with the provisions contained in Section 1.1andin this Section 1.4, theBorrowershall use its best efforts tocause its transfer agent to electronically transmitthe Common Stockissuableupon conversion to the Holder by crediting the account of Holder's PrimeBroker with DTC through its Deposit WithdrawalAgent Commission("DWAC") system.
g)FailuretoDeliverCommonStockPriortoDeadline.Withoutinany waylimitingtheHolder's right topursue other remedies,includingactual damages and/or equitable relief, the parties agree that ifdelivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline,the Borrower shallpay to theHolder $1,000.00 per day incash,for each day beyond the Deadline that the Borrower fails to deliver such Common Stock to the Holder. Such cash amountshall be paid to Holder by the fifthday of the monthfollowing the month in which ithas accrued or,at the option of the Holder,shall be added to the principal amountof this Note,in which event interest shall accruethereoninaccordancewith the terms of this Noteand such additional principal amountshallbe convertibleinto Common Stock inaccordance with the terms of this Note.The Borroweragreesthat the right to convert is avaluable rightto theHolder.Thedamagesresulting froma failure,attempt tofrustrate,or interferencewith such conversion right are difficult if not impossibleto qualify.Accordingly the parties acknowledge thatthe liquidated damages provision contained in this Section 1.4(g)are justified.
h)TheBorroweracknowledgesthatitwilltakeallreasonablesteps necessaryor appropriate,includingprovidinganopinion ofcounsel confirmingthe rightsof Holder to sellshares ofCommon Stock issued to Holder onconversion of the Notepursuant toRule 144 as promulgatedby the SEC ("Rule 144"),as suchRulemay bein effectfrom timeto time. If the Borrower does not promptly provide an opinion from Borrowercounsel, andsolong as the requestedsale may be madepursuant to Rule 144,the Borrower agreesto accept an opinion of counsel totheHolder which opinion willbe issued at the Borrower's expense.
1.5.RestrictedSecurities.Theshares ofCommonStockissuableuponconversion ofthisNotemaynotbe soldortransferredunless (i)such shares are soldpursuant toan effective registration statement under the Act or (ii)the Borrower or its transfer agentshall have been furnished with an opinion of counsel (which opinionshall be in form,substance and scope customary for opinionsof counselin comparable transactions)to the effect that the shares to be sold ortransferred may be soldor transferred pursuant to an exemption fromsuchregistration or(iii) such shares aresold or transferred pursuantto Rule 144 under the Act (or a successor rule)("Rule
144") or(iv)suchsharesaretransferredtoan"affiliate"(asdefinedin Rule 144) ofthe Borrower whoagrees tosellor otherwise transferthe shares only in accordance with thisSection 1.5 andwho isan Accredited Investor(as definedinthe Purchase Agreement). Any legend set forth on any stock certificateevidencinganyConversionShares shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinionof counselform, substance and scopecustomary for opinions ofcounselin comparable transactions,tothe effect that a public sale or transfer of such Common Stockmay be madewithout registration under the Act,which opinion shall be reasonably acceptable to the Company,or (ii) in the case of the Common Stock issued or issuable upon conversion of thisNote, suchsecurity is registered for saleby the Holder under an effective registrationstatementfiledunder the Actor otherwise may be sold pursuant to Rule 144 without any restriction as to the numberof securitiesasof a particular date that can then beimmediately sold.
1.6.EffectofCertainEvents.
a)EffectofMerger,Consolidation,Etc.AttheoptionoftheHolder,the sale,conveyanceordispositionofall orsubstantially allof theassets ofthe Borrower,the effectuationby theBorrower ofa transaction or series of related transactions in which morethan
50% ofthevotingpoweroftheBorrowerisdisposedof,ortheconsolidation,merger orother businesscombinationoftheBorrowerwith or into any other Person (as definedbelow)or Persons when theBorrower is not the survivorshall either:(i) be deemed tobe an Eventof Default (as defined in Article III) pursuant to which theBorrowershall be required to pay to the Holder upon the consummation ofandasa condition tosuchtransaction an amount equal to the DefaultAmount (as defined inArticle III) or (ii) be treatedpursuant to Section1.6(b) hereof. "Person" shallmean any individual,corporation,limited liability company,partnership,association,trust or other entity or organization.
b)AdjustmentDuetoMerger,Consolidation,Etc.If,atany timewhen thisNoteisissuedandoutstandingandpriortoconversion ofalloftheNotes,thereshall be any merger,consolidation,exchange of shares, recapitalization,reorganization,or other similar event,as a resultofwhich sharesofCommonStock oftheBorrower shall bechanged into thesame ora different number of shares of another class or classes of stock or securities of theBorrower or another entity, or in caseofanysaleorconveyance ofallorsubstantially all oftheassets ofthe Borrower other than in connection with a planofcomplete liquidationoftheBorrower,then the Holder of this Note shall thereafterhave the right to receive upon conversion of this Note,upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,such stock,securitiesor assetswhich the Holder would havebeen entitled to receivein such transaction had this Notebeen convertedin full immediately prior to suchtransaction (without regard to any limitations on conversion set forth herein),and inany suchcase appropriate provisions shallbe madewith respect totherightsand interests of the Holder of this Note to the end that the provisions hereof (including,without limitation,provisionsfor adjustment of the Conversion Price and of thenumber ofshares issuable uponconversion of theNote) shall thereafter beapplicable,as nearly as may be practicable in relation to any securitiesor assets thereafterdeliverable upon the conversion hereof. The Borrower shall not affect anytransactiondescribedin this Section 1.6(b) unless (a) it first gives,to the extent practicable, thirty (30)days priorwritten notice(but inanyevent atleast fifteen (15)days prior written notice) of the record date of the special meeting of shareholdersto approve, or if there is no such record date,the consummation of,such merger,consolidation,exchange of shares,recapitalization,reorganization or other similar event or sale of assets (during which time,for clarification,the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiringentity assumesby writteninstrument the obligations of this Section1.6(b).The above provisions shall similarly apply to successive consolidations,mergers, sales, transfers or share exchanges.
c)AdjustmentDuetoDistribution.IftheBorrowershalldeclareormake anydistributionof itsassets(orrightstoacquire its assets) to holders ofCommon Stock as a dividend,stock repurchase,by way ofreturn of capital or otherwise (including anydividend or distribution tothe Borrower'sshareholders incash orshares (or rights toacquire shares) ofcapital stock of asubsidiary(i.e.,aspin-off)) (a "Distribution"),then theHolder of this Note shallbe entitled,upon any conversion ofthis Note after the dateof record fordetermining shareholders entitled tosuchDistribution,to receive theamountof suchassets which would have been payableto the Holder with respect to the shares of Common Stockissuable upon such conversionhad such Holderbeentheholder of suchshares of CommonStockontherecorddateforthedetermination of shareholders entitledto such Distribution. Such assets shallbe held in escrow by the Company pending any suchconversion
d)PurchaseRights.If,at anytimewhenanyNotesareissuedand outstanding,theBorrower issues anyconvertiblesecurities or rights topurchase stock, warrants,securitiesor other property(the"Purchase Rights") pro rata to the record holders of any class of Common Stock,then the Holder of thisNote will beentitledtoacquire,upon the terms applicable to such Purchase Rights,the aggregate Purchase Rights which suchHolder could haveacquired if such Holderhadheld the number of shares of Common Stock acquirable upon completeconversion of thisNote (withoutregardtoanylimitations onconversion contained herein) immediately before thedateon which arecord is takenfor the grant,issuanceor sale ofsuchPurchase Rights or,ifno such record is taken,thedate as ofwhich the record holdersof Common Stockareto be determined forthe grant,issue or saleof such Purchase Rights.
e)StockDividendsandStockSplits.IftheCompany,atany timewhile thisNoteis outstanding:(A)pays a stock dividend or otherwise makes a distribution or distributions payable in sharesof CommonStockonsharesof Common Stockorany securitiesconvertible into or exercisable for CommonStock; (B) subdividesoutstandingshares of Common Stock into a larger numberofshares;(C)combines (including by way ofa reversestock split) outstandingshares of CommonStock into a smaller number of shares; or (D) issues, in theeventof a reclassification of shares of theCommon Stock,any shares ofcapital stock of the Company,then the Conversion Price (and eachsale orbid price used in determining the Conversion Price) shall be multiplied by a fraction,of which thenumerator shall bethenumber of shares of CommonStock outstanding immediatelybeforesucheventand of which the denominator shallbe the number of shares of CommonStockoutstanding immediately after suchevent. Anyadjustment madepursuantto this Sectionshall becomeeffective immediately afterthe recorddate for thedetermination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effectivedatein the case of a subdivision,combinationor re-classification.
f)Noticeof Adjustments.Upontheoccurrenceofeachadjustmentor readjustmentoftheConversionPriceasaresult oftheevents described in this Section 1.6,the Borrower,at its expense,shall promptlycomputesuch adjustmentor readjustment and prepareand furnish totheHoldera certificatesetting forth suchadjustmentor readjustment and showing in detailthe factsupon which such adjustment orreadjustment is based. The Borrower shall, upon the written request at anytime of the Holder,furnish to suchHolder a like certificate setting forth(i) such adjustment or readjustment,(ii) the Conversion Price at the timein effectand (iii) the number ofshares of Common Stock and the amount,if any,of other securitiesor property which at thetime would be receivedupon conversionof the Note.
1.7.Revocation. IfanyConversionSharesarenotreceivedbytheDeadline,the Holdermayrevoketheapplicable Conversionpursuant to which such Conversion Shares were issuable.This Noteshall remainconvertible after the MaturityDate hereof until this Note isrepaid or convertedin full.
1.8.Prepayment.NotwithstandinganythingtothecontrarycontainedinthisNote,subjecttothetermsofthis Section,at anytime during the periodbeginning on the Issue Date and ending onthe datewhich is six (6) months following theIssue Date ("Prepayment Termination Date"), Borrower shall havetheright,exercisable onnot less than five(5)TradingDays prior written notice tothe Holder of this Note,to prepay theoutstanding balanceon this Note (principal and accrued interest),in full,in accordance withthis Section.Any notice of prepayment hereunder (an"Optional Prepayment Notice") shall be delivered to the Holderof the Noteatits registered
addressesandshallstate:(I)that theBorrowerisexercising itsrighttoprepaythe Note,and (2) the dateof prepayment which shall be not more than ten(10)Trading Days from the dateofthe OptionalPrepayment Notice. On thedate fixed for prepayment(the"Optional PrepaymentDate"),the Borrower shall make payment of theOptional Prepayment Amount (as defined below) to or uponthe order of theHolder asspecified bytheHolder in writing tothe Borrower at least one(1) business day priortothe Optional PrepaymentDate.If the Borrowerexercises its rightto prepay the Note,the Borrower shall makepayment to the Holderof an amount in cash (the"Optional Prepayment Amount") equalto 150%, multiplied by the sum of:(w) thethen outstandingprincipal amount ofthis Note plus(x) accruedand unpaidintereston theunpaidprincipal amountof this Note to the Optional Prepayment Dateplus (y)Default Interest,if any,on the amounts referred toin clauses (w) and (x) plus(z) anyamounts owed to theHolder pursuant to Sections1.3and 1.4(g) hereof.If the Borrower delivers an Optional Prepayment Notice and failsto pay the Optional Prepayment Amount due to the Holder ofthe Notewithin two (2) business days following the Optional Prepayment Date,the Borrower shall forever forfeit its right to prepay theNote pursuant to this Section.After thePrepayment Termination Date,theBorrower shall have no right toprepay thisNote.
ARTICLEII.CERTAINCOVENANTS
2.1.DistributionsonCapitalStock.SolongastheBorrowershallhaveany obligationunderthisNote,theBorrower shall notwithouttheHolder'swritten consent (a) pay,declare orset apartfor such payment,any dividend orother distribution (whetherin cash, property or other securities) onshares of capital stock other than dividends onshares of Common Stock solelyin the form ofadditionalsharesofCommon Stock or(b)directly or indirectly or through anysubsidiary makeanyother payment or distribution inrespectof its capital stock exceptfor distributions pursuant toany shareholders'rights plan which is approved by a majority of the Borrower's disinteresteddirectors.
2.2.Restrictionon StockRepurchases.SolongastheBorrowershallhaveany obligationunderthisNote,theBorrowershallnot without the Holder's written consent redeem, repurchase or otherwise acquire(whetherfor cash or in exchangeforpropertyor other securities or otherwise) in any one transaction or series ofrelated transactionsanyshares of capitalstockof the Borrower oranywarrants,rights oroptions topurchase oracquire anysuch shares.
2.3.Borrowings:Liens.Notwithstandingsection4(m)ofthePurchase Agreement,solong astheBorrowershallhave anyobligation under this Note,the Borrowershall not,withoutpromptly providing an Event Disclosure Notice tothe Holder,asset forth in section
4(m) ofthePurchaseAgreement,(i)create,incur,assumeguarantee,endorse,contingently agreeto purchaseor otherwise becomeliable upon the obligationof any person,firm,partnership,joint venture or corporation,except bythe endorsement ofnegotiable instruments for deposit or collection,or suffer toexistany liability for borrowed money,except (a)borrowings in existenceor committed on the date hereof and of which the Borrower has informed Holderin writingprior to the date hereof,or (b) indebtedness to trade creditorsor financial institutions incurred intheordinarycourse ofbusiness,or (ii) enter into,create or incur anyliens,claims or encumbrances ofanykind,on or withrespectto anyof its property or assetsnow owned orhereafter acquired or any interest thereinor anyincome or profits therefrom, securing anyindebtednessoccurring after the date hereof.
2.4.Saleof Assets.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder's written consent,sell, leaseorotherwise disposeof any significant portion ofitsassets outsidetheordinarycourse ofbusiness.Anyconsent tothe dispositionof any assets may be conditionedon aspecifieduse ofthe proceeds of disposition.
2.5·.AdvancesandLoans.SolongastheBorrowershallhaveanyobligation underthisNote,the Borrowershall not, without the Holder'swrittenconsent, lend money, give creditor make advances to any person,firm, joint ventureorcorporation, including,without limitation, officers, directors, employees,subsidiaries and affiliates of the Borrower, except loans, creditsor advancesin existenceor committedonthe date hereof and which the Borrower has informed Holder inwriting prior tothe date hereof.
2.6.Charter.SolongastheBorrowershallhaveanyobligationsunderthisNote, theBorrowershallnot amend its charter documents, including without limitation itscertificate of incorporation andbylaws,inany manner that materially and adversely affects any rights of the Holder.
ARTICLE III.EVENTSOFDEFAULT
Any oneormoreofthefollowingeventswhichshalloccurand/orbe continuingshall constituteaneventofdefault(each,an"Eventof Default"):
3.1.FailuretoPayPrincipalorInterest.TheBorrowerfailstopaytheprincipal hereoforinterestthereonwhendue on this Note,whether at maturity,upon acceleration or otherwise.
3.2.ConversionandtheShares.TheBorrowerfailstoissuesharesofCommon StocktotheHolder(orannouncesor threatens in writing thatit will not honor its obligation todo so at any time following the executionhereof or) upon exercisebythe Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails totransfer orcause its transfer agent to transfer (issue)(electronically orin certificatedform) any certificatefor sharesof Common Stock issued to the Holder upon conversion ofor otherwise pursuant to this Note as andwhen required by thisNote, the Borrower directs its transferagent not to transferor delays, impairs,and/or hinders its transfer agent intransferring(or issuing) (electronically orin certificated form) any certificate for sharesof Common Stock to be issued tothe Holder upon conversion oforotherwise pursuant to this Note as and when required by thisNote,or fails to remove (or directs itstransfer agent notto remove or impairs,delays,and/or hinders its transfer agentfromremoving) any restrictivelegend (or to withdraw any stop transfer instructions inrespect thereof)onany certificate for any shares of Common Stock issued tothe Holder upon conversion of or otherwise pursuant to thisNoteas and whenrequired bythisNote(or makesanywrittenannouncement, statementor threat thatitdoes not intend tohonor theobligations described in this paragraph) and anysuch failure shallcontinue uncured (or any written announcement,statement or threat not to honor its obligations shallnot be rescinded in writing)for five (5) business daysaftertheHolder shall have delivered aNotice of Conversion. It is an obligation of the Borrower to remaincurrent in its obligations toits transfer agent. It shall bean event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to abalance owedby theBorrower to its transfer agent. Ifatthe option of the Holder,the Holderadvances anyfundsto theBorrower's transfer agent in order to process aconversion,
such advancedfundsshallbepaidbytheBorrowertotheHolderwithinfortyeight(48) hoursofa demandfromtheHolder.
3.3.BreachofCovenants.TheBorrower breachesanymaterialcovenantorother materialtermorconditioncontainedinthisNoteandanycollateraldocumentsincluding but not limitedto the Purchase Agreementand such breachcontinues for aperiod of seven (7) daysafter written notice thereof to the Borrower from the Holder.
3.4.BreachofRepresentationsandWarranties. Anyrepresentationorwarrantyof theBorrowermadehereinorinanyagreement,statement or certificate given in writingpursuant heretoorin connection herewith (including,without limitation,the PurchaseAgreement),shall be falseor misleading in any material respectwhenmade and the breach ofwhich has (orwith the passage of timewi II have) a material adverse effecton therightsofthe Holder withrespectto this Note or the PurchaseAgreement.
3.5.ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershall makeanassignmentforthebenefitofcreditors,orapply fororconsent tothe appointment ofa receiver ortrustee forit or forasubstantialpart of itsproperty or business,or such areceiver or trustee shall otherwise be appointed.
3.6.Judgments.Anymoneyjudgment,writor similarprocessshallbeenteredor filedagainsttheBorroweror anysubsidiary of the Borroweror anyofitspropertyor otherassets formore than$50,000.00,and shall remain unvacated,unbonded or unstayedfor a period of twenty (20) days unless otherwise consented to bytheHolder, which consent will not be unreasonably withheld.
3.7.Bankruptcy.Bankruptcy,insolvency,reorganizationorliquidation proceedingsorotherproceedings,voluntaryorinvoluntary,forreliefunderanybankruptcylaw or anylawfortherelief of debtorsshall be institutedby or againstthe Borroweror anysubsidiary of the Borrower.
3.8.DelistingofCommonStock.TheBorrowershallfailtomaintainthelistingof theCommonStockonatleastoneof theOTCQBoranequivalent replacement exchange,Nasdaq, the NYSE or AMEX.
3.9.FailuretoComplywiththeExchangeAct.TheBorrowershallfailtocomply inanymaterialrespectwiththereportingrequirementsoftheExchange Act;and/orthe Borrower shallcease tobe subject to thereportingrequirementsof the ExchangeAct.
3.10.Liquidation.Anydissolution,liquidation,orwinding upofBorrowerorany substantialportionofitsbusiness.
3.11.CessationofOperations.AnycessationofoperationsbyBorroweror Borroweradmitsitis otherwisegenerallyunable to pay itsdebtsas such debts become due, provided,however,thatany disclosure oftheBorrower's ability to continue as a"goingconcern" shallnot be an admission that the Borrower cannot pay its debts as they become due.
3.12.MaintenanceofAssets.ThefailurebyBorrower,duringthetermofthis Note,tomaintain any material intellectualproperty rights, personal,real property or other assets which are necessary to conductitsbusiness(whether nowor in thefuture).
3.13.FinancialStatementRestatement.Therestatementofanyfinancial statementsfiledbytheBorrowerwiththeSECforanydateorperiod from twoyears prior to the
Issue DateofthisNoteanduntilthisNoteisnolongeroutstanding,iftheresultofsuchrestatement would,by comparison to the unrestated financial statement, have constituteda material adverse effecton the rightsof theHolderwithrespectto this Note or the PurchaseAgreement.
3.14.ReverseSplits.TheBorrowereffectuatesareversesplitofitsCommonStock withouttwenty(20)dayspriorwrittennoticetotheHolder.
3.15.ReplacementofTransferAgent.IntheeventthattheBorrowerproposesto replaceitstransferagent,theBorrowerfailsto provide, prior to the effective date of such replacement,afullyexecuted Irrevocable Transfer AgentInstructions in aform asinitially deliveredpursuant to the Purchase Agreement (including butnotlimited to theprovision to irrevocably reserveshares of CommonStock in the Reserved Amount) signed by thesuccessor transfer agent to Borrower and the Borrower.
3.16.Cross-Default.Notwithstandinganythingtothecontrarycontainedinthis Noteortheotherrelatedorcompaniondocuments,abreach ordefault by the Borrower of any covenant or other termor condition contained in any of the OtherAgreements,after the passageof all applicable notice and cure or grace periods,shall,at the option of the Holder,beconsidered a default under thisNote and the Other Agreements,inwhich event the Holder shall be entitled (but in no event required)to applyall rights andremediesof the Holder under thetermsofthis Note and theOther Agreementsby reasonof a default under saidOther Agreement or hereunder."Other Agreements" means,collectively, all agreementsand instrumentsbetween,among or by: (1) the Borrower,and,or forthe benefit of,(2)the Holder and any affiliate of the Holder, including,without limitation, promissory notes;provided, however, theterm"OtherAgreements" shallnot include the related or companiondocuments tothis Note. Each of the loan transactions will be cross-defaultedwith each other loan transaction and with all other existing and future debt of Borrowerto the Holder.
Upon theoccurrenceandduringthecontinuationofanyEventofDefaultspecifiedinSection3.1 (solelywithrespecttofailure to paythe principal hereof orinterestthereon whendue at the MaturityDate),the Note shall become immediatelydue andpayable andthe Borrower shallpayto the Holder,in full satisfactionofits obligations hereunder,an amount equalto the Default Sum (as defined herein). UPON THE OCCURRENCE ANDDURING THE CONTINUATION OF ANY EVENT OF DEFAULTSPECIFIED IN SECTION 3.2, THE NOTESHALL BECOME IMMEDIATELY DUE ANDPAYABLE AND THE BORROWERSHALL PAY TOTHE HOLDER, IN FULL SATISFACTIONOF ITSOBLIGATIONS HEREUNDER,AN AMOUNT EQUAL TO:(Y)THEDEFAULT SUM (ASDEFINEDHEREIN); MULTIPLIED BY (Z)TWO (2).Uponthe occurrence and during the continuationofany EventofDefault specified inSections 3.1 (solely withrespect tofailure topaythe principalhereof or interest thereon when dueonthis Note uponaTrading MarketPrepaymentEvent pursuantto Section 1.7 oruponacceleration),3.3,3.4,3.6,3.8,3.9, 3.11, 3.12,3.13, 3.14,and/or 3.15 exercisable through the delivery of written notice to the Borrowerby such Holders (the"DefaultNotice"), and upon the occurrence of an Event of Default specified in the remaining sections of Articles 11I (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder,an amount equal tothe greaterof (i) 150%timesthesum of (w) the then outstanding principal amount of this Noteplus (x) accrued and unpaid interest on the unpaid principal amountof this Note to the date of payment (the"MandatoryPrepayment Date") plus (y) Default Interest,if any,on theamounts referred to in clauses (w) and/or (x)plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal
amount ofthisNotetothedateofpaymentplustheamountsreferredtoinclauses(x),(y)and (z) shall collectivelybe known as the "Default Sum")or (ii) the"parity value" of the Default Sum to be prepaid,where parity value means (a) the highest number of shares of Common Stock issuableupon conversion ofor otherwise pursuant tosuchDefault Sumin accordancewithArticleI, treatingthe Trading Dayimmediatelyprecedingthe Mandatory Prepayment Dateas the"Conversion Date"for purposes of determining thelowest applicable Conversion Price,unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which casesuch Conversion Date shall be the Conversion Date),multiplied by (b)the highest Closing Price for the CommonStockduring the period beginningon the date of firstoccurrence of the Event of Default and ending one day prior to the Mandatory PrepaymentDate(the "Default Amount") and all other amounts payable hereunder shall immediately become dueand payable,allwithout demand,presentment ornotice,all ofwhich hereby areexpressly waived,together with all costs,including,without limitation,legal fees and expenses,of collection,and the Holder shall be entitled to exercise all otherrights and remediesavailable at law or in equity.
If theBorrowerfailstopaytheDefaultAmountwithinfive(5)businessdaysofwrittennoticethat suchamountisdue and payable,then the Holder shall have therightat any time,so long asthe Borrowerremains in default (and so long and to the extent that there are sufficientauthorized shares), to require the Borrower,uponwritten notice,to immediately issue,in lieu of the Default Amount,the number of shares of Common Stock of the Borrower equal to theDefault Amount divided by the Conversion Pricethen in effect. The Holdermaystillconvertanyamounts due hereunder,including withoutlimitation the Default Sum,until such time as this Note has been repaidin full.
ARTICLE IV.MISCELLANEOUS
4.1.FailureorIndulgenceNotWaiver.Nofailureordelayonthepartofthe Holderintheexerciseofanypower,right or privilege hereunder shall operate as a waiver thereof, nor shall anysingleor partialexerciseof any such power,right orprivilege preclude other or further exercise thereof or of anyotherright,power or privileges. All rightsand remedies existing hereunder are cumulative to,and not exclusive of,any rightsorremedies otherwise available.
4.2.Notices.AU notices,demands,requests,consents,approvals,andother communicationsrequiredorpermittedhereundershallbe in writing and,unless otherwisespecified herein,shallbe (i) personally served,(ii) deposited in the mail,registeredor certified,return receipt requested,postageprepaid,(iii) delivered byreputableair courierservicewith charges prepaid,or (iv) transmitted by hand delivery,telegram,email or facsimile,addressed as set forth belowor to such other address assuch party shall havespecified mostrecently bywritten notice.Anynoticeor other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand deliveryor delivery by facsimile or email,with accurateconfirmation generated by the transmittingfacsimilemachine or computer,at the address,email or number designated in the Purchase Agreement (if delivered on abusiness day during normalbusiness hours where such notice is tobe received),or the first business day following such delivery (ifdelivered otherthan on a business day during normal business hours where such notice is to be received) or (b) on the second business day followingthe dateof mailingby expresscourier service,fully prepaid,addressed to such address,or upon actual receipt of suchmailing,whichevershall first occur.
4.3.Amendments. ThisNoteandanyprovisionhereofmayonlybeamendedby aninstrumentinwritingsignedbythe Borrower and the Holder. The term"Note" andall reference thereto,as used throughout thisinstrument,shallmean this instrument (and theotherNotesissued
pursuant tothePurchaseAgreement)asoriginallyexecuted,orif lateramendedorsupplemented, thenasso amended or supplemented.
4.4.Assignability.ThisNoteshallbebindingupontheBorrowerandits successorsandassigns,andshall inure to be the benefit of theHolder and its successorsandassigns. Each transfereeof this Note must be an"accredited investor"(as defined in Rule501(a) of the 1933 Act). Notwithstanding anythinginthis Note to thecontrary,this Note may bepledgedas collateral in connection with a bona fidemargin account or other lending arrangement.
4.5. CostofCollection.IfdefaultismadeinthepaymentofthisNote,the
Borrower shallpaytheHolderhereofcostsofcollection,includingreasonable attorneys'fees.
4.6. GoverningLaw.ThisNote shallbegovernedbyandconstruedinaccordance withthelawsoftheState of New Yorkwithout regardto conflicts oflaws principles thatwould result in the application of the substantive laws of another jurisdiction. Any action broughtby eitherpartyagainst theother concerning the transactions contemplated by thisAgreement must be brought only in the civilor statecourts of New Yorkor in the federalcourts located in the State and countyof NewYork.Both parties andthe individual signing this Agreement onbehalf of the Borrower agree to submit to the jurisdiction ofsuchcourts. The prevailing party shall be entitled to recover fromthe other party its reasonable attorney's fees and costs.In the event that any provision of this Noteis invalid or unenforceableunder any applicable statute or rule of law,then such provision shall be deemed inoperative to the extent that it may conflict therewith andshall be deemed modifiedto conform withsuchstatuteor ruleof law.Any such provision which mayprove invalid or unenforceable under anylawshall not affect thevalidityor unenforceability ofanyother provisionof this Note.Nothing containedherein shall be deemedoroperate to precludetheHolder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collectonthe Borrower's obligations toHolder,to realize on anycollateral or anyother security for such obligations,or toenforce a judgment or other decision infavor of the Holder. This Noteshall be deemedanunconditional obligation ofBorrower forthepayment ofmoney and, without limitation toany other remedies of Holder, maybeenforced againstBorrower by summary proceeding pursuantto New York Civil Procedure Law and Rules Section 3213 or anysimilar rule or statute in the_jurisdiction whereenforcementis sought. For purposes of suchrule or statute, anyother document or agreement towhich Holder and Borrower are partiesor which Borrower delivered toHolder,which maybe convenientor necessaryto determine Holder's rightshereunder or Borrower'sobligations toHolder are deemed a partof this Note, whether or not such otherdocument or agreement was delivered togetherherewith or was executed apart from this Note.
4.7.Certain Amounts.WheneverpursuanttothisNotetheBorrowerisrequiredto payanamountinexcessofthe outstanding principalamount (orthe portion thereof required to be paid at that time) plus accrued and unpaidinterestplus Default Interest on such interest,the Borrower and the Holder agree that the actual damagesto the Holder from the receipt of cash payment on thisNotemay bedifficulttodetermine andthe amount tobe so paidbythe Borrower represents stipulated damages andnota penalty andis intended to compensatethe Holder inpartfor loss of the opportunity to convert this Note and to earnareturn from the saleof shares ofCommon Stock acquired upon conversion of thisNote at a price inexcessof the price paid forsuch shares pursuant tothis Note.The Borrower and the Holder hereby agree that such amount of stipulated
damages isnotplainlydisproportionatetothepossibleJosstotheHolderfromthereceiptofacash paymentwithouttheopportunityto convertthis Note intoshares ofCommon Stock.
4.8.Disclosure.UponreceiptordeliverybytheCompanyofanynoticein accordancewiththetermsofthisNote,unlessthe Company has in good faith determinedthat the matters relating to suchnotice do not constitute material,non-public information relatingto the Companyorany of its Subsidiaries,the Company sha11 within one( l) TradingDayafter anysuch receipt or delivery,publiclydisclosesuch material,non-public information ona Current ReportonForm 8-Kor otherwise. In the event that the Companybelieves that a notice contains material,non public information relatingto the Company or any ofits Subsidiaries,the Companyso sha11 indicate to suchHoldercontemporaneously with deliveryof suchnotice,and in the absence of any such indication,the Holder shall be allowedto presume that allmattersrelating to suchnoticedo not constitute material, non-public information relating to the Companyor its Subsidiaries.
4.9.NoticeofCorporateEvents.Exceptasotherwiseprovidedbelow,theHolder ofthisNoteshallhavenorightsas a Holderof Common Stock unlessand onlytotheextentthat it converts thisNote intoCommon Stock.TheBorrower shall provide theHolder with prior notificationofanymeeting of the Borrower's shareholders (andcopiesof proxy materials andother informationsentto shareholders). In the event of any takingby theBorrowerof arecordofits shareholdersforthe purpose of determining shareholders whoare entitled to receivepayment ofany dividend orother distribution,any right tosubscribe for, purchaseor otherwise acquire(including byway of merger,consolidation,reclassification orrecapitalization) any shareof anyclass or any other securitiesor property,or to receive anyotherright, or forthe purpose ofdetermining shareholderswhoareentitledtovotein connection withanyproposed sale,lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower,theBorrower shallmaila notice to theHolder,at least twenty (20) days priortotherecorddate specified therein(or thirty (30)daysprior tothe consummation ofthe transaction or event,whichever is earlier),of thedate onwhich any such record is to be taken for the purposeof suchdividend,distribution,right orother event,and a brief statement regarding the amountandcharacter of suchdividend,distribution, right or otherevent tothe extent known atsuch time. TheBorrower sha11 make a public announcement of any event requiring notification to the Holder hereunder substantia11y simultaneously with the notification to the Holder in accordance with theterms ofthis Section4.9.
4.10.Remedies.TheBorroweracknowledgesthatabreachbyitofitsobligations hereunderwillcause irreparable harm to theHolder,by vitiating the intentand purpose of the transaction contemplated hereby.Accordingly,the Borrower acknowledges that the remedyatlaw for a breach of itsobligations underthisNotewill be inadequate and agrees,inthe event of abreach or threatened breach by the Borrower of the provisions of this Note,thatthe Holdershall be entitled,in addition to all otheravailableremedies atlaw or in equity,and in addition tothe penalties assessable herein,to an injunction or injunctionsrestraining,preventing or curing any breach of this Note andtoenforce specificallythe terms andprovisions thereof,without the necessity of showing economicloss and withoutany bond or othersecuritybeingrequired.
4.11.Usury.ThisNoteshallbesubjecttotheanti-usurylimitationscontained in thePurchaseAgreement.
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IN WITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinits nameby itsdulyauthorizedofficerasofthe IssueDatefirstsetforth above.
ALKAME HOLDINGS, INC.
By:/s/ Robert Eakle
Name: Robert Eakle
Title: Chief Executive Officer
EXHIBIT ANOTICE OFCONVERSION
The undersignedherebyelectstoconvertprincipalunderthe12%ConvertibleNoteofALKAME HOLDINGS,INC.,aNevadacorporation(theCompany"),into shares of common stock (the"Common Stock"),of theCompany according to the conditionshereof, as of the datewrittenbelow. If shares of Common Stock are to be issued in the name of a person other than the undersigned,the undersignedwill pay all transfer taxes payable withrespectthereto andis delivering herewith such certificates and opinions asreasonably requested by the Company in accordancetherewith.No fee willbe charged tothe holder for anyconversion,except forsuch transfer taxes,if any.
By thedeliveryofthisNoticeofConversiontheundersignedrepresentsandwarrantstothe CompanythatitsownershipoftheCommonStockdoesnotexceed the amounts specified under Section 1.1 ofthis Note,as determined in accordance with Section13(d)of theExchangeAct.
The undersignedagreesto complywiththe prospectusdeliveryrequirementsunderthe applicablesecuritieslawsinconnectionwithanytransferoftheaforesaid sharesof CommonStock pursuant to any prospectus.
Conversion calculations: _______________
Date toEffectConversion: _______________
Conversion Price: _______________
Principal Amountof NotetobeConverted:
Interest AccruedonAccountofConversionat Issue: _______________
Number ofsharesofCommonStocktobeissued:_______________
Signature: _______________
Name: _______________
Address for DeliveryofCommonStockCertificates:
_______________
_______________
DWAC Instructions: _______________
Broker No: _______________
Account No: _______________
